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FISCAL YEAR 2002

BUDGET

BUDGET OF THE
UNITED STATES GOVERNMENT

THE BUDGET DOCUMENTS
Budget of the United States Government, Fiscal Year 2002
contains the Budget Message of the President and information on
the President’s 2002 proposals by budget function.

A Citizen’s Guide to the Federal Budget, Budget of the
United States Government, Fiscal Year 2002 provides general
information about the budget and the budget process.

Analytical Perspectives, Budget of the United States Government, Fiscal Year 2002 contains analyses that are designed to highlight specified subject areas or provide other significant presentations
of budget data that place the budget in perspective.
The Analytical Perspectives volume includes economic and accounting analyses; information on Federal receipts and collections; analyses
of Federal spending; detailed information on Federal borrowing and
debt; the Budget Enforcement Act preview report; current services
estimates; and other technical presentations. It also includes information on the budget system and concepts and a listing of the Federal
programs by agency and account.

Budget System and Concepts, Fiscal Year 2002 contains an
explanation of the system and concepts used to formulate the President’s budget proposals.

Historical Tables, Budget of the United States Government,
Fiscal Year 2002 provides data on budget receipts, outlays, surpluses or deficits, Federal debt, and Federal employment over an
extended time period, generally from 1940 or earlier to 2006. To
the extent feasible, the data have been adjusted to provide consistency with the 2002 Budget and to provide comparability over time.
Budget of the United States Government, Fiscal Year 2002—
Appendix contains detailed information on the various appropriations and funds that constitute the budget and is designed primarily
for the use of the Appropriations Committee. The Appendix contains
more detailed financial information on individual programs and appropriation accounts than any of the other budget documents. It
includes for each agency: the proposed text of appropriations language, budget schedules for each account, new legislative proposals,
explanations of the work to be performed and the funds needed,
and proposed general provisions applicable to the appropriations of
entire agencies or group of agencies. Information is also provided
on certain activities whose outlays are not part of the budget totals.

Budget Information for States, Fiscal Year 2002 is an Office
of Management and Budget (OMB) publication that provides proposed
State-by-State obligations for the major Federal formula grant programs to State and local governments. The allocations are based
on the proposals in the President’s budget. The report is released
after the budget.
AUTOMATED SOURCES OF BUDGET INFORMATION
The information contained in these documents is available in
electronic format from the following sources:
CD-ROM. The CD-ROM contains all of the budget documents and
software to support reading, printing, and searching the documents.
The CD-ROM also has many of the tables in the budget in spreadsheet format.
Internet. All budget documents, including documents that are
released at a future date, will be available for downloading in several
formats from the Internet. To access documents through the World
Wide Web, use the following address:
http://www.whitehouse.gov/omb/budget
For more information on access to electronic versions of the budget
documents (except CD–ROMs), call (202) 512–1530 in the D.C. area
or toll-free (888) 293–6498. To purchase a CD–ROM or printed documents call (202) 512-1800.

GENERAL NOTES
1.
2.

All years referred to are fiscal years, unless otherwise noted.
Detail in this document may not add to the totals due to rounding.

U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON 2001

For sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250
Mail: Stop SSOP, Washington, DC 20402–0001

TABLE OF CONTENTS
Page

The Budget Message of the President .............................................................

II.

Budget Highlights .................................................................................................

III.

Creating a Better Government
1.

Improving Government Performance ..................................................

National Defense ...................................................................................

International Affairs .............................................................................

General Science, Space, and Technology .............................................

Energy ....................................................................................................

Natural Resources and Environment ..................................................

Agriculture .............................................................................................

Commerce and Housing Credit ............................................................

Transportation .......................................................................................

10.

Community and Regional Development ..............................................

11.

Education, Training, Employment, and Social Services ....................

12.

Health ....................................................................................................

13.

Medicare .................................................................................................

105

14.

Income Security .....................................................................................

109

15.

Social Security .......................................................................................

115

16.

Veterans Benefits and Services ............................................................

121

17.

Administration of Justice .....................................................................

129

18.

General Government .............................................................................

137

19.

Net Interest ...........................................................................................

143

20.

Allowances .............................................................................................

147

21.

Undistributed Offsetting Receipts .......................................................

149

22.

Detailed Functional Tables ..................................................................

151

IV.

Summary Tables ....................................................................................................

221

List of Charts and Tables ....................................................................................

245

VI.

OMB Contributors to the 2002 Budget ............................................................

249

THE BUDGET MESSAGE OF
THE PRESIDENT

THE BUDGET MESSAGE OF THE PRESIDENT
To the Congress of the United States:
On February 28, 2001, I submitted A
Blueprint for New Beginnings, which provided
the Congress with my budget plan to fund
America’s important priorities, reduce the
debt by a historic amount, and provide fair
and responsible tax relief for the American
people. Today I am sending to the Congress
more details on my proposed budget.
A budget is much more than a collection
of numbers. A budget is a reflection of
a nation’s priorities, its needs, and its promise.
This budget offers a new vision of governing
for our Nation.
My budget strengthens and reforms education; preserves and protects Medicare and
Social Security; strengthens and modernizes
our military; improves health care; and protects our environment. Importantly, this budget creates an unprecedented $1 trillion reserve
for additional needs and contingencies.

This budget also retires the maximum
amount of debt possible by providing the
fastest, largest debt reduction in history,
$2 trillion over 10 years. Debt held by
the public will be reduced to its lowest
share of the economy since World War I.
After funding important priorities and retiring all Government debt possible, my budget
uses the remaining portion of the surplus
to provide fair and reasonable tax relief
to every American who pays income taxes.
My budget uses roughly one-fourth of the
budget surplus to provide the typical family
of four $1,600 in tax relief. The American
people have been overcharged for Government,
and they deserve a refund.
My budget does all these things, and
more. I believe America’s best days are
yet to come, and I look forward to working
with the Congress in a bipartisan fashion
to ensure that our Nation reaches its full
potential as we begin a new century.
GEORGE W. BUSH

April 9, 2001

II.

BUDGET HIGHLIGHTS

II.

BUDGET HIGHLIGHTS

A New Approach to Budgeting
Moderate Growth in Government and Fund National Priorities:
• Moderates recent rapid growth in spending, while funding national priorities,
paying down the debt, and providing tax relief.
• Strengthens and reforms education, granting the Education Department the
largest percentage spending increase of any Department (11.5 percent increase in 2002).
• Saves the entire Social Security surplus ($2.6 trillion) and commits to reforming the program.
• Spends every penny of Medicare tax and premium collections over next 10
years only on Medicare. Modernizes and reforms Medicare.
• Restores commitment to military personnel and begins transition to a 21st
Century force structure.
• Champions compassionate conservatism by supporting the critical role that
faith-based and community organizations play in helping people at the local
level.
Debt Reduction: Achieves historic levels of debt reduction, retiring the maximum
amount of debt possible over 10 years ($2 trillion).
Tax Relief: Lets taxpayers keep roughly one-fourth of the surplus they produced
($1.6 trillion over 10 years).
By the Numbers:
• Allocates projected $5.6 trillion surplus over 10 years. Breakdown of surplus:
—Saves all of Social Security surplus ($2.6 trillion) for Social Security.
—Provides $1.6 trillion in tax relief over 10 years.
—Creates an unprecedented $1.4 trillion reserve for additional needs, debt
service, and contingencies.
• Produces a $231 billion total surplus in 2002.
• Reduces historically high income tax burden.
• Moderates recent explosive growth in discretionary spending to 4.0 percent
growth in 2002, an increase of $26 billion over 2001.
• Moderates growth in spending by making reductions in one-time spending,
unjustified programs, duplicative programs, and programs that have completed their mission in 2002.

THE BUDGET FOR FISCAL YEAR 2002

A New Approach to Budgeting—Continued
Initiative Highlights:
• K–12 Education. Increases funding for elementary and secondary education by
$1.9 billion in 2002 over 2001 funding.
• Reading. Fully funds President’s Reading First initiative, including Early
Reading First, at $975 million in 2002, more than tripling funding for reading.
• Medicare. Sets aside $153 billion over the next 10 years for the Immediate
Helping Hand initiative and Medicare modernization.
• National Institutes of Health (NIH). Continues commitment to double NIH, by
providing a $2.8 billion increase for NIH, the largest annual funding increase
in NIH’s history.
• WIC. Funds the Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC) at 7.25 million individuals a month, maintaining current
program level.
• Conservation. Provides the highest ever request for the Land and Water Conservation Fund - fully funding the program at $900 million.
• Energy Assistance. Nearly doubles the existing Weatherization Assistance
Program providing an increase of $1.4 billion over 10 years.
• Community Health Centers. Launches a doubling of the number of people
served by Community Health Centers by adding 1,200 sites.
• Provides tax relief to all Americans who pay income tax.
• Reduces the marriage penalty.
• Ends the death tax.
• R&D tax credit. Permanently extends the research and development (R&D)
tax credit.
• Tax incentives. Provides other tax incentives for education, farmers, the disabled, health care, the environment, and charitable purposes.
• National Defense. Provides a $14.2 billion increase in Department of Defense
spending in 2002 to begin to arrest the decline in national security, including
$1.4 billion for military compensation to improve quality of life and reenlistment and retention of military personnel, $2.6 billion for research and development for new technologies (including missile defense alternatives), and $400
million to improve housing for our military members and their families.
• International security. Improves embassy security overseas, adding $1.2
billion.

III.

CREATING A BETTER
GOVERNMENT

IMPROVING GOVERNMENT
PERFORMANCE

The Federal Government’s performance
needs to improve. The past Administration,
Congress, and the General Accounting Office
concluded that we still have much work
to do to improve the management and performance of the Federal Government.
True Government reform must be based
on a reexamination of the role of the Federal
Government. The President has called for
an ‘‘active, but limited’’ Government: one
that empowers States, cities, and citizens
to make decisions; ensures results through
accountability; and promotes innovation
through competition. Thus, the Administration
will reform and modernize Government on
the basis of three objectives to make Government:
• Citizen-centered,
tered;

not

bureaucracy

cen-

• Results-oriented, not process-oriented; and
• Market-based, actively promoting not stifling, innovation and competition.
This task will not be easy and it will
take time. The agenda for management reform
outlined in the discussion below and in
the following chapters of the President’s Budget is just the first step in the process.
As a next step, in the next few months
the Administration will announce a more
comprehensive Government reform and management agenda that will expand on the
initiatives discussed below, and address other
key reforms.
Section III, ‘‘Creating a Better Government,’’
of this budget is a Government-wide Performance Plan with an integrated view of the
goals and descriptions of program activity
as contemplated by the Government Performance and Results Act of 1993 (GPRA). Rather
than examining performance only in individual
organizational units (such as departments
and agencies), the functional presentation
in the chapters that follow groups together
similar programs. The Government-wide

Performance Plan contains a significant number of key performance goals that serve
as a window into the agencies’ 2002 Performance Plans, which will be sent to Congress
following the transmittal of the budget.
Good beginnings are not the measure of
success, in Government or any other pursuit.
What matters in the end is performance.
Not just making promises, but making good
on promises. This will be the standard for
this Administration—from the farthest field
office to the highest office in the land—
as we begin the process of getting results
from Government.
Making Government Citizen-Centered
Use the Internet to Create a Citizen-Centric Government: The explosive growth of the
Internet has transformed communications between customers and businesses. It is also
transforming communications between citizens
and Government. The President believes that
providing access to information and services
is only the first step in electronic Government
(e-gov). Citizen-centered Government will use
the Internet to bring about transformational
change: agencies will conduct transactions
with the public along secure web-enabled
systems that use portals to link common
applications and protect privacy. This will give
citizens the ability to go online and interact
with their Government and with their State
and local Governments that provide similar
information and services around citizen preferences and not agency boundaries.
Create an E-Government Fund: The
budget proposes $20 million in 2002 as the
first installment of a fund that will grow to
a total of $100 million over three years to
support interagency e-gov initiatives. OMB
would control the allocation of the fund to support information technology (IT) projects in the
e-gov arena.
11

12
Projects that operate across agency boundaries will build off the foundation of essential
building blocks, including: www.firstgov.gov,
the online information portal that provides
24 hours a day/seven days a week access
to all Government online information, searchable by topic rather than by agency; and
the development of a Public Key Infrastructure
to implement digital signatures that are accepted across agencies for secure online communications.
The fund will also further the Administration’s ability to implement the Government
Paperwork Elimination Act of 1998, which
calls upon agencies to provide the public
with optional use and acceptance of electronic
information, services and signatures, when
practicable, by October 2003. In recent years,
funding for interagency e-gov initiatives has
been obtained, as authorized by law, by
passing the hat among agencies to support
activities of interagency councils. The e-gov
fund will accelerate the improvements this
Administration will make to provide for interagency e-gov innovation.
Making Government Results-Oriented
Link Budget and Management Decisions
to Performance: The Government’s budget
decision-making
process
allows
elected
officials—the President and members of
Congress—to set broad priorities for Government programs and their managers through
resource allocation. Choices are framed by the
assessments of these officials about the country’s needs for education, defense, energy,
health, and a host of other national needs,
within a framework of the resources available.
Making spending choices and allocating
the appropriate resource level is an important
step, but it is also important for spending
to produce meaningful results. Performance
information is necessary to determine the
value and success of Government programs
in achieving their goals. Passage of GPRA
elevated the importance of good information
on program performance, and at the same
time signaled dissatisfaction with the performance information that has been available
in the past.
The initial years of GPRA implementation
have focused on developing a performance

THE BUDGET FOR FISCAL YEAR 2002

management framework, accompanied by a
growing increase in the use of this performance information to support budget decisions.
However, a systematic integration of budgeting
with program performance has yet to occur,
and GPRA has not been fully harnessed
to improve management and managerial accountability. Bringing about a better linkage
between performance and budget information
will be a priority of this Administration.
As a first step, department and agency heads
have been directed to ensure that their
2002 Performance Plans, which will be submitted to Congress in April, also include
performance goals for Presidential initiatives
and for Government-wide and agency-specific
reform proposals.
Over the coming year, the Administration
will take a number of steps to strengthen
the linkage between budget decision making
and program performance.
• Formally integrate performance with budget decisions: Agencies will be asked to submit performance-based budgets this September for a selected set of programs. For
the selected programs, agencies will be advised of specific performance targets that
are compatible with funding levels, and
program managers will be held directly
accountable for managing to the targets.
In future years, policy officials at all levels
in the Executive Branch will be expected
to set output targets to match funding
levels for selected programs.
• Develop legislation to enable program
managers to be charged for support services, capital assets, and employer benefits:
If program managers are going to be held
more accountable for the achievement of
output targets, they should be given accurate information on the cost of their programs and flexibility in choosing service
providers. At present, program managers
do not always have information on, or control of, the full costs of support services,
retirement, and other non-direct costs associated with their programs, which can
distort budget choices. Legislation will be
developed this year to address this problem by changing the way support services,
capital assets, and employee benefits are
budgeted.

IMPROVING GOVERNMENT PERFORMANCE

• Publish detailed performance data: The
2003 Budget will include more performance information and the 2004 Budget will
integrate detailed performance and budget
data to establish a stronger, more extensive and public link between the agency
budget requests and performance measurement in the President’s Budget.
Ensure Financial Accountability: The
President believes that Government must ensure a basic level of financial accountability
that is expected of any company in the private
sector. He is holding agency heads accountable
for obtaining and maintaining unqualified or
‘‘clean’’ opinions on their agencies’ annual
financial statement audits. More than 60
percent of agencies currently receive ‘‘clean’’
opinions; heads of the agencies without clean
opinions are expected to attack vigorously the
long-standing difficulties and record-keeping
deficiencies that prevent clean opinions.
Reduce Erroneous Payments to Beneficiaries and Other Recipients of Government Funds: Financial accountability also requires assurance that Federal funds are being
used for their intended purpose and not being
distributed due to error. The General Accounting Office identified $19.1 billion in erroneous
payments made last year, and noted that the
amount could be considerably larger. The
President will direct agency heads to develop
more rigorous controls to ensure that Federal
funds reach their intended recipients at the
correct time and in the proper amount.
Further, he will promote the use of recovery
audits and other steps to ensure that
overpayments are avoided or returned to the
Government.
Use Capital Planning to Improve Performance: Agencies invest more than $40
billion in IT to support some 26,000 information systems. Technology now affects virtually
every aspect of the way the Government
operates, and IT investments are extremely
important to the success of e-gov transforming
the delivery of information and services. Agencies will use capital planning and investment
control to promote security and privacy in the
use of technology and guide the results of this
investment, and ultimately for ensuring results from other capital assets as well. The
Government can thus achieve outcomes from

13
IT investments that match agency strategic
priorities and provide real benefits for the
American people.
Eliminate Duplicative and Ineffective
Programs: The Federal Government spends
billions of dollars on programs that are
obsolete, ineffective, or better performed by the
private sector. The Administration will seek
to redeploy resources from old priorities to
make room for new Administration priorities
by reducing or eliminating funding for programs that have completed their mission or
that are redundant, ineffective, or obsolete.
Expand the Use of Performance-Based
Contracts: Because of expanding missions and
declining staff, agencies are increasingly
relying on outside contractors. The Federal
Government spends roughly $110 billion a
year in service contracts. The increase in the
amount and type of contracting creates the
opportunity and the necessity to move toward
performance-based contracting—where the
focus is on the results to be achieved, rather
than the manner in which the work is
performed or the ‘‘effort’’ involved. Agencies
will convert Federal service contracts to performance-based contracts wherever possible, saving an estimated $8.3 billion over five years.
Incorporate Successful Private Sector
Reforms Throughout the Federal Work
Force: The current civil service system does
not do all it should to reward achievement or
encourage excellence. It also limits the ability
of agency heads to compete successfully for
high-skilled senior talent. In an effort to get
closer to the customer, American businesses
have increasingly replaced old, hierarchical
organizations with flatter, more entrepreneurial ones. To shrink the distance between
citizens and decision makers who shape Government programs, the Administration will incorporate successful private sector reforms
throughout the Federal work force: flatten the
Federal hierarchy; reduce the number of layers
in the upper echelon of Government; and use
work force planning to help agencies redistribute higher-level positions to front-line,
service delivery positions that interact with
citizens. The Administration will also seek
legislation to provide program managers new
and expanded work force restructuring tools.
These actions, combined with improved

14
accountability through better linkage of program performance with budget decision making and other reforms, will make the Federal
Government more nimble and responsive. The
Government can also be made more effective.
These same work force planning tools can help
ensure that agencies have people with the
right skills in the right places in the right
numbers to deliver programs people care
about.
Making Government Market-Based
Make e-Procurement the Governmentwide Standard: Businesses are experiencing
significant cost savings by shifting their procurement to the Internet. Savings are derived
from reduced transaction-processing costs,
more efficient inventory management, and
greater competition from vendors lowering
prices. In an effort to lower costs and utilize
market-based solutions wherever possible,
agencies will move to paperless contracting
processes in which information from one step
of the process is automatically fed to the next
step in the process, eliminating the need to
re-enter data. Procurement data will be linked
to financial systems, making the payment
process both faster and more accurate; disposal

THE BUDGET FOR FISCAL YEAR 2002

of excess Government property will become
more effective. Agencies will also expand use
of ‘‘share-in-savings’’ approaches, in which
market incentives reward contractors who can
retain a portion of any savings that result from
innovation.
Open Government Activities to Competition: Opening Government functions to competition to the fullest extent possible is the
best way to ensure market-based pricing and
encourage innovation, while saving the taxpayers an estimated $14 billion over five years.
Since 1998, agencies have been required to
inventory their activities that are commercial
in nature—that is activities that are not ‘‘so
intimately related to the public interest as to
require performance by Federal Government
employees.’’ In the past, agencies have found
that when competitive bidding is employed,
they experience average savings of 30 percent
when a private contractor wins, and 20 percent
when the public sector wins. Consequently, for
these activities, agencies will use an open,
competitive process (considering both public
and private bidders) to choose the providers.
The competitive process will be studied so that
it can be streamlined.

IMPROVING GOVERNMENT PERFORMANCE

Table 1–1.

Federal Resources by Function
(In billions of dollars)

Category
NATIONAL DEFENSE:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
INTERNATIONAL AFFAIRS:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
GENERAL SCIENCE, SPACE, AND
TECHNOLOGY:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Tax Expenditures:
Existing law ....................................
ENERGY:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
NATURAL RESOURCES AND ENVIRONMENT:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
AGRICULTURE:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................

Estimate

2000
Actual

2001

300.8

2002

311.3

2003

2004

2005

2006

325.1

333.9

343.2

352.7

362.5

–0.1
0.1

–0.2
0.2

–0.5
0.2

–0.6
0.1

*
*

0.1
0.1

0.1
0.5

0.2
0.5

2.1

2.2

2.3

23.5

22.7

23.9

24.4

24.9

25.5

26.0

–4.1

–6.7

–3.5

–3.4

1.6
11.4

2.3
11.1

2.0
11.5

0.5
10.8

0.2
10.7

0.2
11.6

0.1
11.2

16.6

18.1

18.3

18.9

20.0

21.3

22.6

19.2

20.9

21.2

21.9

22.4

22.9

23.5

0.1

0.2

0.1

3.3

7.7

8.4

7.2

6.6

4.7

3.3

2.7

3.1

2.8

2.9

3.1

3.2

3.3

–4.0

–3.7

–3.3

–3.2

–3.7

–3.6

1.4
0.2

1.9
0.1

2.2
0.1

2.5
0.1

2.7
0.1

2.8
0.1

2.9
0.1

2.0

2.1

1.9

1.6

1.8

1.9

24.6

28.7

26.4

27.0

27.6

27.4

*
–0.2
................. .................

–0.1
–*

0.1
–0.1

0.2
–*

0.1
*

0.1
0.1

*
*
................. .................

*
*

*
0.1

*
*

–0.5
–0.4
................. .................
.................
*

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

*
*
................. .................

1.5

1.6

1.7

1.8

1.9

2.0

4.7

5.1

4.8

5.2

5.3

5.4

32.0

20.4

13.2

9.8

8.8

9.1

11.0
5.4

10.3
6.5

10.4
6.8

8.9
6.9

8.8
6.9

8.6
6.9

8.9
6.9

THE BUDGET FOR FISCAL YEAR 2002

Table 1–1.

Federal Resources by Function—Continued
(In billions of dollars)

Category
Tax Expenditures:
Existing law ....................................
COMMERCE AND HOUSING
CREDIT:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
TRANSPORTATION:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
COMMUNITY AND REGIONAL DEVELOPMENT:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL
SERVICES:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
HEALTH:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Guaranteed loans ............................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

1.0

1.1

1.2

1.3

5.1

0.7

–0.3

–0.1

–0.4

–0.5

6.7
–0.1

4.7
–0.1

4.0
–0.1

4.2
–0.1

2.9
–0.1

–1.3
–2.5
................. .................
1.3
218.7

1.7
231.3

1.6
250.8

1.6
263.2

1.6
272.8

1.6
282.4

1.6
290.0

242.5

254.7

266.7

277.8

289.5

301.2

314.8

15.2

18.9

16.8

17.8

18.2

18.6

19.0

2.1

2.2

1.8

2.0

1.9

0.3
0.9

0.4
0.6

0.7
0.4

1.1
0.2

1.5
0.2

2.0
0.2

2.2
0.2

2.1

2.2

2.4

2.5

2.7

2.8

3.0

12.2

11.0

10.4

10.7

10.9

11.1

11.3

–0.3
–*

–0.7
–0.1

–0.8
–0.2

–0.9
–0.4

–0.8
–0.6
................. .................
1.9
1.4

2.2
2.8

1.9
2.4

1.8
2.0

2.0
1.8

2.0
1.9

1.2

1.4

1.9

2.4

2.6

3.1

44.4

61.1

65.4

67.1

69.0

70.7

72.3

14.3
0.1

14.5
0.3

14.8
0.4

15.3
0.4

16.2
0.4

10.3
9.1
................. .................
16.4
26.6

19.1
29.5

16.6
30.7

17.5
32.4

18.4
34.2

19.4
36.2

20.4
38.2

36.0

37.8

38.8

40.4

43.2

45.0

47.5

33.8

38.9

41.0

45.7

46.9

48.1

49.4

138.7
2.5

152.4
10.7

168.9
13.7

183.6
14.6

199.7
4.3

216.6
0.1

124.5
.................
*

IMPROVING GOVERNMENT PERFORMANCE

Table 1–1.

Federal Resources by Function—Continued
(In billions of dollars)

Category
Tax Expenditures:
Existing law ....................................
MEDICARE:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
INCOME SECURITY:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
SOCIAL SECURITY:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Tax Expenditures:
Existing law ....................................
VETERANS BENEFITS AND
SERVICES:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................
Tax Expenditures:
Existing law ....................................
ADMINISTRATION OF JUSTICE:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
GENERAL GOVERNMENT:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Tax Expenditures:
Existing law ....................................
NET INTEREST:
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

91.1

99.8

108.6

117.8

127.5

136.8

147.1

3.0

3.4

3.5

3.6

3.7

3.8

270.8
8.3

279.4
12.8

194.1
216.0
226.4
238.6
252.2
................. ................. ................. ................. .................

31.6

39.5

206.5
217.2
................. .................

42.8

45.1

46.7

48.3

49.6

228.5
0.3

237.0
0.9

246.3
1.0

258.2
1.2

265.5
1.3

*
*

*
0.1

147.6

153.4

159.1

165.7

172.3

179.1

187.7

3.2

3.4

3.5

3.6

3.7

3.8

406.0

430.0

451.6

473.5

498.0

524.3

553.0

24.8

26.0

27.3

28.4

29.7

31.3

33.0

20.9

22.5

23.5

24.0

24.5

25.1

25.7

28.1
*

29.7
–*

31.3
–0.1

35.4
–0.1

34.1
–0.1

26.3
23.0
................. .................

................. ................. ................. .................
0.1
0.1
0.1
0.1

1.5
20.2

1.7
29.5

1.7
29.0

1.9
29.6

2.0
30.2

2.0
30.8

2.0
31.5

3.3

3.5

3.7

3.9

4.0

4.3

4.5

27.1

30.0

29.8

31.9

32.3

32.8

33.5

1.0

0.7

1.5

1.1

2.5

12.4

14.0

14.8

15.0

15.4

15.7

16.0

2.0
1.2

1.8
*

1.0
2.3
................. .................

1.8
*

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

67.7

71.3

74.8

78.3

82.1

86.0

88.7

188.1
*

175.2
*

161.5
*

144.6
0.1

127.1
0.1

223.2
206.4
................. .................

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

THE BUDGET FOR FISCAL YEAR 2002

Table 1–1.

Federal Resources by Function—Continued
(In billions of dollars)

Category
Tax Expenditures:
Existing law ....................................

2000
Actual

0.5

Estimate
2001

0.5

2002

2003

2004

2005

2006

0.5

0.6

ALLOWANCES:
Spending:
Discretionary Budget Authority ....

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

5.3

5.4

5.6

5.7

5.8

UNDISTRIBUTED OFFSETTING
RECEIPTS:
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................

–42.6
–47.7
................. .................

–51.8
2.4

–60.7
0.3

–62.4
–8.2

–56.2
–2.7

–57.8
–4.6

634.9

660.6

685.1

702.7

720.1

737.9

1,204.4
2.5

1,255.4
13.4

1,289.2
15.2

1,336.6
8.9

1,403.0
11.2

1,444.0
9.6

39.6
311.6

37.3
332.0

35.9
346.0

37.5
357.6

38.6
370.1

40.2
380.0

FEDERAL GOVERNMENT TOTAL:
Spending:
Discretionary Budget Authority ....
Mandatory Outlays:
Existing law .................................
Proposed legislation ....................
Credit Activity:
Direct loan disbursements .............
Guaranteed loans ............................

584.4
1,174.0
.................
35.5
284.9

* $50 million or less.
Notes: Tax expenditure proposals are presented in Table S–10.
The Administration proposes to reverse the misleading budget practice of using advance appropriations simply to avoid
spending limitations and is requesting sufficient appropriations in 2002 to cover normal funding, instead of requesting advance appropriations for 2003. This increases budget authority by $22.7 billion in 2002 only.

2.
Table 2–1.

NATIONAL DEFENSE

Federal Resources in Support of National Defense
(In millions of dollars)

Function 050

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................
Proposed legislation ...................
Credit Activity:
Direct loan disbursements ............
Guaranteed loans ..........................
Tax Expenditures:
Existing law ...................................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

300,767

311,271

325,079

333,934

343,194

352,704

362,515

–470
..............

–445
..............

–122
97

–182
155

–517
150

–555
108

–630
68

..............
47

32
39

72
120

136
518

201
537

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

2,140

2,160

2,190

2,210

2,240

2,260

2,290

The Federal Government will allocate $325
billion in 2002 to defend the United States,
its citizens, its allies, and to protect and
advance American interests around the world.
National defense programs and activities ensure that the United States maintains strong,
ready, and modern military forces to promote
U.S. objectives in peacetime, deter conflict,
and if necessary, successfully defend our
Nation and its interests in wartime.
Over the past half-century, our defense
program has fielded forces for conflicts in
Korea, Vietnam, and Southwest Asia, deterred
both conventional and nuclear attack on U.S.
soil, helped bring an end to the Cold War,
and successfully executed numerous contingency operations. Today, the United States
military remains the strongest on earth, but
it still faces a number of challenges. These
include assuring that military personnel are
adequately paid, their families are adequately
housed, and that they receive the necessary
training and equipment to do their jobs.
In order to meet the challenges of the
21st Century, the President has asked the
Secretary of Defense to conduct a major
review that will analyze the Nation’s military
strategy, the structure of our Armed Forces,
and defense spending priorities.

Department of Defense (DOD)
The DOD budget provides for the pay,
training, operation, basing, and support of
U.S. military forces, and for the development
and acquisition of equipment. DOD sustains
the capabilities that follow to achieve its
objectives.
Conventional Forces: Conventional forces
include ground forces such as infantry and
tank units; air forces such as tactical aircraft;
naval forces such as aircraft carriers, destroyers, and attack submarines; and Marine Corps
expeditionary forces. The Nation needs conventional forces to deter aggression and, when
that fails, to defeat it. Funds to support these
forces cover pay and benefits for military
personnel; the purchase, operation, and maintenance of conventional systems such as tanks,
aircraft, and ships; the purchase of ammunition and spare parts; and training.
Mobility Forces: Mobility forces provide the
airlift and sealift that transport military personnel and materiel throughout the world.
They play a critical role in U.S. defense strategy and are a vital part of America’s response
to contingencies that range from humanitarian
relief efforts to major theater wars. Airlift aircraft provide a flexible, rapid way to deploy
19

THE BUDGET FOR FISCAL YEAR 2002

forces and supplies quickly to distant regions,
while sealift ships allow the deployment of
large numbers of heavy forces together with
their fuel and supplies. The mobility program
includes prepositioning equipment and supplies at sea or on land near the location of
a potential crisis, allowing U.S. forces that
must respond rapidly to crises overseas to
quickly draw upon these prepositioned items.
The mobility program also ensures that DOD
will have access to a fleet of active, militarily
useful, privately-owned U.S. vessels that would
be available in times of national emergency.

DOD’s Performance Report for 2000 examined the Department’s success in achieving
the goals outlined in its 2000 Performance
Plan. The Performance Report highlighted
several critical long-term goals accomplished
by DOD in 2000.

Strategic Forces: Nuclear forces are an
essential element of our national deterrent
posture. They include land-based intercontinental ballistic missiles, submarine-launched
ballistic missiles, long-range bombers, and substrategic forces. In addition to offensive forces,
the President has established the deployment
of effective missile defenses as a top Administration policy. To deter new threats, including
weapons of mass destruction and increasingly
sophisticated ballistic missiles, we require offensive and defensive systems working
together. The President has initiated a review
to determine how to put this new concept of
deterrence into effect.

• Recruitment: During 2000, aggregate
active and reserve component forces met
recruiting and quality goals.

Supporting Activities: Supporting activities include research and development, communications, intelligence, training and medical
services, central supply and maintenance, and
other logistics activities. In particular, the
Defense Health Program provides health care
through DOD facilities, as well as through
TRICARE—its contracted, civilian network
companion program.
DOD Performance
The President has asked the Secretary
of Defense to conduct a major review to
analyze the Nation’s military strategy, the
structure of our Armed Forces, and the
defense budget priorities. The results of this
review will lay the foundation for DOD’s
future goals, clarify key performance measures, and guide future decisions on military
spending. Consequently, DOD’s 2002 Performance Plan will be prepared following the
completion of this review. The Administration
will determine final 2002 and outyear funding
levels only when the review is complete.

• Overseas Presence: During 2000, U.S.
military forces supported a variety of
peacetime deployments worldwide. Many
of these missions were undertaken as part
of the almost 200 annual joint and combined exercises sponsored by DOD.

• Joint Experiments: In its second year as
the lead for joint experimentation, the
U.S. Joint Forces Command conducted 19
transformation-related joint experiments
in 2000—more than 35 percent above
original projections.
• Infrastructure
Streamlining:
The
portion of the defense budget spent on
infrastructure decreased from a high of 45
percent in 1995 and 1996 to 42 percent
in 1999. DOD exceeded its target for
disposing of excess land and demolishing
unused buildings. DOD was also able to
surpass its target of 90 percent asset visibility and to exceed its target for reducing
the National Defense Stockpile.
• Acquisition Reform: During 2000, 79
percent of DOD transactions in the areas
of contracting, program management, and
logistics were processed electronically. In
addition, 95 percent of all micro-purchases
under $2,500 were made with purchase
cards. Finally, the acquisition work force
was reduced by an additional five percent
(relative to 1997), and DOD completed disposal of over 50 percent of Government
surplus property—147,000 cumulative
acres.
• Financial Management: DOD has
reduced the number of accounting and finance systems from 324 in 1991 to 76 in
2000. At the end of 2000, 13 accounting
and finance systems were reported to be
compliant with legislative requirements.

NATIONAL DEFENSE

The Department will also seek to improve
management and efficiency by: (1) reducing
cost growth and cycle times on major weapon
systems to less than one percent and eight
years, respectively; (2) eliminating excess infrastructure; (3) expanding annual publicprivate A-76 competitions; and (4) developing
better measurement of inadequate defense
housing.
Department of Energy (DOE)
Performance
DOE’s defense missions include national
security and environmental remediation. The
National Nuclear Security Administration
(NNSA) is responsible for maintaining a safe,
secure, and reliable nuclear weapons stockpile,
improving nuclear nonproliferation, and managing the naval nuclear propulsion program.
The goal of DOE’s Environmental Management (EM) program is to clean up the
legacy of contamination from nuclear weapons
programs.
The NNSA and EM programs continue
to experience delays and cost overruns in
managing contracts and acquiring capital
assets. DOE intends to increase performancebased contracting and improve project management to achieve significant cost savings for
the taxpayers.
The budget proposes $13.4 billion to meet
DOE’s national security and environmental
objectives, of which $7.2 billion is for ongoing
national security missions and $6.2 billion
addresses environmental cleanup activities.
In 2002, DOE will achieve the following
performance goals:
National Security
• Report annually to the President on the
need to resume underground nuclear testing to certify the safety and reliability of
the nuclear weapons stockpile.

• Continue consolidation of weapons-usable
material into fewer buildings and fewer
sites in Russia. Convert an additional 1.7
metric tons of weapons grade highly enriched uranium to low enriched uranium,
increasing the total converted to 3.8 metric
tons.
Environmental Quality
• Complete remediation of one geographic
site, bringing the total number of sites
cleaned up to 75 out of a total of 113.
• Clean up 64 release sites, bringing the
number completed to more than 5,166 of
a total inventory of approximately 10,000
release sites. (A release site is a specific
location where hazardous, radioactive, or
mixed waste has or is suspected to have
been discharged.)
• Treat high-level waste in the Defense
Waste Processing Facility at the Savannah
River site to produce 150 canisters of solidified waste, bringing the total produced
to 1,576 of the estimated 19,179 required.
• Ship 3,149 cubic meters of transuranic
waste to the Waste Isolation Pilot Plant,
bringing the total waste shipped to 6,227
cubic meters out of 175,600 cubic meters
requiring disposal.
Other Defense-Related Activities
Several other national defense activities
are implementing performance measurement.
These include: the Coast Guard; the Federal
Bureau of Investigation; the American Battle
Monuments Commission; Arlington National
Cemetery; and the Selective Service System.

• Meet the milestones in DOE’s science campaigns to improve understanding of nuclear weapons systems to certify annually
the nuclear weapons stockpile without underground testing.

The Coast Guard supports the defense
mission through overseas deployments for
engagements with friends and allies, port
security teams, boarding and inspection teams
for enforcing UN sanctions, training, aids
to navigation, international icebreaking, equipment maintenance, and support of the Coast
Guard Reserve.

• Meet all annual weapons maintenance and
refurbishment schedules jointly developed
by DOE and DOD.

The Federal Bureau of Investigation conducts counterintelligence and surveillance activities.

22
The American Battle Monuments Commission is reducing the backlog of maintenance
and continuing productivity improvements at
cemeteries and memorials overseas.
Arlington National Cemetery is implementing a capital investment plan for using
contiguous land sites that will be vacated
by the Services, including the Navy Annex
and portions of Fort Myer. A review is
underway of the demographics of the four

THE BUDGET FOR FISCAL YEAR 2002

million annual visitors to this national historic
shrine.
The Selective Service System is modernizing
its registration process to promote military
recruiting among registrants, and in cooperation with DOD, is reducing active duty and
reserve force officers to reflect the reduced
readiness requirements, and to fund additional
automation.

3.
Table 3–1.

INTERNATIONAL AFFAIRS
Federal Resources in Support of International Affairs
(In millions of dollars)

Function 150

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................
Credit Activity:
Direct loan disbursements ............
Guaranteed loans ..........................
Tax Expenditures:
Existing law ...................................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

23,459

22,651

23,867

24,388

24,918

25,468

26,031

–4,069

–6,651

–3,543

–3,422

–3,438

–3,408

–3,361

1,571
11,443

2,252
11,110

2,047
11,544

476
10,829

226
10,743

224
11,585

119
11,215

16,630

18,060

18,340

18,910

20,040

21,260

22,590

The Administration proposes $23.9 billion
for International Affairs programs in 2002.
By fully funding these programs, the United
States can provide the global leadership needed to enhance national security, including
the security of Americans overseas; promote
free trade and open markets; counter the
threat posed by the global trade in illegal
drugs; provide humanitarian and development
assistance to address the global spread of
poverty and diseases; and provide the modern
technology and working conditions that our
diplomats need in their efforts to secure
our national interests overseas.
The performance goals that follow represent
key U.S. foreign policy priorities based on
the Administration’s initial review of our
international affairs programs and objectives.
As the Administration continues to refine
U.S. national security and foreign policy strategies, additional objectives and performance
goals are likely to be identified. These goals
should, therefore, be viewed as preliminary
and not as an exhaustive list. International
affairs agencies have additional performance
goals that meet their legislative mandates
in ways that contribute to U.S. national
interests.

National Security
Vigorous engagement and leadership in
international affairs are essential to U.S.
national security. Experienced and skilled
professionals are required to protect America’s
security interests, along with an active diplomacy and sufficient resources to address
challenges anywhere in the world. The Administration’s efforts to reduce the threat of
weapons of mass destruction will combine
active diplomacy with critical, targeted assistance programs. The United States will continue its bilateral efforts to resolve destabilizing regional conflicts, including the use
of economic and reconstruction assistance,
which will be complemented by multilateral
work through international financial institutions and the United Nations. These tools
for leadership in international affairs require
a sustained commitment of resources to
achieve results.
American resolve to advance national security and foreign policy interests throughout
the world is unmatched. The advancement
of those interests requires a day-to-day American presence in dangerous locations despite
continued threats of terrorist violence. Effective performance of embassy security measures
23

24
must be an integral component of efforts to
meet our national security goals. The Administration has accepted the management challenge to achieve efficiently and effectively global embassy security upgrades and maintain a
high level of readiness at U.S. overseas posts.
The budget proposes $1.3 billion for enhanced
security measures, including $665 million for
new, secure facility construction, which includes funding for U.S. Agency for International Development (USAID) facilities, $211
million for additional security upgrades to existing facilities, and $428 million for security
readiness.
In addition to enhanced security, the Administration intends to review America’s official
presence overseas. According to one study,
the distribution of U.S. Government staff
overseas is based more on historical legacy
and bureaucratic inertia than by a clear
commitment to advance American policy goals.
In some embassies, up to 30 U.S. agencies
may be represented. Frequently, agencies do
not know the true costs of having their
staff in foreign countries. This situation clearly
does not reflect the desired goal of a well
managed, rational, and cost effective American
presence overseas.
United Nations peacekeeping efforts can
benefit U.S. national security. Working with
the UN allows the United States to address
policy objectives and share the cost among
all nations, while reducing the possible requirement to deploy U.S. troops abroad. The
United States must continue to address the
need for UN management reforms. The United
States must ensure that UN peacekeeping
mission goals are defined and achievable,
that vital national interests are identified,
and that there is not only a planned exit
strategy, but also a ‘‘success’’ strategy to
UN peacekeeping operations.
The Department of State will meet the
following goals in 2002:
• Continue to make full use of active and
defensive measures to prevent and deter
terrorist attacks and the loss of human
life. The resources requested will support
maintenance of counter-surveillance programs, integration of threat intelligence
into an active security posture, inspection
of all vehicles entering U.S. diplomatic

THE BUDGET FOR FISCAL YEAR 2002

compounds, and 24-hour guard coverage
and electronic monitoring of embassy facilities.
• Improve the security posture of all agencies overseas, make more reliable the
Department’s ability to project resource
needs in the future, and examine the
current financing structure for overseas
facilities to determine if it provides a
sound basis for long-term capital needs.
• Set standards to measure the effectiveness
of UN peacekeeping activities and bilateral U.S. assistance programs designed to
build regional and national peacekeeping
and peace enforcement capacities worldwide. Make decisions concerning continued
support for and funding of these activities
based on whether these standards are
being met.
• Achieve demonstrable reductions in the
flow of the material, equipment, and technology needed to acquire, produce, or
deploy weapons of mass destruction, by
helping officials in exporting countries and
key transshipment points to improve their
systems of export controls.
State Department Management and
Operations
The budget provides funding to modernize
and improve State Department management,
which is expected to enable the Department
to achieve its strategic and performance goals.
The Department will identify appropriate
quantitative indicators to measure the success
of management reforms and ensure that
budgetary resources are directly linked to
management performance.
As with any institution, excessive layers
of bureaucracy and duplicative bureaus impede
effective management. In the case of the
State Department, they can hinder the prompt
and effective execution of foreign policy. To
reduce the number of middle management
positions that complicate lines of authority
and hinder the development and presentation
of coherent foreign policy, the Department
of State will empower line officers. The
budget also provides the necessary resources
to improve needed work force planning and
to strengthen the Department’s human

INTERNATIONAL AFFAIRS

resource management to enable the Department to effectively recruit, assess, and retain
the highest possible caliber work force.
The budget includes $210 million for information technology investments that will improve interaction and information sharing
among agencies in the foreign affairs community and modernize secure communications
capabilities. The budget also provides the
necessary funding to ensure that diplomatic
and consular facilities are planned and constructed effectively, efficiently, and on budget.
In the context of the biennial authorization
process, the Department will propose legislative changes needed to implement management reforms. In addition, the Department
will improve its financial management practices to identify savings and performance
enhancements accruing from the United States
Information Agency (USIA)/Arms Control Disarmament Agency (ACDA) merger. This merger brought 4,000 staff under the direct control
of the Secretary of State.
The Department will meet the following
performance goals in 2002:
• Identify and eliminate bureaucratic layers
that hinder effective foreign policy.
• Undertake and implement a comprehensive review of the Department’s organization to realize efficiency gains by eliminating duplication in bureau functions.
• Review current administrative practices in
overseas facilities and undertake reforms,
including increased use of Foreign Service
Nationals, to reduce substantially the cost
of administrative support.
• Design and implement a long-term investment strategy in new technology that
enables employees to communicate more
effectively and that realizes increased cost
savings and efficiencies.
• Complete and implement a comprehensive
examination of current and future work
force needs. The Department will demonstrate with measurable criteria how
additional personnel contribute to fulfillment of specific program goals.
• Create and implement policies to ensure
that the Department recruits, hires, and

retains Foreign and Civil Service officers
with the proper skills needed to fulfill the
Department’s strategic and performance
goals. The Department will develop and
apply performance criteria to measure the
effectiveness of its recruitment, examination, and retention strategies.
• Identify, review, and implement, as
necessary, overseas facility planning,
construction, and management processes
to ensure effective and on-budget service
delivery.
• Describe savings and performance enhancements deriving from the USIA/ACDA
merger and take steps to ensure that this
merger achieves scale and other benefits
as originally anticipated.
• Make substantial progress toward financial systems compliance with the Federal
Financial Management Improvement Act.
• Present an authorization proposal that
includes a blueprint for substantial management reforms.
Free Markets
As the President said in his Address to
the Joint Session of Congress: ‘‘The cause
of freedom rests on more than our ability
to defend ourselves and our allies. Freedom
is exported every day, as we ship goods
and products that improve the lives of millions
of people. Free trade brings greater political
and personal freedom.’’
International affairs programs work to increase our economic freedom and prosperity
in several ways. First, the United States
Trade Representative (USTR), supported by
the Departments of State and Commerce,
and other agencies, works to reduce barriers
to trade by negotiating new trade liberalizing
agreements and by enforcing existing agreements. To reach this objective, the President
has called on Congress to quickly give him,
as each of the previous five Presidents has
had, the ability to negotiate far reaching
trade agreements with presidential trade promotion authority. This authority will enable
the Administration to proceed aggressively
with its negotiating agenda, which includes
the World Trade Organization’s (WTO) builtin agenda on agriculture and services, the

26
Free Trade Area of the Americas (FTAA),
and bilateral free trade agreements.
Second, the Export-Import Bank provides
export financing to correct market distortions
that can put U.S. exports at a competitive
disadvantage. The Overseas Private Investment Corporation (OPIC) provides investment
insurance and financing for projects involving
U.S. business. The President has pledged
to reduce unnecessary corporate assistance
and to support an active, but limited, Government. To this end, the Export-Import Bank
must sharpen programs by focusing on support
that would not otherwise be available in
the private market or which redresses officially
supported foreign competition. Similarly,
OPIC’s activities should focus more closely
on companies and countries that cannot access
private financing or insurance. These efforts
should enhance the value added of ExportImport Bank’s programs and make OPIC’s
programs complementary, not competitive,
with the private market.
At the moment, these agencies have similar
client bases and sometimes overlapping product lines. For example, both the ExportImport Bank and OPIC offer political risk
insurance. The Administration intends to review how these agencies, along with the
U.S. Trade and Development Agency, can
serve American clients more effectively.
The trade agencies will meet the following
performance goals in 2002:
• USTR will work with Congress to obtain
trade promotion authority and use this to
provide impetus for a new negotiating
round in the WTO, progress in the FTAA,
and negotiation of other free trade agreements, including with Chile and Singapore.
• USTR, working with the Treasury Department and Congress, will seek extension of
the Generalized System of Preferences and
extension and enhancement of the Andean
Trade Preference Act, as included in the
President’s revenue proposals.
• The Export-Import Bank will expand its
direct support to small business above
2001 levels, as well as improve its internal
processes and outreach through use of
proven technologies.

THE BUDGET FOR FISCAL YEAR 2002

• OPIC will strive to support a stable level
of private U.S. investment in 2002 that
promotes American development goals,
while continuing to expand its lending to
U.S. small business above 2001 levels.
Andean Initiative
Andean countries are the source of virtually
all of the cocaine in the United States
and an increasing share of the heroin—
Colombia is the primary regional source of
both. This drug trade contributes to political,
economic, and social instability.
The budget includes $731 million for U.S.
funding for the Andean regional initiative,
which will support drug eradication, interdiction, alternative development in Colombia,
Peru, Bolivia, Ecuador, and other countries
in the region. (Additional funding from economic assistance accounts will augment these
reforms directed toward democratic strengthening and economic growth.) This initiative
will build upon the resources provided in
the 2000 Emergency Supplemental Appropriations Act for Plan Colombia and ongoing
regional counterdrug funding for the State
Department’s Bureau of International Narcotics and Law Enforcement Affairs. About
50 percent of this combined new funding
will go to Peru, Bolivia, Ecuador and neighboring countries to maintain and continue
their success in eradicating illegal drug crops
and to prevent spillover of violence and
the drug trade from Colombia. Additionally,
about 50 percent of these 2002 funds will
support alternative development, human
rights, displaced persons, judicial reform and
democratic institution building programs.
The State Department, working with other
U.S. agencies, will meet the following performance goals:
• Reduce Colombian coca production by 30
percent from calendar year 2000 levels by
the end of calendar year 2002.
• Eliminate all illicit coca production in Bolivia by the end of calendar year 2002.
• Negotiate revised coca and poppy control
goals with the new Government of Peru
after it assumes power in July 2001.

INTERNATIONAL AFFAIRS

• Establish meaningful, aggressive, achievable, and quantifiable goals for counterdrug efforts in other countries in the region by August 15, 2001, to be used in
carrying out programs in 2002.
International Development/Humanitarian
Response
The United States has a long and proud
history of providing assistance to poor countries, both to alleviate the human suffering
brought on by poverty and man-made and
natural disasters. U.S. assistance must also
help to improve opportunities for freedom
and prosperity. The United States will work
with other countries to help meet the needs
of the poor and vulnerable around the globe.
The budget for USAID provides an increase
in funding to fight the spread of HIV/
AIDS and other infectious diseases. This
will continue recent efforts by the United
States to combat the global spread of this
disease and maintain the pressure on other
donors, multilateral organizations, and nongovernmental organizations to make greater
efforts to address a plague that threatens
to undermine the economies and national
security of affected countries, especially those
in sub-Saharan Africa where prevalence rates
often exceed 20 percent of the adult population. The budget also increases investment
in such key social sectors as basic education.
In addition, the United States will continue
to leverage international donor resources to
promote global economic growth and reduce
poverty by seeking funding for our commitments to the Multilateral Development Banks
and to the Heavily Indebted Poor Country
(HIPC) multilateral debt reduction initiative.
These multilateral programs assist countries
to reach their potential for sustainable growth
through adoption of policy reforms that promote market-oriented economies, fight corruption, and improve transparency and accountability. The United States will continue to
make resources available to carry out agreements under the Tropical Forest Conservation
Act, which allows for restructuring debt to
generate funds for conservation projects.
One aspect of debt forgiveness, however,
is the coordination of that forgiveness with
new lending. Four U.S. Government agencies

27
currently have direct loan and guarantee
programs that are subject to debt forgiveness
initiatives. In some cases, agencies have offered new credits to a country, only to
have the country qualify for debt reduction
a short time later. The Administration intends
to reconcile the goals of debt forgiveness
and credit management in a rational manner.
Relevant agencies will meet the following
performance goals for 2002:
• USAID will increase funding to support
prevention and care programs that combat
the HIV/AIDS pandemic.
• USAID will increase support for economic
growth, leveraging private sector resources
to foster agricultural development, improve the business and trade climate,
expand access to basic education and
increase the efficient use of energy in developing countries.
• USAID will expand conflict prevention and
development relief efforts, facilitating increased support from non-governmental
organizations, other private sector entities
and other donors to respond to crises, and
recovery and support prevention including
support for democracy.
• The United States will support the HIPC
initiative to reduce the debt burden of the
poorest countries to more sustainable levels in return for adopting appropriate policies to reduce poverty and enhance economic growth. As part of this initiative,
the Department of Treasury will fund the
forgiveness of debt owed to the United
States by an expected 33 qualifying countries and will provide contributions to the
HIPC Trust Fund in order to finance debt
reduction by multilateral institutions. The
budget requests $224 million, which along
with $16 million from existing balances of
previously appropriated funds, will fully
meet the U.S. commitment for contributions to the HIPC Trust Fund.
• Under the Tropical Forest Conservation
Act (TFCA), the Department of the Treasury has restructured some of Bangladesh’s
debt in order to generate funds for conservation programs. Treasury expects to
continue making progress on this initiative
by completing agreements with two or

THE BUDGET FOR FISCAL YEAR 2002

three additional countries in 2001 with a
budget cost of approximately $13 million.
In 2002, Treasury will make more funds
available for further programming under
TFCA, as well as up to $13 million that
may be transferred from USAID.
• The State Department, through the help
and advice it provides countries to clear
land mines and other unexploded ordnance, will expand by 3,500 square kilometers over 2001 the amount of land
available for local agricultural and other
economic activity. These efforts, funded
primarily by $40 million from the Nonproliferation, Anti-terrorism, Demining,
and Related Programs account, will speed
economic and social recovery and will reduce the casualties suffered by innocent
civilians, including children.
• State, in cooperation with USAID and
other relevant agencies, should make and
implement recommendations based on the
2000 review of humanitarian assistance
programs to improve the administration
and delivery of relief.
• The Peace Corps expects to have more
than 7,000 volunteers to address a variety
of problems in the areas of agriculture,
environment, small business, and health,
including a multi-faceted initiative to fight
the HIV/AIDS pandemic.
International Broadcasting
International broadcasting directly impacts
the global free flow of information by providing
accurate coverage of world and local events
to foreign audiences with limited access to
unbiased news reports. To meet the President’s
Government-wide performance goals for 2002,
the Broadcasting Board of Governors will:

• Reduce the number of upper- and middlelevel managers in each of the four broadcasting entities.
• Link budget and management decisions
more closely to performance by revamping
the strategic planning and performance
management system that incorporates
Government Performance and Results Act
(GPRA) planning, the annual language
service review process, and the program
reviews of individual language services. By
early 2002, the Broadcasting Board of
Governors will produce an over arching
strategic plan containing specific criteria
for measuring the need for and effectiveness of individual language services and
programs and explaining how they relate
to one another and to overall GPRA planning. This strategy will reduce duplication
among the various broadcast entities,
eliminate ineffective or low-priority language services and programming, and
direct resources to highest-priority, most
effective languages and programming.
• By the middle of 2002, finalize and implement a uniform, agency-wide strategy for
capital planning, using private contractors
whenever possible, that will improve the
operating efficiency and reach of its broadcast network by taking advantage of
emerging technologies. Such a strategy
will address the latest broadcast technologies to combat jamming and other
transmission difficulties while ensuring
that worldwide audiences receive broadcasts via the media they are most likely
to use.
• Actively solicit the participation of privatesector firms in competitive bidding for
contracts.

GENERAL SCIENCE, SPACE, AND
TECHNOLOGY

Table 4–1.

Federal Resources in Support of General Science, Space,
and Technology
(In millions of dollars)

Function 250

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................
Tax Expenditures:
Existing law ...................................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

19,203

20,861

21,191

21,892

22,441

22,910

23,488

126

158

150

3,310

7,700

8,440

7,160

6,590

4,700

3,260

More than half of the Nation’s economic
productivity growth in the last 50 years
is attributable to technological innovation and
the science that supported it. Appropriately,
the private sector makes the largest investments in technology development. The Federal
Government, however, also plays a role. Total
Federal research and development would be
at an all-time high in inflation-adjusted terms
if the President’s proposal is approved.
Within the General Science, Space, and
Technology function, the Federal Government
supports areas of cutting-edge science, through
the National Aeronautics and Space Administration (NASA), the National Science Foundation (NSF), and the Department of Energy
(DOE). The activities of these agencies contribute to a greater understanding of the
world in which we live, ranging from the
edges of the universe to the smallest particles,
and to new knowledge that may have immediate applications for improving our lives.
Because the results of basic research are
unpredictable, developing performance goals
for this area presents unique challenges.
Each of these agencies funds research and
contributes to the Nation’s cadre of skilled
scientists and engineers. As a general goal
for activities in this function, at least 80
percent of the research projects will be

reviewed by appropriate peers and selected
through a merit-based competitive process.
Another important Federal role is to construct
and operate major scientific facilities and
capital assets for multiple users. These include
telescopes, satellites, oceanographic ships, and
particle accelerators. Many of today’s advances
in medicine and other fields rely on these
facilities. As general goals:
• agencies will keep the development and
upgrade of these facilities on schedule and
within budget, not to exceed 110 percent
of estimates; and
• in operating the facilities, agencies will
keep the operating time lost due to
unscheduled downtime to less than 10
percent of the total scheduled possible
operating time, on average.
The budget proposes $21.2 billion to conduct
activities in support of general science, space,
and technology. The Government also stimulates private investment in these activities
through over $8.4 billion a year in tax
credits and other preferences for research
and development (R&D). With the 2002 Budget, the President proposes that the tax credit
for research and experimentation be made
permanent.
29

30
National Aeronautics and Space
Administration (NASA)
The budget proposes $13.6 billion for NASA
activities in this function. NASA serves as
the lead Federal agency for R&D in civil
space activities, working to expand frontiers
in air and space to serve America and
improve the quality of life on Earth. To
carry out these activities, NASA pursues
this vision through balanced investment in
five enterprises: Space Science, Earth Science,
Biological and Physical Research, Aero-Space
Technology, and Human Exploration and
Development of Space.
NASA’s achievements in 2000 included:
launching Terra, the first mission in the
Earth Observing System series of spacecraft;
discovering potential evidence of recent liquid
water flows on the surface of Mars from
the Mars Global Surveyor spacecraft; securing
the arrival of the Shoemaker Near Earth
Asteroid Rendezvous mission at the asteroid
Eros, the first spacecraft ever to orbit an
asteroid; and continuing successful assembly
of the International Space Station in orbit.
Space Science: Space Science programs, for
which the budget proposes $2.8 billion, are designed to enhance our understanding of how
the universe was created, what fundamental
rules govern its evolution, how stars and planets evolve and die, how space phenomena affect Earth, and the possible existence of life
beyond Earth. In 2000, NASA developed and
launched Hubble Servicing Mission 3A, the
Imager for Magnetopause-to-Aurora Expansion
mission, and contributions to the X-ray MultiMirror and Cluster-2 missions, with an average one-percent cost overrun. The High Energy
Solar Spectroscopic Imager mission and the
Thermal,
Ionosphere,
and
Mesosphere
Energetics and Dynamics mission did not
launch as planned in 2000 due to spacecraft
development issues and launch vehicle delays.
The Mars Polar Lander mission was lost when
it did not land successfully on Mars as planned
in 2000. Although scheduled to launch in 2000,
the High-Energy Transient Explorer mission
was launched shortly after the end of the year.
For 2000, the NASA Advisory Council,
an independent panel, indicated that 34 of
65 performance plan objectives and 18 of

THE BUDGET FOR FISCAL YEAR 2002

19 science objectives for Space Science have
been successfully met. In 2002:
• NASA will successfully complete its performance goal for design and development
of projects to support future Space Science
research. These development projects represent near-term investments that will
allow future research in pursuit of the
strategic plan’s science objectives. Completion will be demonstrated by a successful
rating from the NASA Advisory Council
or an equivalent senior-level external review committee. This rating will be based
on achievement of six of the eight predetermined performance objectives, four of
which address launch readiness for the
Space Infrared Telescope Facility, the
Galaxy Evolution Explorer, the Comet
Nucleus Tour mission, and the Hubble
Space Telescope Servicing Mission 3B.
• NASA’s annual performance goals in support of strategic plan Space Science objectives will be rated as being successfully
met by NASA’s Advisory Council or an
equivalent senior-level external review
committee. Examples of these objectives
include: learn how galaxies, stars, and
planets form, interact, and evolve; understand the formation and evolution of the
Solar System and the Earth within it; and
understand our changing Sun and its effects throughout the Solar System. Each
of these performance goals calls for obtaining at least 80 percent of the expected scientific data from operating missions that
support the relevant science objective.
• NASA will continue to expand the integration of education and enhanced public
understanding within its Space Science
research and flight mission programs.
Performance objectives in support of this
effort call for Space Science-funded education and public outreach activities for
every funded Space Science mission, which
will result in projects in at least 40 States.
These projects will range from elementary
schools to graduate students and postgraduates. In addition, Space Science will
ensure that Enterprise-funded projects are
underway in Historically Black Colleges
and Universities, Hispanic Serving Institutions, and Tribal Colleges.

GENERAL SCIENCE, SPACE, AND TECHNOLOGY

Earth Science: Earth Science programs, for
which the budget proposes $1.5 billion, focus
on the effects of natural and human-induced
changes on the global environment through
long-term, space-based observation of Earth’s
land, oceans, and atmospheric processes. In
2000, NASA successfully launched five spacecraft (Terra, ACRIMSAT, the Shuttle Radar
Topography Mission, and two National Oceanic
and Atmospheric Administration (NOAA)
weather satellites (GOES-L, NOAA-L)), and
delivered four instruments to international
spacecraft, with an average seven-percent cost
overrun. Launches of spacecraft expected in
2001 have been delayed: Aqua until no earlier
than July 2001, IceSAT until December 2001,
and Triana pending shuttle availability. Users
have routinely received earth science data
products within five days of receipt or production of the requested data product.

poses $1.5 billion, work with other NASA enterprises, industry, and academia to develop
and test technologies that reduce risk and improve cost performance for future spacecraft
and space transportation systems. In 2000,
NASA initiated assembly of the X-37 flight test
vehicle. The X-33 and X-34 programs did not
perform flight tests as planned in 2000, due
to technical problems encountered during development. Both programs have been canceled.
Depending on selections, NASA will develop
additional 2002 Aero-Space Technology goals
based on Second Generation Reusable Launch
Vehicle awards in 2001. In 2002:

The NASA Advisory Council concluded that
43 of 47 Earth Science performance targets
were successfully met. In 2002:
• NASA will successfully launch and operate
at least two of three planned spacecraft,
IceSAT, Gravity Recovery and Climate Experiment and the Solar Radiation and Climate Experiment within 10 percent of
their schedules and budgets. For those
spacecraft already successfully launched,
NASA Earth Science will obtain at least
80 percent of the expected scientific data;
• NASA will increase by 50 percent the volume of climate data it archives over the
2001 target of 442 terabytes, increase the
number of products delivered from its archives by 10 percent over the 2001 target
of 5.4 million products delivered, and
make the data available to users within
five days; and,
• NASA’s Advisory Council will be able to
rate all near-term Earth Science objectives
as being met or on schedule. Examples of
these objectives include: observe and document land cover and land use change and
impacts on sustained resource productivity; and understand the causes and impacts of long-term climate variations on
global and regional scales.
Aero-Space Technology: Aero-Space Technology programs, for which the budget pro-

• NASA will perform the rollout and begin
test flights of the X-37 vehicle. This vehicle will serve as a platform on which to
test and verify advanced technologies in
the area of lightweight composite airframes, integrated vehicle health monitoring, and thermal protection systems.
• The Space Base program will complete
working prototypes of over 40 micro-scaled
and low-power electronic spacecraft and
sensor components. These components can
lead to future science spacecraft that are
the functional equivalent or better of current spacecraft but with less than onetenth the volume and mass.
Human Exploration and Development of
Space: Human Exploration and Development
of Space (HEDS) programs, for which the
budget proposes $7.3 billion, focus on the use
of human skills and expertise in space. In
2000, the Space Shuttle flew four successful
missions, including the Hubble Space Telescope Servicing Mission 3A that replaced failing gyros on the Hubble. The Shuttle Radar
Topography Mission, a joint Department of Defense/NASA payload to study the earth, successfully mapped over 98 percent of the available terrain. Two flights to the International
Space Station delivered equipment and supplies to set the stage for future assembly missions and to prepare for the first Expedition
crew. Improvements to the Space Shuttle system achieved an additional 10-percent increase
in predicted reliability over the 1999 levels,
and completed the first flight of a new upgraded cockpit. Space Shuttle operations continued to perform well and observed an average of six anomalies per flight, achieved 100

32
percent on-orbit mission success for primary
payloads, and achieved a 12-month flight preparation cycle. The International Space Station
program delivered, as planned, two-thirds of
the total U.S. flight hardware to the launch
site, and also conducted successful operations
throughout the year. However, projected cost
overruns have required a major restructuring
of the program in 2002, which should control
cost growth, while enabling accommodation of
contributions from international partners. In
2002:
• NASA will successfully complete a majority of planned operations schedules and
milestones for 2002 for the International
Space Station. For example, NASA plans
to conduct permanent on-orbit operations
with crew support dedicated to assembly,
vehicle operations, payload operations, and
early research, and conduct the first Space
Shuttle flight to the Space Station dedicated to research; and
• NASA will ensure that Space Shuttle safety, reliability, availability, and cost will
improve, by achieving eight or fewer flight
anomalies per mission, 100 percent onorbit mission success for primary payload
on-orbit operations, and a 12-month manifest preparation time. NASA will complete
the implementation of the Alternate Turboprop to improve the safety of flight operations
and
continue
safety
and
supportability upgrades to maintain Space
Shuttle infrastructure.
Biological and Physical Research:
NASA’s Biological and Physical Research programs, for which the budget proposes $380
million, focus on basic and applied research
to support the safe and effective human exploration of space, as well as the use of the space
environment as a laboratory for increasing our
understanding of biological, physical, and
chemical processes. In 2000, the Biological and
Physical Research Enterprise was created as
a separate entity from the HEDS Enterprise
to provide a greater focus on biological and
physical research. The new Office of Biological
and Physical Research (OBPR) and its predecessor organization, the Office of Life and
Microgravity Sciences and Applications, conducted significant commercial research on the
May Space Shuttle mission to the Space Sta-

THE BUDGET FOR FISCAL YEAR 2002

tion, and inaugurated the Space Station research era by conducting the first long-duration experiment on the International Space
Station. In 2002:
• OBPR will continue to build a productive
scientific community to utilize its space assets, expanding agency support to approximately 1,000 scientific investigations (from
877 reported in 1999); and
• NASA will collaborate with the National
Cancer Institute to develop and test cutting-edge methods and instruments to support molecular-level diagnostics for physiological and chemical processes monitoring.
Management Reform Goals
To fulfill the President’s commitment to
make Government more market-based, NASA
will pursue management reforms to promote
innovation, open Government activities to
competition, and improve the depth and quality of NASA’s R&D expertise. These reforms,
described below, will help reduce NASA’s
operational burden and focus resources on
Government-unique R&D at NASA.
• International Space Station. NASA will
undertake reforms and develop a plan to
ensure that future Space Station costs will
remain within the President’s 2002 Budget
plan. Key elements of this plan will: restore cost estimating credibility, including
an external review to validate cost estimates and requirements and suggest additional options as needed; transfer Space
Station program management reporting
from the Johnson Space Center in Texas
to NASA Headquarters until a new program management plan is developed and
approved; and open future Station hardware and service procurements to innovation and cost-saving ideas through competition, including launch services and a
Non-Government Organization for Space
Station research.
• Space Shuttle Privatization. NASA will
aggressively pursue Space Shuttle privatization opportunities that improve the
Shuttle’s safety and operational efficiency.
This reform will include continued implementation of planned and new privatization efforts through the Space Shuttle

GENERAL SCIENCE, SPACE, AND TECHNOLOGY

prime contract and further efforts to safely
and effectively transfer civil service positions and responsibilities to the Space
Shuttle contractor.
• Space Launch Opportunities. NASA’s
Space Launch Initiative provides commercial industry with the opportunity to meet
NASA’s future launch needs, including
human access to space, with new launch
vehicles that promise to dramatically reduce cost and improve safety and reliability. NASA will undertake management
reforms within the Space Launch Initiative, including: ensuring vehicle affordability and competitiveness by limiting requirements to essential needs through
commercial services; creating requirements flexibility, where possible, to accommodate innovative industry proposals;
validating requirements through external,
independent review; implementing a wellintegrated risk-reduction investment strategy that makes investments only after requirements and vehicle options are wellunderstood, to ensure a viable competition
by the middle of the decade for initial Station cargo and crew launch services; ensuring no set-aside funds for non-industry
vehicles like the Space Shuttle; and
achieving affordable, near-term successes
in Next Generation Launch Services and
Alternative Access to the Space Station
and integrating these near-term activities
into longer-term planning.
• Critical Capabilities. U.S. academia and
industry provide a rich R&D resource that
NASA can tap to strengthen its mission
capabilities. NASA will develop an integrated, long-term agency plan that ensures a national capability to support
NASA’s mission by: identifying NASA’s
critical capabilities and, through the use
of external reviews, determining which capabilities must be retained by NASA and
which can be discontinued or led outside
the agency; expanding collaboration with
industry, universities and other agencies,
and outsourcing appropriate activities to
fully leverage outside expertise; and pursuing civil service reforms for capabilities
that NASA must retain, to ensure recruitment and retention of top science, engineering and management talent at NASA.

National Science Foundation (NSF)
Under the President’s plan, between
2000–2002, NSF’s budget will grow by 15
percent to $4.5 billion. This significant
increase is consistent with the President’s
support for increasing the Federal investment
in basic R&D, and funding NSF as the
primary agency for supporting peer-reviewed,
competitively awarded, long-term, high-risk
research conducted through our Nation’s university systems. For 2003, the Administration
will undertake a budgetary review to determine how best to support the NSF’s budget
in a sustained manner over time.
While NSF represents just three percent
of Federal R&D spending, it supports nearly
half of the non-medical basic research conducted at academic institutions, and provides
30 percent of Federal support for mathematics
and science education.
NSF research and education investments
are made in three primary areas:
People: Activities to facilitate development
of a diverse and talented work force of scientists, engineers, and well-prepared citizens
account for more than 20 percent of NSF’s
budget. In 2002, NSF will invest $1.0 billion
in this area. NSF supports formal and informal science, mathematics, engineering and
technology education at all levels, including
multidisciplinary education and training for
graduate students. In addition, resources support projects to develop curriculum, enhance
teacher professional development, and provide
educational opportunities for students from
pre-K through postdoctoral work. In 2000, the
three major systemic efforts implemented
mathematics and science standards-based curricula in 6,348, or over 80 percent, of the 7,630
participating schools. NSF awards provided intensive professional development to a total of
89,723 teachers, substantially exceeding the
performance goal of 65,000. For 2002, NSF will
begin the President’s $200 million Math and
Science Partnership initiative.
• In 2002, at least half of the States will
activate partnerships with institutions of
higher education aimed at strengthening
K-12 math and science education through
the President’s Math and Science Partnership initiative. These partnerships can

THE BUDGET FOR FISCAL YEAR 2002

involve local school districts and will address issues such as preparation and professional development of math and science
teachers, implementation of high standards for math and science, and address
gaps in performance between majority and
minority and disadvantaged students.
Ideas: Approximately one-half of NSF’s resources support research projects performed by
individuals, small groups, and centers. In
2002, NSF will invest $2.2 billion in this area.
• In 2002, results over the period studied
will demonstrate significant achievement
for the majority of the following indicators:
important discoveries; a robust fundamental knowledge base; connections between discovery and learning, innovation,
or societal advancement; partnerships that
enable the flow of ideas among academic,
public or private sectors; and leadership
in fostering newly developing or emerging
areas. NSF’s performance will be determined by aggregating the performance indicator assessments provided by independent external committees of experts.
Tools: NSF will invest $1.0 billion in this
area to provide state-of-the-art shared tools for
research and education, such as instrumentation and equipment, multi-user facilities, accelerators, telescopes, research vessels and aircraft, and earthquake simulators. In addition,
resources will support large databases as well
as computation and computing infrastructures
for science, engineering, or education. Nearly
a quarter of NSF’s budget is targeted to providing the tools required for cutting-edge
research.
• In 2002, NSF facilities will continue to
meet the function-wide goals to remain
within cost and schedule.
Management Goals
NSF has identified management and investment process goals to address the efficiency
and effectiveness of administrative activities,
and to focus on the means and strategies
to achieve its outcome goals. In 2002:
• at least 85 percent of basic and applied
research funds will be allocated to projects
that undergo merit review;

• for 70 percent of proposals, NSF will be
able to inform applicants within six
months of receipt whether their proposals
have been declined or recommended for
funding. In 2000, NSF processed 54 percent of proposals within six months; and
• NSF will increase the average annualized
award size for research projects to
$111,000, compared to a goal of $109,000
in 2001.
Management Reforms
To fulfill the President’s commitment to
make Government more results-oriented, NSF
will undertake management reforms, focusing
on performance and results.
• Study Reorganizing Research in Astronomy and Astrophysics: NSF and
NASA provide more than 90 percent of
Federal funds for academic astronomy research and facilities. Historically, NASA
has funded space-based astronomy and
NSF has funded ground-based astronomy,
as well as astronomy research proposals.
Several changes have evolved which suggest that now is the time to assess the
Federal Government’s management and
organization of astronomical research.
NSF and NASA will establish a Blue Ribbon Panel to assess the organizational
effectiveness of Federal support of astronomical sciences and, specifically, the pros
and cons of transferring NSF’s astronomy
responsibilities to NASA. The panel may
also develop alternative options. This
assessment will be completed by September 1, 2001.
• Document the Efficiency of the Research Process. NSF asserts that the current size of its grants and their duration
might be resulting in an inefficient research process at U.S. academic institutions. Researchers might be spending too
much time writing proposals instead of
doing actual research. NSF has increased
grant size and duration in previous years,
particularly through its priority research
areas; however, there is little documentation that this is having a positive impact
on research output. With the assistance
of U.S. academic research institutions,
NSF will develop metrics to measure the

GENERAL SCIENCE, SPACE, AND TECHNOLOGY

efficiency of the research process and determine the ‘‘right’’ grant size for the various types of research the agency funds.
These metrics and grant size determination will be developed in time for consideration of the 2003 NSF budget request.

researchers use in fields ranging from the
physical and materials sciences to the biomedical and life sciences. These facilities
are available, on a competitive basis, to
scientists and engineers in universities, industry, and other Federal agencies.

• Enhance NSF Capability to Manage
Large Facility Projects. NSF has several
multi-year, large facility projects awaiting
approval for funding. NSF will enhance its
capability to manage proposed projects,
given the magnitude and costs of future
projects. NSF will develop a plan for costing, approval, and oversight of major facility projects, and also will enhance its capability to estimate costs and provide oversight of project development and construction.
• Improve NSF’s Ability to Administer
and Manage its Program Activities. Although NSF has had robust increases in
its program responsibilities and budgets in
the past decade, funding for administration and management has remained relatively flat. NSF has been able to keep
pace with the increased workload by investing in information technology. Both
the NSF Inspector General and the NSF
Management Controls Committee have expressed concern about the adequacy of
staffing at a time when the agency is facing turnover and recruitment problems
and management of more complex programmatic activities. They also raise concerns with systems and data management.
NSF will develop a five-year strategic plan
for the work force and information technology needs of the agency in time for consideration of the 2003 Budget.
Department of Energy (DOE)
The budget proposes $3.2 billion in 2002
for DOE science programs and supporting
activities. DOE’s Office of Science is one
of the Nation’s leading source of support
for basic research in the physical sciences,
conducting research at universities and the
national laboratories. DOE also operates major
scientific facilities including particle accelerators, magnetic confinement fusion reactors,
synchrotron light sources, neutron sources,
supercomputers, and high-speed networks that

Basic Energy Sciences: The budget proposes $1.0 billion for Basic Energy Sciences
(BES), which supports basic research in materials science, chemistry, engineering, geoscience, plant biology, and microbiology. As
part of its mission, BES plans, constructs, and
operates major scientific user facilities. In
2000, Los Alamos National Laboratory’s Lujan
Neutron Scattering Center delivered only 79
percent of scheduled operating time, missing
its target of no more than 10 percent unscheduled downtime. A recent review found the
Lujan Center staff to be seriously over-committed. In 2002:
• DOE will meet the cost and schedule milestones for construction and upgrade of scientific user facilities as confirmed by regular external independent reviews. Major
ongoing projects include construction of
the Spallation Neutron Source (a powerful
tool to explore materials structure and
properties) and an upgrade of the SPEAR3
storage ring at the Stanford Synchrotron
Radiation Laboratory; and
• DOE science programs will significantly
increase their funding for basic research
on renewable sources of energy, to advance
cost-effective means to further diversify
the Nation’s energy supply.
Advanced Scientific Computing Research: The budget proposes $166 million for
Advanced Scientific Computing Research,
which supports applied mathematics, computer
science, and networking research, and operates
supercomputer, networking and related facilities to enable the analysis, simulation, and
prediction of complex physical phenomena.
• By the end of 2002, DOE will review the
Integrated Software Infrastructure Centers, newly established in 2001, to ensure
effective coupling of these centers to scientific application pilot projects and teams
funded throughout the Office of Science.

36
Biological and Environmental Research:
The budget proposes $443 million for Biological and Environmental Research, which supports basic research to identify, understand,
and anticipate the long-term health and environmental consequences of energy production,
development, and use. In addition to its accomplishments in genomics, DOE plays a major
role in understanding the global carbon cycle.
• In 2002, DOE will develop and test a fullycoupled climate model that integrates the
atmosphere with the ocean, land, and sea
ice, with higher spatial resolution than is
presently available; and
• By the end of 2002, the DOE Joint Genome Institute DNA sequencing will complete the high quality DNA sequence of
human chromosomes 5 and 19 and
produce six million base pairs of DNA sequence from model organisms to help understand the human sequence.
High Energy and Nuclear Physics: The
budget proposes $1.1 billion for High Energy
and Nuclear Physics, which strives to understand the nature of matter and energy in
terms of the most elementary particles and
forces, and to more completely explain the
structure and interactions of atomic nuclei.
• In 2002, DOE will capitalize on its opportunities to discover the particle that gives
rise to mass, to search for physics not adequately described by the Standard Model,
and to confirm and characterize neutrino
oscillations and neutrino mass.
Fusion Energy Sciences: The budget proposes $238 million for DOE’s Office of Fusion

THE BUDGET FOR FISCAL YEAR 2002

Energy Sciences, which conducts research to
advance plasma science, fusion science, and fusion technology. DOE will continue to reorient
its fusion program to focus on developing the
scientific understanding necessary to support
fusion as a practical energy source.
• In 2002, DOE will study feedback stabilization as means to control disruptive
plasma oscillations in the recently upgraded DIII–D fusion reactor.
Tax Incentives
Along with direct spending on R&D, the
Federal Government has sought to stimulate
private investment in these activities with
tax preferences. The current law provides
a 20-percent tax credit for private research
and experimentation (R&E) expenditures
above a certain base amount. The credit,
which expired in 1999, was retroactively
reinstated for five years, to 2004, in the
Tax Relief Extension Act of 1999. The budget
proposes to make the R&E tax credit permanent. It will cost $9.9 billion from 2002
to 2006 (see Table S–10).
A permanent tax provision also lets companies deduct, up front, the costs of certain
kinds of R&E, rather than capitalize these
costs. This tax expenditure will cost $1.7
billion in 2002. Finally, equipment used for
research benefits from relatively rapid cost
recovery. The cost of this tax preference
is calculated in the tax expenditure estimate
for accelerated depreciation of machinery and
equipment.

5.
Table 5–1.

ENERGY

Federal Resources in Support of Energy
(In millions of dollars)

Function 270

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

2,706

3,095

2,773

2,869

3,100

3,199

3,299

–4,019

–3,701

–3,296

–3,150

–3,704

–3,626

–3,582

1,423
152

1,896
52

2,246
105

2,461
100

2,735
100

2,817
100

2,907
100

2,030

2,100

2,120

1,930

1,620

1,770

1,890

Federal energy programs contribute to energy security, economic prosperity, and environmental protection. Funded mainly through
the Energy Department (DOE), they range
from protecting against disruptions in petroleum supplies, to conducting research on
renewable energy sources, to cleaning up
DOE facilities contaminated by years of nuclear-related research activities. The Administration proposes to spend nearly $2.8 billion
for these programs. In addition, the Federal
Government allocates about $2.1 billion a
year in tax benefits, mainly to encourage
development of traditional and alternative
energy sources.
The Federal Government has a longstanding
and evolving role in energy. Most Federal
energy programs and agencies have no State
or private counterparts. The federally-owned
Strategic Petroleum Reserve, for instance,
protects against supply disruptions and the
resulting price shocks. DOE’s applied research
and development (R&D) programs in fossil,
nuclear, solar/renewable energy, and energy
conservation are intended to speed the development of technologies to use energy more
cleanly or efficiently, often through costshared partnerships with industry.

Energy Reserves
Strategic Petroleum Reserve (SPR): DOE
maintains SPR to protect against petroleum
supply disruptions and reduce the economic
impact of any disruptions. SPR was authorized
in 1975, in response to the oil embargoes of
the early 1970s. The Reserve now holds 541
million barrels of crude oil in underground salt
caverns at four Gulf Coast sites. SPR helps
protect the economy and provide flexibility for
the Nation’s foreign policy in case of a severe
energy supply disruption.
In 2001, the two-million barrel Northeast
Home Heating Oil Reserve was established.
Operated by the private sector, the Reserve
helps ensure adequate supplies of heating
oil in the event that colder than normal
winters occur in the Northeastern United
States. The President has committed to continue support for the Reserve.
• In 2002, DOE will maintain its capability
to reach a SPR drawdown rate of about
four million barrels a day within 15 days
and to maintain that rate for at least 90
days.

38
Applied R&D
DOE’s energy R&D investments cover a
broad array of resources and technologies
to make the production and use of all forms
of energy, including solar and renewables,
fossil, and nuclear, more efficient and more
environmentally sound. The applied R&D programs fund research at DOE’s national labs
and engage in a variety of partnerships
with industry for technology development and
deployment.
Energy Conservation: DOE’s energy conservation programs, for which the budget proposes $795 million, are designed to improve
the fuel economy of various transportation
modes, increase the productivity of our most
energy-intensive industries, and improve the
energy efficiency of buildings and appliances.
They also include grants to States to fund energy-efficiency programs and low-income home
weatherization. The weatherization program is
slated for a significant increase in 2002, as
part of the President’s commitment to increase
funding for the program by $1.4 billion over
10 years. Each of these activities benefits our
economy and the environment. Many rely on
partnerships with the private sector for costsharing and commercialization.
In 2002:
• The world’s first automotive-scale (50 kilowatt, (kW)), fully integrated, gasoline-powered fuel-cell system will be delivered by
a contractor to the DOE test facility at
Argonne National Laboratory. Validation
of low-cost ($10/kW) fuel-cell technology
will be completed.
• Initial testing will be completed on light
trucks with advanced diesel engines that
provide a 35 percent improvement in fuel
economy while meeting Tier 2 emissions
standards.
• The Office of Industrial Technologies will
continue R&D partnerships with energyintensive industries, resulting in an estimated additional $200 million energy savings and productivity gain.
• Local recipients of DOE Weatherization
Assistance program grant funds will
weatherize approximately 116,000 low-income homes, improving their energy effi-

THE BUDGET FOR FISCAL YEAR 2002

ciency, and safety, and reducing the residents’ energy bills. This is an increase of
approximately 51,000 homes over 2001.
Solar and Renewable Resources: Solar
and renewable resources programs focus on
technologies that will help the Nation use its
renewable resources such as wind, solar, and
biomass to produce energy. The United States
is the world’s technology leader in wind energy, with a growing export market and production costs that have fallen dramatically. In
addition, photovoltaics (PV) are becoming more
useful in remote power applications, and new
biofuels plants are being constructed.
Solar and renewable energy will benefit
from the Administration’s legislative proposal
to open a small part of the Arctic National
Wildlife Refuge (ANWR) to oil and gas leasing
and production. This process will generate
bidding bonuses for the Federal government
estimated at $1.2 billion, to become available
in 2004, which will be made available over
a series of years to increase the funding
for solar and renewable energy technologies.
In 2002:
• A 100 kW cold-weather wind-turbine, winner of an ‘‘R&D 100’’ award in 2000, will
begin experimental operation and testing
in an Alaskan village. These turbines are
expected to provide reliable power options
for small villages and remote installations
in extremely harsh arctic environments.
• DOE’s biofuels program will complete development of a yeast that can ferment
most biomass-derived sugars to meet the
cost goals for production of ethanol from
cellusic feedstocks.
• The PV program will develop a 17-percent
efficient cadmium-telluride thin-film PV
cell. This laboratory achievement will be
about seven percent more efficient than
the best available commercial thin-film PV
units of any type.
• The biopower program will complete technical feasibility testing of using closedloop, short-rotation wood (fast-growing willows) as a dedicated fuel source for power
generation at two retrofitted coal power
plants in New York State.

ENERGY

Electric Energy Systems: These activities
are managed by DOE’s Office of Energy
Efficiency and Renewable Energy. The programs focus on technical advances in electricity transmission and storage and on the
efficiency and reliability of the Nation’s electrical grid. The largest activity is in high-temperature superconductivity R&D, which can
greatly increase the efficiency of generators
and heavy electrical machinery, and dramatically increase the carrying capacity of highvoltage transmission lines.
• In 2002, operational testing will be
completed on the world’s first commercialservice superconducting utility power
cable. This single cable has four times the
electrical capacity of the copper cable it
replaced, and will supply power to 14,000
residents in a Detroit neighborhood.
Fossil Energy R&D: Fossil fuel energy
R&D programs, for which the budget proposes
$449 million, help industry develop advanced
technologies to produce and use coal, oil, and
gas resources more efficiently and cleanly. Federally-funded development of clean, highly-efficient gas-fired and coal-fired generating systems aims to reduce gas emission rates, while
reducing electricity costs compared to currently
available technologies. These programs also include efforts to discover effective, efficient, and
economical means of sequestering carbon dioxide. In the past, the oil and gas program has
funded research on activities that had already
been commercialized by the private sector. The
budget targets funds to projects that will not
compete with private sector investment and
will improve the longer-term technologies to
foster increased, environmentally sound,
domestic energy production.
Through a new $150 million Clean Coal
Power initiative, the Department will create
an industry consortium to direct research
toward the most critical barriers to expansion
of coal use for power generation in the
United States. This cooperative effort, totaling
more than $2 billion over 10 years, will
require industry to share in the cost of
the research work, with the industry share
increasing as technologies approach commercial stages. Participating companies will be
asked to take part in selection of technologies
and evaluate the progress of R&D efforts,

with the goal of accelerating development
and deployment of coal technologies that
will economically meet environmental standards.
In 2002, DOE will:
• develop a new consortium of coal companies, utilities, and generating equipment
vendors to direct coal research toward the
most important problems faced by the
entire industry;
• complete technology evaluations to make
available, by 2003, advanced control technologies seeking to achieve cost competitive, deep nitrogen oxides (NOx) reductions in power plant flue gas emissions
in response to the Clean Air Act standards, at 25 percent lower cost than available technology; and
• conduct integrated research and field demonstrations of carbon dioxide (CO2) sequestration in deep, unminable coal seams and
depleted oil reservoirs and develop sufficient data to determine reservoir integrity
and fate of injected CO2. If the CO2 does
not escape the formations where it is injected, a safe and economical method of
disposal might be developed based on this
knowledge.
Nuclear Energy R&D: Twenty percent of
our Nation’s electricity and about 17 percent
worldwide is made today with nuclear power
plants. R&D addressing the issues that threaten the acceptance and viability of nuclear fission in the United States will help determine
whether nuclear fission can continue to supply
increasing amounts of economically-priced energy while reducing emissions.
In 2002, DOE will:
• continue peer-reviewed, competitively-selected R&D projects that address nuclear
energy’s cost-effectiveness and acceptability, including plant economics, operational safety, proliferation, and waste
disposal;
• maintain the advanced radioisotope power
system program and facility operations
and capabilities for current and future
space and national security missions, and
explore fission power systems to support
future human exploration of space;

40
• manage its resources and capabilities at
Nuclear Energy (NE) managed sites to
ensure that the Department can meet its
mission requirements, that the NE sites
are maintained in a safe, secure, environmentally-compliant and cost-effective manner, and ensure the protection of the
workers, the public, and the environment;
and
• continue to provide, through the isotope
program, a supply of radioactive and
stable isotopes for medical and other research.
Environmental Quality
Environmental Management: For the
Non-Defense Environmental Management and
Uranium Facilities Maintenance and Remediation programs, the budget proposes $592
million to manage part of the Nation’s most
complex environmental cleanup program, the
result of more than five decades of research
and production of nuclear energy technology
and materials. This will reduce environmental
risk and manage the waste at: 1) sites run
by DOE’s predecessor agencies; 2) sites contaminated by uranium and thorium production
from the 1950s to the 1970s; 3) DOE’s inactive
uranium processing facilities; and 4) the Paducah Gaseous Diffusion Plant operated by the
United States Enrichment Corporation. (For
information on DOE’s Defense Environmental
Management
program
and
performance
measures, see Chapter 2, ‘‘National Defense.’’)
Office of Civilian Radioactive Waste
Management
This office is responsible for ensuring the
safe, geologic disposal of radioactive wastes
from civilian and defense uses. The budget
increases funding for DOE’s Civilian Radioactive Waste Management Program in order
to help the program stay on schedule toward
a formal Site Recommendation in 2002, and
a formal License Application at the end
of calendar year 2003. In addition, the budget
request will enhance the program’s effort
to achieve a competitive design effort, leading
to a robust license application. This design
effort will include: 1) an analysis of concepts
that span the full range of repository operating
conditions, and 2) the development of modular

THE BUDGET FOR FISCAL YEAR 2002

concepts that will lead to outyear budgetary
savings for the program.
In addition, the Administration supports
efforts to use the nuclear utilities’ budgetary
receipts for their intended purposes. DOE
will submit to Congress an updated report
regarding alternative approaches to finance
and manage the program by June 30, 2001,
as directed by the House report language
accompanying the 2001 Energy and Water
Development Appropriations Act. DOE will
identify in this report models of effective
organizations that might benefit the operation
of its civilian program.
Energy Production and Power Marketing
Power Marketing Administrations: The
Federal Government operates programs that
produce, distribute, and finance electric power.
The four Federal Power Marketing Administrations, or PMAs, (Bonneville, Southeastern,
Southwestern, and Western) market electricity
generated at 131 multi-purpose Federal dams
and related facilities, and manage more than
33,000 miles of federally-owned transmission
lines in 34 States. The PMAs sell about five
percent of the Nation’s electricity, primarily
to preferred customers such as counties, cities,
and publicly-owned utilities. The PMAs face
growing challenges as the electricity industry
moves toward open, competitive markets.
• In 2002, each PMA’s goal is to operate
its transmission system to ensure that
service is continuous, reliable, and balanced—that is, that the system achieves
a ‘‘pass’’ rating each month under the
North American Electric Reliability Council performance standards. These measures are used industry-wide and indicate
the reliability and quality of power provided by utilities.
Tennessee Valley Authority (TVA): TVA
is a Federal Government corporation and one
of the five largest electric power companies in
the country. It generates three percent of the
Nation’s electric power and transmits that
power over its 17,000-mile transmission network to 158 municipal utilities and rural electric cooperatives that serve eight million people in seven States. TVA also promotes economic activity in the area it serves by operating a complex river management system that

ENERGY

provides navigation, flood control, hydropower,
water supply, and recreation services.

broadband and high-speed Internet access;
and

The Nation’s electric power industry is
changing so that customers benefit from competition in the industry. To prepare for
that change, TVA is cutting its costs wherever
possible. In the past four years, TVA has
paid down its outstanding debt by over
$1.7 billion, roughly six percent.

• provide distance learning facilities to 300
schools, libraries, and rural education centers, and telemedicine equipment to 150
rural health care providers, benefiting millions of residents in rural America.

In 2002, TVA will:
• reduce its debt by an estimated $260 million; and
• keep the navigable waterway TVA manages on the Tennessee River open to commercial traffic 99 percent of the time, up
from the 94 percent level TVA achieved
in 2000.
Rural Utilities Service: In 2002, the Agriculture Department’s Rural Utilities Service
(RUS) will make $2.6 billion in direct and
guaranteed loans to rural electric cooperatives,
public bodies, nonprofit associations, and other
utilities in rural areas for generating, transmitting, and distributing electricity. Its main
goal is to finance modern, affordable electric
service to rural communities. Included within
this funding is $100 million loans originated
by the private sector and guaranteed by RUS,
which will help rural utility borrowers better
position themselves in a competitive, deregulated environment. RUS will also make $495
million in direct loans to companies providing
telecommunications services to rural communities, and $27 million in grants and $400 million in loans for distance learning, telemedicine, and broadband technology. RUS borrowers continue to provide service in some of
the poorest counties in rural America and to
the majority of counties suffering from recent
population out-migration.
In 2002, RUS will:
• upgrade 187 rural electric systems, which
will benefit over 2.8 million customers and
create or preserve approximately 60,000
jobs;
• provide more than 50 telecommunication
systems with funding for advanced telecommunications services benefiting more
than 300,000 rural customers by providing

Energy Regulation
The Federal Government’s regulation of
energy industries is designed to protect public
health, achieve environmental and energy
goals, and promote fair and efficient interstate
energy markets.
Appliance Efficiency Rules: DOE specifies
minimum levels of energy efficiency for major
home appliances, such as water heaters, air
conditioners, and refrigerators, and for commercial-scale heating and cooling components.
The initial efficiency standards were established in legislation, and DOE periodically
issues rules to revise those standards or to
create standards for new categories of equipment.
• In 2002, DOE will issue a final rule for
residential air conditioning products for
specialized applications, and will begin
rulemakings for residential furnaces and
boilers, commercial air conditioning products, and electrical distribution transformers—all of which are scheduled to be
completed by the end of 2004.
Federal Energy Regulatory Commission
(FERC): FERC, an independent agency within
DOE, regulates the transmission and wholesale prices of electric power, including nonFederal hydroelectric power, and the transmission of oil and natural gas by pipeline in
interstate commerce. FERC promotes competition in the natural gas industry and in wholesale electric power markets.
In 2002, in order to promote competitive,
well-functioning energy markets, FERC will
measure the response of prices to external
conditions in natural gas and electricity,
the level of price volatility and changes
in price volatility in electricity and gas,
and the correlation of commodity prices across
regions.

42
Nuclear Regulatory Commission (NRC):
NRC, an independent agency, regulates the
Nation’s civilian nuclear reactors, the medical
and industrial use of nuclear materials and
their safeguards, and the disposal of nuclear
waste to ensure adequate protection of the
public health and safety, to promote the common defense and security, and to protect the
environment. NRC international activities support U.S. interests in nonproliferation and the
safe and secure use of nuclear materials in
other countries. To meet the challenges of a
restructured and deregulated electric utility industry, NRC is committed to adopting a more
risk-informed and performance-based approach
to regulation. This regulatory framework will
focus NRC and licensee resources on the most
safety-significant issues, while providing flexibility in how licensees meet NRC requirements.
The budget increase accommodates the increasing demand NRC is facing to renew
nuclear power plant licenses for an additional
20 years of plant operations, approve reactor
license transfers associated with electricity
industry restructuring, and support industry
initiatives to increase the Nation’s electricity
supply. In addition, the budget proposes to
reduce the burden on licensees to pay fees
for NRC expenses that do not provide a
direct benefit to them. In 2002, the NRC
will recover approximately 96 percent of its
total costs through licensee fees, and this
will decline to 90 percent by 2005.
In 2002:
• NRC’s nuclear reactor strategic goal is to
prevent radiation-related deaths and illnesses, promote the common defense and
security, and protect the environment in
the use of civilian nuclear reactors;
• NRC’s nuclear materials strategic goal is
to prevent radiation-related deaths and illnesses, promote the common defense and
security, and protect the environment in
the use of source, by-product, and special
nuclear material; and
• NRC’s nuclear waste strategic goal is to
prevent significant adverse impacts from
radioactive waste to the current and future public health and safety and the envi-

THE BUDGET FOR FISCAL YEAR 2002

ronment, and promote the common defense and security.
Management and Procurement Reform
Program and contract management at DOE
is a priority management objective of the
Administration because more than 90 percent
of the Department’s budget is spent on contracts to operate its facilities. DOE has
made insufficient use of competitive, performance-based contracts, and the Administration
will increase the use of such contracts for
DOE in 2002.
Industry cost-sharing requirements in DOE’s
applied R&D programs have not been uniformly implemented, and in some programs
as few as 20 percent of the projects obtain
any cost-sharing. In 2002, DOE’s applied
energy R&D programs will be implementing
a rigorous and consistent cost-sharing policy
that applies to all contracts, grants, cooperative agreements, or other funding mechanisms
for industry-performed R&D. The cost-sharing
policy will provide for an absolute minimum
requirement for industry cost-sharing in any
project, with graduated steps based on technological maturity and risk, up to a requirement
for more than 50 percent cost-sharing for
demonstration or commercialization activities.
The policy will also include explicit consideration of factors such as estimated time to
a
commercialization
decision,
technical
progress and change in risk as a result
of previous funding phases, and existence
of external incentives for industry to perform
similar work.
More aggressive and consistent cost-sharing
will reduce corporate subsidies, free up funds
for other priority projects, and create an
internal incentive for industry to terminate
projects that are not making adequate progress
or are not meeting performance goals.
DOE will also better define its performance
measures across the Department, and particularly in its R&D programs. In the past,
some performance measures were outside the
scope of the Department’s influence and gave
a distorted vision of the role of the Government and its ability to affect outcomes (e.g.,
‘‘Ensure a competitive electricity industry is
in place that can deliver adequate and affordable supplies with reduced environmental

ENERGY

impact.’’) Future performance measures will
better match the strategic goals identified
by DOE.
Tax Incentives
Federal tax incentives are mainly designed
to encourage the domestic production or use
of fossil and other fuels, and to promote
the vitality of our energy industries and
diversification of our domestic energy supplies.
The largest existing incentive lets certain
fuel producers cut their taxable income as
their fuel resources are depleted. An income
tax credit helps promote the development
of certain non-conventional fuels. It applies
to oil produced from shale and tar sands,
gas produced from a number of unconventional
sources (including coal seams), some fuels
processed from wood, and steam produced
from solid agricultural byproducts. Another
tax provision provides a credit to producers
who make alcohol fuels—mainly ethanol—
from biomass materials. The law also allows
a partial exemption from Federal gasoline
taxes for gasolines blended with ethanol.
Provide Tax Credit for Residential Solar
Energy Systems: Current law provides a 10percent investment tax credit to businesses for
qualifying equipment that uses solar energy
to generate electricity, to heat or cool or provide hot water for use in a structure, or to
provide solar process heat. No credit is available for non-business purchases of solar energy
equipment. The Administration proposes a
new tax credit for individuals that purchase
solar energy equipment used to generate electricity (PV equipment) or heat water (solar
water heating equipment) for use in a dwelling
unit. The credit would be available only for
equipment used exclusively for purposes other
than heating swimming pools. The credit
would be equal to 15 percent of the cost of
the equipment and its installation. The credit
would be nonrefundable and the lifetime maximum credit allowed to an individual would
be limited to $2,000 for PV equipment and
$2,000 for solar water heating equipment. The
credit would apply only to solar water heating
equipment placed in service after December
31, 2001, and before January 1, 2006, and to
PV systems placed in service after December
31, 2001, and before January 1, 2008.

43
Extend and Modify the Tax Credit for
Producing
Electricity
from
Certain
Sources: Current law provides taxpayers a
1.5-cent-per-kilowatt-hour tax credit, adjusted
for inflation after 1992, for electricity produced
from wind, closed-loop biomass (organic material from a plant grown exclusively for use
at a qualified facility to produce electricity),
and poultry waste. The electricity must be sold
to an unrelated third party and the credit is
limited to the first 10 years of production. The
current credit applies only to facilities placed
in service before January 1, 2002. The Administration proposes to extend the credit for electricity produced from wind and biomass to facilities placed in service before January 1,
2005. In addition, eligible biomass sources
would be expanded to include certain biomass
from forest-related resources, agricultural
sources, and other specified sources. Special
rules would apply to biomass facilities placed
in service before January 1, 2002. Electricity
produced at such facilities from newly eligible
sources would be eligible for the credit only
from January 1, 2002, through December 31,
2004, and at a rate equal to 60 percent of
the generally applicable rate. Electricity produced from newly eligible biomass co-fired in
coal plants would also be eligible for the credit
only from January 1, 2002, through December
31, 2004, and at a rate equal to 30 percent
of the generally applicable rate.
Modify Treatment of Nuclear Decommissioning Funds: Under current law, deductible
contributions to nuclear decommissioning
funds are limited to the amount included in
the taxpayer’s cost of service for ratemaking
purposes. For deregulated utilities, this limitation may result in the denial of any deduction
for contributions to a nuclear decommissioning
fund. The Administration proposes to repeal
this limitation. Also under current law, deductible contributions are not permitted to exceed
the amount the IRS determines to be
necessary to provide for level funding of an
amount equal to the taxpayer’s post-1983
decommissioning costs. The Administration
proposes to permit funding of all decommissioning costs (including pre-1984 costs)
through deductible contributions. The IRS
would continue to determine the amount necessary to provide for level funding of the
taxpayer’s
decommissioning
costs.
The

44
Administration also proposes to permit a
nuclear decommissioning fund to receive transfers from certain funds that do not qualify as
nuclear decommissioning funds for Federal tax
purposes (nonqualified funds). Under this
proposal, a taxpayer would be permitted to
transfer amounts that have been irrevocably
set aside in a nonqualified fund pursuant to
the requirements of a State or Federal agency
exclusively for the purpose of funding the

THE BUDGET FOR FISCAL YEAR 2002

decommissioning of the nuclear power plant.
Any portion of the amount transferred that
exceeds the amount deducted (or excluded
from the taxpayer’s gross income) on account
of transfers to the nonqualified fund would be
allowed as a deduction ratably over the remaining useful life of the nuclear power plant.
These proposals would be effective for taxable
years beginning after December 31, 2001.

Table 6–1.

NATURAL RESOURCES AND
ENVIRONMENT
Federal Resources in Support of Natural Resources and
Environment
(In millions of dollars)

Function 300

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

24,646

28,687

26,401

27,020

27,587

27,630

27,418

37
..............

–213
..............

–83
–10

107
–69

249
–20

123
42

136
78

21
..............

33
..............

29
50

27
100

28
50

28
..............

29
..............

1,520

1,550

1,630

1,710

1,820

1,920

2,020

The Federal Government plans to spend
over $26 billion in 2002 to protect the
environment, manage Federal land, conserve
resources, provide recreational opportunities,
and construct and operate water projects.
The Federal Government manages about 700
million acres—a third of the U.S. continental
land area.

contamination. The major purposes of this
function include:

The Natural Resources and Environment
function reflects most Federal support for
natural resources and the environment, but
does not include certain large-scale environmental programs, such as the environmental
clean-up programs at the Departments of
Energy and Defense. (See Chapter 2, ‘‘National
Defense’’ and Chapter 5, ‘‘Energy.’’) This
function does not include many other initiatives that help protect the environment, including energy conservation and tax credits
for using non-conventional energy sources.
(See Chapter 5, ‘‘Energy,’’ for more details.)

providing recreational opportunities for
the public to enjoy natural and cultural
resources.

Within the Natural Resources and Environment function, Federal efforts focus on providing cleaner air and water, conserving natural resources, and cleaning up environmental

protecting human health and safeguarding
the natural environment;
restoring and maintaining the health of
federally-managed lands, waters, and
renewable resources; and

Federal lands include the 384 units of
the National Park System; the 156 National
Forests; the 530 refuges in the National
Wildlife Refuge System; and the 264 million
acres of public lands managed by the Bureau
of Land Management (BLM), mainly in Alaska
and 11 Western States.
Land and Water Conservation Fund
The budget allocates $900 million from
the Land and Water Conservation Fund
(LWCF) to acquire and conserve lands in
national parks, forests, refuges, and public
lands, and provide grants to States for broad
conservation and outdoor recreation purposes.
45

46
The National Park Service will provide
$450 million in 2002 for LWCF matching
grants to States in support of State and
local conservation, wildlife protection, and
outdoor recreation efforts. In 2002, two new
programs aim to establish positive incentives
for private landowners and local communities
to protect imperiled species and restore habitat: $50 million in matching grants will
help States establish Landowner Incentive
Programs to help private landowners protect
imperiled species, and $10 million will establish a Private Stewardship Grant Program
to provide funding for private conservation
activities.
• In 2002, the Department of the Interior’s
(DOI’s) and U.S. Department of Agriculture’s (USDA’s) Federal LWCF program
will increase the number of easement acquisitions, rather than just fee simple acquisitions, and increase the involvement
of communities as DOI and USDA consider acquiring lands or interests in lands
for national parks, forests, refuges, and
public lands.
National Parks
The Federal Government spends over $2
billion a year to maintain a system of
national parks that covers over 83 million
acres in 49 States, the District of Columbia,
and various territories. Discretionary funding
for the National Park Service (NPS) has
steadily increased (almost five percent a year
since 1986) and recreation demonstration and
concession fee receipts have grown to about
$150 million in 2000. Yet, the popularity
of national parks has also generated growth
in the number of visitors, new parks, and
additional NPS responsibilities. Over the past
30 years, the number of national park units
has grown by 50 percent and the number
of national park visits has increased from
164 million a year to almost 287 million
a year.
With growing demands on park facilities
and resources, NPS is taking new, creative,
and more efficient approaches to managing
parks and has developed performance measures against which to gauge progress. NPS
is systematically addressing facility maintenance and construction needs through various

THE BUDGET FOR FISCAL YEAR 2002

management reforms, such as establishing
five-year lists of priority projects, conducting
condition assessments, implementing new information systems, and using business plans
at parks to achieve strategic plan goals
and resolve management challenges. NPS
will use these business plans and other
reforms to clearly communicate priorities,
hold superintendents accountable, and influence how funding for individual parks is
allocated. By next year’s budget, NPS expects
to establish better measures for addressing
the backlog of deferred maintenance and
resource protection needs. These reforms, coupled with increased appropriations and targeted fee receipts, will allow NPS to eliminate
its backlog after five years.
In 2002, NPS plans to:
• maintain the percentage of park visitors
responding to surveys that summarize
their experience as good or very good at
95 percent; and
• as part of the National Resource Challenge, improve science-based management
in parks, and complete 1,121 data sets for
natural resource inventories in 2002 out
of 2,527 required, compared to 455 completed through 2000.
Conservation and Land Management
The 75 percent of Federal land that makes
up the National Forests, National Grasslands,
National Wildlife Refuges, and BLM-administered public lands also provides significant
opportunities for public recreation. BLM provides for nearly 75 million recreational visits
a year, while over 36 million visitors enjoy
wildlife each year at National Wildlife Refuges.
With its approximately 192 million acres,
USDA’s U.S. Forest Service (USFS) is the
largest single supplier of public outdoor recreation. USFS estimates that in 1996 it provided
341 million recreational visitor days. In 2001,
USFS will be releasing a new scientific
based statistical sample measure for recreation
use that it has been developing.
Federal lands also provide other benefits.
With combined annual budgets of almost
$6 billion, BLM and USFS manage lands
for multiple purposes, including outdoor recreation, fish and wildlife conservation, energy

NATURAL RESOURCES AND ENVIRONMENT

and mineral production, timber production,
livestock grazing, and wilderness preservation.
As part of the efforts to cut red tape
and streamline processes, these agencies will
upgrade an integrated nationwide outdoor
recreation information system that gives the
American public quick and easy electronic
access to information about recreation use,
permits, and reservations on Federal lands
(www.recreation.gov).
In addition to managing the land for recreation and conservation purposes, in 2002:
• BLM will improve domestic energy supplies by increasing leasing of oil and gas
from 2,900 leases in 2000 to 3,400 leases;
and
• BLM plans to increase processing of applications for permits to drill from 3,600 in
2000 to 4,400.
BLM will continue to emphasize accountability as well as verification for royalty
production through inspection and enforcement
on both Federal and Indian leases. The
budget initiates planning and studies on
potential oil and gas leasing in the Arctic
National Wildlife Refuge in northern Alaska
in 2004. Beginning in 2004, the budget
would dedicate one-half of the bonus bids—
the cash paid to the United States by successful bidders for oil and gas leases—to fund
increased research on solar and renewable
energy technology research and development,
to be conducted by the Department of Energy
over a seven-year period. The budget assumes
that $1.2 billion would be available in 2004
to increase the funding for the solar and
renewable technology program.
Some high-priority projects include:
Service First: USFS and BLM are working
together to deliver seamless service to customers and ‘‘boundaryless’’ care for the land.
The goal is to: improve customer service with
one-stop shopping; achieve efficiencies in operations to reduce or avoid costs; and take better
care of the land by taking a landscape approach to stewardship rather than stopping at
the traditional jurisdictional boundaries. USFS
and BLM are also looking to streamline major
business processes to make them work better
for both employees and customers.

47
USFS Administrative Reforms: The Administration is committed to enhancing USFS
accountability and ensuring that more resources are available for ‘‘on-the-ground’’ activities. Over the next year, USDA will review
and begin implementation of streamlining and
efficiency enhancing measures for USFS administrative operations. Centralized servicing
and enterprise teams will be evaluated as
ways to provide additional efficiency savings.
National forest units may be able to contract
with the private sector for these services where
appropriate, or rely on coordinated cost pools.
In addition, streamlined decision-making and
an emphasis on forest-level activities will help
establish increased accountability and improved decision-making for the agency. USFS
will also improve its financial accounting system in support of fire suppression efforts to
provide more accurate and timely information
on fire suppression costs.
The risk of wildfires increasingly threatens
communities and the environment. Last year,
USFS and DOI jointly released a report,
Managing the Impact of Wildfires on Communities and the Environment. The report outlined a national strategy (known as the
National Fire Plan) to reduce risks to communities from catastrophic wildfires, and to
increase fire preparedness. The report made
clear the importance of restoring landscapes
and rebuilding communities devastated by
fire; the need to invest in projects to reduce
fire risk; and the importance of working
closely with local communities to reduce risks.
In 2002, the land management agencies plan
to:
• perform hazardous fuels treatments on 1.4
million acres of Federal land to reduce the
risk of loss of life, property, and natural
resources from catastrophic wildfire; and
• assist over 5,300 communities and volunteer fire departments, more than double
the number assisted in 1999.
The agencies will also be working to improve
the fuels reduction program by integrating
the best available fire science in fuels treatment planning for 2002 and by developing
performance measures to better target and
then gauge the effectiveness of fuels treatments on reducing fire risks. These perform-

THE BUDGET FOR FISCAL YEAR 2002

ance measures are expected to be developed
and in place by 2002.

and improve habitat on 32 million acres
of cropland.

BLM and USFS concentrate on the longterm goal of providing sustainable levels
of multiple uses while ensuring and enhancing
ecological integrity. In 2002:

• USDA intends also to help livestock
producers reduce agricultural runoff and
protect water quality through the
development and implementation of 4,315
comprehensive
nutrient
management
plans.

• USFS will target funding to needed watershed restoration work (25,000 acres) and
noxious weed control (85,000 acres); and
• BLM plans to improve the condition of 800
priority watersheds and increase the number of acres treated to control noxious
weeds to 245,000 acres.
DOI’s Fish and Wildlife Service (FWS),
with a budget of $1.091 billion, manages
roughly 94 million acres of refuges and,
with the Commerce Department’s National
Marine Fisheries Service (NMFS), protects
species on Federal and non-Federal lands.
• In 2002, FWS will again ensure that the
refuge acreage is protected, of which 3.4
million acres will be enhanced or restored.
• FWS expects the status of 347 species listed under the Endangered Species Act as
endangered or threatened a decade or
more to stabilize or improve in 2002,
compared to 309 in 2000; and anticipates
recovery efforts will result in the delisting
of three species.
• NMFS will implement programs in 2002
to reduce from 95 to 74 the number of
fisheries where overfishing is occurring
out of the 286 major fish stocks.
• The National Oceanic and Atmospheric
Administration (NOAA) plans to support
an increase in the number of restored
acres of coastal habitat by 10,000 acres
in 2002 to a total of 80,000.
Half of the continental United States is
crop, pasture, and rangeland. Two percent
of Americans manage this land—farmers and
ranchers.
USDA’s
Natural
Resources
Conservation Service provides technical and
financial assistance to them to improve land
management practices.
• Through several programs, USDA will implement conservation and resource management systems to control erosion, reduce
nutrient runoff, improve pest management

In addition, in 2002, USDA will explore
alternative methods of delivering technical
assistance to farmers and ranchers. As part
of this effort, USDA has authority to implement a small pilot program through which
Conservation Reserve Program participants
receive USDA-funded private-sector technical
assistance, instead of the technical assistance
traditionally provided by USDA. This pilot
would allow USDA to determine if contracting
out some services improves program delivery
or reduces costs, and whether contracting
should be explored for similar programs.
Everglades and California Bay-Delta
Restoration
Federal and non-Federal agencies are carrying out long-term restoration plans for
several nationally significant ecosystems, such
as those in South Florida and California’s
Bay-Delta. The South Florida ecosystem is
a national treasure that includes the Everglades and Florida Bay. Its long-term viability
is critical to the health of scores of endangered
plants and animals, important tourism and
fishing industries, the economy of the State,
and the quality of life for South Florida’s
six million people who depend on the ecosystem for its water and natural resources.
Economic development and water uses in
California’s San Francisco Bay-San Joaquin
Delta watershed have diminished water quality, degraded wildlife habitat, endangered
several species, and reduced the estuary’s
reliability as a water source for two-thirds
of Californians and seven million acres of
highly productive agricultural land.
The total proposed in the 2002 Budget
for the implementation of the Comprehensive
Everglades Restoration Plan (CERP), authorized by the Water Resources Development
Act of 2000, is $37 million. This includes
$28 million for the Army Corps of Engineers
and $9 million for DOI for research,

NATURAL RESOURCES AND ENVIRONMENT

monitoring, and planning studies to support
CERP implementation.
In addition to CERP, the budget proposes
$183 million to continue ongoing construction,
research, and land acquisition activities associated with the restoration of the South Florida
ecosystem, including the Everglades. For example, the budget continues important restoration efforts on the Kissimmee River and
funds the project to provide additional water
to Everglades National Park.
• By September 30, 2002, five of the 68 currently known federally-endangered and
threatened species in South Florida will
be able to be ‘‘down-listed’’ or removed
from the list.
In August 2000, Federal and State of
California officials agreed upon a long-term,
$8.7 billion plan for the California BayDelta that would improve water quality, habitat and ecological functions, and water supply
reliability, while reducing the risk of
catastrophic breaching of Delta levees. The
Congress is likely to consider legislation to
authorize the Bay-Delta program early in
2001. The budget contains funds for BayDelta activities that can be undertaken within
existing statutory authorities, including $20
million of new funds in a dedicated DOI
account.
• In 2002, as part of implementing that
plan, participating agencies expect to
make up to 60,000 acre-feet of water available to Federal water project contractors
that would not otherwise have been available.
Scientific Support for Natural Resources
The management of lands, the availability
and quality of water, and improvements in
the protection of resources are based on
sound and objective natural resources science.
DOI’s U.S. Geological Survey (USGS) provides
research and information to land managers
and the public to better understand ecosystems
and species habitat, land and water resources,
and natural hazards. In 2002, USGS will
streamline its activities to better focus on
providing sound and objective scientific information to land managers and the public.

The Department of Commerce’s NOAA manages ocean and coastal resources in the
200-mile Exclusive Economic Zone and in
13 National Marine Sanctuaries. Its NMFS
manages 891 fish stocks and approximately
200 marine mammal populations, and along
with NOAA’s National Ocean Service seeks
to conserve coastal and marine habitats.
NOAA’s National Weather Service (NWS),
using data collected by NOAA’s National
Environmental Satellite and Data Information
Service, provides weather forecasts and flood
warnings. Its Office of Oceanic and Atmospheric Research provides science for policy
decisions in areas such as climate change,
air quality and ozone depletion.
• In 2002, the modernized NWS expects to
increase the lead time of tornado warnings
to 13 minutes and the accuracy of tornadoes warning to 72 percent; increase the
lead time of flash flood warnings to 50
minutes and the accuracy to 87 percent;
and increase the accuracy of winter storm
warnings to 88 percent. Since 1986, lead
times for tornado warnings and flash flood
warnings have improved significantly. For
example, in 1986 the lead time for tornado
warnings was less than five minutes
versus the expected 13 minutes lead time
in 2002.
Pollution Control and Abatement
The Federal Government helps achieve the
Nation’s pollution control and abatement goals
by: (1) taking direct action; (2) funding actions
by State, local, and Tribal governments; and
(3) implementing an environmental regulatory
system. The Environmental Protection Agency’s (EPA) $7.3 billion in discretionary funds
and the Coast Guard’s $138 million Oil
Spill Liability Trust Fund (which funds oil
spill prevention and cleanup) finance these
pollution control and abatement activities.
EPA’s discretionary funds have three major
components—the operating program, Superfund, and water infrastructure financing.
EPA’s $3.7 billion operating program provides the Federal funding to implement most
Federal pollution control laws, including the
Clean Air, Clean Water, Resource Conservation and Recovery, Safe Drinking Water,
and Toxic Substances Control Acts. The

50
Operating Program is funded at the second
highest level in history and is higher than
2001 if unrequested projects are excluded.
EPA protects human health and the environment by developing national pollution control
standards, supported by sound science, largely
enforced by the States under EPA-delegated
authority. In 2002, the States and Tribes
will receive $1.1 billion in grants, the highest
level ever, to administer delegated programs
and other responsibilities pursuant to EPA
statutes. Included in this total is $25 million
in new funding for State enforcement programs, reflecting a shift in enforcement responsibilities in delegated States from Federal
enforcement to expanded State enforcement.
The budget also includes $25 million for
information exchange network State grants,
which will develop environmental information
standards, practices and design in accord
with existing efforts in several States.
Under the Clean Air Act, EPA works
to make the air clean and healthy to breathe
by setting standards for ambient air quality,
toxic air pollutant emissions, new pollution
sources, and mobile sources. In 2002:
• EPA plans to certify that three areas of
the remaining 55 nonattainment areas
have attained the one-hour National Ambient Air Quality Standard for ozone,
thereby increasing the number of people
living in areas with healthy air quality
by 2.9 million; and

THE BUDGET FOR FISCAL YEAR 2002

Under the Federal Insecticide, Fungicide,
and Rodenticide Act and the Federal Food,
Drug, and Cosmetic Act, EPA regulates pesticide use, grants product registrations, and
sets tolerances (standards for pesticide residue
on food) to reduce risk and promote safer
means of pest control. EPA also seeks to
reduce environmental risks where Americans
reside, work, and enjoy life, through pollution
prevention and risk management strategies.
• By the end of 2002, EPA plans to reassess
a cumulative 66 percent of the 9,721 pesticide tolerances required to be reassessed
over ten years. This includes 70 percent
of the 893 tolerances having the greatest
potential impact on dietary risks to children. This will be a major improvement
given that only 121 reassessments were
completed in 2000.
• The quantity of Toxic Release Inventory
pollutants released, disposed of, treated, or
combusted for energy recovery in 2002,
(normalized for changes in industrial production) is expected to be reduced by 200
million pounds, or two percent, from 2001
reporting levels. These data will be
reported in 2004.

• air toxic emissions nationwide from stationary and mobile sources combined will
be reduced by five percent from 2001 (for
a cumulative reduction of 40 percent from
the 1993 annual level of 4.3 million tons).

• In 2002, EPA will make publicly available
screening level hazard data and assessments for eight percent of the 2,800 High
Production Volume chemicals (industrial
chemicals which are manufactured in or
imported into the United States at one
million pounds or greater), as part of the
Agency’s implementation of a comprehensive strategy for screening, testing,
classifying, and managing the potential
risks posed by commercial chemicals.

Under the Clean Water Act, EPA works
to conserve and enhance the ecological health
of the Nation’s waters through regulation
of point source discharges, support for programs and projects to address polluted runoff,
and through other multi-agency cooperative
endeavors.

Under the Resource Conservation and
Recovery Act, EPA and authorized States
prevent dangerous releases to the environment
of hazardous, industrial nonhazardous, and
municipal solid wastes by requiring proper
facility management and cleanup of environmental contamination at those sites.

• In 2003, water quality will improve on a
watershed basis such that 600 of the Nation’s 2,262 watersheds will have greater
than 80 percent of assessed waters meeting all water quality standards. (Water
quality is surveyed biennially.)

• In 2002, 82 more hazardous waste management facilities are expected to have approved controls in place to prevent dangerous releases to air, soil, and groundwater, for an approximate total of 71 percent of 2,750 facilities.

NATURAL RESOURCES AND ENVIRONMENT

EPA’s underground storage tank (UST) program seeks to prevent, detect, and correct
leaks from USTs containing petroleum and
hazardous substances. Regulations issued in
1988 required that substandard USTs (lacking
spill, overfill and/or corrosion protection) be
upgraded, replaced or closed by December
22, 1998. EPA’s leaking underground storage
tank program (LUST) promotes and implements rapid and effective responses to UST
releases. In 2002:
• EPA and its State and Tribal partners aim
to achieve 96 percent compliance of active
USTs with the 1998 requirements and 75
percent compliance of active USTs will be
in compliance with the leak detection requirements. (EPA is in the process of
changing the way it measures compliance,
including changing from a per tank to a
per facility basis.)
• The performance goal is to complete
23,000 LUST cleanups.
The $1.3 billion Superfund program pays
to clean up hazardous spills and abandoned
hazardous waste sites, and to compel responsible parties to clean up. The Coast Guard
implements a smaller but similar program
to clean up oil spills. Superfund also supports
EPA’s Brownfields program. The Administration’s strategy on Brownfields (abandoned
industrial sites) is to clean them in order
to protect human health and the environment
while allowing affordable cleanups and flexible
approaches. The Administration intends to
remove legal obstacles to cleanups, make
the Brownfields tax incentive permanent, and
make Federal financial assistance more effective by cutting red tape and reforming existing
funding mechanisms. Brownfield cleanup and
redevelopment is important because it revitalizes urban communities by improving public
health and environmental conditions, boosting
local property tax rolls, and providing jobs.
In 2002:
• EPA and its partners intend to complete
65 Superfund cleanups (construction completions) for an overall total of 895 construction completions by the end of 2002;
and
• The Coast Guard expects to reduce the
rate of oil spilled into the Nation’s waters

51
to 3.6 gallons per million gallons shipped,
which will make good progress toward a
goal of a 20-percent reduction from the
3.9 gallons per million five-year moving
average.
EPA water infrastructure funds provide
grants to States for capitalizing revolving
funds, which make low-interest loans, to
help municipalities pay for wastewater and
drinking water treatment systems required
by Federal Law. Also, EPA funds State
sewer overflow control grant programs. The
$1.3 billion requested in the 2002 Budget
for EPA state wastewater grants fund the
Clean Water State Revolving Funds (CWSRF)
at $850 million and the newly authorized
Sewer Overflow Control Grant program at
$450 million. This request is consistent with
EPA’s plan to capitalize the CWSRF to
the point where it provides $2 billion in
average annual assistance and further addresses Federal mandates to control the biggest remaining municipal wastewater problem,
sewer overflows. The $76 billion in Federal
wastewater assistance since passage of the
1972 Clean Water Act has dramatically increased the number of Americans enjoying
better quality water; nearly all of the Nation’s
wastewater treatment systems have been upgraded to secondary treatment or better.
Also, the Drinking Water State Revolving
Fund (DWSRF) is funded at $823 million
to provide capitalization grants to State
DWSRFs, to provide $500 million in longterm average annual assistance. Ensuring
that community water systems meet healthbased drinking water standards is supported
by both the DWSRF and operating program
resources. In 2002:
• 700 CWSRF projects are intended to
initiate operations, including 400 projects
providing secondary treatment, advanced
treatment, combined sewer overflow
correction (treatment) and, or/or storm
water treatment. Cumulatively, 7,900
CWSRF-funded projects will have initiated
operations since program inception.
• 91 percent of the population served by
community water systems is expected to
receive drinking water meeting all health
based standards in effect as of 1994, up
from 83 percent in 1994.

52
USDA gives financial assistance to rural
communities to provide safe drinking water
and adequate wastewater treatment facilities
to under-served rural communities (less than
10,000 people). USDA offers this loan assistance at subsidized interest rates based on
the community’s income. The budget proposes
$1.4 billion in combined grant, loan, and
loan guarantees for this assistance, equal
to the 2001 enacted levels.
• USDA expects to provide 1.4 million rural
residents access to clean, safe drinking
water and/or quality waste disposal service by funding 900 water/waste treatment
projects in 2002.
Water Resources
The Federal Government builds and manages water projects for navigation, flooddamage reduction, environmental purposes,
irrigation, and hydropower generation. The
Army Corps of Engineers (Corps) operates
nationwide, while DOI’s Bureau of Reclamation operates in the 17 western States. The
budget proposes $4.7 billion for these agencies
in 2002—$3.9 billion for the Corps, $0.8
billion for the Bureau of Reclamation. The
budget targets Corps funds at completing
the backlog of ongoing projects, rather than
starting new ones. It gives priority for funding
to activities in the Corps’ primary missions
areas—commercial navigation, flood damage
reduction, and environmental restoration.
In 2002, the Corps plans to:
• maintain high-use commercial navigation
facilities in a fully operational state at
least 90 percent of the time;
• maintain flood damage-reduction facilities
in a fully operational state at least 95
percent of the time;

THE BUDGET FOR FISCAL YEAR 2002

• achieve ‘‘no net loss’’ of wetlands by
creating, enhancing, and restoring wetlands functions and values that are comparable to those lost; and
• address concerns regarding the assessment of construction projects.
The Bureau of Reclamation manages, develops, and protects water and related resources
in an environmentally and economically sound
manner in the interest of the American
public.
• In 2002, the Bureau of Reclamation intends to deliver or release the amount of
water contracted for from Reclamationowned and operated facilities, expected to
be no less than 28 million acre-feet, and
generate power needed to meet contractual
commitments and other requirements 100
percent of the time, depending upon water
availability.
Tax Expenditures
Conservation Tax Credit: To provide an
incentive for private, voluntary land protection, the budget includes a 50-percent capital
gains tax exclusion for private landowners who
voluntarily sell land or water to a Government
agency or qualified conservation organization
for conservation purposes. This incentive is a
cost effective, non-regulatory, market-based
approach to conservation.
Brownfields: To spur more cleanups across
the country, the budget includes a permanent
extension of favorable tax treatment of the
costs of cleaning up contamination at abandoned waste sites. Taxpayers may elect to
treat certain environmental remediation expenditures as deductible in the year paid or
incurred. Under current law, the Brownfields
tax incentive expires at the end of 2003.

7.
Table 7–1.

AGRICULTURE

Federal Resources in Support of Agriculture
(In millions of dollars)

Function 350

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

4,725

5,111

4,833

5,242

5,152

5,264

5,383

31,990

20,437

13,162

9,819

8,759

8,789

9,099

11,005
5,435

10,280
6,492

10,392
6,783

8,949
6,886

8,791
6,886

8,564
6,886

8,868
6,886

1,040

1,080

1,130

1,180

1,230

1,290

1,340

Through the Department of Agriculture
(USDA), the Federal Government seeks to
enhance the quality of life for the American
people by supporting agricultural production;
ensuring a safe, affordable, nutritious, and
accessible food supply; conserving agricultural,
forest, and range lands; supporting sound
development of rural communities; providing
economic opportunities for farm and rural
residents; expanding global markets for agricultural and forest products and services;
and working to reduce hunger in America
and throughout the world. (Many of these
missions fall within other budget functions
and are described in other chapters in this
section.)
The Federal Government helps to increase
U.S. agricultural income by boosting productivity, ensuring that markets function fairly,
and providing a safety net for farmers and
ranchers who face financial risk and natural
disasters. Farming and ranching are risky.
Federal programs are designed to accomplish
two key economic goals: (1) provide an economic safety net for farmers and ranchers;
and (2) open, expand, and maintain global
market opportunities for agricultural producers.
USDA programs disseminate economic and
agronomic information, and help farmers

finance their operations and manage risks
from both weather and variable export conditions. Agriculture, food, and its related activities account for 15 percent of total annual
U.S. personal consumption expenditures.
Conditions on the Farm
Farm conditions are improving. While supplies of farm commodities continued to exceed
demand, some prices have started to recover
from the lows of the past two years. Gross
cash market receipts rose three percent to
$195 billion in 2000, above the average
level for 1990-1995. Net cash income also
rose slightly, remaining above average due
to Federal emergency payments. Farmers are
expected to earn slightly more from 2001
crop sales due to a larger harvest and
improving prices. Livestock prices in 2000
recovered from previous lows, and livestock
receipts exceeded the record level of $96.5
billion in 1997. Crop and livestock prices
are expected to strengthen modestly in 2001.
Economic and weather conditions in the
2000 crop year prompted the Federal Government to expand spending on agriculture for
a third year, including $11 billion in emergency disaster relief enacted in the 2001
Agriculture Appropriations Act and Agriculture Risk Protection Act of 2000. Overall,
53

54
Federal Government farm payments and related expenditures reached a record $32 billion
in 2000 (up significantly from the $10 billion
provided in 1998).
Farm assets and equity continue to rise,
notwithstanding the generally low commodity
prices. Farm sector assets increased in value
in 2000, to $1.1 trillion. Farm asset values
are forecast to remain at historic high levels
in 2001, as farm real estate values increase
for the thirteenth straight year. Farm business
debt declined slightly in 2000, from its highest
level since 1986; and debt-to-equity and debtto-asset ratios also improved slightly in 2000,
and are much stronger than on the eve
of the financial stress in the farm sector
during the 1980s. Farmer loan delinquencies
are at a low and flat level. However, continuing low commodity prices and higher
input costs due to increasing energy costs,
may cause certain producers some increasing
financial stress.
Future farm income will be closely linked
with exports. The Nation exports 30 percent
of its farm production, and agriculture produces the greatest balance of payments surplus, for its share of national income, of
any economic sector. Agricultural exports
reached a record $60 billion in 1996. Lower
world market prices and bulk export volume
reduced exports to $49 billion in value terms,
although export volume was steady in that
period, but in 2000 exports increased to
$51 billion. In 2001, export growth is likely
to continue to improve gradually to $53
billion, with the agricultural trade net surplus
expected to reach $13 billion.
The 1996 Farm Bill
The 1996 Farm Bill, effective through 2002,
fundamentally redesigned Federal income support and supply management programs for
producers of wheat, corn, grain sorghum,
barley, oats, rice, and cotton. It expanded
the market-oriented policies of the previous
two major farm bills, which had gradually
reduced the Federal influence in the agricultural sector at the same time it significantly
altered Federal support payments.
Under previous laws dating to the 1930s,
farmers who reduced plantings could get
income support payments when prices were

THE BUDGET FOR FISCAL YEAR 2002

low, but farmers had to plant specific crops
in order to receive such payments. Even
when market signals encouraged the planting
of a different crop, farmers had limited
flexibility to do so. By contrast, the 1996
Farm Bill eliminated most such restrictions
and, instead, provided fixed, but declining
payments to eligible farmers through 2002,
regardless of market prices or production
volume. This law decoupled Federal income
support from planting decisions and market
prices. The law brought changes in the crop
acreage planted in response to market signals.
In 1997, wheat acreage fell by six percent,
or about five million acres, from the previous
year, while soybean acreage rose by 10 percent, or over six million acres.
Since the Farm Bill eased planting restrictions, there has been greater potential volatility in crop prices and farm income. The
size of farm income-support payments no
longer varies as crop prices fluctuate, and
USDA can no longer require farmers to
grow less when supplies are great. The
previous farm bills were not perfectly countercyclical: participants in USDA commodity programs whose crops were totally ruined when
prices were high got no income-support payment then, but would now through fixed
payments. The 1996 Farm Bill does provide
some counter-cyclical price protection because
it provides additional marketing loan payments to farmers when commodity prices
fall below a statutorily set loan rate. These
marketing loan payments reached the historic
high level of nearly $7 billion in calendar
year 2000. Farmers also received additional
emergency assistance: $6 billion was appropriated in 1999 for 1998 crop-year losses,
and $14 billion was legislated in 2000 to
address both 1999 and 2000 crop-year losses.
The budget does not assume supplemental
income assistance for farmers for the 2001
crop year because it appears that commodity
prices are improving, net cash income is
projected to be over 90 percent of the average
income in the 1990s, and it is too early
to know what the crop quality and yield
situation will be. However, the 2002 Budget
provides a reserve fund that could be used
to provide emergency support. USDA will
work to enhance the competitiveness of
American agriculture and to expand market

AGRICULTURE

opportunities for agricultural products using
its trade, export, research and education
and other programs.
Federal Programs
Federal Farm Commodity Programs:
Since the amount of Federal income support
payments under the 1996 Farm Bill is largely
fixed, farm income can fluctuate much more
from year to year due to supply and demand
changes. Farmers must rely more on
marketing alternatives, and develop strategies
for managing financial risk and stabilizing
farm income. However, in response to
unprecedented crop/livestock price decreases
and regional production problems, Congress included, as part of the $14 billion in emergency
disaster relief in 2000, a doubling of the 1996
Farm Bill’s fixed $5 billion in income-support
payments. In addition, the Federal Government continues to provide other safety-net protections, such as the marketing assistance
loans that guarantee a minimum price for
major commodities, which paid producers $7
billion in 2000 and will pay them about $6
billion in 2001. Since July 1998, USDA has
been seeking to support U.S. crop prices by
purchasing surplus commodities to donate
overseas.
Insurance: USDA helps farmers manage
their risks by providing subsidized crop insurance, delivered through the private sector,
which shares the insurance risk with the Federal Government. Farmers pay no premiums
for coverage against catastrophic production
losses, and the Government subsidizes their
premiums for higher levels of coverage. Over
the past three years, an average of nearly 70
percent of eligible acres has been insured, the
highest in the program’s 60-year history.
USDA now targets an average indemnity payout of $1.08 for every $1 in premium, down
from the historical average indemnity of $1.40
for every $1 in premium. Crop insurance costs
the Federal Government about $3 billion a
year, including USDA payments to private
companies for delivery of Federal crop insurance. Producers pay about $1 billion in premium costs for this protection.
The Agricultural Risk Protection Act
(ARPA), enacted in June 2000, included broad
crop insurance reforms. Premium subsidies

55
were increased to levels that will roughly
double the cost of the program (from $1.5
billion to $3 billion) and targeted to higher
levels of coverage. Consequently, participation
is expected to increase to an estimated 84
percent of insurable acres, and the average
coverage purchased by a farmer is expected
to reach more than 70 percent of expected
revenue. The program is expected to provide
over $36 billion in risk protection in 2001,
up from $34 billion in 2000. Both increased
participation and higher coverage have the
effect of enhancing the farm safety net,
and reducing the need for disaster assistance
legislation. ARPA provides incentives for the
private sector to develop crop insurance policies on new crops and expand several insurance products that mitigate revenue risk,
price and production risk combined. Revenue
insurance policies are now among the most
popular crop insurance products, and USDA
will continue to expand their application
and availability.
Trade: The trade surplus for U.S. agriculture rose to $12.0 billion in 2000 after having declined in recent years. This is largely
the result of the growth in high-value agricultural products rather than bulk commodities.
USDA’s Foreign Agriculture Service (FAS)
negotiates, implements, and enforces trade
agreements to strengthen the market for U.S.
exports.
In 2002, FAS will work to carry out
the President’s commitment to expand overseas agricultural markets by strengthening
USDA’s market intelligence capabilities in
order to address more effectively governmental
policies and issues that affect the competitiveness of U.S. exports. FAS, the Agricultural
Marketing Service, Grain Inspection Packers
and Stockyards Administration, and Animal
and Plant Health Inspection Service will
work to enhance the USDA’s expertise in
addressing and resolving technical trade issues
with foreign trading partners and expand
participation in the development of international commodity standards.
USDA is authorized to spend more than
$1 billion in 2002 on a wide range of
trade promotion programs that expand overseas market opportunities and develop longterm
trade
relationships
with
foreign

56
countries. These include subsidies to export
firms that face unfairly subsidized overseas
competitors and credit guarantees for the
commercial financing of U.S. agricultural exports. A small, but fast growing component
of the guarantees is made available under
the Supplier Credit Guarantee Program. This
relatively new program was developed in
response to changing trade patterns and
was tailored specifically to facilitate sales
of high value and consumer ready products,
among the fastest growing components of
U.S. agricultural trade.
USDA also provides outreach and exporter
assistance activities that are designed to
assist businesses identify marketing opportunities overseas and enter export markets for
the first time. This effort includes assistance
in addressing laws, customs, and technical
requirements that can discourage smaller,
less experienced firms from taking advantage
of export opportunities. USDA also facilitates
participation in international trade shows
and market promotion events. In these activities, increased emphasis is being placed on
emerging markets in order to assist U.S.
exporters to offset the initial costs and risks
involved in capturing new market opportunities.
Agricultural Research: In 2002, the Federal Government expects to spend $2.1 billion
for agricultural research, education, economics
and statistics programs to make U.S. agriculture more productive and competitive in the
global economy.
The Agricultural Research Service (ARS)
is USDA’s in-house research agency. In 2002,
ARS’ $946 million proposed funding level
will increase emphasis in high-priority areas,
such as combating emerging and exotic diseases, controlling weeds and arthropods, as
well as for biotechnology, and genomics. Working towards the ultimate goal of having
a method to rapidly detect the presence
of Bovine Spongeform Encephalopathy (BSE)
disease agents in live animals, USDA will
develop one or more BSE tests that will
be ready for field evaluation in 2002. To
accommodate these high priority items, funding for some lower-priority earmarked projects
will be discontinued and funding for facility

THE BUDGET FOR FISCAL YEAR 2002

modernization will be limited to the most
urgent needs.
Another important ARS initiative is to
develop technologies that will enhance the
range of uses for agricultural commodities
and byproducts. This work would result in
competitively priced value-added products and
spur jobs and business activity, especially
in rural areas. Of particular promise is
a new USDA research program carried out
in collaboration with the Department of Energy. This effort focuses on developing
biobased products and biofuels products made
from renewable resources that can meet environmental needs, reduce dependence on petroleum-based products, and expand market opportunities for U.S. agriculture. In addition
to developing new products, the USDA also
will create new ways to ensure their efficient
mass-production and processing. In 2002,
USDA will:
• Expand transfer of research results to industry in order to increase the number of
high quality and economically competitive
bio-based products for sale.
The Cooperative State Research, Education
and Extension Service (CSREES) provides
grants, through open competition, statutory
formula, or, less desirably, direct earmark.
Most of these grants are provided to land
grant universities and State agricultural experiment stations. In 2002, CSREES’ $991
million request (including $120 million for
the Initiative for Future Agriculture and
Food Systems) will maintain funding for
all programs except those that were funded
with congressional earmarks in 2001.
USDA economics and statistics programs,
which are funded at $181 million, improve
U.S. agricultural competitiveness by reporting
and analyzing information. The Economic Research Service provides economic and other
social sciences information and analysis for
decision-making on agriculture, food, natural
resources and rural development policy. The
National
Agricultural
Statistics
Service
(NASS) conducts the Census of Agriculture
and provides estimates of production, supply,
price and other aspects of the farm economy,
providing information that helps ensure efficient markets. In 2002, NASS will:

AGRICULTURE

• Provide timely information needed to
support orderly marketing of agricultural
products by meeting scheduled report release dates 100 percent of the time.
Inspection and Market Regulation: The
Federal Government will spend approximately
$825 million a year to secure U.S. cropland
from pests and diseases and make U.S. crops
more marketable. The Animal and Plant
Health Inspection Service (APHIS) inspects agricultural products that enter the country,
searching for goods or commodities that could
harbor potential infestations; monitors the disease status of agricultural plants and animals;
controls and eradicates diseases and infestations; helps control damage to livestock and
crops from animals; and uncovers cruel treatment of many domesticated animals. The Agricultural Marketing Service (AMS) and the
Grain Inspection, Packers and Stockyards Administration (GIPSA) help market U.S. farm
products, ensure fair trading practices, and
promote a competitive, efficient market place.
In 2002, APHIS will provide increased
funding to stop the importation of goods
and commodities that could endanger U.S.
agriculture; use appropriated discretionary
funding to respond to ongoing emergencies
such as Medfly, citrus canker and Asian
Longhorned Beetle; and improve trade issues
and management. Reductions of unneeded
funding will be made in boll weevil and
brucellosis activities. An example of a performance goal in 2002 is:
• APHIS will continue to ensure that at
least 95 percent of air travelers comply
with restrictions to prevent entry of pests
and diseases despite growing passenger
traffic.
For AMS and GIPSA, more funding will
be devoted towards active participation in
the development and resolution of international commodity standards. Examples of
performance goals in 2002 are:
• AMS will establish accredited procedures
and methods for testing bio-engineered
fruits and vegetables similar to those
already established for grains by GIPSA;
and
• GIPSA will become the International
Standardization Organization certifier to

promote the marketing of value-added
products through internationally recognized quality assurance systems, thus
opening new market opportunities and
avoiding costly trade disputes.
Conservation: The 1996 Farm Bill was the
most conservation-oriented farm bill in history,
enabling USDA to provide incentives to farmers and ranchers to protect the natural resource base of U.S. agriculture. The bill created several new conservation programs and
extended and expanded other ongoing programs. The largest new program is the Environmental Quality Incentives Program, which
provides cost-share and incentive payments to
encourage farmers to adopt improved farming
practices, and reduce the environmental impact of livestock operations. In a typical year,
USDA, through the Natural Resources Conservation Service, provides technical assistance
to 650,000 landowners, farmers and ranchers.
In 2002, USDA will:
• increase the number of acres enrolled in
riparian buffers and filter strips to 2.5 million, from an estimated 1.6 million acres
in 2001;
• develop conservation systems on 18 million acres of cropland and grazing land
to control erosion;
• help landowners apply integrated pest
management systems on four million
acres;
• help landowners apply conservation measures to reduce nutrient runoff on five million acres; and
• improve fish and wildlife habitat on five
million acres of private land.
For more information on conservation, and
USDA’s investments in public land management, see Chapter 6, ‘‘Natural Resources
and Environment.’’ USDA programs also help
to maintain vital rural communities, as described in Chapter 10, ‘‘Community and Regional Development.’’
Agricultural Credit: USDA provides about
$800 million a year in direct loans and nearly
$3 billion in guaranteed loans to finance farm
operating expenses and farmland purchases. A
portion of direct loans, which carry interest

58
rates at or below those on Treasury securities,
are targeted to beginning or socially disadvantaged farmers. Both direct and guaranteed
loans are limited to family farmers who cannot
obtain adequate credit from other sources.
In 2002, USDA will:
• Increase the proportion of loan amounts
targeted to beginning and socially-disadvantaged farmers to 30 percent, from
an estimated 28 percent in 2001 and nine
percent in 1996 when USDA first began
measuring this activity; and
• Reduce the delinquency rate on farm loans
to 18 percent, from over 24 percent in
1994.
The Farm Credit System and Farmer Mac,
both Government-Sponsored Enterprises, enhance the supply of farm credit through
ties to national and global credit markets.
The Farm Credit System (which lends directly
to farmers) has recovered strongly from its
financial problems of the 1980s, in part
through Federal help. Farmer Mac increases
the liquidity of commercial banks and the
Farm Credit System by purchasing agricultural loans for resale as bundled securities.
In 1996, Congress gave the institution authority to pool loans as well as more years
to attain required capital standards, which
Farmer Mac has now achieved.
Management Reform: USDA administers
its many farm, conservation, and rural development programs through 2,500 county-level
service centers with over 25,000 staff. During
the prior Bush Administration, an effort was
begun to streamline USDA’s county office
structure to improve service and reduce costs.
The increasing costs of maintaining the current delivery system and the investment in
new information technology have prompted the
USDA to continue to examine its staff-intensive field office-based infrastructure. USDA
will merge information technology staff of the
Farm Service Agency, the Natural Resources
Conservation Service, and Rural Development
into one staff to service all three agencies, and
review the field office structure to identify additional opportunities to improve efficiency, realize savings, and recognize the growth in
farm business transacted via computers and
fax machines. With requested resources, USDA

THE BUDGET FOR FISCAL YEAR 2002

will complete implementing its systems integration initiative, known as the Common
Computing Environment (CCE). The CCE will
reduce the paperwork burden by allowing for
electronic filing of information from farmers
and other USDA customers.
USDA will also review streamlining and
efficiency-enhancing measures for the Forest
Service’s field structure, work force, and administrative operations to provide more resources for ‘‘on-the-ground’’ activities. Program
modifications and reforms will also be considered for USDA’s food aid, trade, and marketing
programs. These will ensure that Section
416(b) food aid donations, in particular, significantly benefit U.S. farmers, target necessary
humanitarian feeding, and avoid adverse commercial impacts consistent with Administration policy. The USDA will look for ways
to reduce layers of management where doing
so will increase program responsiveness without sacrificing needed oversight and accountability.
Improving management and financial accountability is also a key priority for the
Department. USDA will develop centralized
and integrated management information systems to provide timely and reliable information
on USDA’s finances, people, and purchases.
Such systems will help USDA resolve major
management challenges, including improving
computer security.
USDA will continue working towards the
goal of an unqualified audit opinion on USDA’s
consolidated financial statements. To assist
in this goal USDA is implementing a corporate
administrative accounting system (estimated
completion by 2003). Last year, three stand
alone component agency statements received
unqualified audit opinions, two received qualified opinions and one received a disclaimer.
Tax Expenditures
Tax expenditures for agriculture are estimated to be $1.1 billion in 2002, and $6
billion between 2003 and 2006. Legislation
in 1999 made permanent the ability for
farmers and ranchers to lower their tax
liability by averaging their taxable income
over the prior three-year period. Producers
of certain crops, such as corn, also receive
indirect benefits from the ethanol tax credit,

AGRICULTURE

due to the higher commodity prices that
result from the increased demand for their
commodities.
The Administration proposes to establish
Farm, Fish, and Ranch Risk Management
(FFARRM) savings accounts for owners of
farming, fishing, and ranging businesses. Each
year, up to 20 percent of taxable income
attributable to an eligible farming, fishing,
or ranching business could be contributed
to a FFARRM account and deducted from

59
income. The income earned on the account
would be taxable as earned. Distributions
from the account (except those attributable
to income from the account) would be included
in gross income. Any amount not distributed
within five years of deposit would be deemed
to have been distributed and included in
gross income, plus subject to a 10 percent
surtax. This proposal would be effective for
taxable years beginning after December 31,
2001.

COMMERCE AND HOUSING CREDIT

Table 8–1.

Federal Resources in Support of Commerce and Housing
Credit
(In millions of dollars)

Function 370

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:.
Existing law ...............................
Proposed legislation ...................
Credit Activity:
Direct loan disbursements ............
Guaranteed loans ..........................
Tax Expenditures:
Existing law ...................................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

5,115

687

–286

–75

–389

–504

–470

–1,263
..............

–2,462
..............

6,691
–95

4,740
–108

4,027
–119

4,160
–130

2,900
–143

1,322
218,697

1,725
231,340

1,602
250,765

1,576
263,247

1,567
272,765

1,561
282,387

1,558
289,973

242,455

254,680

266,700

277,810

289,470

301,230

314,770

Notes: Discretionary budget authority is offset by receipts (negative credit subsidy) to the Department of
Housing and Urban Development for loan guarantee programs.
2000 discretionary budget authority includes cyclical expenses associated with the decennial census.

The
Federal
Government
facilitates
commerce and supports housing through many
diverse activities. It provides direct loans
and loan guarantees to ease access to
mortgage and commercial credit; sponsors
private enterprises that support the secondary
market for home mortgages; regulates private
credit intermediaries; protects investors when
insured depository institutions fail; promotes
exports and technology; collects our Nation’s
statistics; and offers tax incentives.
Mortgage Credit
The Government provides loans and loan
guarantees to increase homeownership, and
to help low-income families afford suitable
apartments. Housing credit programs of the
Departments of Housing and Urban Development (HUD), Agriculture (USDA), and Veterans Affairs supported $123 billion in new
loan and loan guarantee commitments in
2000, helping nearly 1.3 million households.
All of these programs have contributed to
boosting the national homeownership rate,

now at a record high of 67.7 percent (see
Chart 8–1).
• The 2002 goal for the national homeownership rate is 68.5 percent.
HUD’s Federal Housing Administration
(FHA): The Mutual Mortgage Insurance
(MMI) Fund, run by FHA, helps increase access to single-family mortgage credit across the
United States. As noted in Table 8–2, FHA
also insures mortgage loans for multi-family
housing as part of its General Insurance and
Special Risk Insurance Fund. In 2000, the
MMI Fund insured over $86 billion in mortgages for almost 900,000 households. Of the
FHA borrowers who purchased their homes in
2000, more than 80 percent are first-time
homeowners and 42 percent belong to a minority group. In 2002, FHA will achieve the following:
• the share of FHA mortgage insurance for
first-time home buyers will increase to 82
percent; and

THE BUDGET FOR FISCAL YEAR 2002

Chart 8-1. Historical Homeownership Rates
Percentage of households owning their homes

67.7

68
66.8

67.0

66.0
65.6

65.0

0
1995

1996

1997

• the share of FHA mortgage insurance for
minority households will increase to 44
percent.
To help achieve these goals, the Administration proposes to allow FHA to insure a
popular new type of financial product on
the mortgage market, hybrid adjustable-rate
mortgages (ARMs). Hybrid ARMs are adjustable-rate loans that carry an initial fixed
interest rate for longer than one year. Hybrid
ARMs will substantially enhance FHA’s product line, offering a sound mortgage product
to borrowers who do not qualify for a fixedrate mortgage or cannot afford the fixedrate pricing, but who want to avoid the
volatility associated with traditional ARMs.
The Administration will reduce FHA fraud
and improve program controls. Inadequate
information systems have weakened FHA’s
ability to monitor lenders that use its guarantees. A scheme to defraud the Government,
known as ‘‘property-flipping,’’ recently highlighted internal weaknesses in FHA’s singlefamily systems and controls. To combat the
scheme,
last
year
FHA
implemented

1998

1999

2000

emergency foreclosure moratoria to protect
borrowers in areas where property-flipping
was prevalent. FHA will strengthen the integrity of internal systems and controls to eliminate the need for foreclosure moratoria or
other emergency responses. Actions will include improving the loan origination process
and providing better monitoring of lenders
and appraisers.
USDA’s Rural Housing Service (RHS):
RHS offers direct and guaranteed loans and
grants to help very low- to moderate-income
rural residents buy and maintain adequate, affordable housing. The single family direct loan
program provides subsidized loans to very lowincome rural residents, while the single family
guarantee loan program guarantees up to 90
percent of a private loan for moderate-income
rural residents. Together, the two programs
provided $3 billion in loans and loan guarantees in 2000, providing 46,000 decent, safe affordable homes for rural Americans.
• In 2002, RHS will further reduce the number of rural residents living in substandard housing by providing $4 billion

COMMERCE AND HOUSING CREDIT

Table 8–2.

Selected Federal Commerce and Housing Credit Programs:
Credit Programs Portfolio Characteristics
(Dollar amounts in millions)

Numbers of housDollar volume of ing units/small
direct loans/
business financed
guarantees
by loans/
written in 2000
guarantees
written in 2000
Mortgage Credit:
HUD/FHA Mutual Mortgage Insurance Fund .........................................
HUD/FHA General Insurance and
Special Risk Insurance Fund ..........
USDA/RHS single-family loans ..........
USDA/RHS multifamily loans ............
VA guaranteed loans ...........................

Dollar volume of
total outstanding
loans/guarantees
as of the end of
2000

86,274

873,265

449,805

12,506
3,324
246
20,159

154,492
51,400
7,400
175,559

98,888
27,697
11,397
199,759

Subtotal, Mortgage Credit ...........

122,509

1,262,116

787,546

Business Credit:
SBA Guaranteed Loans ......................
SBA Direct Loans ................................

13,195
27

48,422
65

45,556
65

Subtotal, Business Credit ............

13,222

48,487

45,621

Total Assistance ...............................

135,731

1,310,603

833,167

in loans and loan guarantees (equal to the
2001 enacted level) for 55,800 new or improved homes.
Veterans’ Affairs (VA): VA recognizes the
service that veterans and active duty personnel provide to the Nation by helping them
buy and retain homes. The Government partially guarantees loans from private lenders,
providing $20 billion in loan guarantees in
2000. One of VA’s key goals has been to
improve loan servicing to avoid veteran
foreclosures.
• In 2002, VA will be successful in intervening to help veterans avoid foreclosure
34 percent of the time. Over the past several years, VA has decreased foreclosures
by approximately 10 percent.
Ginnie Mae: The Congress created Ginnie
Mae in 1968 to support the secondary market
for FHA, VA, and RHS mortgages through
securitization. Ginnie Mae guarantees the
timely payment of principal and interest on
privately issued securities that are backed by
pools of FHA, VA, and RHS mortgages. The

Ginnie Mae guarantee gives lenders access to
the capital markets for funds to originate new
loans. Together with the Government-sponsored enterprises that operate in the secondary
market for mortgages, Ginnie Mae provides
lenders with the liquidity to maintain a steady
supply of credit available for housing.
• In 2002, Ginnie Mae will securitize 85 percent of eligible FHA and VA loans, enhancing mortgage market efficiency and
lowering costs for home buyers.
Rental Housing
The Government provides housing assistance
through a number of HUD and USDA programs. These rental assistance programs provide subsidies for five million low-income
households. In 1999, families with severe
housing needs dropped by over 400,000 to
4.9 million. This is the first decrease in
severe housing needs in 10 years. The budget
provides $197 million to fund 34,000 new
HUD vouchers for low-income families. HUD
will adopt program reforms to eliminate the
accumulation of excess balances that have

64
resulted in the recapture of one to two
billion dollars in unspent funds annually
over the past few years.
Weak oversight of local housing providers
has reduced the quality of housing services
and increased costs, reducing the number
of households that receive assistance. HUD
will improve its management of these providers to encourage compliance and subject
non-performers to remedial action. Currently,
HUD overpays hundreds of millions of dollars
in low-income rent subsidies because tenants’
incomes are underreported and rents are
improperly calculated or not fully collected.
HUD will undertake a series of reforms
to correct these errors.
The Administration will work to remove
deteriorating, obsolete public housing units
through the implementation of public housing
reform legislation passed in 1998 and replace
them with housing vouchers that families
can use to obtain better housing available
on the private market. Over time, removing
the most costly-to-maintain, obsolete public
housing developments is expected to reduce
the need for capital spending.
The budget terminates the Public Housing
Drug Elimination program for the following
reasons: the same types of activities (e.g.,
security patrols and better lighting) are eligible under the Public Housing Operating and
Capital programs; the program was found
to have limited impact; current regulatory
tools, such as eviction, are effective in reducing
drug-related crime in public housing; and
fighting crime and drugs is not directly
related to HUD’s core mission—it is the
mission of Federal law enforcement and other
agencies whose programs help combat illegal
drugs and crime in public housing communities.
HUD’s Supportive Housing for the Elderly
program works with non-profits to create
housing and supportive services tailored to
the needs of the very low-income elderly.
The Supportive Housing for the Disabled
program provides housing and supportive services necessary to promote stability and selfsufficiency of very low-income disabled households. The budget provides for the construction
of approximately 7,500 units for the elderly
and over 1,500 units for the disabled.

THE BUDGET FOR FISCAL YEAR 2002

USDA’s RHS rental assistance grants to
low-income rural households provided $640
million to support 42,000 new and existing
rental units in 2000. RHS’s multifamily housing programs, which generally lend to private
developers, finances both the construction
and rehabilitation of rural rental housing
for low- to moderate-income, elderly, and
handicapped rural residents, as well as farm
laborers. The budget provides $257 million
in direct and guaranteed loans, providing
over 5,200 new units for very low-income
tenants in rural America.
HUD and USDA intend
following performance goals:

meet

the

• For the period 2001–2002, reduce the
number of households with severe housing
needs by four percent among families with
children, and elderly and disabled households.
• In 2002, demolish 13,000 more obsolete,
deteriorated public housing units.
• In 2002, decrease the number of public
housing units managed by troubled housing authorities by 15 percent.
• For 2002, increase the share of welfare
families that move from welfare to work
while assisted by tenant-based Section 8
by two percentage points over 2001.
• For 2002, make new and continued rental
assistance commitments to fund 43,000
rural rental assistance units (a one-percent decrease from 2001).
Housing Tax Expenditures
The Government provides significant support for housing through tax preferences.
The two largest tax benefits are the mortgage
interest deduction for owner-occupied homes
(which is estimated to cost the Government
$66 billion in 2002 and $353 billion over
five years) and the deductibility of State
and local property tax on owner-occupied
homes (costing $26 billion in 2002 and $146
billion over five years).
The Administration will propose an investorbased tax credit, designed to encourage investors to redevelop single-family housing or
construct new single-family housing for lowincome home buyers. The credit for investors

COMMERCE AND HOUSING CREDIT

will amount to as much as 50 percent
of project costs for eligible home rehabilitation
or construction. The tax credit will increase
by 100,000 the number of homes available
to low-income families and those living in
low-income areas. Credits will be distributed
by State agencies that will have the flexibility
to tailor the program to local needs. In
addition, the Administration proposes to create
one million new Individual Development Accounts (IDAs) through a tax incentive. Financial institutions will receive a federal tax
credit for matching the contributions made
to IDAs by low- to moderate-income individuals saving to buy a first home, start a
business, or pay for education.
Other tax provisions also encourage investment in housing: (1) taxpayers can deduct
capital gains of up to $500,000 on home
sales (costing $104 billion from 2002 to
2006); (2) States and localities can issue
tax-exempt mortgage revenue bonds, whose
proceeds subsidize purchases by first-time,
low- and moderate-income home buyers; and
(3) installment sales provisions let some real
estate sellers defer taxes. In addition, the
low-income housing tax credit (LIHTC) provides incentives for constructing or renovating
rental housing that help low-income tenants
(costing approximately $3.5 billion in 2002).
The Community Renewal Act of 2000 expanded the LIHTC by increasing the per
capita allocation to States from $1.25 to
$1.50 in 2002, $1.75 in 2003, and indexing
the allocation to inflation thereafter. The
LIHTC will support construction or rehabilitation of nearly 100,000 rental units annually.
Commerce, Technology, and International
Trade
Technology and Intellectual Property
Rights: The Department of Commerce undertakes a range of activities to promote technological innovation. In 1999, the Nation’s intellectual property rights system was strengthened with the passage of the landmark American Inventors Protection Act, which reformed
patent law and converted Commerce’s Patent
and Trademark Office (PTO) into a performance-based organization to better serve America’s entrepreneurs and innovators. PTO also
protects U.S. intellectual property rights
around the world through international trea-

65
ties. The budget includes a 10-percent increase
in PTO’s budget so that it can continue to
meet these crucial responsibilities. In 2002:
• PTO expects to issue approximately
167,000 patents with an average processing time for inventions of 26.7 months,
despite a 12-percent increase in patent
applications over the 2001 level.
• PTO expects to register approximately
127,000 trademarks and maintain an average processing time for trademarks of 20
months despite a 20.2-percent increase in
trademark applications over the 2001
level.
Commerce’s National Institute of Standards and Technology (NIST): NIST works
with industry to develop and apply technology,
measurements, and standards to promote
American competitiveness. NIST also assists
industry through the Manufacturing Extension
Partnership (MEP), which makes technological
information and expertise available to smaller
manufacturers, and the Advanced Technology
Program (ATP) which supports businesses’
development of pre-competitive technologies.
In 2002:
• NIST laboratories will offer 1,350 standard reference materials and 68 standard
reference data titles, a 2.7 percent and
three percent increase, respectively, over
the 2001 level.
• MEP will serve more than 37,000 clients,
increase their sales by $24 million, and
generate $134 million in additional capital
investments.
• New ATP awards will be suspended. The
program will be reevaluated to determine
whether it is still warranted.
Commerce’s International Trade Administration (ITA): ITA strives to promote an
improved trade posture for U.S. industry and
develop the export potential of U.S. firms in
a manner consistent with U.S. foreign and economic policy.
• In 2002, ITA will assist approximately
54,000 small to medium sized businesses
in exporting to new markets, the same
level as in 2001.

66
Commerce’s Bureau of Export Administration (BXA): The BXA is a regulatory agency that enforces U.S. export controls and protects the proprietary commercial information
of industry. The budget includes a six-percent
increase in BXA’s overall budget.
• In 2002, BXA will issue at least 12,000
licenses for dual use commodities (military
or civilian use) and increase the number
of investigations of export control violations by seven percent over the 2001 level.
Commerce’s Census Bureau and Bureau
of Economic Analysis (BEA): The Census
Bureau collects, tabulates, and distributes a
wide variety of statistical information about
Americans and the economy, including the constitutionally-mandated decennial census. BEA
prepares and interprets U.S. economic accounts, including the Gross Domestic Product
(GDP).
• In 2002, the Census Bureau will deliver
on time 100 percent of their scheduled releases, including over 12 major detailed
demographic products from the decennial
census. These products, which include
socio-economic data such as income, occupation, education, disability, and ancestry,
are necessary for the distribution of nearly
$200 billion in Federal funds annually to
States, counties, and over 39,000 towns,
cities, and other Governmental entities.

THE BUDGET FOR FISCAL YEAR 2002

Small Business Administration (SBA):
SBA supports small businesses through Federal guarantees, which increase the availability of capital and credit, by promoting Federal procurement opportunities, and by providing management and other business training. SBA’s largest business credit programs
are: the general business loan guarantee (7(a))
program; the certified development company
program; and the small business investment
company equity capital program. The budget
anticipates that SBA will guarantee more than
$17.5 billion in small business loans and equity investments in 2002.
The budget includes $5 million and proposes
$25 million over the next five years for
the Paul D. Coverdell Drug Free Workplace
Program, which gives grants to organizations
that help small businesses develop employee
education programs and company drug policies. The New Freedom Initiative includes
$5 million in technical assistance to help
small businesses comply with the Americans
with Disabilities Act and hire more people
with disabilities.
The objective of SBA’s loan guarantee programs is to correct market imperfections.
The 2002 Budget recognizes that some small
businesses may have trouble accessing capital
but by increasing fees, the budget does not
require the Government to subsidize their
cost of borrowing.

• In 2002, BEA will strive to maintain its
number one international ranking in GDP
timeliness, its high customer satisfaction
rating of 4.3 (on a five-point scale), and
accuracy and reliability of the GDP by incorporating data on new and rapidly growing economic activities, such as e-business.

The budget supports $20.5 million in loans
($35,000 and under) targeted to entrepreneurs
traditionally considered ‘‘unbankable,’’ largely
due to inexperience with credit, lack of assets,
or the need for ongoing technical assistance.
To also increase the borrower’s probability
of success, the loans are complimented with
$20 million in associated technical assistance.

Commerce’s Emergency Steel and Oil
and Gas Loan Guarantee Programs: The
budget proposes to rescind $125 million of unobligated balances from these two loan guarantee programs ($10 million from the steel
program and $115 million from the oil and
gas program). Sufficient funds remain to address pending 2001 applicants for both programs. The oil and gas program was created
in 1999 when oil and gas prices were far below
current levels, and applications for the program have been particularly limited.

• To further help people whose business
needs for small loans (under $150,000) are
not met by traditional lenders, SBA will
implement changes enacted in 2001 to increase the percentage of 7(a) loan volume
made to small borrowers from less than
10 percent to 20 percent.
• In 1999, SBA initiated an ongoing $10 billion loan asset sale program reflecting a
recognition that the private sector can
service these loans more effectively and

COMMERCE AND HOUSING CREDIT

efficiently than the Government. SBA
plans to conduct two asset sales during
2002. In addition, SBA will explore the
feasibility of contracting out all loan
servicing functions and closing unneeded
loan servicing centers.
• In 2002, SBA will work with Federal agencies to achieve the Government-wide small
business procurement goal of 23 percent
of total Federal contracting dollars. Of the
projected $180 to 200 billion in total Federal procurement in 2002, the Government
expects to award $42 to 46 billion to small
businesses.
Federal Trade Commission (FTC): FTC
enforces various consumer protection and
antitrust laws that prohibit fraud, deception,
anti-competitive mergers, and other unfair and
anti-competitive business practices in the
marketplace.
• In 2002, FTC reports that it will protect
consumers by stopping the sales of $400
million worth of fraudulent products, and
save the public an estimated $1 billion by
stopping anti-competitive business practices that lead to price increases, which
are then passed on to consumers.
Federal Communications Commission
(FCC): FCC works to encourage a fully competitive market place in communications and
to promote affordable communications services
for all Americans. Through introduction of
more efficient licensing, FCC will ensure a
more rapid introduction of new services and
technologies. Through policy rulemakings and
enforcement actions, FCC promotes competition in the public interest. FCC ensures efficient spectrum management; enforces commission rules, regulations and authorities; and
promotes consumer information and awareness
of communications options and providers
through the dissemination of Commission decisions and actions. In 2002:
• FCC will achieve 90 percent of licensing
activities within established timeframes;
and
• eighty percent of all FCC applications will
be filed electronically.

Financial Regulation
Federal Deposit Insurance: Federal deposit insurance protects depositors against
losses when insured commercial banks, thrifts
(savings institutions), and credit unions fail.
Currently, the Federal Deposit Insurance Corporation (FDIC), and the National Credit
Union Administration’s (NCUA’s) funds insure
more than $3 trillion in deposits at more than
20,000 institutions. Five agencies regulate federally-insured depository institutions to ensure
their safety and soundness: the Office of the
Comptroller of the Currency regulates national
banks; the Office of Thrift Supervision regulates thrifts; the Federal Reserve regulates
State-chartered banks that are Federal
Reserve members; FDIC regulates other Statechartered banks; and, NCUA regulates credit
unions.
• In calendar year 2001, FDIC will perform
more than 2,600 safety and soundness examinations.
• In 2002, NCUA will reduce the percentage
of federally-insured credit unions that are
undercapitalized to two percent of operating credit unions.
Securities and Exchange Commission
(SEC) and Commodity Futures Trading
Commission (CFTC): SEC regulates U.S.
capital markets and the securities industry
and facilitates capital formation. The CFTC
regulates U.S. futures and options markets.
Both regulators protect investors by preventing fraud and abuse in U.S. capital markets and ensuring adequate disclosure of information. In 2002:
• SEC will examine every investment company complex and every investment advisor at least once during each five-year and
5.7-year examination cycle, respectively.
• CFTC will review every contract market
designation application and derivatives
transaction execution facility registration
application within 30 to 60 days and respond to applicant exchanges with a notification letter. CFTC will also review requests for approval of products and rule
changes within 90 days and respond to

THE BUDGET FOR FISCAL YEAR 2002

trading exchanges (e.g., Chicago Board of
Trade).
Commerce Tax Expenditures
The tax law provides expenditures to encourage business investment. The Government
taxes capital gains at a lower rate than
other income. The tax law provides more
generous depreciation allowances for machinery, equipment, and buildings. This business
expenditure is estimated to cost the Government $35 billion in 2002. Other tax provisions
benefit small firms generally, including the
graduated corporate income tax rates, preferential capital gains tax treatment for small
corporation stock, and write-offs of certain
investments. Credit unions, small insurance

companies, and insurance companies owned
by certain tax-exempt organizations also enjoy
tax preferences.
The Taxpayer Relief Act of 1997 significantly
changed the tax treatment and lowered tax
rates for long-term capital gains. Also, during
the last few years, several capital gains
provisions were enacted to limit certain perceived abuses related to capital gains taxes.
The capital gains tax expenditure will cost
the Government almost $43 billion in 2002.
In addition, the law does not tax gains
on inherited capital assets that accrue during
the lifetime of the original owner. Recent
tax law changes also provided an increase
in expensing for small businesses, and an
increase in the top corporate tax rate.

9.
Table 9–1.

TRANSPORTATION

Federal Resources in Support of Transportation
(In millions of dollars)

Function 400

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

15,172

18,912

16,836

17,790

18,190

18,558

18,970

2,107

2,219

1,796

2,046

1,982

1,913

1,890

323
886

403
634

709
418

1,109
218

1,542
218

1,993
218

2,221
218

2,090

2,220

2,370

2,520

2,670

2,840

3,010

49,668

57,261

57,736

60,099

61,449

62,790

64,195

The security, economic prosperity, and social
well being of the Nation are dependent
on the efficient movement of people and
commerce. America’s transportation system
is an indispensable component in moving
people and goods. Our transportation system
must enable the Nation to sustain its economic
growth and enhance the quality of life for
all Americans. In 2002, the Federal Government will invest over $57 billion on transportation to continue to improve the Nation’s
transportation system, build and maintain
the transportation infrastructure, and ensure
safety for the traveling public.
Significant investments have been made
in Federal transportation infrastructure in
recent years. The challenge the Administration
and the Department of Transportation (DOT)
now face is how to maximize the effectiveness
of new investments and ensure vigilant management and oversight of taxpayer resources.
DOT plans to target its efforts on a number
of unresolved critical transportation problems
over the next year in the areas of tire
and truck safety, aviation system modernization, Coast Guard fleet replacement, and
highway grant oversight and accountability.
(See Chart 9–1.)

Transportation Safety
Ensuring transportation safety is one of
the highest priorities of the Federal Government. This budget continues Federal efforts
to work with State and local governments
and private groups to minimize the safety
risks inherent in transportation. DOT leads
efforts to regulate motor vehicle design and
operation; inspect commercial vehicles; design,
build, and operate safer roadways; educate
the public regarding safety; direct air and
waterway traffic; rescue mariners in danger;
monitor railroad safety; and conduct safety
research. The budget recommends $7.3 billion
for safety programs to meet this challenge.
A range of Federal programs and activities
has helped to reduce the number of deaths
and injuries from highway crashes. Federal
programs reach out to State and local partners, industry, and health care professionals
to identify the causes of crashes and develop
new strategies to reduce deaths, injuries,
and the resulting medical costs. These partnerships yield results. For example, the partnership against drunk driving helped the Nation
hold alcohol related highway fatalities to
an estimated 38 percent of all highway
deaths in 2000. And, efforts continue to
69

THE BUDGET FOR FISCAL YEAR 2002

Chart 9-1. Department of Transportation Budgetary Resources
Dollars in billions

40
Highway

30
Other

20
Aviation

10
Water

0
1993

Transit

1994

1995

1996

1997

1998

1999

2000

2001

2002

Note: Data includes only discretionary budgetary resources.

reduce the roughly 41,000 deaths and three
million injuries that occur each year on
the Nation’s roadways.
Highway and Truck Safety: The budget
includes $196 million for the National Highway Traffic Safety Administration (NHTSA)
Operations and Research program. Along with
coordinating national traffic safety efforts such
as increasing seat belt use, NHTSA regulates
the design of motor vehicles, researches design
improvements for crash worthiness, and investigates reported safety defects. In 2002, safety
defect investigations will continue to focus on
improved defect testing, database modernization, and enhanced consumer complaint processing. NHTSA will also concentrate its efforts
on updating the tire safety standard and increasing crash data collection to capture information regarding tire failure. In 2002, NHTSA
will distribute $223 million in highway traffic
safety grants that target increased seat belt
use, decreased alcohol-related fatalities, and
efforts to improve State safety data. Additional

programs are designed to reduce drunk and
drugged driving, and focus on reducing injuries
and fatalities among minorities and youth, and
in rural communities.
In partnership with the highway community
and NHTSA, the Federal Highway Administration (FHWA) works to identify top roadway
and vehicle safety issues and countermeasures.
In 2002, safety construction programs will
contribute an estimated $765 million to correct
unsafe roadway design, remove roadway hazards, and fund other safety construction programs.
Highway safety programs are targeted to
reduce the rate of highway-related fatalities
and injuries per 100 million vehicle miles
traveled (VMT). In 2000, NHTSA estimated
that there were 1.6 fatalities per 100 million
VMT, and 119 highway-related injuries per
100 million VMT. The Department’s 2002
goal is to:

TRANSPORTATION

• Reduce the rate to 1.4 highway-related fatalities per 100 million VMT and 111 highway-related injuries per 100 million VMT.
The Federal Motor Carrier Safety Administration (FMCSA) prescribes motor carrier safety regulations and conducts interstate enforcement efforts to enhance motor carrier safety.
FMCSA also collects motor carrier safety
data and reviews safety operations. States
will continue to receive dedicated funding
to heighten oversight of commercial (e.g.,
large truck and bus) license, vehicle, and
driver inspection at roadside locations in
an effort to keep unsafe vehicles and drivers
off our Nation’s highways. The budget includes
$183 million for grants to States to enforce
Federal and State standards for commercial
motor vehicle safety inspections, traffic
enforcement, and compliance reviews.
To ensure that trade between the United
States and Mexico, under the North American
Free Trade Agreement, is accomplished safely,
the budget includes $88 million for additional
inspectors and $56 million for State funding
for construction and operation of border safety
inspection facilities. An additional $17 million
is included for information systems and strategic initiatives aimed at improving motor
carrier safety and $5 million is provided
to continue a comprehensive study on commercial motor vehicle crash causation initiated
in 2001. One of the prime highway safety
goals of FMCSA is to:
• Reduce the number of motor carrier fatalities to no more than 4,710 in 2002.
Aviation Safety: Perhaps the Federal Government’s most visible transportation safety
function involves air traffic control and air
navigational systems. The Federal Aviation
Administration (FAA) provides air traffic service to over two flights per second, moving 1.8
million passengers safely each day. In 2002,
the FAA will perform nearly 325,000 safetyrelated inspections. The budget includes $6.9
billion for FAA operations and $2.9 billion for
capital modernization. In total, a 6.7-percent
increase over 2001. FAA seeks to:
• Achieve an 80-percent reduction in the
fatal accident rate for U.S. commercial air
carriers by 2007. The 2002 target is .038
accidents per 100,000 departures. While

71
FAA’s annual targets may fluctuate due
to the limited number of accidents, they
generally follow a downward slope to the
2007 80-percent reduction goal.
• Reduce the number of runway incursions
with a target for 2002 of 236 incursions.
In 2000, there were 403 incursions, up
from 330 in 1999. To counter the increase
in runway incursions, the FAA has identified and established strategies under its
Runway Incursion Program 2000 Blueprint.
Coastal Waterway Safety: The Federal
Government plays a key safety role on our
waterways. On average, Coast Guard efforts
result in the rescue of one life every two hours.
The Coast Guard works to improve maritime
safety by preventing incidents and mitigating
the effect of accidents. In 2000, the Coast
Guard saved 93 percent of all mariners reported in imminent danger. To accomplish
this, the Coast Guard operates radio distress
systems, guides vessels through busy ports,
and operates reliable and safe navigation systems. It also regulates vessel design and operation, enforces United States and international
safety standards, provides boating safety
grants to States, and supports a 35,000-member voluntary auxiliary that provides safety
education and assistance to regular Coast
Guard units. The budget includes more than
$4 billion for Coast Guard operations and capital, a 12-percent increase compared with 2001.
With this funding, the Coast Guard seeks to:
• Limit the number of recreational boating
fatalities to less than 742 in 2002. In 2000
there were 742 recreational boating fatalities in our coastal regions and inland
waterways.
Rail Safety: The budget includes $154 million in 2002 for Federal railroad safety programs that work in partnership with the rail
industry. The Safety Assurance and Compliance program brings together rail labor, management, and the Federal Government to determine causes of safety problems. This partnership has produced results: record low levels
in the number and rate of overall rail-related
fatalities and injuries. In 2000, the fatality
level was the lowest level since 1981. The
Federal Railroad Administration seeks to:

THE BUDGET FOR FISCAL YEAR 2002

• Reduce the rate of rail-related fatalities
to 1.20 fatalities per million train miles
or less in 2002. In 2000, the rate was estimated to be 1.29 fatalities per million
train miles.
• Reduce the grade crossing accident rate
in 2002 by 0.35 percent compared with
2000.
Pipeline and Hazardous Material Safety: Similarly, the Federal Government has implemented several important initiatives in its
pipeline safety program to reduce the risk of
pipeline failures. These include oversight and
enforcement of recently strengthened Federal
pipeline safety standards, assistance to communities in protecting their citizens from pipeline failures, expanded partnership with
States, and research and development efforts.
The budget includes $54 million for pipeline
safety programs, a 15-percent increase above
2001. The Research and Special Programs Administration, through its Office of Pipeline
Safety, seeks to:
• Reduce
mission
percent
failures

the number of natural gas transpipeline failures by almost four
since 1999 to no more than 4,301
in 2002.

• Reduce the spillage rate of hazardous liquid materials shipped by pipelines (in
tons) per million ton-miles to 0.0142 in
2002. In 2000, the spillage rate was
0.0131.
The Federal Government also develops regulations and standards to ensure the safe
transportation of hazardous materials, and
enforces those standards for every mode of
transportation. The budget includes $113 million for hazardous materials safety programs,
an eight-percent increase over 2001. The
Federal Government seeks to:
• Reduce the number of serious hazardous
materials incidents in transportation to
391 or fewer in 2002. In 2000, there were
an estimated 396 serious hazardous material incidents.
Infrastructure and Efficiency Investment
Mobility as much as any other factor
defines us as a Nation. It connects people
with work, school, community services, health

care, markets, religious facilities, and other
people. The U.S. transportation system carries
over 4.6 trillion passenger miles of travel
and 3.9 trillion ton miles of freight every
year—generated by more than 276 million
travelers and six million businesses. The
Federal Government helped develop large
parts of the system, with funding supported
by user fees and transportation taxes. Investment is targeted to maintaining and improving
the existing system while at the same time
advancing safety, quality, efficiency, accessibility, and the intermodal character of transportation infrastructure. This investment ensures the Nation will meet commerce needs
and enhance its efficiency. The budget includes
$42.3 billion in mobility funding to meet
this challenge.
Highways and Bridges: More than 958,000
miles of roads and bridges are eligible for Federal support, including the National Highway
System (NHS) and Federal lands roads. For
2002, the Transportation Equity Act for the
21st Century (TEA-21) provides $31.6 billion
for the Federal-aid highway program. About
90 percent of these funds are distributed to
the States by formula, primarily for highwayrelated projects, including the preservation
and expansion of eligible roads and bridges.
This funding comes from Federal motor fuel
and truck taxes, mainly the gasoline tax,
which is currently 18.4 cents per gallon, of
which 15.44 cents goes into the Highway Trust
Fund’s Highway account to finance grants to
States and local governments for highway
related repair and improvement.
In aggregate, State and local governments
provide 63 percent of highway and bridge
infrastructure spending, most of which they
generate through their own fuel and vehicle
taxes. The average State gasoline tax was
approximately 20 cents per gallon in 2000.
State and local governments accelerate their
infrastructure projects through debt financing,
such as bonds and revolving loan funds.
FHWA will work with State and local governments in 2002 to:
• Maintain 95 percent or more of NHS miles
in a condition that meets pavement performance standards for acceptable ride
quality. The NHS carries one trillion, or
43 percent, of all vehicle miles traveled.

TRANSPORTATION

The condition of the system affects public
safety, wear-and-tear on vehicles, fuel consumption, travel time, congestion, and
comfort. In 2000, the estimated percentage
was 94 percent.
• Hold the growth in average annual hours
of extra travel time due to delays over
30 minutes to a total of 34 hours in 2002.
In 1999, the individual urban traveler experienced an average 32 hours of extra
travel time due to delays. Without projects
that improve traffic flow, this would grow
to 35 hours of extra travel time. Clearly,
traffic congestion is a problem which DOT
will need to devote increasing attention.
• Reduce the percentage of bridges on the
NHS that are deficient—from 21.5 percent
in 2000 to 21 percent in 2002.
Transit: As with highways, the Federal
Government assists State and local governments to improve mass transit. Of the Federal
motor fuels tax, 2.86 cents per gallon goes to
fund mass transit improvements. Federal capital grants comprise about half of the total
spent each year to maintain and expand the
Nation’s 6,000 bus, rail, trolley, van, and ferry
systems. Together, States and localities invest
over $3.5 billion a year on transit infrastructure and equipment.
Federal funding growth has been substantial. In 2002, TEA-21 provides $6.6 billion
for transit infrastructure. The Federal role
is especially important in financing new urban
bus and rail transit systems, as well as
rural bus and van networks. Millions of
Americans use transit for their daily commute,
easing roadway congestion and reducing air
pollution. Many riders depend on public transportation to access employment, schools,
healthcare, and social services. Transit can
also provide economic opportunity. For example, the Job Access and Reverse Commute
program helps provide transportation services
in urban, suburban, and rural areas to assist
welfare recipients and low-income individuals
reach employment opportunities. The Administration proposes to target transit funding
to communities with the greatest need. To
ensure that local governments play a major
role in funding transit ‘‘New Starts,’’ the
budget recommends a cap on Federal partici-

73
pation at 50 percent starting in 2004. The
Federal Transit Administration seeks to:
• Increase transit ridership to 47.5 billion
passenger-miles traveled in 2002. In 2000,
transit rider ship was 45.3 billion passenger-miles traveled.
Innovative Financing: There are a number
of financing innovations designed to streamline
procedures, improve existing programs, and
implement new ideas for improving the Nation’s transportation infrastructure. In total,
these initiatives are helping advance over 200
projects, representing a total capital investment of more than $20 billion. For example,
there is the Transportation Infrastructure Finance and Innovation Act (TIFIA) program,
authorized by TEA–21. TIFIA provides Federal
credit assistance to major transportation investments of critical national importance, such
as: intermodal facilities, border crossing infrastructure, highway trade corridors, and transit
and passenger rail facilities with regional and
national benefits. In 2000, $37 million of
TIFIA budget authority supported $637 million
in credit assistance. In 2002, an estimated
funding level of $108 million should provide
for as much as $2.4 billion in credit assistance.
Passenger Rail: The budget includes $521
million in 2002 to support Amtrak capital improvements and equipment maintenance. The
Federal Railroad Administration seeks to:
• Increase Amtrak’s intercity ridership to
26.7 million passengers in 2002. In 2000,
22.5 million passengers rode Amtrak.
Amtrak ridership in 2000 was an all-time
annual record, reflecting a 4.7-percent
increase over 1999.
Amtrak’s financial condition will demand
continued oversight by DOT.
Aviation and Airports: The Federal Government seeks to ensure that the aviation
system is safe, reliable, accessible, well
integrated, and flexible. In 2002, the Administration will continue aggressive modernization
of FAA air traffic control equipment, including
the development of new technologies and instituting improvements to existing systems to
decrease air traffic delays. The Free Flight
Phase I program is implementing air traffic
automation aids that allow controllers to use
airspace and runway capacity more efficiently.

74
In addition, FAA is developing controller pilot
data link and Global Positioning System
technologies to improve efficiency in handling
aircraft. Ongoing replacement of airport
surveillance and beacon radar systems will improve the reliability of equipment used for air
traffic control.
About 3,300 airports throughout the country
are eligible recipients of Airport Improvement
Program (AIP) funding provided in the Aviation Investment and Reform Act for the
21st Century, which reauthorized this program. AIP helps enhance airport capacity,
safety, security, and noise mitigation. These
funds augment other airport funding sources,
such as bond proceeds, State and local grants,
and passenger facility charges that airports
are permitted to establish. With 98 percent
of the population living within 20 miles
of a public airport, most people have excellent
access to air transportation. The budget includes $6.9 billion for FAA operations and
$2.9 billion for modernizing air traffic control
capital assets—in total $619 million, or seven
percent, more than 2001. To ensure the
most ‘‘bang-for-the-buck,’’ the Administration
is proposing to modify the Essential Air
Service (EAS) program. EAS, which provides
subsidies to air carriers serving small airports,
would be targeted only to communities with
limited transportation alternatives and which
face great distances to air carriers. The
Federal Government seeks to:
• Reduce the rate of air travel delays to 171
delays per 100,000 activities in 2002. In
2000, the rate of air delays was 250 delays
per 100,000 activities.
While the FAA is funded at historically
high levels, the Administration recognizes
that substantial reform is necessary to make
the aviation system more efficient. Current
levels of aviation delay are unacceptable.
The Administration supports efforts to institute improved business practices, organizational changes, and market-oriented techniques to strengthen FAA’s operations and
reduce system delays, recognizing the role
of airlines and airports. As part of this
effort, over the next year the Administration
will work with the aviation community and
Congress to develop a plan of action for
improving the Nation’s aviation record. In

THE BUDGET FOR FISCAL YEAR 2002

particular, the Administration will examine
the success that various nations, including
Canada, have experienced with individual
air traffic control systems owned and operated
by private companies.
Marine Transportation and Law Enforcement: For our Nation’s commercial shipping infrastructure, the Coast Guard establishes and operates electronic and visual aidsto-navigation infrastructure that enables the
safe movement of shipping. This includes ensuring that winter shipments such as fuel oil
arrive without delay. The Maritime Administration and the Coast Guard are co-leading a
joint cooperative effort with other Federal,
State, and local government agencies and the
private sector to review the Nation’s Marine
Transportation System (MTS). The MTS is
faced with growing levels of demand, shifting
and competing user requirements, and safety
and information system improvements. The
Federal Government seeks to:
• Limit the number of days that critical waterways are closed due to ice to no more
than two days in an average winter. In
2000, there were no waterway closures
due to ice conditions.
As a military service with civil law enforcement missions, the Coast Guard plays an
important role in maritime security, through
enforcement of a wide range of Federal
laws on the Nation’s waters. The budget
provides new funding for the Coast Guard
to continue implementation of the Western
Hemisphere Drug Elimination Act and to
recapitalize its fleet of aircraft and ships
under an initiative entitled Deepwater. The
Coast Guard’s deepwater acquisition plan will
be an Administration management and procurement initiative over the coming year.
This procurement will be monitored carefully
to ensure that Federal funds are efficiently
and productively spent. These efforts will
enhance drug interdiction efforts and improve
the Coast Guard’s capability to:
• Reduce the rate at which illegal drugs successfully enter the United States from the
transit and arrival zones by 10 percent
as compared to the 1996 base year.

TRANSPORTATION

• Hold the flow of undocumented illegal migrants entering the United States via
maritime routes to no more than 13 percent of estimated entry attempts.
Research and Development
The Federal Government has a role in
developing transportation technology. Federal
research helps build stronger roads and
bridges, design safer cars, reduce human
error in operations, lower barriers to people
with disabilities, and improve the efficiency
of existing infrastructure.
Smart Roads: The Department’s Intelligent
Transportation Systems (ITS) program is developing and deploying technologies to help
States and localities improve traffic flow and
safety on streets and highways. ITS provides
cost-effective ways to improve the management
of our infrastructure, boosting efficiency and
capacity. The Federal Government seeks to:
• Increase the number of metropolitan areas
with integrated ITS infrastructure from 52
in 2000 to 61 in 2002.
Aviation Research: The FAA’s research,
engineering, and development programs help
improve safety, security, capacity, and efficiency in the National Airspace System. For
example, the development of improved weather
forecasting and modeling tools will help reduce
delays and prevent accidents and injuries
caused by aircraft icing and turbulence. In
2002, the budget includes work on the impact
of fatigue on performance and determining the
causes of human error that lead to accidents.
Work will continue on aircraft safety and fire
protection methods that explore new ways to
reduce the risk of aircraft fires and new inspection techniques to detect flaws in aging
aircraft. Security and explosive detection systems research will develop machines that process baggage more rapidly and provide new
technology for passenger and cargo screening.
Research will continue on reducing aircraft
noise and emissions.
The National Aeronautics and Space Administration (NASA) coordinates closely with FAA
to develop new technologies that address
challenges to growth in the Nation’s air-

aviation system in the areas such as air
system safety, aircraft noise and emissions,
and airport system congestion. For example,
NASA will be undertaking a Virtual Airspace
Modeling project to produce an advanced
computer-model of the Nation’s air traffic
aviation system. This model will help the
FAA and NASA develop new operational
concepts and better understand where the
benefits of new technologies will have the
greatest leverage in reducing airport crowding
and delays, while improving aviation safety.
• DOT, NASA, the Department of Defense,
and private industry will work together
on research to achieve an 80-percent reduction in the fatal aviation accident rate
for commercial air carriers by 2007 (from
a 1994–1996 baseline of 0.051 accidents
per 100,000 departures). Research will
focus on preventing equipment malfunctions, reducing human error, and ensuring
the separation between aircraft and potential hazards.
Regulation of Transportation
Federal rules greatly influence transportation and constitute one of the key ways
the Federal Government achieves desired
transportation safety, mobility, accessibility,
equity, and efficiency outcomes. In the past
two decades, economic deregulation of the
railroad, airline, and interstate and intrastate
trucking industries has reduced costs for
consumers and shippers, while improving service.
The Federal Government also issues regulations that promote safer, cleaner transportation. The regulations—of cars, trucks, ships,
trains, and airplanes—have substantially cut
the number of transportation-related deaths
and injuries, improved the safe handling
of hazardous materials shipments, and helped
reduce the number of oil spills.
Where regulations are used to meet our
transportation safety, security, equity, and
environmental goals, the Government aims
for rulemakings that are timely, cost-effective,
and make common sense.

10.

Table 10–1.

COMMUNITY AND REGIONAL
DEVELOPMENT
Federal Resources in Support of Community and Regional
Development
(In millions of dollars)

Function 450

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

12,210

10,965

10,350

10,693

10,864

11,095

11,332

–796
..............

–647
..............

–278
–12

–662
–61

–719
–123

–833
–232

–865
–377

1,891
1,418

2,180
2,798

1,918
2,450

1,798
2,020

2,012
1,760

2,011
1,829

2,011
1,860

1,180

1,400

1,890

2,450

2,420

2,600

3,090

Federal support of community and regional
development helps build the Nation’s economy
and helps economically distressed urban and
rural communities secure a larger share of
America’s prosperity. The Federal Government
spends nearly $12 billion a year, and offers
about $1.4 billion in tax incentives to help
States and localities create jobs and economic
opportunity, and build infrastructure to support commercial and industrial development.
Federal programs have helped to stabilize
and revitalize many of these communities,
allowing them to expand their economic base
and support their citizens, particularly those
in need.
Housing and Community Development
The Department of Housing and Urban
Development (HUD) provides communities
with funds to promote commercial and industrial development, enhance infrastructure, and
develop strategies to provide affordable housing close to jobs. HUD also provides grants
and sponsors research to reduce the hazards
created by lead-based paint in housing.

Community Development Block Grants
(CDBG) provide funds for various community
development activities directed primarily at
low-and moderate-income persons. CDBG
funds help to improve housing, public works
and services, promote economic development,
and acquire or clear land. Seventy percent
of CDBG funds are given to more than
1,000 central cities and urban counties, and
the remaining 30 percent go to States to
award to smaller localities. There are also
several smaller programs funded within the
CDBG program. The University Partnerships
Program provides grants to academic institutions, including Historically Black Colleges
and Universities, Hispanic Serving Institutions, and Tribal Colleges. The Indian CDBG,
a set-aside within the larger CDBG program,
focuses mainly on public infrastructure, community facilities, and economic development
on reservations.
In 2002, CDBG will support $4.4 billion
in formula grants to States and entitlement
communities. CDBG will also include two
new initiatives. The first will provide $80
million in competitive grants to create or
expand community technology centers in high
77

78
poverty areas and provide technical assistance
to those centers. The second will be a competitive grant program to provide funds to ADAexempt civic, community, and religiously affiliated organizations to make their facilities
accessible to the disabled.
The 2002 Budget provides $1.8 billion for
HUD’s HOME Investment Partnerships Program to expand the supply of affordable
rental and homeownership housing for low
and moderate-income families through acquisition, new construction and rehabilitation. In
addition, new homebuyers can receive help
in rehabilitating their homes and renters
can receive help through direct tenant-based
rental assistance programs. HOME funds are
provided to every State and over 550 local
governments who design the affordable housing programs that best address their needs.
HOME also supports homeownership assistance counseling programs, and in 2002 a
new down payment assistance initiative will
be included.
Performance goals for the CDBG and HOME
programs in 2002 include:
• producing approximately 161,000 units of
rehabilitated and newly constructed housing for ownership and rental through the
CDBG program;
• creating more than 114,000 jobs through
CDBG;
• producing over 71,000 units of affordable
housing and providing direct rental assistance to nearly 10,000 tenants through the
HOME program; and
• providing down payment assistance to
130,000 new homebuyers through the new
down payment assistance initiative to
first-time homeowners program.
Empowerment Zones and Economic
Development Tax Incentives
The Community Renewal and Tax Relief
Act of 2000 provided for the designation
of nine new Empowerment Zones (EZs), seven
in urban areas and two in rural areas,
bringing the total number of EZs to 40.
EZs provide tax incentives and grants to

THE BUDGET FOR FISCAL YEAR 2002

carry out 10-year, community-wide strategic
plans to revitalize designated areas.
The Act also created a new program under
which 40 Renewal Communities will be competitively designated by HUD and an Advisory
Council by December 31, 2001. Renewal Communities will be areas of pervasive poverty,
unemployment and general distress, will receive tax incentives and wage credits.
In 2002, the Administration will work with
communities to improve utilization of tax
incentives available to EZ/ECs that currently
are underutilized.
Community Capacity Building
The Department of Commerce’s Economic
Development Administration (EDA) provides
assistance to communities to help build capacity and address long-term economic challenges
through its nationwide program delivery network. EDA’s public works grants help build
or expand public facilities to stimulate industrial and commercial growth, such as industrial parks, business incubators, access roads,
water and sewer lines, and port and terminal
developments. EDA also assists communities
in addressing sudden and severe economic
downturns and in adjusting to downsizing
and closure of defense facilities. The 2002
Budget requests funding for EDA programs
of $335 million, the level authorized for
2002.
EDA’s performance targets for 2002 include:
• Creating or retaining nearly 58,000 jobs
and generating $1.94 billion in privatesector leveraged investment by 2011 with
infrastructure development investments
made in 2002. Interim performance measures in achieving long-term performance
targets include nearly 5,800 jobs created
or retained and $190 million in private
sector investment by 2005.
• Achieving $277 million in State and local
dollars being committed to EDA projects
in 2002.
• Targeting 40 percent of EDA grants to
areas of highest distress nationwide in
2002.

10.

COMMUNITY AND REGIONAL DEVELOPMENT

Community Development Financial
Institutions

for economic and community development
projects in rural areas.

The Community Development Financial Institutions (CDFI) Fund seeks to promote
economic revitalization and community development in distressed areas by increasing
the availability of capital and leveraging
private sector funds for community development banks, credit unions, venture capital
funds, and microenterprise loan funds.

The 2002 goals for these USDA programs
include:

The 2002 Budget includes $68 million for
the CDFI Fund. CDFI will also administer
the New Markets Tax Credit, which is expected to stimulate $15 billion in new private
capital investment in CDFIs and other qualified entities over 10 years.
The 2002 goals for the CDFI Fund include:
• providing financial and technical assistance to 100 CDFIs through the Core,
Intermediary, and Technical Assistance
programs; and
• leveraging $448 million in community development investments through the Bank
Enterprise Awards program.
Rural Community Advancement
Because their needs are different, no single
approach will help both urban and rural
communities. To address this, the budget
provides flexible funding through the Rural
Community Advancement Program (RCAP).
RCAP grants, loans, and loan guarantees
stimulate economic development, help build
rural community facilities, such as health
clinics, day care centers, as well as water
and wastewater systems. Under RCAP, States
have increased flexibility within the three
funding streams for Water and Wastewater,
Community Facilities, and Business and
Industry. The Department of Agriculture
(USDA) State Directors have the authority
to transfer up to 25 percent of the funding
between any of the programs contained within
a stream in order to tailor RCAP assistance
to the specific rural economic development
needs of individual States. USDA also provides
loans through the Intermediary Relending
Program (IRP), which provides funds to an
intermediary such as a State or local government agency that, in turn, provides funds

• retaining and creating 58,000 new jobs
through the Business and Industry and
IRP loan programs.
Department of the Interior
The Department of the Interior’s (DOI)
Bureau of Indian Affairs (BIA) helps Native
American Tribes, organizations, and individuals improve their economies, natural resources, and communities. BIA administers
more than 56 million acres of Indian trust
lands, and assists Indian landowners in developing agricultural, grazing, forestry, mineral,
oil, and gas resources. In addition, BIA
helps Indian businesses secure private capital
through its loan guarantee program and partnerships with other Federal agencies. BIA
also assists Tribal governments in providing
law enforcement, fire protection, employment
training, housing assistance, and other community services. BIA provides support for
185 elementary and secondary schools, and
25 Tribal community colleges, and maintains
more than 7,000 buildings, including school
and dormitory facilities, 3,000 employee housing units, and more than 200 dams and
irrigation facilities. Working with Federal,
State, and local transportation agencies, BIA
maintains and improves nearly 50,000 miles
of road and 770 bridges that provide access
to schools, employment, health, and other
public services.
BIA’s goals for 2002 include:
• investing $123 million to replace the
remaining six schools on the 2000 priority
list: Fort Wingate Elementary Boarding
School Dormitory and Santa Fe Indian
Boarding School in New Mexico; Pollaca
Elementary School and Holbrook Boarding
School Dormitory in Arizona; Ojibwa
Elementary and Middle School in North
Dakota; and Paschal Sherman Boarding
School in Washington;
• providing $165 million to further reduce
the backlog of maintenance and repair
needs at BIA schools. With continued
funding at this level and stronger over-

THE BUDGET FOR FISCAL YEAR 2002

sight, BIA would eliminate the current
$942 million backlog over five years;
• providing $25 million to implement recently enacted Indian land and water settlement agreements for tribes in California, Colorado, New Mexico, Michigan,
and Utah; and
• providing $12 million to improve Indian
trust program operations, while continuing
to work with DOI’s Special Trustee for
American Indians on installing modern
trust fund accounting and management
systems for more accurate and timely information on payments to over 263,000
tribal and individual accounts.
Regional Development Programs
Federal efforts have been instrumental in
shaping the economic development and prosperity of many U.S. regions through targeted
assistance programs. Two areas in which
longstanding efforts have been underway are
the Tennessee Valley and the Appalachian
Region. More recently, Federal resources have
been leveraged to provide substantial financial
and technical assistance to the District of
Columbia and the Mississippi Delta Region,
both of which have struggled with unique
financial and economic problems.
Appalachian Region: The Appalachian Regional Commission (ARC) targets its resources
to highly distressed areas in 13 States in Appalachia, focusing on critical development
issues on a regional scale, and making strategic investments that leverage other Federal,
State, local, and private participation and resources.
In 2002, ARC-supported activities throughout Appalachia are expected to:
• provide more than 30,000 households with
access to new or improved water, sewage,
or waste management systems;
• provide educational and worker training
programs to more than 25,000 students;
and
• place 100 physicians in health professional
shortage areas.
District of Columbia: To fulfill the Federal
Government’s commitments to the District of

Columbia under the Revitalization Act, the Administration’s budget proposes $494 million for
District courts and corrections, including $201
million to house the District’s sentenced felon
population, $147 million for the Court Services
and Offender Supervision Agency, and $146
million for the District Courts.
In addition, the budget requests $17 million
to continue the District’s Tuition Assistance
Grant Program.
Delta Region: The recently-created Delta
Regional Authority (DRA) will provide a
framework for coordinated Federal, State, and
local government efforts to meet the
development challenges in this region. The
budget requests $20 million for DRA. DRA will
focus on basic public infrastructure in distressed counties and isolated areas of distress;
transportation infrastructure for the purpose
of facilitating economic development in the region; business development; and job training
or employment-related education.
The region is comprised of 236 counties
and parishes in eight States: Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi,
Missouri, and Tennessee. In the area’s distressed counties, poverty estimates are more
than double the national average and per
capita income estimates are only 53 percent
of the U.S. average.
Disaster Relief and Insurance
The Federal Government provides financial
help to cover a large share of the Nation’s
losses from natural disasters. In the last
10 years, two major Federal disaster assistance programs—the Federal Emergency Management Agency’s (FEMA’s) Disaster Relief
Fund and the Small Business Administration’s
(SBA) Disaster Loan program—have provided
more than $43 billion in emergency assistance.
The Federal Government shares the costs
with States for infrastructure rebuilding;
makes disaster loans to individuals and businesses to cover uninsured losses; and provides
grants for emergency needs and housing
assistance, unemployment assistance, and crisis counseling.
In recent years, emergency supplemental
appropriations have been used to finance
many of the costs associated with disasters.

10.

COMMUNITY AND REGIONAL DEVELOPMENT

In fact, emergencies have become a recurring
feature of the budget process, where they
have become magnets for special interest,
non-emergency spending. The budget proposes
a strategy that will ensure adequate funding
for FEMA and SBA disaster programs (as
well as DOI and USDA fire fighting programs),
and limit disaster supplementals to extremely
rare events by setting aside a reserve for
emergency needs. The National Emergency
Reserve will supplement these programs when
significant needs arise and also supplement
other Federal programs to the extent that
they must respond to domestic disasters.
In addition to responding to disasters, much
of FEMA’s focus is disaster preparedness
and mitigation. Since 1989, FEMA has provided $2.7 billion to States and communities
following disasters for hazard mitigation
projects to reduce the costs of future disasters.
Recent Stafford Act changes, enacted in 2000,
will ensure that a higher percentage of funds
spent by the Federal Government and States
following future disasters will be allocated
to hazard mitigation activities.
The budget proposes two reforms that will
help to ensure that States and localities
make a significant commitment to preparing
for disasters before they happen. First, the
Administration proposes that publicly-owned
buildings carry disaster insurance. States and
communities that do not carry insurance
should not be rewarded with disaster assistance unavailable to those who do carry
insurance. Second, States will be expected
to carry a larger share (50 percent) of
the cost associated with hazard mitigation
grants, the pre-1993 practice for the program.
Shouldering a larger share of the costs will
help to ensure that States select truly costeffective projects, an incentive that is missing
if most of the funding is provided by FEMA.
Communities participating in FEMA’s flood
insurance program, which provides the only
source of affordable flood insurance to property
owners, must mitigate future losses by adopting and enforcing floodplain management
measures that protect lives and new construction from flooding. FEMA is also modernizing
its inventory of flood plain maps and taking

measures to mitigate properties experiencing
repetitive flood damages.
The budget proposes two reforms that will
end
preferential
treatment
of
certain
properties in the program. First, flood insurance will no longer be available for several
thousand properties that are flooded regularly,
but that are not required to pay risk-based
premiums. Starting in 2002, owners of these
properties will be allowed one claim before
being removed from the program. Second,
the budget proposes phasing out subsidized
premiums for vacation homes, rental properties and other non-primary properties. Both
measures will help stabilize the program’s
long term finances.
The 2002 goals for FEMA include:
• increasing the number of flood insurance
policies in force by five percent. FEMA has
already overseen tremendous growth in
the number of policies issued by the
National Flood Insurance Program, which
has grown to 4.2 million policyholders,
with insurance coverage worth more than
$500 billion.
For SBA’s disaster loan program, the Administration proposes raising the interest rate
charged to business borrowers from about
four percent to a comparable maturity Treasury rate (estimated to be approximately 5.5
percent in 2002). With this change, businesses
would continue to have access to low cost
credit following disasters, but would face
greater incentives to mitigate potential losses
in the future.
SBA plans to continue working to reduce
paperwork and simplifying the loan application
process for its disaster loan program. SBA
has already streamlined loan processing by
introducing automated loan documentation
and approval systems.
The 2002 goals for SBA’s disaster loan
program include:
• processing 80 percent of loans within 21
days of submission to SBA; and
• disbursing initial loan proceeds within
three days of receipt of loan closing documents.

82
Tax Expenditures
Tax expenditures related to the Community
and Regional Development function will total
nearly $2 billion in 2002, and $12 billion
from 2002 through 2006. About one-half of
this amount is related to the tax incentives
for EZs and ECs described earlier in this
chapter.
The Administration also proposes to permanently extend the Brownfields tax incentive

THE BUDGET FOR FISCAL YEAR 2002

allowing favorable treatment of expenses incurred in cleaning up abandoned property
that may be contaminated. Such cleanup
is important because it revitalizes urban
communities. In addition, in 2002 the Administration will implement the New Markets
Tax Credit, which is expected to stimulate
$15 billion in private capital investment over
the next 10 years.

11.

EDUCATION, TRAINING, EMPLOYMENT,
AND SOCIAL SERVICES
Table 11–1.

Federal Resources in Support of Education, Training,
Employment, and Social Services
(In millions of dollars)

Function 500

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

44,378

61,146

65,424

67,060

69,049

70,661

72,273

10,266
..............

9,145
..............

14,304
90

14,522
315

14,757
387

15,315
393

16,183
398

16,425
26,602

19,061
29,501

16,579
30,742

17,460
32,421

18,395
34,228

19,387
36,153

20,442
38,202

36,030

37,780

38,770

40,410

43,210

45,010

47,500

DEPARTMENT OF EDUCATION
Elementary and Secondary Education
The President’s education reform plan is
devoted to two fundamental principles: that
all children can learn, and that no child
should be left behind. Our K-12 education
system needs to do more to live up to
its potential to prepare all our students
for productive lives in the 21st Century.
The academic achievement gap between rich
and poor and Anglo and minority is large
and, in some cases, growing larger. Nearly
70 percent of fourth-grade students in our
highest-poverty schools cannot read at a basic
level. And our high school seniors trail students in most industrialized countries on
international math tests. This Administration
is committed to improving the academic performance of America’s youth.
The President’s agenda measures how well
we are educating our children, not in dollars
or numbers of programs, but in results.
The budget reflects a bold and ambitious
plan for reauthorizing the Elementary and
Secondary Education Act (ESEA) that places

accountability for improved achievement at
the center of K-12 reforms. It lays the
foundation for learning by ensuring that
every child can read by the third grade.
It streamlines dozens of overlapping programs
into five performance-based funding streams
that allow States the flexibility to address
their unique needs. And it empowers parents
with more choices in the education of their
children.
Accountability for Results: The President’s plan would grant States and school districts unprecedented freedom from rules and
regulations—in exchange for accountability for
results. States will establish accountability
systems built on high standards, annual tests,
measurable goals, rewards for success, and
sanctions for failure. They will be required to
test students every year in grades 3–8 in math
and reading so that parents, teachers, and
communities will know if their schools and students are meeting State academic standards.
The budget provides $320 million to support
the costs of developing new assessments. Once
accountability systems are in place, a new Federal fund will reward States and schools that
improve student achievement. The budget also
83

84
provides $109 million, a $69 million increase,
to expand the National Assessment of Educational Progress to administer tests in reading and math in 4th and 8th grade every year.
These tests, sometimes called the Nation’s report card, will provide additional information
on whether States are on track toward success.
Part of the Administration’s ESEA reauthorization strategy for improving accountability
will be the implementation of performancebased grants. Once ESEA is passed this
year, States will set performance targets
for the major ESEA programs and strategies
for meeting them. In future years, the Department of Education will revise and refine
its own performance goals based on State
targets and plans.
Title I—Closing the Achievement Gap for
Disadvantaged Students: While the Federal
Government is the junior partner to States and
local governments in providing education to
our children, it has a special obligation to our
most disadvantaged students, in particular
those who are low income or with limited
English proficiency. The Title I Grants to Local
Educational Agencies (LEAs) program enables
high-poverty
schools
to
provide
extra
educational assistance to help their students
to catch up with their peers. The Administration seeks $9.061 billion, an increase of $459
million or 5.3 percent, to help students most
at-risk of not reaching State standards improve their academic achievement. The President’s plan would require States to set measurable performance targets to ensure that all
groups of disadvantaged students improve, and
would hold States, districts, and schools accountable for meeting those goals. Schools that
fail to meet performance targets will receive
help to turn themselves around. The Administration seeks $400 million within Title I
Grants to LEAs for low-performing schools, a
$175 million, or 78-percent, increase over 2001.
States will use these funds to provide technical
assistance and intensive interventions to improve achievement in schools that are failing
to make sufficient academic gains. To ensure
that no student is trapped in a chronically failing school, students in schools that are consistently low-performing will have the option of
transferring to a better public school, or of
using their share of Federal Title I funds to
seek supplemental educational services or

THE BUDGET FOR FISCAL YEAR 2002

private school alternatives. This combination
of accountability for improved achievement
among all groups of students, extra help for
struggling schools, and the unacceptability of
chronic failure, provides powerful incentives
for all Title I schools to use their funds on
effective, proven practices in order to achieve
results.
• The Administration’s goal is to ensure that
the performance of our lowest-achieving
students and students in high-poverty
schools will increase substantially in reading and mathematics.
Reading First: The budget builds a foundation for success by investing $900 million in
the Reading First initiative to help all children
read by the third grade. This new program
will provide funds to States that establish comprehensive reading programs in kindergarten
through third grade. States would be required
to implement scientifically proven reading programs, train K-3 teachers in proven teaching
practices, implement effective reading interventions for students who are falling behind,
and use a reading diagnostic test in K-3 to
identify students early who have reading difficulties. Ensuring that children receive effective reading instruction means that more children will get the help they need before they
fall too far behind, and will result in fewer
referrals to special education in later years.
The budget also includes an additional $75
million for the Early Reading First initiative
that helps implement research-based reading
practices in existing pre-school and Head Start
programs that feed into participating elementary schools. This program will help ensure
that children enter school ready to learn to
read.
• These two programs will help the Nation
make significant progress toward the goal
of ensuring that all students can read by
the third grade.
Improving Teacher Quality: Improvements in student achievement begin with an
effective teacher in every classroom. Unfortunately, some schools are not yet meeting this
challenge. They are unable to retain promising
new teachers and employ a complete staff of
fully qualified teachers. Currently, 22 percent
of all new teachers leave teaching in their first
three years of service. In high-poverty

11.

EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES

secondary schools, 12 percent of teachers only
hold a temporary or emergency certification,
and 18 percent teach out of their field of expertise. The President requests $2.6 billion, an
increase of $0.4 billion to prepare, train, and
recruit a high-quality teaching force. States
would have the flexibility to invest these funds
to address their most pressing quality improvement needs, whether it be to alleviate
shortages, enhance skills, or reform the certification process. The President’s plan combines
the funding from the largest Federal teacher
programs, including the Class Size Reduction
program and Eisenhower Professional Development programs, into a streamlined, performance-based grant to States and school districts.
In addition, the budget provides $30 million
to expand and build on the Troops to Teachers
program, currently adminstered by the Department of Defense, which helps military professionals become teachers and serve in high-need
communities.
An expanded Math and Science Partnership
program, administered by the National Science
Foundation in coordination with the Department of Education, would provide funds to
States to join with institutions of higher
education to strengthen K-12 math and science
instruction and curriculum. The Administration requests $200 million for this program
(see Chapter 4, ‘‘General Science, Space, and
Technology’’).
• One performance goal of this program is
to help increase the percentage of teachers
with improved knowledge and skills in
core academic subjects.
Moving Limited English Proficient Students to English Fluency: Over the last two
decades, the population of limited English proficient (LEP) children in the 50 States has
grown dramatically, increasing from less than
one million in 1980, to approximately 3.4
million in the 1996–1997 school year. LEP
students face unique challenges in achieving
to the same high standards expected of all
students—many must face the difficult task
of learning the English language while simultaneously mastering the content of academic
subjects. Unfortunately, many English language-learners, when compared with their
English-fluent peers, receive lower grades and
often score below average on standardized

math
and
reading
assessments.
The
President’s reform plan proposes to consolidate
Bilingual and Immigrant Education funds into
a $460 million formula-driven grant to provide
school districts with added flexibility in
exchange for more effective transitioning of
LEP and immigrant students into English
fluency and for improving their overall
achievement levels. States would be required
to establish performance goals for English language acquisition and develop high-quality
annual assessments to measure English language proficiency. In addition, both States and
school districts will be held accountable for
ensuring that LEP and immigrant students
meet State academic achievement goals.
• The Administration’s goal is to improve
significantly the English proficiency and
academic achievement of limited English
proficient and immigrant students.
Indian Education: American Indians have
made progress in recent decades but continue
to be disproportionately affected by poverty
and low educational attainment. For example,
American Indian students, on average, score
lower on the National Assessment of Educational Progress and the Scholastic Aptitude
Test than other students. To address these
issues, the budget provides $116 million to
support formula grants to local educational
agencies and Bureau of Indian Affairs operated
schools to implement programs that address
the special educational and cultural needs of
Indian children. In order to address the critical
shortage of trained Indian professionals in
schools with high concentrations of American
Indian students, funding for both the American Indian Teacher Corps and American
Indian Administrator Corps initiatives will
continue at the 2001 level.
• American Indian and Alaska Native students served by LEAs receiving Indian
Education formula grants will progress at
rates similar to those for all students in
achievement to standards, promotion, and
graduation.
Safe and Drug Free Schools: The President’s plan for improving school safety and
drug-use prevention emphasizes researchbased practices, includes tougher enforcement
of existing gun laws, grants teachers control
over
their
own
classrooms,
improves

86
cooperation between school districts and law
enforcement, and stresses accountability for results. Under the $644 million Safe and Drug
Free Schools program, districts will be held
accountable for the effectiveness of their crime
prevention and drug outreach activities, and
students trapped in persistently dangerous
schools will have the option to transfer to a
safe alternative.
21st Century Community Learning Centers: The budget includes $846 million for a
more flexible after-school program that allows
States to award Federal funds to school districts, private organizations, and faith-based
entities, thereby empowering local communities to provide a wider array of choices for
students and parents. Expanding access to
high-quality before- and after-school programs
is a key strategy in providing students safe
and supervised environments and extending
learning time to improve student achievement.
States would conduct grant competitions to
support before and after-school programs that
are proven to be effective and advance statewide academic achievement goals.
This program will be supplemented by
two new initiatives in other agencies. The
budget requests $400 million for After-School
Certificates within the Child Care and Development Block Grant in the Department of
Health and Human Services to help low
income working parents obtain quality after
school childcare with a strong educational
component. The Corporation for National and
Community Service will provide $15 million
for the Veterans Mission for Youth, a new
initiative that will provide matching grants
to community organizations that connect veterans and retired military personnel with
America’s young people through mentoring,
tutoring, after-school and other programs.
The Choice and Innovation Fund: The
most direct form of accountability is parents’
ability to choose the school their children will
attend. The Administration is committed to expanding the educational choices that parents
and students have. Under the new Choice and
Innovation fund, the Administration consolidates 10 programs to create a $472 million
fund that provides States with the flexibility
to pursue a range of effective education reform
strategies, including school choice, that

THE BUDGET FOR FISCAL YEAR 2002

address areas of State and local need. A separate Reform and Innovation fund supports
character education and allows the Secretary
to fund projects that address national priorities in K-12 education.
Educational Technology: The budget supports a streamlined educational technology
fund that consolidates nine overlapping programs into one flexible $817 million fund. The
President believes that technology must be
used to improve learning and that Federal
funding for educational technology must focus
on results. This performance-based formula
grant will provide States greater discretion to
make educational technology an effective
learning tool, and ensure that more technology
funds reach the classroom.
The Administration is seeking administrative improvements in the E-rate to ensure
that this program provides greater flexibility
to schools and libraries in how they use
their E-rate discounts, while reducing the
administrative burden they have faced in
applying for educational technology funds.
The Administration also proposes $80 million
in matching grants, through the Department
of Housing and Urban Development’s Community Development Block Grant, to support
Community Technology Centers in high poverty areas. (See Chapter 10, ‘‘Community
and Regional Development.’’)
Impact Aid and School Construction:
The budget proposes $1.130 billion for the Impact Aid program, a $137 million increase from
the 2001 appropriation. The request provides
a significant increase for the Impact Aid construction program to improve the quality of
public school buildings and eliminate the backlog of repairs and construction for schools on
or near military facilities and those serving
children from Native American lands.
Special Education: Under the Individuals
with Disabilities Education Act (IDEA), the
Department of Education works with States
to ensure that more than six million children
with disabilities receive a ‘‘free appropriate
public education’’ that prepares them for employment and independent living, and that all
schools are held accountable for the educational results of special education children.
The President’s education reform plan will require States to report on the educational

11.

EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES

progress of all student groups—including students with disabilities. In addition, the President’s new Reading First initiative will help
ensure that fewer children are referred to special education simply because they did not receive proper reading instruction in the crucial
early years. The Administration seeks $7.3 billion for IDEA Part B Grants to States—the
primary special education program—a $1 billion increase.
One measure of success in the IDEA program is the increase in the percentage of
students with disabilities who are graduating
from high school with a regular diploma
and the reduction in the number who are
dropping out.
• In the 1998–1999 school year, 57 percent
of students with disabilities left school by
graduating with a regular diploma and 29
percent dropped out of school. The Administration’s goal for the 2001–2002 school
year is that 59 percent of students with
disabilities will graduate with regular diplomas and that no more than 27 percent
will drop out.
Vocational and Adult Education: The
President requests significant resources for the
Department of Education’s Vocational and
Adult Education programs to help Americans
of all ages obtain the training and education
they need to succeed in a rapidly changing
economy. Vocational Education programs, including State grants and Tech-Prep, help
States and communities develop the academic,
vocational, and technical skills of students in
high schools and community colleges. Adult
Education State grants and other programs
fund State and local activities that enable
adults to become literate and complete high
school so that they can succeed as workers,
parents, and citizens. Access to Adult Education programs is particularly important for
recent immigrants and other limited English
proficient adults who wish to learn English
and further their education.
• The Administration’s goal is to provide
students with increased access to improved vocational and adult education programs
that
strengthen
educational
achievement, workforce preparation, and
lifelong learning.

Postsecondary Education
Pell Grants: Low-income and minority students continue to lag behind their peers in
college enrollment and graduation rates. In
1998, 77 percent of students from high-income
families entered college after completing high
school, compared to 46 percent of high school
graduates from low-income families. To help
increase access to postsecondary education for
disadvantaged students, the Administration
proposes to increase funding for Pell Grants
by $1 billion in the 2002 Budget. This level
would fund a $100 increase in the maximum
award for all students, fill a projected shortfall
of over $100 million in the 2001 award year,
and create a small surplus in the program.
• At the President’s budget level, over four
million low- and middle-income college
students would receive Pell Grants in
2002, when the maximum award would be
$3,850.
TRIO: The gap in college enrollment rates
between low-income students and other students is due to differences not only in financial
resources but also in academic preparation and
support. The President proposes a $50 million
increase for TRIO programs to promote college
success for disadvantaged young people. TRIO
programs provide tutoring, college outreach,
and student support services to help lowincome, first-generation college, and disabled
individuals achieve academic success beginning in middle school, throughout high school
and college, and into graduate school.
• TRIO projects aim to increase participating students’ persistence in and completion of academic programs. In 1998, 29
percent of participants in the TRIO program Student Support Services had
earned a degree from the college where
they began within six years.
Aid for Institutional Development: The
President requests significant increases to Department of Education programs supporting
Historically Black Colleges and Universities
(HBCUs), Historically Black Graduate Institutions (HBGIs), and Hispanic-Serving Institutions (HSIs) as the first installment of the
President’s plan to increase funding for these
institutions by 30 percent between 2001 and
2005. HBCUs and HBGIs receive a combined

THE BUDGET FOR FISCAL YEAR 2002

$15 million, seven-percent increase over 2001;
the increase for HSIs is $4 million, or six percent. The budget also includes funding to support Tribal Colleges and other institutions that
serve low-income students and that have low
per-pupil expenditures. This funding would
help these educationally and historically important institutions increase their capacity to
serve low-income and minority college students
and will help ensure equal access to postsecondary education for all Americans. The performance goals for these programs are:

loan volume directly from the Department of
Education through participating schools.

• The percentage of HBCUs, HBGIs, HSIs,
and other institutions serving disadvantaged populations having specialized
accreditation, a measure of academic
program quality, will be maintained or
increased. In 1998–1999, 75 percent of
HSIs receiving title V grants and 71
percent of HBCUs, HBGIs, and other
institutions receiving Aid for Institutional
Development grants had at least one specialized accreditation.

Vocational Rehabilitation Services: The
Vocational Rehabilitation (VR) program helps
individuals with disabilities prepare for and
obtain gainful employment to the extent of
their capabilities. State VR agencies are also
required One-Stop partners under the Workforce Investment Act of 1998. The Administration proposes $2.5 billion for the VR program,
an $82 million increase.

• The percentage of full-time, degree-seeking
students enrolled at HBCUs, HBGIs,
HSIs, and other institutions serving
disadvantaged populations who complete a
degree or certificate will increase over
time. In 1997–1998, 35 percent of students
at four-year schools receiving Aid for
Institutional Development completed their
degrees within six years. Of students at
two-year schools, 18 percent earned a
degree or certificate or transferred to a
four-year school within three years.
Student Loans: The Federal Government
plans to provide nearly $37 billion in new student loans to 5.5 million borrowers in 2002.
Loans are provided through two programs: the
Federal Family Education Loan (FFEL) program and the Federal Direct Student Loan
(FDSL) program. The FFEL program will
originate approximately two-thirds of new loan
volume through a network of approximately
4,100 private lenders, 36 guaranty agencies,
50 participants in the secondary markets, and
over 4,000 participating schools. The Federal
Government provides lenders with a 98-percent guarantee against default and interest
subsidy payments to ensure a sufficient lender
rate of return. The FDSL, created in 1993,
provides the remaining third of new student

Under current law, teachers who are employed in high-poverty schools for five years
may have up to $5,000 of their Federal
student loans forgiven. The Administration
proposes to expand this program to allow
individuals who majored in math or science
and who teach those subjects in high-need
schools to have up to $17,500 of their loans
forgiven.

Today,
the
unemployment
rate
for
Americans with disabilities is unacceptably
high, and individuals with disabilities face
significant obstacles in obtaining competitive
employment in the general labor market.
• In 2002, one of VR’s performance goals is
that 63.2 percent of all individuals with
disabilities served in the VR program will
obtain employment, up from 62.5 percent
in 1999.
New Freedom Initiative: In addition, the
Department of Education’s budget proposal
supports part of the New Freedom Initiative,
to help individuals with disabilities access the
best assistive technologies of today, invest in
research and development so even better technologies will be available in the future, and
promote telecommuting opportunities for
individuals with disabilities.
Management Reforms
Financial Management: Since 1996, when
independent audits were first required, the
Department of Education has received only one
unqualified audit opinion, and that was in
1997. Beginning in 1999, separate independent
audit reports have also been prepared for the
performance-based Student Financial Assistance (SFA) Office. Audits of both the Department as a whole and SFA have repeatedly
found
major
financial
management

11.

EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES

deficiencies. These failed audits indicate a potential for improper use of Government resources. Through investments in updated financial reporting systems, as well as better
oversight and other management improvements, the Department expects to significantly
increase the reliability and accuracy of its financial data. The Department’s goals are:
• By 2002, the Department will have implemented and launched a new general ledger
system and asset tracking software that
will address many of the Inspector
General’s longstanding concerns about
Education’s financial management.
• For 2002, the Department will resolve all
outstanding material weaknesses from
prior reports and receive an unqualified
(‘‘clean’’) audit opinion on all of its financial statements.
• The Department will ensure that its
information systems are safe and secure
by implementing and testing contingency
back-up plans.
Student Aid Modernization: The Department of Education manages the delivery of
student aid benefits to over eight million
students in approximately 5,300 postsecondary
schools and oversees the direct and guaranteed
loan systems, affecting 37 million individuals,
4,100 lenders, and 36 guarantee agencies. To
correct perennial deficiencies in the Department’s student aid operations, the Higher
Education Amendments of 1998 created the
Federal Government’s first performance-based
organization, with the goal of modernizing
student aid delivery and management. Student
aid modernization is dependent on better use
of efficient technologies, simplification of
business processes, and seamless coordination
with myriad partners in the higher education
community.

Michigan in 1999, SFA scored 63 in satisfaction. The goal is to increase this rating
to 74 out of 100 by 2002.
• Reduce cost: SFA has set a target to
reduce the projected unit cost of delivering
each student aid dollar by 19 percent by
2004. This cut in operating costs is necessary given flat administrative funding
levels coupled with a fast-growing
workload. In 2002, SFA will continue to
re-invest all budgetary savings from reformed operations into the modernization
effort in order to achieve its goal for 2004.
• Improve employee satisfaction: Recognizing
that employee satisfaction is essential to
modernizing the delivery of student financial assistance and achieving the aforementioned goals, SFA has committed to
raising employee satisfaction, as measured
by the Gallup Workplace Management
(GWM) survey, to a level comparable to
the private sector (3.6 out of 5.0) by 2004.
SFA will use the GWM to measure satisfaction at the work group level in order
to develop action plans aimed at improving
any areas with low scores.
Default Prevention: Over the last eight
years, outstanding student loan defaults have
more than doubled from $12 billion to $25
billion, resulting in significant costs for
taxpayers. As the loan programs continue to
grow—outstanding loan volumes increased
from $81 billion to $224 between 1993 and
2000—outstanding defaults will continue to
increase unless the Department and its partners significantly improve default management
and prevention activities.

The three primary goals of the SFA Office,
which is charged with this modernization
effort, are to:

During 2001 and 2002, the Department
plans to work to minimize new defaults
and maximize loan collections through continued counseling of students on their loan
repayment responsibilities, improved early
identification of problem loans, and implementation of loan management ‘‘best practices.’’

• Improve customer satisfaction: SFA has
established the goal of increasing the
satisfaction of customers of the student
financial assistance programs to a level
commensurate with private sector financial service firms. Under the national
survey conducted by the University of

Reducing Erroneous Payments: As part
of the Administration’s Government reform effort to reduce erroneous payments to Pell
Grant and student loan beneficiaries, the Departments of Education and Treasury plan to
review their pilot program to match income
data reported on student aid applications

THE BUDGET FOR FISCAL YEAR 2002

against IRS data, as well as the results of
two test matches, to determine whether a permanent matching program would be cost-effective and consistent with relevant statutes governing taxpayer privacy and privacy in data
sharing between agencies. A match could enable the Department of Education to reduce
fraud and improve eligibility determinations in
Federal student aid programs.
DEPARTMENT OF LABOR
Elementary, secondary, and postsecondary
education and training investments enable
Americans to acquire the skills to get good
jobs in an increasingly competitive global
economy. In addition, most workers acquire
more skills on the job or through the billions
of dollars that employers spend each year
to enhance worker skills and productivity.
However, some workers also need special,
targeted assistance. In addition to Pell Grants,
student loans, and tax credits, the budget
requests $6.6 billion for Department of Labor
(DOL) programs that finance job training
and related services. Workers who want to
learn about job openings can use the OneStop Career Center/Employment Service and
DOL’s popular America’s Job Bank (AJB)
web site, which lists an average of 1.5
million job vacancies daily and has over
10 million job searches each month. Employers
can search through resumes posted on the
AJB web site, with over 500,000 daily listings.
The Workforce Investment Act (WIA) of
1998: The WIA took full effect on July 1, 2000,
as the Job Training Partnership Act was repealed and all States began to implement the
WIA requirements. The WIA calls for a customer-driven job training system that focuses
on: streamlining services through One-Stop
Career Centers; empowering individuals with
the information and resources they need to
choose the training that is right for them; providing universal access to a core set of employment services, such as job search assistance;
increasing accountability; ensuring a strong
role for the private sector and the local boards
who develop and oversee programs; facilitating
State and local flexibility; and improving the
quality of youth development and job training
services.

In 2000, spending for the core WIA programs, including State grants for Dislocated
Workers, Adults and Youth Activities, was
well below expectations. The budget promotes
efficiency by utilizing these unexpended balances to maintain current service levels in
the core programs. The 2002 budget also
supports the WIA goal of a streamlined
job training system by reallocating funding
from duplicative, or narrowly targeted programs in favor of the core WIA programs.
In addition, the budget addresses shortcomings of the WIA financial reporting system.
Currently, DOL’s Employment and Training
Administration lacks an integrated information management system for the regular
reporting of financial and performance data.
The budget provides resources to increase
DOL financial management capacity and to
strengthen program management through specialized oversight and assistance to States
and other grant recipients. The budget
provides resources to improve the Department’s financial reporting systems to strengthen accountability.
Over the next few years, DOL will work
to implement fully the performance accountability provisions of the WIA. In July 2000,
each State began implementing an accountability system to measure performance. The
goal of this system is to optimize the return
on investment of Federal funds directed to
State and local workforce activities. This
accountability system will assess the effectiveness of States and local areas in achieving
positive outcomes and ensuring continuous
improvement of their workforce investment
systems. The WIA establishes core performance indicators related to unsubsidized job
placements, retention, and increased earnings;
customer satisfaction for job seekers and
employers; and attainment of occupational
or educational skills credentials. DOL worked
with each State to establish appropriate baselines and challenging performance goals.
• The performance goals for the WIA Adult
Program are to increase the employment,
retention, and earnings of individuals registered. Specifically, in 2002, of those registered in the program, 70 percent will be
employed in the quarter after program
exit; 80 percent will be employed in the

11.

EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES

third quarter after program exit; and the
average earnings change, compared to the
third quarter prior to registration, for
those who are employed in the third quarter after program exit, will be $3,423.
• The performance goals for the WIA Dislocated Worker Program are to increase
the employment, retention, and earnings
replacement of registered individuals. Specifically, in 2002, 75 percent of those registered in the program will be employed
in the quarter after exit; 85 percent will
be employed in the third quarter after program exit; and, of those who are employed
in the third quarter after program exit,
their earnings will represent 92 percent
of their pre-dislocation earnings.
• The performance goal for the WIA Youth
Activities Formula Grants Program is to
increase the number of youth making a
successful transition to a career path. Specifically, in 2002, of the 14- to 18-yearold youth registered in the program, 53
percent will be either employed, in advanced training, post-secondary education,
military service, or apprenticeships, in the
third quarter after program exit. Of the
19- to 21-year-old youth registered in the
program, 77 percent will be employed in
the third quarter after program exit.
The WIA establishes strong ties between
performance and funding. If a State fails
to meet its expected levels of performance
in any year, it will receive technical assistance
from DOL. If a State continues to fail
to meet its agreed-upon performance levels
for a second year, or if a State fails to
report its performance information in any
year, its funding may be reduced by up
to five percent. Because the WIA is a new
program, the above goals will be regularly
reviewed for appropriateness and rigor.
One-Stop Centers/Employment Service:
The One-Stop Center/Employment Service provides a single point of contact for information
about and access to education, job training and
employment services, and a free labor exchange for all job seekers and employers. It
is growing more effective through implementation of a One-Stop delivery system. The budget
proposes $980 million for a range of information and services, including self-service access

to job and labor market information, either
through the Internet or in local offices, as well
as staff-assisted services for those needing
more help.
• The performance goal for the One-Stop
Centers is to increase the total number
of job openings listed with the public labor
exchange, including State Employment
Security Agencies (SESAs) and AJB. Specifically, in 2002, the program plans to
increase the total number of job openings
by five percent over the 2001 level to 13.5
million (AJB and SESAs) and increase the
number of new employers that register
with AJB by 10 percent to 76,000.
Work Incentive Grants: To enhance the
employment prospects of individuals with disabilities, the budget includes $20 million for
competitive grants to partnerships or consortia
to provide new services and information for
individuals with disabilities who want to return to work. These partnerships would work
with the One-Stop system to augment its capabilities to provide timely and accurate information that people with disabilities need to get
jobs and learn about the benefits available to
them when they return to work. In addition,
the partnerships would improve local service
delivery by coordinating the State and local
agencies and disability organizations that help
individuals with disabilities prepare to enter
or reenter the workforce.
Workplace Protections: DOL regulates
compliance with various laws that protect individuals in the workplace—a minimum wage
for virtually all workers, prevailing wages and
equal employment opportunity for workers on
government contracts, overtime pay, restrictions on child labor, and time off for family
illness or childbirth. (For discussion of workplace safety programs, see Chapter 12,
‘‘Health.’’) In these areas, the Federal Government seeks to increase industry’s compliance
with labor protections through voluntary compliance efforts coupled with continued enforcement. DOL measures the success of these efforts against specific measurable goals:
• In the area of workplace protection, the
performance goal for the Department is to
increase compliance—including among employers which were previous violators and
the subject of repeat investigations—with

THE BUDGET FOR FISCAL YEAR 2002

labor standards laws and regulations in
nationally targeted industries, including
health care, garment and agriculture. For
example, in 2002, the Department’s goal
is to increase the compliance rate in the
nationally targeted industries (or sectors
of those industries) by an average of at
least five percentage points.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Promote Safe and Stable Families: The
Administration for Children and Families
(ACF) administers a number of programs that
focus on preventing maltreatment of children,
protecting children from abuse and neglect,
and finding permanent placements for children
who cannot safely return to their homes. To
strengthen States’ ability to promote child
safety, permanency, and well-being, the President proposes to reauthorize the Promoting
Safe and Stable Families program at $505 million in 2002, a $200 million increase over the
2001 level. These additional resources will help
States to keep children with their biological
families if safe and appropriate, to return children to their families, if possible, or to place
children with adoptive families. By undertaking more preventative efforts to help families in crisis, the prospects for children to live
in a permanent home are enhanced. To support these efforts, the President also proposes
to provide an additional $2 million to expand
collaborative Federal/State child welfare monitoring efforts. For those children who cannot
live with their biological parents, the budget
proposes to encourage increased adoptions by
raising the adoption tax credit from $5,000 to
$7,500.
• In 2002, decrease the percentage of children with substantiated reports of maltreatment who have a repeat substantiated report of maltreatment within six
months from eight percent in calendar
year 1998 to seven percent.
• Increase the number of adoptions from
46,000 in 1999 to 56,000 in 2002.
The President also proposes to provide
greater assistance to older foster children.
Approximately 16,000 young people leave foster care each year when they reach age

18 without an adoptive family or other guardian. Research indicates that these young
people experience alarming rates of homelessness, early pregnancy, mental illness, unemployment, and drug abuse in the first years
after they leave the system. To help these
children, the budget proposes to provide $60
million through the Independent Living Program specifically for education and training
vouchers to youth who are aging out of
foster care. This initiative will help ensure
that these young people are able to obtain
the support they need to develop skills to
lead independent and productive lives. Vouchers worth up to $5,000 would be available
to cover the costs of college tuition or vocational training.
Mentoring Children of Prisoners: The Administration proposes to create a new $67 million initiative within the Promoting Safe and
Stable Families program to assist children of
prisoners. This initiative will provide grants
through States to assist faith and communitybased groups in providing a range of activities,
including family-rebuilding programs that
serve low-income children of prisoners and probationers.
Responsible Fatherhood Initiative: The
budget includes $64 million in 2002 ($315 million over five years) to strengthen the role of
fathers in the lives of families. This initiative
will provide competitive grants to faith-based
and community organizations that help unemployed or low-income fathers and their families
avoid or leave cash welfare, as well as to programs that promote successful parenting and
strengthen marriage. The initiative also will
fund projects of national significance that support expansion of State and local responsible
fatherhood efforts.
Head Start: Head Start is administered by
ACF. The budget provides $6.325 billion for
Head Start, a $125 million increase over the
2001 level.
• In 2002, Head Start will serve an estimated 916,000 children. Within the overall
total of children served, approximately
55,000 children under age three will participate in the Early Head Start component.

11.

EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES

The President has proposed to reform Head
Start and return it to its original purpose—
education. Head Start programs will be required to adopt a proven core curriculum
that makes school readiness—pre-reading and
numeracy—its top priority. The budget includes an Early Reading First program within
the Department of Education for researchbased reading programs in existing pre-school
programs, including Head Start programs.
Planning is also underway to move Head
Start to the Department of Education to
reinforce the emphasis on school readiness.
Compassion and Charitable Giving: The
President proposes two initiatives to ensure
that the Federal Government plays a larger
role in providing support to charitable organizations. The ‘‘Compassion Capital Fund’’ will
provide start-up capital and operating funds
totaling $89 million in 2002 to qualified charitable organizations that wish to expand or
emulate model programs. In addition, the fund
will support and promote research on ‘‘best
practices’’ among charitable organizations. Finally, to encourage States to create state tax
credits for contributions to designated charities, the budget will propose legislation to
allow States to use Federal Temporary Assistance to Needy Families funds to partially offset revenue losses.
Maternity Group Homes: The budget also
includes $33 million in 2002 for maternity
group homes, which are community-based,
adult-supervised group homes or apartment
clusters for teenage mothers and their children. The homes provide safe, stable, nurturing environments for teenage mothers and
their children who cannot live with their own
families because of abuse, neglect, or other extenuating circumstances.

NATIONAL SERVICE
The Corporation for National and Community Service supports programs providing service opportunities nationwide for Americans
of all ages and backgrounds. The Corporation
organizes its programs into three streams
of service, with various annual performance
goals.
National Senior Service Corps: The Senior Corps links the talents, skills, and experiences of more than 500,000 older Americans
with service opportunities in the areas of education, public safety, health, human needs, and
the environment. Members serve as Foster
Grandparents, as Senior Companions, and in
the Retired and Senior Volunteers Program
(RSVP). In 2002, the budget proposes $203
million for the Senior Corps, a $14 million increase over 2001 and the first step of the
President’s five-year strategy to increase the
annual funding for the Senior Corps to the
$250 million over five years.
• For 2002, the Foster Grandparents and
Senior Companions programs plan to serve
some 160,000 special-needs youth and frail
elderly, while RSVP volunteers will serve
through more than 70,000 local organizations.
AmeriCorps: The AmeriCorps program
helps Americans of all backgrounds to serve
in local communities through programs sponsored by local and national nonprofits. Participants serve full or part-time generally for at
least a year. For their service, participants become eligible to receive education awards that
help pay for college, graduate school or re-pay
student loans.
• For 2002, the AmeriCorps program plans
to engage 50,000 Americans in community
service, and provide education awards in
return for such service.

Aging Services Programs: The Administration on Aging (AoA) administers information and assistance, home and communitybased support services for older people and
support programs that protect the rights of
vulnerable, at-risk older people. In 2002, the
budget proposes $1.1 billion for these AoA programs.

Learn and Serve America: This program
provides young people with opportunities to
serve by connecting community service with
academic learning, personal growth and civic
responsibility.

• In 2002, AoA will increase the number of
meals served under the Home-Delivered
Meals Program to 183 million, compared
to 176 million meals in 2001.

• For 2002, the Learn and Serve program
plans to engage more than one million students in elementary schools, high schools
and colleges in service-learning programs.

THE BUDGET FOR FISCAL YEAR 2002

CULTURAL AGENCIES
The Smithsonian Institution and Other
Cultural Agencies: The Smithsonian Institution, the National Gallery of Art, the U.S.
Holocaust Memorial Museum, the John F.
Kennedy Center for the Performing Arts, and
the Woodrow Wilson International Center for
Scholars all have as part of their missions the
advancement of knowledge and sharing that
knowledge with the American public. To
accomplish its mission, each institution must
maintain its physical infrastructure and
provide access to its unique assets. In 2002,
each agency will undertake at least two
management reform activities: addressing the
backlog of deferred maintenance and enhancing management decisions through improved
budgetary information.
The budget requests $494 million for the
Smithsonian Institution, $80.4 million for the
National Gallery of Art, $36 million for
the U.S. Holocaust Memorial Museum, $34
million for the John F. Kennedy Center
for the Performing Arts, and $7.8 million
for the Woodrow Wilson International Center
for Scholars.
To address the backlog of deferred maintenance, each agency will prepare a plan that
encompasses renovation activities, annual
maintenance, and backlog maintenance. The
plans will also propose a strategy for how
each agency will take appropriate action.
The plans will be reviewed by an independent
entity as part of a Government-wide review
of cultural agency buildings and repair and
restoration plans for museums.
Each of these agencies is, to some extent,
a partnership between the Federal Government and the private sector, relying on
funding from both partners. In order to
assess the overall fiscal health and strategy
of the enterprise, it is necessary to understand
not only the Federal portion, but also the
funding anticipated from private sources.
Therefore, each agency will work to present
its proposed budget for 2003 in a format
such that the components are clearly identifiable, including projections for private funding.

The National Foundation on the Arts
and Humanities: In 2002, the Administration
proposes $105 million for the National Endowment for the Arts and $121 million for the
National Endowment for the Humanities.
For the Institute of Museum and Library
Services (IMLS), the Administration requests
$193 million. IMLS awards grants and cooperative agreements to assist the Nation’s museums and libraries in increasing and expanding
their services to the public. In 2002, IMLS
plans to invest in: responding to the educational needs of learners of all ages; providing
the public with broad access to library and
museum services; supporting technology to
improve library and museum services; serving
the changing informational and educational
needs of families; helping museums and libraries expand their roles as centers of community
engagement; preserving our cultural heritage;
and maintaining efficient internal operations.
Commission of Fine Arts: The Commission
of Fine Arts supports non-profit cultural entities in the Washington, D.C. region, using
funds appropriated to its National Capital Arts
and Cultural Affairs account. The budget requests $8.3 million for the Commission of Fine
Arts. Currently, the support is through formulation-based grants. In 2002, the Commission
will examine the benefits and consequences of
implementing a competitive grants program,
rather than awarding the funds based on formulas, in order to improve the quality of activities supported by Federal funds.
National Capital Planning Commission:
The National Capital Planning Commission
provides overall planning guidance for Federal
land and buildings in the National Capital Region. The budget requests $7.3 million for the
National Capital Planning Commission. The
Planning Commission will examine the content
and timeline of its Federal Capital Improvements Program, which coordinates proposed
Federal land and building projects, to make
it more useful to Federal agencies in their capital budgeting process.

11.

EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES

Tax Expenditures
The Federal Government helps individuals,
families, and employers (on behalf of their
employees) pay for education and training,
and helps State and local governments support
education and training activities, through numerous tax benefits, which under current
law will cost an estimated $39 billion in
2002, and $215 billion from 2002 to 2006.
The President proposes four new or expanded tax incentives. To help parents offset
the increasing costs of education, the annual
contribution limit for Education Savings
Accounts would be increased from $500 to
$5,000, and families would be allowed to
withdraw these funds tax-free to pay educational costs from kindergarten through college. To encourage parents to save early
for college, a full tax exemption would be
available for all qualified pre-paid tuition
and savings plans. The President also proposes
a new tax deduction for teachers to deduct
up to $400 annually to defray out-of-pocket

classroom expenses, including books, school
supplies, and professional development programs. The President proposes to help local
school districts meet school construction demands by allowing tax-exempt State private
activity bonds to be used for school construction and repair.
The President proposes to extend the Work
Opportunity Tax Credit and the Welfareto-Work Tax Credit, letting employers claim
a tax credit for part of the wages they
pay to certain hard-to-employ people who
work for them for a minimum period. Other
current tax expenditures continue under the
budget, such as tax credits to help families
offset the costs of higher education. In addition, State and local governments can issue
tax-exempt debt to finance student loans
or build facilities of non-profit educational
institutions. Interest from certain U.S. Savings
Bonds is tax-free if the bonds go solely
to pay for education. Many employers provide
education benefits that do not count as income.

12.
Table 12–1.

HEALTH

Federal Resources in Support of Health
(In millions of dollars)

Function 550

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................
Proposed legislation ...................
Credit Activity:
Guaranteed loans ..........................
Tax Expenditures:
Existing law ...................................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

33,823

38,858

41,008

45,663

46,882

48,130

49,397

124,521
..............

138,710
2,500

152,363
10,675

168,913
13,743

183,636
14,571

199,672
4,265

216,553
121

91,080

99,750

108,620

117,750

127,500

136,810

147,080

In 2002, the Federal Government will spend
about $193 billion under existing law and
allocate nearly $109 billion in tax incentives
to provide direct health care services, promote
disease prevention, further consumer and occupational safety, and conduct and support
research. These Federal activities aim to
improve the health of Americans as evidenced
by key health statistics such as life expectancy
and infant mortality. In addition, in 2002
Federal health programs will continue efforts
to research and understand the causes of
diseases such as cancer and diabetes, as
well as to reduce the incidence of HIV
and other infectious diseases. The Department
of Health and Human Services (HHS), as
the Federal Government’s lead agency for
health, will undertake a thorough examination
across the entire Department to become more
efficient and ensure a streamlined, rationalized budget and program structure.
Health Care Services and Financing
Of the estimated $193 billion in Federal
health care spending in 2002, 84 percent
finances or supports direct health care services
to individuals.
Immediate Helping Hand (IHH): The
Immediate Helping Hand initiative provides
critical assistance to our Nation’s most vulner-

able senior citizens for the cost of their prescription drugs. It provides $46.0 billion for
2001–2005 to States to help low-income
Medicare beneficiaries pay for their prescriptions. This proposal builds on coverage that
is already in place in more than half the
States and would provide benefits to 9.5
million vulnerable Medicare beneficiaries who
currently do not have any other prescription
drug coverage. The plan is unique because
needy seniors will be able to get help with
their prescription drug costs this year.
IHH covers the full cost of drug coverage
for individual Medicare beneficiaries with incomes up to $11,600 who are not eligible
for Medicaid or a comprehensive private retiree benefit, and for married couples with
incomes up to $15,700 (135 percent of poverty)
who do not have access to coverage. These
beneficiaries would receive comprehensive
drug insurance for no premium with nominal
charges for prescriptions.
IHH covers part of the drug costs for
individual Medicare beneficiaries with incomes
up to $15,000 and married couples with
incomes up to $20,300 (175 percent of poverty).
These beneficiaries would receive subsidies
for at least 50 percent of the premium
for drug coverage.
97

98
IHH also provides catastrophic drug
coverage for all Medicare beneficiaries, giving
them financial security against the risk of
very
high
out-of-pocket
prescription
expenditures.
Medicaid: This Federal-State health care
program served about 33.4 million low-income
Americans in 2000. States that participate in
Medicaid must cover several categories of eligible people as well as several mandated
services. The Federal Government spent
$117.9 billion, 57 percent of the total, on the
program in 2000 while States spent $89.1
billion, or 43 percent. Medicaid covers a fourth
of the Nation’s children and is the largest single purchaser of maternity care as well as of
nursing home services and other long-term
care services; the program covers almost twothirds of nursing home residents. The elderly
and disabled made up a third of Medicaid
enrollees in 2000, but accounted for approximately two-thirds of spending on benefits.
Medicaid serves at least half of all adults
living with AIDS (and up to 90 percent of children with AIDS), and is the largest single
payer of direct medical services to adults living
with AIDS. Medicaid pays for over one-third
of the Nation’s long-term care services.
Medicaid spends more on institutional care
today than it does for home and communitybased care, but the mix of payments is expected to be almost equal in 10 years.
Current restrictions and requirements in
the Medicaid program may be inhibiting
the States’ ability to operate the program
efficiently. In addition to taking steps to
further address the Medicaid upper payment
limit loophole, the Administration plans to
consult with the States on the development
of ideas to increase State flexibility, control
Medicaid costs, improve Medicaid coverage,
and ensure the fiscally prudent management
of the Medicaid program.
A major Administration priority is to improve the quality of Medicaid coverage.
Because the Health Care Financing Administration (HCFA) and States jointly administer
Medicaid, HCFA has worked with State
Medicaid agencies to develop national performance goals for Medicaid. These efforts will
continue in 2002. With respect to the goal
of increasing immunization rates among Med-

THE BUDGET FOR FISCAL YEAR 2002

icaid children, HCFA will continue to collaborate with States to develop individualized
State immunization goals, with each State
developing its own methodology, baseline,
and three-year target. In 2002, the first
and second groups of States will report
their progress towards their State goals,
and the final group of States will establish
their baselines and targets. HCFA’s goal
complements the Centers for Disease Control
and Prevention’s (CDC’s) broader 2002 goal
of helping States ensure that at least 90
percent of all U.S. children by age two
receive each recommended basic childhood
vaccine.
State Children’s Health Insurance Program: The State Children’s Health Insurance
Program (S-CHIP) was established in 1997 in
the Balanced Budget Act to provide $24 billion
over five years for States to expand health
insurance coverage to low-income, uninsured
children. S-CHIP provides States with broad
flexibility in program design while protecting
beneficiaries through basic Federal standards.
Each State’s S-CHIP plan describes the
strategic objectives, performance goals, and
performance measures used to assess the
effectiveness of the plan. HCFA has been
working with the States to develop baselines
and targets for the S-CHIP/Medicaid goal
of decreasing the number of uninsured children by enrolling children in S-CHIP and
Medicaid. In 2000, 3.3 million children were
enrolled in S-CHIP, a 70-percent increase
over 1999 levels. However, more than twice
as many children remain uninsured.
Other Health Care Services: In addition
to Medicare and Medicaid, HHS administers
a number of other programs, some of which
have been added to the inventory of HHS
activities over the last several years. As a
result, HHS has evolved into a sprawling,
loosely organized bureaucracy where several
programs are serving similar populations. During 2002, HHS will ensure strong centralized
control and coordination to eliminate overlap
and duplicative activities. Selected health-related 2002 performance goals are highlighted
below.
• Access to health care: The budget includes
a Community and Migrant Health Center
(CMHC) initiative to increase access to

12.

HEALTH

health care by supporting 1,200 new and
expanded community health center sites
over five years. In 2001, 3,263 CMHC sites
delivered high quality, culturally competent care to millions of uninsured and
underserved Americans. In 2002, the number of health center sites will increase by
almost 100. By increasing the number of
health care access points, CMHCs will be
able to help assure the provision of preventive and primary health care to almost
one million more individuals than were
served in 2001.
• Healthy Communities Innovation Fund
(HCIF): The 2002 Budget includes an
HHS-wide HCIF initiative that will make
available approximately $400 million within existing grant activities to target innovative solutions in areas of health risks
such as heart disease, adult and childhood
Type II diabetes, and childhood obesity.
HHS will ensure that the best and broadest range of innovative solutions are funded across the country.
• Indian Health Service (IHS): IHS is committed to addressing the major health
problems afflicting Native Americans and
Alaska Natives and has targeted diabetes
because of the high prevalence of this
disease in this population. IHS’ efforts in
disease monitoring, prevention education,
and treatment focus on improving the
average blood sugar levels of IHS’ diabetic
patients. In 2002, IHS will demonstrate
a continued trend in improved glycemic
control in the proportion of Native
American patients with diagnosed diabetes.
• Substance Abuse and Mental Health Services Administration (SAMHSA): SAMHSA
is committed to narrowing the treatment
gap between those in need of treatment
and those with access to it, which is
almost three million individuals. SAMHSA
also seeks positive, measurable outcomes
for those people who do receive treatment.
By 2007, SAMHSA expects that those who
complete substance abuse treatment
programs will achieve a 10-percent increase in full-time employment status, a
10-percent increase in educational status
for adolescents, a 10-percent decrease in

99
illegal activity, and a 10-percent increase
in general medical health.
• Youth drug treatment: While drug use
among youth increased for much of the
last decade, there has been some encouraging news in the most recent data. The
percent of youths age 12 to 17 who
reported current use of illicit drugs
decreased from 11.4 percent in 1997 to
nine percent in 1999. In 2002, SAMHSA
will aim to cut monthly marijuana use in
this population by 25 percent, from the
1998 baseline of 8.3 percent to 6.2 percent.
• Services for the mentally ill: The Surgeon
General’s 1999 report on mental health
states that one in five Americans is living
with a mental health disorder. Mental
health services funded in SAMHSA will
advance the goal of increasing the percent
of adults with serious mental illness who
are employed, are living independently,
and have had no contact with the criminal
justice system.
Consumer Product Safety Commission
(CPSC): In 1999, there were an estimated
670,000 product-related head injuries to children under 15 years old. As a part of CPSC’s
effort to reduce head injuries by 10 percent
by 2006, this independent agency recalled or
took corrective actions on 20 products in 1999
and 32 in 2000 that presented a substantial
risk of head injury. In 2002, CPSC projects
pursuing another 30 recalls or corrective actions of products that present substantial risk
of head injury.
Bioterrorism: HHS’ Office of Emergency
Preparedness will work with localities to establish 25 new Metropolitan Medical Response
Systems, which develop and link local public
health, public safety, and health services capabilities to respond to a chemical/biological/nuclear terrorist incident, for a total of 122 systems in various stages of development by the
end of 2002. HHS will spend $52 million in
2002 on a civilian stockpile of therapeutics to
meet potential threats caused by the agents
listed in the 1999 Antibioterrorism Plan: anthrax, plague, tularemia, smallpox, and nerve
and blister agents. In 2002, HHS plans to meet
preparedness targets for treating victims of
these agents as specified in the Plan. Two new
agents have been added to the list, and HHS

100
has begun determination of both treatment
methods and victim numbers for these agents.
Preparedness percentages will rise each year,
with an expected readiness level of 100 percent
to be reached for each agent on the list, including the two new agents, by 2004.
HHS’ HIV/AIDS Prevention and Care Activities: HHS spends approximately $2.7 billion for the Centers for Disease Control and
Prevention (CDC) and the Health Resources
and Services Administration (HRSA) to prevent the spread of HIV/AIDS both domestically
and increasingly, internationally, and provide
appropriate treatment for those living with
HIV/AIDS.
• By 2005, CDC will reduce the incidence
of new HIV infections in the United States
by 50 percent, from 40,000 in 1999 to
20,000 in 2005. As part of its efforts to
achieve this goal, CDC will reduce the
number of new infections by approximately six percent by 2002.
• Internationally, working with other countries, the U.S. Agency for International
Development, and international and U.S.
Government agencies, CDC will reduce the
number of new infections among 15 to 24
year-olds in sub-Saharan Africa from an
estimated two million, by 25 percent by
2005.
• There are an estimated 800,000 to 900,000
persons in the United States living with
HIV infection, two-thirds of whom are
aware of their status. HRSA’s Ryan White
CARE Act treatment efforts will increase
the number of AIDS Drug Assistance Program (ADAP) clients receiving HIV/AIDS
medications during at least one month of
the year through State ADAPs from
65,387 in 2000 to approximately 72,000
clients in 2002.
Centers for Disease Control and Prevention: CDC is the leading prevention agency
within the public health service and focuses
on preventing and controlling disease, injury
and disability. CDC’s activities cover a broad
range of programmatic areas from childhood
immunizations to HIV/AIDS prevention to
occupational safety and health research to
infectious disease control and chronic disease
prevention. In 2002, CDC will continue its

THE BUDGET FOR FISCAL YEAR 2002

efforts to improve State and local public health
capacity to detect and respond to emerging
infectious diseases. Fifty-three State health
departments will have increased epidemiologic
and laboratory capacity, which is an increase
from 33 in 1999. CDC will also continue to
work to improve its financial management,
accounting and budgetary systems so that the
total costs of CDC’s activities will be presented
more accurately and fairly.
Health Research: The National Institutes
of Health (NIH) supports and conducts
research to gain knowledge to help prevent,
detect, diagnose, and treat disease and disability. NIH supports nearly 60,000 awards
and contracts to universities, medical schools,
and other research and research training
facilities while conducting over 1,200 projects
in its own laboratories and clinical facilities.
In 2002, NIH-supported research will aim to
add to the body of knowledge about biological
functions, develop new and improved instruments and technologies for use in research and
medicine, and develop new or improved approaches to diagnosing and treating diseases
and disability. NIH performance goals include:
• Continuing the progress of genome sequencing by completing two-thirds of the
human genome sequence with 99.99 percent accuracy by the end of 2002. This
goal builds on a recent announcement of
the completion of a draft sequence and initial analysis of the human genome. While
this draft is extremely useful, the next
stage will involve finishing the sequence
completely with no gaps and with a 99.99
percent accuracy. Currently about onethird of the sequence is in finished form.
Additionally, progress toward development
of a vaccine for HIV/AIDS by 2007 is encouraging. Diverse approaches to HIV vaccine
design are being pursued, including refinements in the envelope protein strategy, using
other HIV accessory proteins as immunogens,
and improved DNA vaccine strategies.
By 2002, NIH funding will have grown
by $9.5 billion, or 70 percent, since 1998.
NIH is working to meet the management
challenges that can arise when an agency
receives a substantial infusion of resources
over a short period of time. During the
2000 financial audit, for instance, the Inspec-

12.

HEALTH

tor General noted that NIH’s decentralized
and
non-standard
accounting
processes
resulted in numerous errors that were not
corrected until several months later, significantly delaying NIH preparation of reliable
financial statements. NIH is in the process
of identifying strategies and policies that
would be implemented in 2002 and 2003
and beyond to maximize budgetary and management flexibility in the future. Such strategies would include funding the total costs
of an increasing number of new grants in
the grant’s first year and supporting some
one-time activities such as high-priority
construction and renovation projects.
Besides NIH, eight other HHS agencies
supported over $1.2 billion of public health,
health services and policy research in 2001.
In light of the initiative to double funding
for NIH, there is an opportunity now to
examine the HHS health research portfolio
to streamline management of the research
agenda, identify any overlap in funding for
similar research, and set priorities. Over
the coming year, HHS will examine these
issues closely and develop recommendations
for reforming the Department’s health research activities. In particular, HHS will
prioritize its research agenda to focus on
activities where the Federal mission and
interests are clear, and focus less on research
that is more traditionally and appropriately
supported by universities and other research
institutions.
Agency for Healthcare Research and
Quality (AHRQ): AHRQ will continue efforts
to gather data on the effectiveness and delivery of treatments. In 2002, AHRQ will conduct,
support, and disseminate research on the organization, quality, financing, and content of
health services. A minimum of 60 projects will
be funded that will reduce medical errors and
enhance patient safety. Evidence-based Practice Centers will produce a minimum of 18
evidence reports and technology assessments
that can serve as the basis for interventions
to enhance health outcomes and quality by improving practice.
Office of the Secretary (OS): The OS will
take the lead across HHS in ensuring that
operations and investments are managed
effectively and produce results. Funding for OS

101
will grow by 14 percent in 2002, which will
include major, new investments in information
technology. The budget supports efforts to
streamline HHS’ decentralized approach to
departmental management with the goal of enhancing coordination, eliminating costly duplication of efforts, and developing unified
approaches and measurable outcomes for
several of the key management challenges. For
example, HHS will move toward a unified
financial management system to streamline
accounting operations throughout the Department
and
consolidate
Department-level
financial reporting. OS will also promote a
Department-wide information technology (IT)
system design, to find efficiencies in the
Department’s current internal IT spending
base of $1.5 billion. Additionally, HHS will
also review opportunities for managing and
consolidating similar programs.
Public Health Regulation and Food
Safety Inspection: The Food and Drug
Administration (FDA) spends over $1.2 billion
a year to promote public health by ensuring
that foods are safe and wholesome and drugs,
biological products, and medical devices are
safe and effective. It leads Federal efforts to
review new products and ensure that regulations enhance public health without unnecessary burden. The FDA also supports important
research and consumer education.
To allow innovative new drugs, medical
devices, and other products to be made available to the public more quickly, FDA has
set the following performance goals for 2002:
• Review and act on 90 percent of standard
original new drug application submissions
within 10 months of receipt and 90 percent of priority original new drug application submissions within six months of receipt, while handling a new drug application workload that grows annually; and,
• Complete first action on 90 percent of new
medical device applications (known as premarket applications) within 180 days,
compared to 74 percent in 1999.
To allow for more thorough inspection of
imported foods, FDA has set the following
performance goal for 2002:
• Increase the number of import inspections
of high-risk foods to 60,000 in 2002.

102
The Food Safety and Inspection Service
(FSIS), in the U.S. Department of Agriculture
(USDA), inspects the Nation’s meat, poultry,
and egg products at over 6,000 establishments
nation-wide. In 1996, FSIS began implementing a scientifically-based inspection system (Hazard Analysis and Critical Control
Point (HACCP)) that requires meat and poultry plants to implement food safety controls
and conduct sanitation and microbiological
testing. In addition to in-plant inspection,
FSIS conducts foreign and State program
reviews, risk assessments, and consumer education to reduce the prevalence of harmful
pathogens on U.S. meat and poultry that
contribute to foodborne illness. USDA has
the following food safety goal:
• In 2002, make continued progress towards
the five-year goal of reducing by 50
percent the prevalence of salmonella on
certain raw meat and poultry products by
2005.
Workplace Safety and Health
In 2002 the Federal Government will spend
over $670 million to promote safe and healthful conditions for over 100 million workers
in six million workplaces, primarily through
the Department of Labor’s Occupational Safety
and Health Administration (OSHA) and Mine
Safety and Health Administration (MSHA).
Through a combination of compliance assistance and targeted enforcement, these agencies
protect workers from illness, injury, and death
caused by occupational exposure to hazardous
substances and conditions. Although occupational fatalities, injuries, and illness are at
record-low levels, the Government must maintain its commitment to partner with employers
and workers to reduce the over six thousand
fatalities and 5.7 million injuries and illnesses
that occur annually.
• In 2002, OSHA will: reduce injury and illness rates by 20 percent in at least
100,000 hazardous workplaces where
OSHA initiates action; reduce injuries and
illnesses by 15 percent at work sites engaged in voluntary, cooperative relationships with OSHA; and initiate an investigation of 95 percent of worker complaints
within one working day or conduct an onsite inspection within five working days.

THE BUDGET FOR FISCAL YEAR 2002

• In 2002, MSHA will reduce fatalities and
lost-workday injuries to below the average
number recorded for the previous five
years.
Federal Employees Health Benefits
Program (FEHBP)
Established in 1960 and administered by
the Office of Personnel Management, the
FEHBP is the largest employer-sponsored
health insurance program in the Nation,
providing over $20 billion in health care
benefits a year to about nine million Federal
employees, annuitants, and their families.
FEHBP offers a wide range of health
insurance plans that enable employees to
choose the benefits package that best suits
their particular health care needs and budgets.
Because choice and competition are hallmarks
of the program, the FEHBP reports one
of the highest levels of customer satisfaction
of any health care program in the country.
About 85 percent of eligible Federal employees
participate in the FEHBP.
FEHBP is one part of the Government’s
total compensation package, and, like other
health plans, has seen its costs outpace
inflation over the last few years. The Administration will consider the following: options
to ensure that the Program offers high quality
and cost effective health plans; incentives
to Federal employees and annuitants to choose
their plans wisely; and coordination of annuitant health benefits with future reforms
to Medicare.
Tax Expenditures: Federal tax laws help
finance health insurance and care. Most notably, employer contributions for health insurance premiums are excluded from employees’
taxable income, costing $92 billion in 2002 and
$540 billion from 2002 to 2006. In addition,
self-employed people may deduct a part (60
percent in 2001, rising to 100 percent in 2003
and beyond) of what they pay for health insurance for themselves and their families. Total
health-related tax expenditures, including
other provisions, will cost an estimated $109
billion in 2002, and $638 billion from 2002
to 2006.

12.

HEALTH

To encourage private health insurance coverage, the budget includes a new refundable
tax credit for individuals and families who
are not covered by an employee plan nor
eligible for public programs. The budget also
includes new tax provisions to reform and
permanently extend Medical Savings Accounts
(MSAs). The budget proposes to help those
with long-term care costs by providing a

103
deduction for long-term care insurance premiums and an additional personal exemption
to home caretakers of family members. In
addition, the budget would improve flexible
spending accounts by allowing up to $500
in unused benefits to be distributed as taxable
income rolled over into an MSA, or rolled
over into a 401(K) or similar plan.

13.
Table 13–1.

MEDICARE

Federal Resources in Support of Medicare
(In millions of dollars)

Function 570

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................
Proposed legislation ...................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

2,998

3,352

3,466

3,549

3,631

3,714

3,800

194,115
..............

216,002
..............

226,448
..............

238,575
..............

252,231
..............

270,784
8,300

279,426
12,800

Created by the Social Security Amendments
of 1965, and expanded in 1972, Medicare
is a nationwide health insurance program
for the elderly and certain people with disabilities. The program will spend an estimated
$226 billion in 2002 on mandatory benefits
(net of beneficiary premiums) and administrative costs.
Medicare was designed to address a serious,
national problem in health care—the elderly
often could not afford to buy health insurance,
which was more expensive for them than
for other Americans because they had higher
health care costs. Medicare was expanded
in 1972 to address a similar problem of
access to insurance for people with disabilities.
Through Medicare, the Federal Government
created one insurance pool for all of the
elderly and eligible disabled individuals while
subsidizing some of the costs, thus making
insurance much more affordable for almost
all elderly Americans and for certain people
with disabilities. Medicare expanded access
to quality care for the elderly and people
with disabilities. With rapid changes in the
health care industry, however, Medicare’s
approach to health care coverage has become
increasingly dated. Medicare’s benefits have
significant gaps, including the lack of a
prescription drug benefit. Medicare provides
fewer coverage options for many beneficiaries
than are enjoyed by employees of large private
firms and the Federal Government. As a
result, many beneficiaries do not have access

to innovative disease management programs
for their chronic illnesses, or to coverage
options that would help them limit their
out-of-pocket costs. In addition, Medicare has
an enormous and growing long-term financing
gap.
Medicare Benefits
In contrast to the integrated health insurance plans that provide coverage for most
non-elderly Americans today, Medicare’s structure continues to reflect the historical division
of health insurance into a ‘‘hospital’’ component and a ‘‘physician’’ component that existed
at the time the program was created. Medicare
has two parts: (1) Hospital Insurance (Part
A) and (2) Supplementary Medical Insurance
(Part B).
Part A covers almost all Americans age
65 or older, and most persons who are
disabled for 24 months or more and who
are entitled to Social Security or Railroad
Retirement benefits. People with end-stage
renal disease (ESRD) also are eligible for
Part A coverage. Part A reimburses providers
for the inpatient hospital, skilled nursing
facility, home health care related to a hospital
stay, and hospice services provided to beneficiaries. Part A’s Hospital Insurance (HI)
Trust Fund receives most of its income from
the HI payroll tax—2.9 percent of payroll,
split evenly between employers and employees.
105

106
Part B coverage is optional, and it is
available to almost all resident citizens age
65 or older and to people with disabilities
who are entitled to Part A. About 94 percent
of those enrolled in Part A have chosen
to enroll in Part B. Enrollees pay monthly
premiums that cover about 25 percent of
Part B costs, while general taxpayer dollars
subsidize the remaining costs. For most beneficiaries, the Government simply deducts the
Part B premium from their monthly Social
Security checks. Part B pays for medically
necessary physician services; outpatient hospital services; diagnostic clinical laboratory
tests; certain durable medical equipment (e.g.,
wheelchairs) and medical supplies; home
health care; physical and occupational therapy;
speech pathology services; and outpatient mental health services. Part B also covers kidney
dialysis and other services for ESRD patients.
Public vs. Private Health Care Coverage
Beneficiaries can choose the coverage they
prefer among a limited set of options. Under
the traditional fee-for-service option, beneficiaries can go to most providers in the
country. Medicare pays providers primarily
based on prospective payment, an established
fee schedule, or reasonable costs. About 84
percent of Medicare beneficiaries now opt
for fee-for-service coverage.
Alternatively, beneficiaries can enroll in
a Medicare+Choice plan. Generally, enrollees
receive care from a network of providers.
Most managed care plans receive a monthly,
per-enrollee capitated payment that covers
the cost of Part A and B services. The
Administration will focus on expanding opportunities for beneficiaries to access a wider
array of plans, including Preferred Provider
Organizations and plans that offer a point
of service benefit, allowing beneficiaries to
receive certain services from non-network providers.
Spending and Enrollment
Federal spending on Medicare benefits will
rise by an estimated average annual rate
of 5.4 percent from 2002 to 2006, from
$226 billion to $279 billion. Part A benefit
outlays will grow by an estimated 23 percent
over the period—from $140 billion to $172
billion, or an average of 5.3 percent a year.

THE BUDGET FOR FISCAL YEAR 2002

Part B outlays will grow by an estimated
23 percent—from $85 billion to $106 billion,
or an average of 5.7 percent a year. These
figures cover net Federal spending on Medicare benefits, and do not include spending
financed by beneficiaries’ premium payments.
Medicare enrollment will grow slowly until
2011, then rapidly increase as the baby
boom generation begins to reach age 65
in 2011. From 1995 to 2011, enrollment
will grow at an estimated average annual
rate of 1.5 percent, from 37.4 million enrollees
in 1995 to 46.9 million in 2011. After 2011,
average annual growth will grow at a faster
rate, with enrollment reaching more than
69 million in 2025.
The Two Trust Funds and Solvency
Hospital Insurance (HI) Trust Fund: As
noted earlier in this chapter, the HI Trust
Fund is financed by a 2.9 percent payroll tax,
split evenly between employers and employees.
Since current benefits are paid by current
workers, Medicare costs associated with the retirement of the baby boomers starting in 2010,
will be borne by the relatively small number
of people born after the baby boom. As a
result, only 2.3 workers will be available to
support each beneficiary in 2030—compared to
today’s four workers per beneficiary. The
Medicare Trustees recently reported that the
HI Trust Fund depletion date improved slightly from last year’s report (from 2025 to 2029)
but HI spending will begin to exceed tax receipts by 2016. In addition, the Medicare
Trustees reported that the HI Trust Fund is
in worse long-term financial shape than the
Social Security Trust Fund. The President
plans to work with Congress to develop a longterm solution to this financing challenge.
Supplementary Medical Insurance (SMI)
Trust Fund: The SMI Trust Fund receives
about 75 percent of its income from general
Federal revenues and about 25 percent from
beneficiary premiums. Unlike HI, the SMI
Trust Fund is really a trust fund in name
only; the law lets the SMI Trust Fund tap
directly into general revenues to ensure its annual solvency.

13.

107

MEDICARE

Comprehensive Measure of Medicare Solvency: Currently, there is no comprehensive
measure of Medicare’s solvency that takes into
account SMI finances, as well as HI. This seriously underestimates the magnitude of the
Medicare financial problem. The Medicare
Trustees acknowledged this disconnect in their
2001 Trustees report. They stated that:
‘‘Although this report focuses on the financial
status of the HI Trust Fund, it is important
to recognize the financial challenges facing the
Medicare program as a whole and the need
for integrated solutions.’’
As the Trustees report begins to show,
on a combined basis Medicare spending will
grow from 2.2 percent of GDP in 2000
to 4.5 percent in 2030 and 8.5 percent
in 2075. Sources of dedicated Medicare financing will rise at a slower rate, from 1.8
percent of GDP in 2000, to 2.2 percent
in 2030, and 2.5 percent in 2075. The gap
in Medicare financing will therefore grow
from 0.4 percent of GDP in 2000 to six
percent of GDP in 2075. The Administration
will work to establish a comprehensive measurement of solvency in order to assess the
overall financial outlook of the Medicare program.
Previous Medicare Reform Legislation
The Balanced Budget Act (BBA) of 1997
improved Medicare’s financial outlook temporarily, while the Balanced Budget Refinement
Act (BBRA) of 1999 corrected some of the
unintended consequences of the BBA. The
Beneficiary Improvement and Protection Act
(BIPA) of 2000 added preventive benefits
health care benefits, reduced beneficiary cost
sharing, while also reducing some provider
payments. Despite this legislative activity,
the Medicare program requires additional

Table 13–2.

reform to address its poor financial condition,
and the inadequate benefits package, among
other problems. The Administration will work
with Congress to further modernize Medicare
and integrate prescription drug coverage, while
also strengthening the Medicare+Choice program.
Budget Implementation
Medicare Reform: Many improvements in
Medicare’s outdated structure are needed to
increase the quality of care for seniors and
the disabled, to streamline the burdensome
and inflexible bureaucratic controls, and to improve the program’s financing. The budget devotes $153 billion over 10 years for Medicare
modernization, including providing for a prescription drug benefit for all Medicare beneficiaries (see Table 13–2).
The President plans to reform Medicare
based on the following principles:
• Medicare should be modernized, to provide
better coverage options, streamlined regulations, and higher quality of care.
• Medicare should assure that all seniors
have affordable access to prescription drug
coverage, as part of a modernized Medicare program.
• Medicare should provide better options for
protection against high out-of-pocket expenses, particularly for low-income seniors.
• Medicare should have greater overall financial security, including an accurate
measure of the financial status of the program as a whole, without raising payroll
tax rates.

Immediate Helping Hand and Medicare Modernization
(Outlays in billions of dollars)
Estimate

Total

2001
Immediate Helping
Hand and Medicare
Modernization .........

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2002–
2006

2002–
2011

153

108
Reforming the Health Care Financing
Administration (HCFA): HCFA faces the
formidable challenge of modernizing its administrative infrastructure, meeting pressing statutory deadlines for program changes from the
BBA, the BBRA, the BIPA, and the Health
Insurance Portability and Accountability Act,
and perhaps most importantly, the need to be
highly responsive to its customers. HCFA
management reform is an Administration priority. HCFA will undertake a major effort to
modernize and streamline its operations to
more effectively manage current programs and
implement new legislation. The Administration
will also examine more fundamental change
in HCFA’s mission and structure as part of
this effort.
In addition, HCFA will also work to protect
the integrity of Medicare’s payment systems
without
imposing
burdensome
new
requirements on providers. Previous legislation
authorizes mandatory Federal funds and
greater authority to prevent inappropriate
payments to fraudulent providers, and to
seek out and prosecute providers who continue
to defraud Medicare and other health care
programs. In 2000, the error rate was 6.8
percent, or $11.9 billion. The 2002 goal
is to reduce the error rate to five percent.

THE BUDGET FOR FISCAL YEAR 2002

Performance Plan: HCFA has developed a
set of performance goals to measure its
progress in ensuring that Medicare beneficiaries receive the highest quality health
care.
HCFA’s 2002 goals include:
• increasing the percentage of female Medicare beneficiaries who receive a mammogram once every two years from 45 percent in 1998 to 52 percent in 2002;
• decreasing the one-year mortality rate
among Medicare beneficiaries hospitalized
for heart attacks from 31.2 percent in 1995
to 27.4 percent in 2002;
• reducing the prevalence of pressure ulcers
(bed sores) in nursing homes from 9.8 percent in 2000 to 9.5 percent in 2002. Absence of pressure ulcers are a good indicator of quality of care provided by nursing home; and
• increasing the percentage of Medicare
beneficiaries age 65 and over receiving
vaccinations for influenza from 59 percent
in 1994 to 73 percent in 2002, and those
receiving a lifetime pneumococcal vaccination from 25 percent in 1994 to 65 percent
in 2002.

14.
Table 14–1.

INCOME SECURITY

Federal Resources in Support of Income Security
(In millions of dollars)

Function 600

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

31,553

39,483

42,805

45,057

46,683

48,313

49,571

206,481
..............

217,157
..............

228,526
273

237,028
895

246,267
1,047

258,199
1,166

265,456
1,280

17
19

20
33

12
59

..............
74

..............
73

147,604

153,372

159,053

165,675

172,346

179,058

187,685

The Federal Government provides over $271
billion a year in cash or in-kind benefits
to individuals through income security programs, including those generally defined as
part of the ‘‘social safety net.’’ Since the
1930s, these safety net programs, plus Social
Security, Medicare, Medicaid, and housing
assistance (each discussed in other chapters),
have grown enough in size and coverage
so that even in difficult economic times,
most Americans can count on some form
of minimum support to prevent destitution.
The income security programs also include
retirement and disability insurance (excluding
Social Security, which is described in Chapter
15), Federal activity related to private pensions, and Federal employee retirement and
disability programs.
Major Public Benefit Programs
The largest means-tested income security
programs are Food Stamps, Supplemental
Security Income (SSI), Temporary Assistance
for Needy Families (TANF), and the Earned
Income Tax Credit (EITC). The various kinds
of low-income housing assistance are discussed
in Chapter 8, ‘‘Commerce and Housing Credit.’’
These programs, along with unemployment
compensation (which is not means-tested),

are the primary ‘‘safety net’’ assistance programs in the Income Security function.
The major income security programs are
managed by four agencies that broadly interact
with the American people and businesses.
These agencies are the Food and Nutrition
Service (FNS), the Administration on Children
and Families (ACF), the Social Security Administration (SSA), and the Internal Revenue
Service (IRS).
Nutrition Assistance: Federal nutrition
assistance programs are managed by the
Department of Agriculture’s FNS. The largest
of these programs is the Food Stamp Program.
In addition, FNS administers the Special
Supplemental Nutrition Program for Women,
Infants, and Children, and the National School
Lunch and School Breakfast Programs.
Food Stamps: In an average month in
2000, 17.2 million people, or 7.3 million
households, received benefits—and in that
year, the program provided total benefits
of $15.0 billion. Food Stamp enrollment has
steadily declined since peaking at 28 million
people in 1994, due in part to the strength
of the economy and declining welfare caseloads
associated with welfare reform. However, studies also show that enrollment has dropped
109

110
among eligible individuals, including working
families. Total Federal program spending was
$18.3 billion in 2000.
• In 2002, the program will provide an average projected benefit of $78 to 18.4 million
persons each month.
• In 2002, FNS plans to expand the number
of States using Electronic Benefits Transfer to issue 89 percent of Food Stamp
benefits, compared to 75 percent in 2000,
improving the delivery of benefits, and increasing the ability to track benefits redemption as a fraud prevention tool.
• In 2000, FNS estimates that benefit overpayments will represent 6.78 percent of
all benefits issued. FNS will work with
States to reduce this rate to 6.58 percent
of all payments in 2002. A challenge for
States is reducing error among the higher
number of working families whose fluctuating income increases the likelihood of
errors in the level of benefits.
Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC): WIC
provides vouchers for nutritious supplemental
food packages, nutrition education and counseling, and health and immunization referrals
to low-income women, infants, and children.
The program reached an average of nearly
7.2 million people each month in 2000. Participation in 2001 is projected to exceed 7.2
million women, infants, and children monthly,
and the budget proposes $4.1 billion, an
increase of $94 million, to serve 7.25 million
people monthly in 2002.
• Only 34 percent of women participating
in WIC were breastfeeding in 1996. In
2002, together with State public health
agencies, FNS will strive to increase the
incidence of breast-feeding among WIC
mothers to 46 percent.
Child Nutrition Programs: The National
School Lunch and School Breakfast Programs
provide free or low-cost nutritious meals
to children in participating schools.
• In 2002, the programs will serve an estimated 28.0 million children on a daily
basis. In school year 1998–1999, the average percent of calories from saturated fat
in school lunches was 12 percent, above

THE BUDGET FOR FISCAL YEAR 2002

the recommended level of 10 percent, and
only one in seven schools met the 10 percent level. By 2005, FNS aims to reduce
the average percent of calories from saturated fat to 10 percent.
Income Assistance to Aged, Blind, and
Individuals with Disabilities: The SSI program, administered by SSA, provides benefits
to needy aged, blind, and disabled adults
and children. In 2000, 6.3 million individuals
received $30.8 billion in Federal SSI benefit
payments. In 2002, an estimated 6.4 million
individuals will receive a total of $31.5 billion
in Federal SSI benefits. Federal eligibility
rules and payment standards are uniform
across the Nation. In 2000, average monthly
benefit payments ranged from $254 for aged
adults to $445 for blind and disabled children.
Most States supplement the SSI benefit.
The SSI program has been vulnerable to
payment inaccuracy and abuse. For example,
studies by SSA indicate that overpayments,
as a percent of total SSI outlays, were
5.5 percent in 2000. A major aspect of
the President’s vision for Government reform
is to reduce erroneous payments.
• SSA expects to increase payment accuracy
so that 94.7 percent of SSA outlays will
be free of overpayments (based on nonmedical factors of eligibility), an improvement from 94.5 percent in 2000.
Income Assistance to Families: Major
income assistance for low-income families is
provided through the TANF program, administered by the Department of Health and
Human Services’ ACF and the EITC, administered by the IRS. In addition, ACF administers
the Child Support Enforcement Program and
the Child Care and Development Fund. Other
income security programs run by ACF include
refugee assistance and low-income home
energy assistance.
Temporary Assistance for Needy Families
(TANF): The 1996 welfare reform law established TANF as the successor to the 60year-old Aid to Families with Dependent
Children program. TANF, for which the
Federal Government allocates about $16.7
billion each year, is designed to meet the
goal of dramatically changing the Nation’s
welfare system into one that requires and

14.

INCOME SECURITY

rewards work in exchange for time-limited
assistance. The TANF program gives States
broad flexibility to set eligibility criteria and
to determine the types of assistance they
provide. With fewer families receiving cash
assistance, States can use the flexibility in
TANF to help low-income working families
retain and advance in their jobs. The budget
proposes legislation to allow States to use
Federal TANF funds to partially offset revenue
losses from State tax credits for contributions
to State-designated charities.
• States reported that more than 1.2 million
parents on welfare went to work in the
period between October 1, 1998, and September 30, 1999. Overall 43 percent of
welfare recipients entered the work force
in 1999 in comparison to 39 percent in
1998. In 1999, States reported an average
earnings increase of 22 percent for former
welfare recipients over a period of two
quarters.
• Although in 1999 all States met overall
work participation requirements, eight of
36 States that have two-parent family programs failed to meet the required two-parent work participation rate. ACF will work
with States to meet two-parent work participation requirements in 2002.
Individual Development Accounts (IDAs):
The budget includes $25 million in grants
for IDAs, to empower low-income individuals
to save for a first home, postsecondary education, or to start a new business. The
budget also includes a proposal to provide
a tax credit to financial institutions that
match private IDAs.
Child Support Enforcement: The Child Support Enforcement Program establishes and
enforces the support obligations owed by
noncustodial parents to their children. In
1999, the program established approximately
1.6 million paternities among children born
to unwed mothers, and collected an estimated
$17.9 billion in child support in 2000. In
2000, the Federal Government provided $3.2
billion to State and local governments to
help them run the program. The Federal
Government retained $1.3 billion in TANFrelated collections from the States, making
the net cost of this program to the Federal
Government $1.9 billion. In 2002, estimated

111
Federal costs net of TANF collections will
be $2.5 billion.
• In 2002, ACF plans to increase the child
support collection rate to 55 percent, compared to 52 percent in 1999.
Strong child support enforcement is critical
to getting fathers who have the ability to
pay to support their children. However, research shows that a large portion of fathers
who do not pay child support are themselves
poor. And while fathers must fulfill their
financial commitments, they must also fulfill
their emotional commitments. The budget
includes a responsible fatherhood initiative
to reverse the rise in father absence, improve
the job skills of low-income fathers, promote
marriage among parents, and help low-income
fathers establish positive relationships with
their children and their children’s mothers.
(See Chapter 11, ‘‘Education, Training, Employment, and Social Services.’’)
Child Care: The Child Care and Development Fund provides grants to States for
the purposes of providing low-income families
with financial assistance for child care, improving the quality and availability of child
care, and establishing, expanding, or conducting early childhood development programs
and before- and after-school programs.
The budget creates a new $400 million
After-School Certificate program within the
Child Care and Development Block Grant,
raising total funding to $2.2 billion. The
new program would provide grants to States
to assist up to 500,000 parents in obtaining
after-school childcare with a high-quality education focus.
ACF has worked with States to develop
a new set of performance measures and
ACF will continue to collect baseline data
for the program’s goals of increasing access
to affordable care and improving the quality
of care to promote children’s development.
For example, in order to support access
to affordable care, ACF aims to maintain
the average percentage of family income spent
on child care co-payments by families receiving
Federal subsidies. In order to improve the
quality of care, ACF will increase the number
of facilities that are accredited by a nationally

112
recognized early childhood development professional organization.
• In 2002, the Child Care and Development
Fund, including the new After-School Certificate program, will provide child care assistance to an estimated 2.6 million lowincome children, including up to 500,000
children receiving after-school certificates
through the proposed initiative.
• The Administration proposes to increase
the child credit from $500 to $1,000 for
each qualifying child under the age of 17,
and to phase out the credit more slowly
and at a higher levels of income.
Tax Expenditures
Tax expenditures related to income security
total $159 billion in 2002 and $864 billion
from 2002 through 2006. Most of these tax
expenditures are for retirement saving. The
portion of the EITC that offsets tax liabilities
is counted as a tax expenditure; the portion
that is refundable is counted as an outlay.
Tax expenditures related to retirement savings
are discussed at the end of this chapter.
Earned Income Tax Credit (EITC): EITC,
a refundable tax credit for low-income workers,
has two broad goals: (1) to encourage families
to move from welfare to work by making work
pay; and (2) to reward work so parents who
work full time do not have to raise their children in poverty. In 2001, EITC provided $30.8
billion in credits for low-income tax filers, including spending on both tax refunds and reduced tax receipts. For every dollar that lowincome workers earn—up to up to certain
limits—they receive between seven and 40
cents as a tax credit. In 2001, EITC provided
an average credit of nearly $1,680 to 19 million workers and their families. In 2002, an
estimated 19 million families will receive an
average credit of $1,729.
The EITC program faces high error rates.
According to a September 2000 IRS study
of 1997 returns, an estimated $7.8 billion
(25.6 percent) of the $30.3 billion in EITC
claims made by taxpayers were erroneously
paid. The budget includes $146 million in
2002 for IRS to devote to reducing EITC
error rates. The majority of ongoing compliance initiatives are aimed at improving the

THE BUDGET FOR FISCAL YEAR 2002

detection and prevention of erroneous EITC
claims before tax refunds are paid.
Unemployment Compensation
Unemployment Compensation, overseen by
the Department of Labor’s (DOL’s) Employment and Training Administration, provides
benefits to individuals who are temporarily
out of work through no fault of their own
and whose employer has previously paid
payroll taxes to the program. The State
payroll taxes finance the basic benefits out
of a dedicated trust fund. States set benefit
levels and eligibility criteria; benefits are
not means-tested and are taxable. Regular
benefits are typically available for up to
26 weeks of unemployment. In 2000, about
6.9 million persons claimed unemployment
benefits that averaged $212 weekly. In 2002,
an estimated 8.5 million persons will receive
an average benefit of $232 a week. The
Administration plans to examine the unemployment compensation program carefully in
the coming months.
• In 2002, DOL’s goal for accurate eligibility
determinations is that at least 30 States
meet the established criterion for high
quality nonmonetary determinations of eligibility (e.g., determinations that take into
account the reasons for the separation
from the job). In 2000, only 23 States met
the standard for determination quality.
Employee Retirement Benefits
Railroad Retirement Benefits: The Railroad Retirement Board administers retirement, survivor, unemployment, and sickness
insurance benefits for qualified railroad workers and their families. In 2000, about $8.3
billion in retirement-survivor benefits were
paid to some 724,000 individuals, while about
$101 million in unemployment and sickness
benefits, net of current-year recoveries, were
paid to some 35,200 individuals.
The railroad retirement system includes
a benefit equivalent to Social Security benefits,
rail industry pension benefits, and federally
subsidized windfall benefits. The benefits are
financed through railroad employer contributions, railroad employee payroll deductions,
payments from the Social Security trust funds,
and taxpayer subsidies. Unlike other private

14.

INCOME SECURITY

industry pension plans, the rail industry
pension program is the only private industry
pension subsidized by Federal taxpayers and
administered by a Federal agency. In addition,
the program confronts an unfunded liability
of $39.7 billion, as measured by the Employee
Retirement Income Security Act standards.
Any examination of the program should set
as first priorities ending taxpayer subsidies
to the program and ensuring the industry
funds its workers’ pensions.
Federal Employee Retirement Benefits:
The Civil Service Retirement System (CSRS)
and the Federal Employees’ Retirement System (FERS) provide pension coverage for approximately 2.7 million active employees. Both
systems provide a defined benefit pension.
FERS employees (those hired since January
1, 1984) are also covered by Social Security
and a defined contribution plan—the Thrift
Savings Plan (TSP). CSRS employees may contribute to TSP but do not receive the automatic and matching agency contributions provided to FERS employees.
In 2000, the retirement program paid $45
billion in benefits to 2.4 million annuitants
(retirees and survivors). Retirement claims
processing accuracy and timeliness have deteriorated over the past two years, and improving performance in these areas is a high
priority in 2001 and 2002.
• In 2002, the processing time for a FERS
annuity claim will be reduced to 90 days,
substantially lower than the estimated 185
days in 2000.
In conjunction with the effort to improve
claims processing, and to produce future
efficiencies and enhanced services, the budget
provides a substantial increase in funding
for retirement systems modernization, a multiyear information technology investment program aimed at automating much of the
retirement processing function. The budget
also proposes to extend the higher agency
contributions to the retirement fund mandated
by the Balanced Budget Act of 1997 and
set to expire in 2003. The higher employee
contributions required by that Act were repealed in 2001 and are unaffected by this
proposal.

113
Private Pensions: The DOL Pension and
Welfare Benefits Administration (PWBA)
works to protect the roughly $4.9 trillion in
pension assets. More than 95 million participants and beneficiaries are now in private pension plans. DOL’s Pension Benefit Guaranty
Corporation (PBGC) insures against company
bankruptcy the pensions of about 43 million
workers and retirees who earn defined benefit
pensions.
• PWBA issues exemptions allowing certain
financial transactions that pension plans
need to make but would otherwise be prohibited. In 2000, processing the requests
for these exemptions took an average of
294 days, which is too long, even though
the figure includes many older requests.
PWBA now is undertaking to process the
exemptions more speedily, including working off the inventory of complex, older
cases. An additional PWBA goal is to
recover more lost benefits through customer assistance—increasing the dollar
level of recoveries by two percent per year.
PWBA expects to recover $67 million in
benefits for 2002, compared to $66 million
estimated for 2001.
• PBGC is working to reduce the time taken
to calculate individuals’ benefit levels.
This process is technically difficult but
often takes too long. The time taken for
final benefit calculation is expected to drop
to three years in 2002, down from an average of four to five years in 2000. PBGC
also is working to send first benefit checks
more speedily. In 1999, only 83 percent
of pensioners got their first benefit checks
within three months of completing their
applications but PBGC’s goal for 2002 is
95 percent.
Tax Treatment of Retirement Savings:
The Federal Government encourages retirement savings by providing income tax benefits
to both individuals and companies. Generally,
earnings devoted to workplace pension plans
and to many traditional individual retirement
accounts (IRAs) receive beneficial tax treatment in the year earned and ordinarily are
taxed only in retirement, when lower tax rates
usually prevail. Moreover, taxpayers can defer
taxes on the interest and other gains that add
value to these retirement accounts. For the

114
newer Roth IRA accounts, contributions are
made from after-tax earnings, with no tax deduction. However, account earnings are free
from tax when the account is used in retire-

THE BUDGET FOR FISCAL YEAR 2002

ment. All the pension and retirement-saving
tax incentives amount to an estimated $120
billion in 2002—one of the largest set of preferences in the income tax system.

15.
Table 15–1.

SOCIAL SECURITY

Federal Resources in Support of Social Security
(In millions of dollars)

Function 650

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................
Tax Expenditures:
Existing law ...................................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

3,210

3,447

3,520

3,597

3,680

3,759

3,845

406,048

430,000

451,575

473,544

497,967

524,312

552,950

24,800

25,980

27,300

28,450

29,690

31,270

33,000

The Old-Age, Survivors, and Disability Insurance (OASDI) programs, commonly known
as Social Security, are crucial to the economic
well-being of tens of millions of Americans.
Social Security will spend an estimated $455
billion in 2002 to provide more than 46
million beneficiaries with comprehensive protection against loss of income due to the
retirement, disability, or death of a wage
earner.
Social Security provides monthly benefits
to retired and disabled workers who gain
insured status and to their eligible spouses,
children, and survivors. The Social Security
Act of 1935 provided retirement benefits,
and the 1939 amendments provided benefits
for survivors and dependents. These benefits
now comprise the Old Age and Survivors
Insurance (OASI) program. Congress provided
benefits for disabled workers by enacting
the Disability Insurance (DI) program in
1956 and added benefits for the dependents
of disabled workers in 1958. About 30 percent
of Social Security beneficiaries are disabled
workers and their families, or survivors of
deceased workers. (See Table 15–2.)
DI provides income security for workers
and their families when workers lose their
capacity to work due to disability. Before
DI, workers often had no such protection,
although in some cases employees whose
injuries were job-related may have received

State worker’s compensation benefits. Congress enacted DI to protect the resources,
self-reliance, and self-respect of those suffering
from non-work-related disabilities. DI protection can be extremely valuable, especially
for young families who are unable to sufficiently protect themselves against the risk
of the worker’s disability.
The Government expects to collect $539
billion in Social Security taxes in 2002.
These taxes will be credited to the OASI
and DI trust funds, along with $76 billion
of interest on Treasury securities held by
the trust funds.
In 2000, Social Security paid out a total
of $402 billion to 45 million beneficiaries.
These payments included $289 billion in
benefits to 31 million retired workers and
dependent family members, and about $59
billion in benefits to seven million survivors
of deceased workers. Through the DI program,
Social Security paid $54 billion in benefits
to more than six million disabled workers
and their families.
The Long-Range Challenge
Social Security is designed to be selffinanced; its most important revenue source
is the payroll tax. Pressure on the financing
system is growing due to two demographic
factors: members of the baby boom and
subsequent generations are having fewer
115

116

THE BUDGET FOR FISCAL YEAR 2002

Table 15–2.

Social Security Beneficiaries

(Thousands of OASDI beneficiaries)
2002
Estimate

Retired workers and families:
Retired workers .........................................................................................................................................
Wives and husbands .................................................................................................................................
Children .....................................................................................................................................................

28,976
2,779
453

Survivors of deceased workers:
Aged widows and widowers, and dependent parents ............................................................................
Children .....................................................................................................................................................
Widowed mothers and fathers with child beneficiaries in their care ...................................................
Disabled widows and widowers ...............................................................................................................

4,696
1,891
194
210

Disabled workers and families:
Disabled workers ......................................................................................................................................
Wives and husbands .................................................................................................................................
Children .....................................................................................................................................................

5,303
162
1,505

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

46,169

children and are predicted to have longer
life spans than previous generations. The
consequence of these trends is that the ratio
of workers paying into the system for each
beneficiary will decline from 5.1 in 1960
to 3.4 today to 2.1 in 2030. These demographic
trends will strain the Government’s ability
to make benefit payments at current payroll
tax rates. Based on the 2001 Trustee’s Report,
the Social Security trust funds are expected
to run a cash surplus until 2016. However,
cash revenues will fall short of expenditures
after that time, and the trust funds will
exhaust their assets in 2038 unless corrective
action is taken. After 2038, payroll taxes
are projected to cover 73 percent of expenditures. Social Security is largely ‘‘pay-as-yougo,’’ meaning current retirement benefits are
financed by current payroll contributions. Another source of pressure on the trust funds
is the rapid growth of the DI program,
which is expected to accelerate as baby
boomers reach the age at which they are
increasingly prone to disabilities. As a result
of these trends, Social Security’s spending
path is unsustainable in the long run.
The Social Security system faces a longterm unfunded liability of $8.7 trillion. In
addition, the pay-as-you-go structure of Social
Security leads to substantial generational inequities in average rate of return. Future
retirees on average can expect to get back

from Social Security barely more than they
put in. The first generations of workers
covered by Social Security experienced low
payroll tax rates because there were relatively
few retirees to support in the early years
of the program. The earliest cohorts also
paid taxes for only a portion of their working
lives. Consequently, these early generations
enjoyed a high rate of return from the
program because the benefits they received
exceeded their payroll tax contributions by
a comfortable margin. As the system matured,
payroll taxes rose to support an expanding
beneficiary population, and rates of return
declined. (See Chart 15–1.)
Restoring Social Security to financial balance solely through benefit cuts or tax increases would only worsen the returns that
workers would get from the system. One
way to address the long-term financial crisis
is to allow individuals to keep some of
their payroll taxes in personal retirement
accounts that can earn higher rates of return
through investment in private equities markets. The President is committed to modernizing and reforming Social Security, so that
the system will be better able to meet
the needs of tomorrow’s retirees. The President
will form a commission that will examine
Social Security and present recommendations
for reform next fall.

15.

117

SOCIAL SECURITY

Chart 15-1. Social Security Rates of Return

Falling with Each Generation
Average inflation-adjusted rate of return

6%
5%

4.8%

4%
3%
2.2%
1.9%

1.7%

1%
0%
Birth Years

1925

1950

1975*

2000*

*Assumes current-law benefits. The Social Security trust fund will not be able to meet current-law benefit obligations after 2038.
Accordingly, rates of return are overstated.

Principles for Reform
The President believes that Social Security
reform should be based on the following
principles:
• Modernization must not change existing
benefits for current retirees or near-retirees, and it must preserve the disability
and survivors’ components. The promises
made to current retirees must be kept.
• The Social Security surplus must be
preserved only for Social Security. For 30
years, Social Security surpluses have been
used to mask spending increases in programs unrelated to Social Security. Surpluses in the Social Security trust funds
will total $2.6 trillion over the next 10
years. These surpluses will be saved for
Social Security reform and will be used
to reduce debt held by the public until
Social Security reform is enacted.

• Social Security payroll taxes must not be
increased, as they have been 20 times
since the program began in 1937.
• The Government itself must not invest Social Security funds in the private economy.
• Successful Social Security reform, which
addresses both the long-term unfunded liability and the generational inequities,
must be built upon a core of individually
controlled, voluntary personal retirement
accounts that will augment the Social Security safety net.
Social Security Administration (SSA)
To operate a program that affects tens
of millions of beneficiaries and involves a
significant share of all Federal outlays requires an efficient and responsive administrative structure. SSA administers the OASI
and DI programs. SSA also runs the Supplemental Security Income (SSI) program for
low-income aged and disabled individuals,
which is part of the Income Security function

118
(see Chapter 14). In addition, the agency
provides services that support the Medicare
program on behalf of the Health Care Financing Administration, which is part of the
Medicare function (see Chapter 13).
SSA undertakes a variety of activities in
administering its programs. SSA is responsible
for paying benefits to more than 50 million
people every month, processing more than
six million claims for benefits each year,
handling approximately 59 million phone calls
to its 800-number, and issuing 138 million
Social Security statements. Other activities
include issuing Social Security numbers, maintaining earnings records for wage earners
and self-employed individuals, updating beneficiary eligibility information, educating the
public about the programs, combating fraud,
and conducting research, policy analysis and
program evaluation. These activities are largely integrated across the various programs
administered by SSA.

THE BUDGET FOR FISCAL YEAR 2002

structure and offer more services in an online
environment.
SSA’s Performance Plan for 2002 includes
a number of performance indicators that
reflect the President’s commitment to modernizing the agency’s operations. The budget
includes resources to help the agency meet
the goals of responsive programs, excellent
customer service, strong program integrity,
and strengthened public understanding of
Social Security. Like the agency’s administrative activities, these goals cut across programs.
SSA’s broad goals and related performance
measures for 2002 are described below.
Ensure integrity of Social Security programs: The budget supports activities undertaken by SSA to ensure the integrity of records
and payments. These activities include reviewing claimants’ eligibility for continued benefits,
collecting debt, detecting overpayments, and
investigating and deterring fraud.

SSA faces enormous management challenges
as a result of the aging of the baby boom
generation. SSA’s work force is aging and
is likely to experience a wave of retirements
in the next 10 years. During the same
time frame, the agency’s workloads will increase dramatically as members of the baby
boom generation reach their peak years of
disability risk and then begin to retire.
Responding to these challenges will require
that SSA rethink how it does business and
develop innovative ways to manage its growing
workloads.

• In 2002, SSA expects to eliminate the
backlog of more than four million CDRs
that built up prior to 1996. CDRs help
increase public confidence in the integrity
of SSA’s disability programs by ensuring
that only people who continue to be disabled receive benefits.

The Administration proposes $7.7 billion
for SSA, an increase of $0.5 billion, or
6.3 percent, above the 2001 enacted level
of $7.2 billion. This amount includes sufficient
resources to ensure stable staffing in 2002
and will allow SSA to maintain performance
in key service delivery areas such as retirement claims processing. It will allow SSA
to process about 100,000 more initial disability
claims in 2002 than in 2001. This funding
also will help SSA continue its multi-year
continuing disability review (CDR) plan, eliminating the CDR backlog in 2002, as well
as increase the number of SSI non-disability
eligibility redeterminations conducted. In addition, this amount includes resources for SSA
to continue to modernize its computer infra-

Promote responsive programs: SSA’s programs must reflect the interests of beneficiaries and society as a whole. Programs
must evolve to reflect changes in the economy,
demographics, technology, medicine, and other
areas. Many DI and SSI beneficiaries with disabilities, for example, want to be independent
and work. Many of them can work, despite
their impairments, if they receive the support
they need. Yet less than one percent of disabled beneficiaries in any given year actually
leave SSA’s programs due to employment.
Americans with disabilities should have every
freedom to meet their full potential and participate as full members in the economic marketplace.

• In 2002, SSA plans to perform 2.3 million
non-disability redeterminations, an increase of 205,000 redeterminations over
the 2001 level and 78,000 over the 2000
level.

15.

119

SOCIAL SECURITY

As part of the New Freedom Initiative,
the President will work for swift implementation of the Ticket to Work and Work Incentives
Improvement Act. Enacted in 1999, the Act
aims to help disabled beneficiaries enter
or re-enter the work force. This law expands
beneficiaries’ choice of employment service
providers, allows persons with disabilities
to keep or obtain Federal health benefits
when they enter, re-enter, or remain in
the work force, and authorizes SSA to carry
out demonstration projects to identify effective
ways to help DI beneficiaries return to work.
SSA began implementation of the new law
in 2000, and the budget includes funding
to continue and build on these activities
in 2002.
Deliver customer-responsive service:
Roughly three-quarters of SSA’s total administrative budget is devoted to the day-to-day
work generated by requests for service from
the general public. Much of this work takes
the form of determining eligibility for benefits.
The time required to process benefit claims
is affected by the design of the eligibility determination procedures, as well as by the level
of resources dedicated to claims-processing activities and the number of claims received. The
President’s Budget supports efforts to streamline these procedures.
• In 2002, the average processing time for
hearings (i.e., the elapsed time from the
receipt of ‘‘request for hearing’’ to ‘‘notice
of decision’’) at SSA’s Office of Hearings
and Appeals will be 259 days, an improvement from 297 days in 2000.
The Internet is a crucial tool in the Administration’s plan for a Government that is more

efficient and responsive to citizens. SSA will
undertake activities to fully realize the power
of the Internet to improve customer service
delivery.
• By the end of 2002, SSA plans to offer
30 percent of the agency’s customer-initiated services electronically, either via the
Internet or through automated telephone
service. In 2000, only 10 percent of these
services were available electronically.
Strengthen public understanding of Social Security programs: The budget supports
the development, production, and distribution
of products to educate the public about Social
Security benefits and Social Security’s larger
impact on society. SSA conducts an annual
survey to measure public understanding of Social Security programs and issues and undertakes a variety of activities to increase public
awareness.
• In 2002, SSA projects that 75 percent of
the public will be knowledgeable about Social Security programs, an increase from
the 2000 goal of 65 percent.
Tax Expenditures
Social Security recipients pay taxes on
their Social Security benefits when their
overall income, including Social Security, exceeds certain income thresholds. Social Security beneficiaries will pay $13.5 billion in
income taxes on their benefits in 2002 and
$79.3 billion over the period 2002 to 2006.
If all Social Security benefits were subject
to income taxes, taxes would increase by
an estimated $27 billion in 2002 and $150
billion from 2002 through 2006.

16.

VETERANS BENEFITS AND SERVICES

Table 16–1.

Federal Resources in Support of Veterans Benefits and
Services
(In millions of dollars)

Function 700

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

20,904

22,463

23,469

23,996

24,533

25,085

25,651

26,330
..............

23,004
..............

28,142
19

29,725
–24

31,319
–55

35,407
–87

34,054
–117

1,451
20,159

1,712
29,548

1,724
28,969

1,923
29,577

1,962
30,198

2,008
30,838

2,045
31,458

3,280

3,490

3,670

3,860

4,050

4,260

4,470

The Federal Government provides benefits
and services to veterans and their survivors
of conflicts as long ago as the SpanishAmerican War recognizing the sacrifices of
wartime and peacetime veterans during military service. The Federal Government spends
over $51 billion a year on veterans benefits
and services, including medical care to lowincome and disabled veterans and education
and training for veterans reentering civilian
life. In addition, veterans benefits provide
financial assistance to needy veterans of
wartime service and their survivors, and
over $3 billion in tax benefits to compensate
veterans and their survivors for service-related
disabilities.
The Department of Veterans Affairs’ (VA’s)
mission is ‘‘to care for him who shall have
borne the battle and for his widow and
his orphan.’’ The spirit of these words, spoken
by President Lincoln over 100 years ago,
is ingrained in the Department’s statutory
mandate ‘‘to administer the laws providing
benefits and other services to veterans and
the dependents and the beneficiaries of veterans.’’ The mandate sets forth VA’s role
as the principal advocate for veterans and
charges it with ensuring that veterans receive

the medical care, benefits, social support,
and lasting memorials they deserve in recognition of their service to this Nation.
Active duty military personnel are eligible
for veterans housing benefits, and they can
contribute to the Montgomery GI Bill program
for education benefits that are paid later.
VA employs 21 percent of the Federal Government’s non-Department of Defense (DOD)
work force—approximately 220,000 people,
about 195,000 of whom deliver or support
medical services to veterans.
The veteran population continues to decline
and age (see Chart 16–1). The types of
benefits and services needed by veterans
likely will change as the population ages.
Further, as the veteran population shrinks
and technology improves, access to quality
services should continue to improve. The
Administration will work to provide veterans
with the kind of efficient and effective service,
which has been lacking.
Veterans Health Administration (VHA)
VA provides health care services to over
four million veterans through its national
system of 22 integrated health networks,
consisting of 172 medical centers, 781
121

122

THE BUDGET FOR FISCAL YEAR 2002

Chart 16-1. Estimated Veteran Population
Veterans in millions

28.1

27.2
25.5
23.2

20.8
18.7

16.9

15
10
5
0
1990

1995

2000

outpatient clinics, 135 nursing homes, 43
domiciliaries, and 206 vet centers. VA is
an important part of the Nation’s social
safety net because over 42 percent of its
patients are low-income veterans who might
not otherwise receive care. It also is a
leading health care provider for veterans
with substance abuse problems, mental illness,
HIV/AIDS, and spinal cord injuries.
VA’s core mission is to meet the health
care needs of veterans who have compensable
service-connected injuries or very low incomes.
By law, these core veterans are the highest
priority for available Federal dollars for health
care. The Veterans Health Care Eligibility
Reform Act of 1996 allowed VA, for the
first time, to treat all veterans ‘‘enrolled’’
in the system. VA was able to enroll all
veterans that its funding level would allow.
Previously, VA could provide care to lowerpriority veterans (non-disabled, high-income)
only on a space-available basis. Many people
claim that these lower-priority veterans pay

2005

2010

2015

2020

for themselves through co-payments and insurance collections; however, VA’s collections total
only $0.6 billion annually for all categories
of veterans—a figure that has not substantially changed over the last five years despite
the fact that 21 percent of its users are
lower-priority patients. VA will emphasize
increasing collections from lower-priority
veterans so that this population will eventually
pay for itself.
As a result of past problems in delivering
timely, quality care, VA will emphasize its
service and access initiative. This multi-year
effort sets the standard to provide patients
with primary and specialty care appointments
within 30 days, and to ensure patients are
seen within 20 minutes of their scheduled
appointment at a VA health care facility.
Currently, more than 700,000 military retirees are enrolled in both the Department
of Defense (DOD) and the VA health systems
and may use either whenever they choose.
As a result, DOD and VA encounter problems

16.

VETERANS BENEFITS AND SERVICES

in allocating the necessary resources due
to their difficulty estimating the number
of people that will obtain health care services
in each of the systems. The budget includes
appropriations language for DOD that will
require military retirees to choose either
DOD or VA as their health delivery system—
providing continuity of care and a more
efficient use of resources.
In the mid-1990s, VA reorganized its field
facilities from 172 largely independent medical
centers into 22 Veterans Integrated Service
Networks (VISNs), charged with providing
veterans the full continuum of care. During
the same time, legislation was passed that
eased restrictions on VA’s ability to contract
for care and share resources with DOD
hospitals, State facilities, and local health
care providers.
VA’s efforts in reengineering its health
care program have resulted in significant
reductions in the cost per patient treated
while quality of care increased. Reengineering
efforts within VHA included restructuring
veterans’ health care (to include the organizational, financial, and management change
associated with the VISNs), shifting to a
primary care delivery system, and implementing clinical and administrative consolidations and integrations. However, VA still
lags behind the private sector in some respects. The significant changes were:
• patients treated per year increased by over
37 percent (from 2.8 to 3.8 million—
includes veterans and non-veterans);
• annual inpatient admissions decreased 38
percent (347,894 fewer admissions) in
2000 while ambulatory care visits
increased by 56 percent to 39.2 million (14
million increase); and
• approximately 1,150 sites of care delivery
have been organized under 22 VISNs.
Because of VHA’s increased emphasis on
service delivery and access, the following
specific performance goals have been developed:
• increase the percentage of patients who
receive a non-urgent patient appointment
with their primary care or other
appropriate provider within 30 days (base-

123
line will be 2001; strategic goal is 90 percent);
• increase the percentage of patients who
receive a non-urgent appointment with a
specialist within 30 days of the date of
referral (baseline will be 2001; strategic
goal is 90 percent); and
• increase the percentage of patients who
are seen within 20 minutes of their scheduled appointment to 75 percent in 2002
(1997 baseline is 55 percent; strategic goal
is 90 percent).
Also, VA formed partnerships with the
National Committee on Quality Assurance,
the American Hospital Association, the American Medical Association, the American Nurses
Association, and other national associations
to ensure quality patient care. The Chronic
Disease Care Index II measures VA physicians’
adherence to established industry practice
guidelines for key diseases affecting veterans.
Similarly, the Prevention Index II measures
adherence to disease prevention and screening
guidelines. VA plans to:
• increase the scores on the Chronic Disease
Care Index II to 78 percent by 2002 (strategic goal is 82 percent); and
• increase the scores on the Prevention
Index II to 76 percent by 2002 (strategic
goal is 85 percent).
Medical Research: VA’s research program
provides $360 million to conduct basic, clinical,
epidemiological, and behavioral studies across
the spectrum of scientific disciplines, seeking
to improve veterans medical care and health
and enhance our knowledge of disease and disability. If all funding sources are included, VA
spends more than $1 billion on research. In
2002, VA will focus its research efforts on
aging, chronic diseases, mental illness, substance abuse, sensory loss, trauma-related impairment, health systems research, special
populations (including Persian Gulf War veterans), and military occupational and environmental exposures.
• VA will increase to 60 percent the degree
of Institutional Review Board compliance
with National Committee for Quality
Assurance accreditation (strategic goal is
100 percent).

124
Health Professions Education and
Training: VA conducts education and training
programs to enhance the quality of care provided to patients within the health care system. Education and training efforts for health
profession students and residents are accomplished through partnerships with affiliated
academic institutions. Title 38 U.S.C. mandates that VA assist in the training of health
professionals for its own needs and for those
of the Nation. Building on the long-standing,
close relationships between VA and the country’s academic institutions, VA plays a leadership role in defining the education of future
health care professions to help meet the rapidly changing needs of the Nation’s health care
delivery system. Each year, approximately
85,000 medical and other students receive
some or all of their clinical training in VA
facilities through affiliations with over 1,200
educational institutions, including 107 medical
schools. Many of these trainees have their
health professions degrees and contribute substantially to VA’s ability to deliver cost-effective and high-quality patient care during their
advanced clinical training at VA.
• In 2002, VA will increase medical residents’ and other trainees’ scores to 81 on
a VA survey assessing their clinical training experience (strategic goal is 85 out of
a possible 100).
Veterans Benefits Administration (VBA)
VBA processes veterans’ claims for benefits
in 57 regional offices across the country.
As the veteran population declines, generally
the number of new compensation and pension
claims and appeals from veterans is expected
to decline. VBA anticipates a slight increase
in new claims from survivors and claims
for burial benefits. Since 1993, VBA has
realigned 57 regional offices into nine service
delivery networks. It has established nine
Regional Loan Centers and four Regional
Processing Offices for education claims in
an effort to improve efficiency and quality
of services to its customers. VBA has also
taken steps to integrate information technology into claims processing to improve
timeliness and quality of service delivery.
It has also implemented a ‘‘balanced scorecard,’’ a tool that has helped management
to weigh the importance of and measure

THE BUDGET FOR FISCAL YEAR 2002

progress toward meeting VBA’s strategic goals.
These include improving responsiveness to
customers’ needs and expectations, improving
service delivery and benefit claims processing,
and ensuring best value for the available
taxpayers’ dollar.
VBA monitors its performance in deciding
disability benefits claims through measures
of accuracy, customer satisfaction, processing
timeliness, and unit cost. Performance remains
noticeably off track in the timeliness and
accuracy of processing claims for disability
compensation and pensions. Claims processing
has become increasing complex as a result
of an increased number of disabilities per
claim as veterans age. Moreover, workload
suddenly increased in 2001 as the result
of new legislation and regulatory changes.
The recent duty-to-assist-veterans legislation
and the agent-orange diabetes presumption
regulation will generate a workload increase
of more than 20 percent in 2001. In light
of these changes, performance will substantially decline in the near term. Improving
benefits delivery is a top priority of this
Administration, so considerable attention and
resources will be expended to ensure that
this temporary setback will be overcome.
In 2002:
• VA will process rating-related disability
claims in 273 days (from 173 days in 2000;
strategic goal is 74 days); and
• VA’s rating accuracy (for core rating work)
will be 75 percent (from 59 percent in
2000; strategic goal is 96 percent).
Income Security
Several VA programs help disabled veterans
and their survivors maintain their income.
The Federal Government will spend over
$24 billion for these programs in 2002, including the funds the Congress approves each
year to subsidize life insurance for veterans
who are too disabled to obtain affordable
coverage from private insurers. Veterans may
receive these benefits in addition to the
income security benefits available to all
Americans, such as Social Security and
unemployment insurance. VBA is developing
outcome goals for the compensation and pension programs.

16.

125

VETERANS BENEFITS AND SERVICES

Compensation: Veterans with disabilities
resulting from, or coincident with, military
service receive monthly compensation payments based on the degree of disability. The
payment does not depend on a veteran’s income or age or whether the disability is the
result of combat or a natural-life affliction. It
does depend, however, on the average fall in
earnings capacity that the Government presumes for veterans with the same degree of
disability. Survivors of veterans who die from
service-connected injuries receive payments in
the form of dependency and indemnity compensation. Compensation benefits are indexed
annually by the same cost-of-living adjustment
(COLA) as Social Security, which is an estimated 2.5 percent for 2002.
The number of veterans and survivors
receiving compensation benefits will total an
estimated 2.7 million in 2002. While the
veteran population will decline, the compensation workload is expected to increase due
mainly to numerous changes in eligibility
such as the new duty-to-assist legislation
and the agent-orange diabetes presumption.
COLAs and increased payments to aging
veterans will increase compensation spending
by more than $5 billion from 2002 to 2006.
Pensions: The Government provides pensions to lower-income, wartime-service veterans or veterans who became permanently
and totally disabled after their military service. Survivors of wartime-service veterans may
qualify for pension benefits based on financial
need. Veterans’ pensions, which also increase
annually with cost-of-living adjustments, will
cost nearly $3 billion in 2002. The number
of pension cases will continue to fall from an
estimated 587,000 in 2002 to less than 522,000
in 2006 as the number of veterans declines.
Insurance: VA has provided life insurance
coverage to service members and veterans
since 1917 and now directly administers or supervises eight distinct programs. Six of the
programs are self-supporting, with the costs
covered by policyholders’ premium payments
and earnings from Treasury securities investments. The other two programs, designed for
service-disabled veterans, require annual congressional appropriations to meet the claims
costs. Together, these eight programs will provide $554 billion in insurance coverage to over

4.2 million veterans and service members in
2002. The program provides insurance protection to veterans who cannot purchase commercial policies at standard rates because of their
service-connected disabilities. The program is
designed to provide disbursements (e.g., death
claims, policy loans, and cash surrenders)
quickly and accurately, meeting or exceeding
customers’ expectations.
Veterans’ Education, Training, and
Rehabilitation
Several Federal programs support job training and finance education for veterans and
others. The Department of Labor runs several
programs for veterans. In addition, several
VA programs provide education, training, and
rehabilitation benefits to veterans, military
personnel, reservists, and survivors and dependents who meet specific criteria. These
programs include the Montgomery GI Bill—
which is the largest—the post-Vietnam-era
education program, the Vocational Rehabilitation and Employment (VR&E) program, and
the Work-Study program. Spending for all
these VA programs will total an estimated
$2.4 billion in 2002.
• In 2002, VA will increase to 67 percent
the percentage of VR&E participants who
acquire and maintain suitable employment
and are considered to be rehabilitated
(from the 2000 level of 65 percent; strategic goal is 70 percent).
The Montgomery GI Bill (MGIB): The
Government originally created MGIB as a test
program, with more-generous benefits than the
post-Vietnam era education program, to help
veterans move to civilian life and to help the
Armed Forces with recruitment. Service members who choose to enter the program have
their pay reduced by $100 a month in their
first year of military service. VA administers
the program and pays basic benefits once the
service member becomes eligible. Legislation
enacted in 2000 dramatically increased these
benefits by more than 20 percent and authorized MGIB payments to active-duty personnel
to supplement their military tuition assistance.
Basic benefits available now total over $23,000
per recipient, and program participants may
receive additional benefits if they contribute
more of their own pay.

126
MGIB beneficiaries receive a monthly check
based on whether they are enrolled as fullor part-time students. They can get 36 months
worth of payments, but they must certify
monthly that they are in school. DOD may
provide additional benefits to help recruit
certain specialties and critical skills. VA estimates that nearly 650,000 veterans and service members will use these benefits in 2002.
The MGIB also provides education benefits
to reservists while they are in service. DOD
pays these benefits, and VA administers the
program. In 2002, more than 70,000 reservists
will use the program. Over 90 percent of
MGIB beneficiaries use their benefits to attend
a college or university.
• In 2002, VA will increase the MGIB usage
rate by eligible veterans to 60 percent
(from 55 percent in 2000; strategic goal
is 70 percent).
Veterans’ Housing
In 2002, VA will guarantee an estimated
240,000 loans totaling $28.9 billion. Approximately 80 percent of these loans will have
no downpayment, with over half going to
first-time homebuyers. The Federal Government will spend an estimated $197 million
in 2002 on this program. This amount represents the subsidy necessary to help offset
costs due to foreclosures, as well as administrative expenses.
Avoiding foreclosure is critical to VA and
veterans. VA’s goal is to reduce the likelihood
of foreclosure through aggressive intervention
actions when loans are referred to VA as
a result of three payments in default. Costs
to the Government are reduced when VA
is able to pursue an alternative to foreclosure.
Veterans are helped either by saving their
home or avoiding the expense and damage
to their credit rating caused by foreclosure.
• In 2002, of the loans headed for foreclosure, VA will be successful 34 percent
of the time in ensuring that veterans avoid
foreclosure.
As part of a continuing effort to reduce
administrative costs, in addition to restructuring and consolidations, VA is conducting
a study of the property management function
to determine whether it would be more

THE BUDGET FOR FISCAL YEAR 2002

cost effective to contract this activity. The
study will be completed in 2001. The Administration proposes to eliminate the vendee home
loan program—a program unrelated to VA’s
mission. Vendee loans are awarded to the
general public when purchasing a home
acquired by the Federal Government after
a veteran defaults on a VA-guaranteed home
loan.
National Cemetery Administration (NCA)
VA provides burial in its national cemetery
system for eligible veterans, active duty
military personnel, and their dependents. VA
manages 119 national cemeteries across the
country and will spend over $121 million
in 2002 for VA cemetery operations, excluding
reimbursements from other accounts. Over
82,700 veterans and their family members
were buried in national cemeteries in 2000.
In addition, VA has jointly funded 45 State
veterans cemeteries through its State Cemetery Grants Program. In 2000, VA provided
327,514 headstones and markers for eligible
veterans, who were buried in national, State,
and private cemeteries. In addition, NCA
installed 24 information kiosks and encouraged non-VA national and State veterans
cemeteries to place headstone orders online.
• In 2002, VA will increase the percentage
of veterans served by a burial option within a reasonable distance of the veteran’s
place of residence to 77 percent (from the
2000 level of 75 percent; strategic goal is
88 percent).
Related Programs
Many veterans get help from other Federal
income security, health, housing credit, education, training, employment, and social service programs that are available to the general
population. The Administration inherited some
duplication and often redundant Government
programs, but it will work to reduce these
inefficiencies wherever possible. A number
of these programs have components specifically
designed for veterans. Some veterans also
receive preference for Federal jobs.

16.

VETERANS BENEFITS AND SERVICES

Tax Incentives
Along with direct Federal funding, certain
tax benefits help veterans. All cash benefits
that VA administers (i.e., disability compensa-

127
tion, pension, and MGIB benefits) are excluded
from taxable income. Together, these three
exclusions will cost nearly $4 billion in 2002,
and over $20 billion between 2002 and 2006.

17.
Table 17–1.

ADMINISTRATION OF JUSTICE
Federal Resources in Support of Administration of Justice
(In millions of dollars)

Function 750

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

27,056

29,955

29,782

31,918

32,269

32,760

33,517

996

673

1,458

1,117

2,543

2,467

2,534

Note: 2002–2004 program levels reflect delays in spending from the Crime Victims Fund.

While States and localities bear most of
the responsibility for fighting crime, the Federal Government plays a critical role, both
in supporting State and local activities and
in investigating and prosecuting criminal acts
that require a Federal response. In 2002,
the Federal Government proposes to spend
nearly $30 billion on the administration of
justice, with 67 percent of these funds going
to the Justice Department, and the majority
of the remaining funds going to the Treasury
Department and the Judicial Branch. Total
Federal, State, and local resources devoted
to the administration of justice will grow
to an estimated $181 billion in 2002 (see
Chart 17–1).

lent crime, drug smuggling, and many other
criminal acts. DOJ bureaus work closely with
State and local law enforcement agencies,
often through joint task forces, to address
crime problems.

In 1999, the crime rate (number of crimes
per 100,000 inhabitants) fell for the eighth
consecutive year. However, the crime rate
reported for the first six months of 2000,
the most recent period for which figures
are available, fell only 0.3 percent from
the same period in 1999. In response, the
budget requests substantial funding for proven
anti-crime programs, including: (1) law enforcement; (2) litigative and judicial activities;
(3) correctional activities; and (4) assistance
to State and local entities (see Chart 17–2).

The FBI has primary responsibility for
preventing domestic acts of terrorism. If an
incident should occur, it is the lead investigative agency. The FBI also has developed
the capacity to mitigate and investigate cyberattacks against the Federal Government, the
Nation’s critical infrastructure, and American
businesses. The budget proposes additional
personnel and funding for new technology
to support this effort. Additional funding
is requested to provide security at the 2002
Winter Olympics in Salt Lake City. The
budget also proposes additional resources for
the Criminal Division to provide prosecutorial
assistance for all terrorist incidents, including
cyber-terrorism, serving as a focal point for
such efforts at all levels of law enforcement.

Law Enforcement
Department of Justice (DOJ): DOJ enforces diverse Federal laws dealing with terrorism, immigration, white collar crime, vio-

National security and terrorism: DOJ, with
strong support from Congress, has acted
to prevent, mitigate, and investigate acts
of terrorism, including the use of weapons
of mass destruction and the emerging threat
of cybercrime. The Department will spend
an estimated $902 million in 2001 to combat
terrorism, primarily in the Federal Bureau
of Investigation ($491 million) and the Office
of Justice Programs ($221 million).

129

130

THE BUDGET FOR FISCAL YEAR 2002

Chart 17-1. Administration of Justice Expenditures
Dollars in billions

180
160
140
120
100

Local

80
60
40

State

20
0
1992

Federal

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Note: Federal data includes discretionary expenditures only.

State and local public safety agencies would
have a major role in managing the consequences of any terrorist event involving
the use of weapons of mass destruction,
such as biological, chemical, or nuclear weapons. DOJ and other Federal agencies support
the necessary training and equipping of State
and local agencies to ensure their response
readiness.
• In 2002, DOJ’s Office of State and Local
Domestic Preparedness Support plans to
train an additional 12,000 of the Nation’s
first responders.
Immigration enforcement and services: DOJ’s
Immigration and Naturalization Service (INS)
protects the U.S. borders from illegal immigration while providing services to legal aliens.
Over $3.5 billion is requested for INS in
2002, $264 million (8.1 percent) more than
was appropriated for 2001. The 2002 Budget
proposes to add 570 new Border Patrol agents
in both 2002 and 2003. With these 1,140
additional agents, the total increase of 5,000

Border Patrol agents authorized by the Illegal
Immigration Reform and Immigrant Responsibility Act of 1996 will be achieved. Approximately 11,000 agents will be deployed along
the Nation’s northern and southern borders
by the end of 2003, 12 percent more than
the 2001 level of 9,800 agents.
• As part of its comprehensive enforcement
strategy, INS removed from the United
States 183,860 illegal aliens pursuant to
final removal orders in 2000, a slight increase over the 1999 level (178,200), and
plans to increase removals in 2002
(193,200), of which roughly 72,000 will be
criminal aliens.
• In 2002, INS will continue to focus on
strengthening its capability to apprehend
and deter alien smugglers and drug carriers. In 2000, INS intercepted roughly
19,000 offshore travelers, over twice the
number in 1999 (9,124). INS plans to
maintain this level of interceptions in
2001 and 2002.

17.

131

ADMINISTRATION OF JUSTICE

Chart 17-2. Federal Justice Expenditures
Dollars in billions

30
Criminal Justice
Assistance

25
20

Corrections

Litigation/Judicial

10
Law Enforcement

5
0
1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Note: Data includes discretionary expenditures only.

• INS reduced the average time between
application receipt and naturalization
decisions for qualified candidates from a
national average of 27 months in 1998 to
eight months by the end of 2000. However,
applicants for other immigration benefits—including adjustment of status applications for both employment-based and
family-based petitions—continue to wait
years for their paperwork to be processed.
The 2002 Budget proposes a five-year,
$500 million initiative to support a
universal six-month processing standard
for all immigration applications.
• INS performance is adversely affected by
competing
missions—law
enforcement
versus service delivery. To mitigate internal conflicts, the Administration will propose splitting INS into two agencies with
separate chains of command, but reporting
to a single policy official in DOJ.

Other law enforcement efforts: DOJ also
combats other serious criminal activity, including violent crime, illegal drugs, and white
collar crime. These efforts are lead by the
FBI and the Drug Enforcement Administration. The U.S. Marshals Service protects
the Federal courts and their officers, apprehends fugitives, and maintains custody of
prisoners involved in judicial proceedings.
• In 2002, the Federal Government will continue its commitment to reduce the incidence of violent crime.
• DOJ will dismantle three of the 30 violent
gangs identified as the country’s most dangerous.
• In 2002, the U.S. Marshals Service intends
to improve its performance, apprehending
80 percent of violent offenders within one
year of the issuance of a warrant, and
reducing the fugitive backlog by five percent from 2001 levels. At the end of 2000,

132

THE BUDGET FOR FISCAL YEAR 2002

there were 8,642 outstanding fugitive warrants.
• In addition, the U.S. Marshals Service will
strive to ensure that no judge, witness,
or other court participant is the victim of
an assault stemming from his or her involvement in a Federal court proceeding.
This is an ongoing standard of zero tolerance related to court security.
Department of the Treasury: Within the
Treasury Department, the U.S. Customs Service, Bureau of Alcohol, Tobacco and Firearms
(ATF), United States Secret Service, and other
bureaus enforce laws related to drug and
contraband at our borders; commercial fraud;
firearms trafficking; arson and explosives
crimes; and financial crimes, including money
laundering, counterfeiting, and credit card
fraud. In addition, the Customs Service regulates the importation and exportation of goods;
ATF regulates the alcohol, tobacco, firearms,
and explosives industries; and, the Secret
Service protects the President, Vice President,
and visiting foreign dignitaries. The Federal
Law Enforcement Training Center provides
basic and advanced training to Treasury and
other law enforcement personnel. The Financial Crimes Enforcement Network supports
law enforcement agencies in the detection, investigation, and prosecution of domestic and
international money laundering.
In 2002, the Treasury Department plans
to:
• help solve violent crimes and reduce firearms trafficking by tracing up to 215,000
firearms used in criminal activities, compared to 209,396 in 2000, and by reducing
its trace response time from 11.4 days in
1999 to 10 days;

The Customs Service, which plays an integral role in our Nation’s drug enforcement
and reduction strategies, will also continue
implementation of the Western Hemisphere
Drug Elimination Act (WHDEA). New funding
for Customs (as well as the Coast Guard)
will enhance efforts authorized by the
WHDEA, including purchasing equipment,
training law enforcement personnel in matters
relating to maritime law enforcement, and
enhancing interdiction against drug transit
operations in the source zone.
Federal Drug Control Activities: In 1997,
the Office of National Drug Control Policy
(ONDCP) led Federal agencies involved in
drug control activities in the development of
a comprehensive, 10-year National Drug Control Strategy that incorporated aggressive societal goals for anti-drug programs. The goals
established can not be met by Federal action
alone, but require action by State, local, and
foreign governments, the private sector, religious institutions, not-for-profit agencies, and
individuals. ONDCP also led the development
of a Performance Measures of Effectiveness
(PME) system to track progress toward the
goals of the Strategy. The PME system comprises 97 performance targets that define the
drug control community’s five and 10 year objectives. Much more progress will be necessary
to meet these targets. The performance targets
include:
• Reducing the overall rate of illegal drug
use in the United States from the 1996
baseline by 25 percent by 2002 and by
50 percent by 2007. In 1999, the overall
rate of illegal drug use was 7.0, statistically unchanged from the baseline year;

• maintain or improve upon its 99-percent
collection rate for trade revenue (duties,
taxes, and user fees); and

• Reducing the rate of drug-related violent
crime by 15 percent by 2002, compared
to the 1996 baseline, and by 40 percent
by 2007. The rate of violent crime, regardless of cause, from the Uniform Crime Reports is used as a proxy for drug-related
violent crime. In 1999, the violent crime
rate was 525 per 100,000 U.S. inhabitants,
compared to 636 in 1996, a 17-percent decline; and

• improve importer compliance with trade
laws (e.g., quotas, trademarks, cargo and
merchandise classification) from 81 percent in 1997 to 90 percent in 2002.

• Reducing the number of chronic drug
users by 20 percent from the 1996 baseline
by 2002 and by 50 percent by 2007. In
2000, the most recent year for which such

• ensure the physical protection of the President, Vice President, visiting foreign dignitaries, and others protected by the Secret Service;

17.

ADMINISTRATION OF JUSTICE

data are available, the estimated number
of chronic hardcore cocaine users declined
marginally from 3.41 million users in 1996
to 3.33 million. The number of chronic
hardcore heroin users increased from
917,000 to 977,000 over the same period.
The strategy established in 1997 will continue to guide Federal drug control activity.
However, led by ONDCP, the Administration
will review the strategy with the goal of
distinguishing approaches that are yielding
sufficient results from those approaches that
are not. In particular, the review will look
closely at the relative emphasis on demand
reduction and supply reduction activities, as
well as the amounts invested in individual
programs by the Federal Government. The
Administration intends to develop a drug
control strategy that adequately addresses
the problem, and is evidence-based, cost effective, and affordable.
Civil Rights Laws: Federal responsibility
to enforce civil rights laws in employment and
housing arises from Titles VII and VIII of the
Civil Rights Act of 1964, as well as more recent legislation, including the Age Discrimination in Employment Act and the Americans
with Disabilities Act. The Department of Housing and Urban Development (HUD) enforces
laws that prohibit discrimination on the basis
of race, color, sex, religion, disability, familial
status, or national origin in the sale or rental,
provision of brokerage services, or financing
of housing. The Equal Employment Opportunity Commission enforces laws that prohibit
employment discrimination on the basis of
race, color, sex, religion, disability, age, and
national origin. DOJ’s Civil Rights Division
and the U.S. Attorneys enforce a variety of
criminal and civil statutes that protect the constitutional and statutory rights of the Nation’s
citizens.
In 2002, DOJ will devote increased resources
to its responsibilities associated with worker
exploitation; the Voting Rights Act; criminal
civil rights violations; and the President’s
New Freedom Initiative for the Americans
with Disabilities Act. Other priority areas
include enforcement efforts to combat housing
and lending discrimination and a study to

133
determine the extent to which police engage
in racial profiling.
The Voting Rights Act requires certain
jurisdictions to submit redistricting changes
to the Attorney General for review and
clearance. As redistricting data from the
2000 Census are released, DOJ will experience
a surge of activity in this area. Additional
resources will be provided to address requirements for the timely review of voting changes
and redistricting proposals submitted by
covered jurisdictions, as required by the Voting
Rights Act.
HUD’s Office of Fair Housing and Equal
Opportunity expects to receive over 11,000
allegations of housing discrimination in 2002.
Combating housing discrimination supports
many larger public policy objectives. Most
significantly, the prevention and education
of discrimination in housing and housingrelated transactions helps bridge the large
gap in home ownership rates that now exists
between racial and ethnic groups (especially
African-Americans and Hispanics).
• Through its Comprehensive Enforcement
Program for strategically focusing agency
resources on performance goals, the Equal
Employment Opportunity Commission
(EEOC) plans to continue improving the
timeliness and quality of service to the
public. In 2002, the performance goals for
EEOC are to reduce its backlog of private
sector complaints by six percent from
34,297 in 2000 to 32,296. To accomplish
this goal, EEOC plans to increase the percent of newly filed charges resolved within
180 days from 55 percent in 2000 to 60
percent in 2002.
• EEOC also plans to sustain or increase
the goal for ‘‘beneficial’’ resolutions from
20 percent in 2000 to 22 percent in 2002.
‘‘Beneficial’’ outcomes include conciliations,
successful mediations, settlements with
benefits, and withdrawals with benefits.
These outcomes are the result of both the
nationwide mediation program, which resolves disputes early in a non-adversarial
setting, and stronger investigator-attorney
collaboration to effectively address substantive issues.

134
Litigative and Judicial Activities
Department of Justice: United States Attorneys offices are the chief prosecutorial arm
of the Federal Government within their judicial district and are responsible for the majority of criminal and civil litigation for the
United States. Each U.S. Attorney’s office is
responsible for investigating and prosecuting
alleged violations of Federal law brought to
their attention by Federal, State, and local law
enforcement agencies. Prosecution of those who
violate Federal law is supported by the six
litigating divisions of DOJ that specialize in
specific areas of law—Civil, Criminal, Civil
Rights, Environment and Natural Resources,
Tax, and Antitrust. In 2002, Project Sentry
will support partnerships of Federal, State,
and local law enforcement agencies to establish
Safe School Task Forces and appropriately
prosecute juveniles who violate firearms laws,
as well as adults who illegally purchase guns
for juveniles.
Legal Services Corporation (LSC): The
Federal Government, through LSC, ensures
equal access to our Nation’s legal system by
providing funding for civil legal assistance to
low income persons. For millions of Americans,
LSC-funded legal services is the only resource
available to access the justice system. LSC provides direct grants to independent local legal
services programs chosen through a system of
competition. LSC programs serve clients in
every State and county in the Nation. Last
year, LSC-funded programs provided legal assistance and information to almost one million
clients. Legal services clients are as diverse
as the Nation, encompassing all races, ethnic
groups, and ages. They include the working
poor, veterans, family farmers, people with disabilities, and victims of natural disasters. The
most common types of cases that people bring
to LSC-funded offices are related to domestic
violence, family law, housing, employment,
Government benefits, and consumer matters.
Judicial Branch: The Judicial Branch is
comprised of over 2,100 trial judges, magistrates, and bankruptcy judges, in addition to
the nine justices of the Supreme Court. The
system is made up of a three-tiered hierarchy
with the Supreme Court at the top, the 13
courts of appeals in the middle, and the 94
district courts, the Court of International

THE BUDGET FOR FISCAL YEAR 2002

Trade, and the Court of Federal Claims at the
bottom. The Federal judicial system is empowered by Article III of the Constitution to
ensure that certain rights and liberties are
extended to all persons. The system has
witnessed historic growth in recent years that
is chiefly attributable to the expanding
jurisdiction of Federal courts in the form of
over 200 new Federal laws, and the increased
criminal filings in district courts along the
Southwestern United States border where five
districts now account for roughly one-quarter
of all criminal filings nationwide.
Correctional Activities
The 2002 Budget proposes $4.7 billion for
corrections activities, a $360 million increase
over the 2001 level. As of December 2000,
there were over 146,100 inmates in the
Federal prison system, up 125 percent since
1990. This growth is due to tougher sentencing
guidelines, the abolition of parole, minimum
mandatory sentences, and significant increases
in law enforcement spending. This increase
is largely associated with the arrest and
conviction of drug offenders, who now account
for 57 percent of inmates in the Federal
system.
The rapid growth in inmate population
is expected to continue. This presents a
significant management and financial challenge to the Federal Government and the
Bureau of Prisons. Despite the investment
of more than $5 billion for prison construction
over the past decade, the prison system
is currently operating at 32 percent over
rated capacity, up from 22 percent at the
end of 1997. These conditions could potentially
jeopardize public safety. To reverse this trend,
the 2002 Budget includes almost $1 billion
in new funding for activation of newly-constructed Federal prisons, for prison construction and modernization, and for contract
bed space.
• The 2002 Budget also provides funding to
ensure that the Federal Bureau of Prisons
continues to enroll at least 34 percent of
all inmates in one or more educational
programs, that two-thirds of all prisoners
attain a ‘‘GED,’’ or high school diploma,
at least seven months prior to their
release, and that virtually all eligible

17.

ADMINISTRATION OF JUSTICE

inmates are enrolled in residential drug
treatment programs.
• In addition, the budget includes $5 million
to evaluate the effectiveness of a faithbased, prison pre-release program in reducing the recidivism rate among ex-offenders. The program will be piloted at
four Federal prisons that are geographically diverse, encompass varying levels of
security, and include both male and
female inmate populations to provide the
data for the evaluation.
The National Capital Revitalization and
Self-Government Improvement Act of 1997
transferred prison operations from the District
of Columbia (D.C.) to the Federal Bureau
of Prisons. The Bureau of Prisons will be
responsible for housing all D.C. adult sentenced felons. All but one of the correctional
facilities at the Lorton Correctional Complex
have been closed, with only the Central
Facility housing approximately 1,760 inmates
remaining open. Currently, the Bureau of
Prisons has accepted 3,149 of the approximately 8,000 D.C. adult felony inmates. All
remaining D.C. adult felony inmates will
be transferred to the Federal prison system
when the Central Facility at the Lorton
Correctional Complex is closed, no later than
December 31, 2001.
Criminal Justice Assistance for State and
Local Governments
The budget proposes $4.2 billion to help
State and local governments fight crime,
including $575 million to assist crime victims.
This level reflects a $1 billion reduction
in discretionary spending on State and local
law enforcement assistance, which grew 500
percent between 1992 and 2001. The proposed
reductions represent only six-tenths of a percent of State and local governments total
criminal justice spending, and would come
from programs that have already served their
primary purpose or are less essential to
Federal law enforcement objectives. Reductions
include funding for such programs as State
Prison Grants and a portion of the hiring
grants under the Community Oriented Policing
Services (COPS) program, both of which have

135
achieved their original goals, and the discretionary portion of the Byrne Grant program,
which has been heavily directed to special
projects on a non-competitive basis. The budget continues funding for school resource officers under the COPS program. Even at
the reduced level, the budget proposes a
number of targeted initiatives and selected
increases.
Protecting Children from Gun-Related
Crime: The budget proposes $154 million in
initiatives to help State and local governments
protect our young people from gun-related violence and accidents. In coordination with the
U.S. Attorneys’ Project Sentry, $20 million in
grants will be available to help establish partnerships for reducing youth gun violence. To
ensure that free child safety locks are made
available for every single handgun in America
by 2006, $75 million will be allocated to
Project ChildSafe. The budget also provides
$50 million for grants to encourage States to
get tough on gun criminals with increased
arrests, prosecutions, and public awareness
campaigns.
Drug Control and Treatment: As part of
the Administration’s broader strategy for reducing the supply and demand for drugs, the
2002 Budget proposes a new $50 million grant
program within COPS to aid counties along
the Southwest border with the costs of detaining and prosecuting drug cases referred to
them by U.S. Attorneys. In addition, the Residential Substance Abuse Treatment program
would receive $74 million ($11 million over
2001) to help fund drug treatment for State
and local prisoners.
Stopping Violence against Women: To
combat the significant problem of violence
against women, the budget proposes $391 million ($103 million above 2001) to fund both
existing and new programs authorized in the
Violence Against Women Act of 2000.
• In 2002, the Violence Against Women
Office plans to provide grants and technical assistance to aid 256 additional localities in developing pro-arrest policies and
enforcement orders.

18.
Table 18–1.

GENERAL GOVERNMENT
Federal Resources in Support of General Government
(In millions of dollars)

Function 800

Spending:
Discretionary Budget Authority ...
Mandatory Outlays:
Existing law ...............................
Proposed legislation ...................
Credit Activity:
Direct loan disbursements ............
Tax Expenditures:
Existing law ...................................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

12,438

13,965

14,773

15,047

15,374

15,685

16,044

1,041
..............

2,334
..............

1,798
7

1,809
..............

2,018
1,201

1,822
1

1,795
1

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

67,720

71,300

74,800

78,340

82,100

85,970

88,670

The General Government function encompasses the central management activities of
the executive and legislative branches. Its
major activities include Federal financial management (e.g., tax collection, public debt,
currency and coinage, Government-wide accounting), personnel management, and general
administrative and property management.
Four executive branch agencies are responsible for these activities: the Department
of the Treasury (for which the budget proposes
$14.7 billion); the General Services Administration ($513 million); the Office of Personnel
Management ($226 million); and the Office
of Management and Budget in the Executive
Office of the President ($71 million).
Department of the Treasury
Treasury is the Federal Government’s financial agent—collecting revenue, making payments and managing the Government’s finances. It produces and protects the Nation’s
currency; helps set domestic and international
financial, economic, and tax policy; enforces
economic embargoes and sanctions; regulates
financial institutions and the alcohol, tobacco,
and firearms industries; and protects citizens
and commerce against those who counterfeit
money, engage in financial fraud, violate
our border, and threaten our leaders.

Treasury’s law enforcement functions are discussed in Chapter 17, ‘‘Administration of
Justice.’’
In 2002, Treasury will seek to collect
an estimated $2.2 trillion in tax and tariff
revenues due under law; issue more than
$2 trillion in marketable securities and savings
bonds to finance the Government’s operations
and promote citizens’ savings; and produce
7.5 billion Federal Reserve Notes, 12 billion
postage stamps, and 27 billion coins.
Internal Revenue Service (IRS): IRS is
the Federal Government’s primary revenue collector. IRS’s mission is to provide America’s
taxpayers with top quality service by helping
them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.
The President’s Budget funds two major
initiatives to improve IRS performance. First,
the Administration requests $397 million in
investments to modernize IRS’s outdated computer systems. This multi-year project will
provide IRS with the modern tools needed
both to deliver first-class customer service
to America’s taxpayers and to ensure that
compliance programs are administered fairly
and efficiently. Failure to replace IRS’s outdated computer systems compounds the risks
137

138
that taxpayers will be treated unfairly; that
the IRS work force will not have the skills
required to maintain the outdated systems;
and that the cost of maintaining these archaic
systems will grow. Second, the Administration
proposes follow-on funding for IRS’s Staffing
Tax Administration for Balance and Equity
initiative, begun in 2001. These funds are
intended to complete the hiring of almost
4,000 staff and will enable IRS to address
the decline in audits and the drop in customer
service that have occurred over the past
several years.
IRS is working to improve its work processes
to enhance productivity and customer satisfaction. It has reorganized around customerbased operating divisions and implemented
a performance measurement system that balances business results (including quality and
quantity measures), customer satisfaction, and
employee satisfaction for each business unit.
In 2002, targets for several critical IRS
performance measures include the following:
• improve customer satisfaction (based on
random surveys) to 3.69 on a four-point
scale for toll-free assistance (3.46 in 2000);
6.55 on a seven-point scale for walk-in customer service (6.5 in 2000); 4.9 out of
seven for field examination (4.4 in 2000);
and 5.0 out of seven for field collection
(4.6 in 2000);
• continue to improve customer service
through its toll-free assistance, answering
71 percent of calls, (59 percent in 2000),
with an accuracy rate of 76 percent for
tax law questions (73 percent in 2000);
• receive 38 percent of individual returns
filed electronically, up from 28 percent in
2000 (working toward a legislative goal of
80 percent of all returns and information
documents by 2007); and
• reverse the recent drop in enforcement activity, by closing 341,137 field (‘‘face-toface’’) tax examinations, up 36 percent
from 251,108 in 2000.
Financial Management Service (FMS):
FMS provides central payment services to
Federal agencies, operates the Federal
Government’s collections and deposit systems,
provides Government-wide accounting and

THE BUDGET FOR FISCAL YEAR 2002

reporting services, and manages the collection
of delinquent debt. In 2002, FMS plans to:
• increase the percentage of Treasury payments and associated information transmitted electronically from 68 percent in
1999 to 73 percent in 2002;
• increase the total dollar amount of Federal
Government receipts collected electronically from 72 percent in 1999 to 80 percent
in 2002; and
• increase the amount of delinquent debt
referred from Federal agencies to FMS for
collection (as a percentage of delinquent
debt eligible for referral) from 71 percent
in 1999 to 75 percent in 2002.
Bureau of Public Debt (BPD): BPD conducts all public debt operations for the Federal
Government and promotes the sale of U.S. savings-type securities. In 2002, BPD expects to
continue to meet the following performance
goals:
• issue at least 95 percent of over-thecounter bonds within three weeks of their
purchase (99 percent in 2000);
• as in 2000, conduct all marketable securities auctions without error; and
• announce auction results within one hour
95 percent of the time (100 percent in
2000).
U.S. Mint: The U.S. Mint produces the Nation’s coinage and manufactures numismatic
products for the public. In 2002, the U.S. Mint
seeks to achieve the following goals:
• introduce the fourth five-State series in
the 50 States Commemorative Quarter
Program; and
• maintain high levels of customer service
by shipping commemorative coins within
four weeks and recurring coins within
three weeks of order placement.
In 2000, the Mint received a high customer
satisfaction rating from buyers of numismatic
and commemorative coins. Exceeding the
scores of many private sector firms in the
American Customer Satisfaction Index (ACSI),
the Mint scored among the highest of the
Federal agencies evaluated by ACSI.

18.

GENERAL GOVERNMENT

Bureau of Engraving and Printing
(BEP): BEP produces all U.S. currency, about
half of U.S. postage stamps, and other Government securities. In 2002, BEP is expected to
continue to achieve the following goals:

139
• the Federal Technology Service projects a
15 percent reduction from 1999 rates in
monthly line charges for local telephone
service;

• meet all Federal Reserve and United
States Postal Service orders as requested;
and

• the Federal Supply Service seeks to reduce
its costs of operations in the Supply and
Procurement Business Line by 17 percent
from 2000 costs; and

• prevent more than 0.05 notes per million
from being returned by the Federal
Reserve because of counterfeit deterrence
defects.

• the volume of purchases made with Federal charge cards is expected to total $20.4
billion, a 17-percent increase over 2000.

General Services Administration (GSA)
GSA provides policy leadership and expertly
managed space, products, and services to
support the administrative needs of Federal
agencies. In 2002, revenues from GSA’s various business lines are expected to exceed
$16 billion. GSA is responsible for more
than $50 billion a year in Federal spending
for property management and administrative
services, and management of assets valued
at $450 billion.
In recent years, GSA has worked to develop
a new Federal management model, focusing
on performance measurement, accountability
for agencies and employees, and the effective
use of technology in changing work environments. GSA has established inter-agency
groups to advise it on the policies, best
practices, and performance benchmarks appropriate for each administrative service and
information system. GSA’s ultimate goal is
a Federal Government in which agencies
receive the administrative services they need,
using the best known practices and at the
least cost.
As a provider of many administrative services, GSA seeks to exceed all Governmentwide performance goals and industry benchmarks for these services, as these benchmarks
are developed or identified. Its overall goals
as a service provider are to exceed its
customer agencies’ expectations for price, service, and quality. In 2002:
• the Public Buildings Service plans to deliver 65 percent of its construction, and
82 percent of its repair projects on schedule and within budget, up from 60 and
78 percent in 2001, respectively;

Because GSA provides services on a reimbursable basis, agency budgets fund most
of GSA’s activities. In 2002, for example,
the Administration proposes $513 million (net
discretionary budget authority) for GSA, primarily for the Office of Government-wide
Policy, the Office of the Inspector General,
and the construction of Federal buildings.
However, the budget projects obligations of
$18 billion through GSA’s revolving funds.
GSA also affects Federal spending through
its delegation of authority for real property
disposal, building operations, and the procurement of pharmaceuticals. In addition, GSA
expects to administer contracts through which
agencies will purchase more than $27 billion
in goods and services outside of GSA’s revolving funds.
Office of Personnel Management (OPM)
OPM provides human resource management
leadership and services to Federal agencies
and employees. The budget proposes a Federal
civilian pay increase of 3.6 percent in 2002.
OPM provides policy guidance, advice, and
direct personnel services and systems to the
agencies; operates USAJOBS, a worldwide
job information and application system; oversees the Federal civil service merit system,
covering nearly 1.8 million employees; and
provides retirement, health benefit, and other
insurance services to Federal employees, annuitants, and agencies. Several OPM programs
and related performance measures are discussed elsewhere in the budget. For example,
see Chapter 12 for a discussion of the
health benefits program and Chapter 14 for
a discussion of the retirement program.

140
In 2002, OPM plans to support a broad
range of existing strategic human resources
management tools and produce proposals for
new and expanded tools to attract, develop,
manage, and retain a productive work force.
Such tools include compensation flexibilities,
continual learning and skill development,
work/life balance programs, and a supportive
work environment. In this endeavor, OPM
will explore best and innovative practices
from both the private and other public sectors.
In 2002, OPM expects to:
• implement a fully-functional, on-line work
force planning system to meet the President’s goal to flatten the Federal hierarchy
and help Federal agencies align human resources with accomplishment of agency
mission and objectives;
• expand access to Federal employment information by partnering, for the first time,
with private sector companies to create
links to the USAJOBS web site and maintain a 90 percent or better customer satisfaction level among USAJOBS users;
• increase by 10 percent the number of
agencies with human resources management accountability systems that are
aligned with strategic mission and goals;
• complete implementation of the Federal
Employees Health Care Protection Act of
1998, which includes mandatory and permissive debarments and civil monetary
penalties for untrustworthy health care
providers to sustain the integrity of the
Federal Employees Health Benefits Fund;
and
• conduct 15 nationwide agency oversight
reviews, including reviews of Executive
Branch agencies whose personnel are not
covered by title 5 of the U.S. Code, and
a number of small agencies to ensure Federal agencies use merit principles in hiring
and other personnel actions.
Office of Management and Budget (OMB)
OMB assists the President by preparing
the Federal budget and overseeing its execution in the departments and agencies. In
helping formulate the President’s spending
plans, OMB coordinates the review and exam-

THE BUDGET FOR FISCAL YEAR 2002

ines the effectiveness of agency programs,
policies, and procedures; assesses competing
funding demands among agencies; and provides policy options. OMB works to ensure
that proposed legislation and agency testimony, reports, and policies are consistent
with Administration policies, leveraging use
of interagency programs and Councils. On
behalf of the President, OMB often presents
and justifies major policies and initiatives
related to the budget and Government management before Congress. As such, it performs
an important function in representing the
President’s position during negotiations with
Congress over budget issues and spending
levels.
OMB and the Federal Government as a
whole face enormous challenges to better
manage a nearly $2 trillion budget, a Federal
work force of 1.8 million, a procurement
budget of approximately $200 billion, and
a growing regulatory burden. OMB is often
called upon to provide policy options for
the President on key issues of importance
at home or abroad, such as the Nation’s
policy on education, social security, military
readiness, or taxes.
OMB has a central role in developing,
overseeing, coordinating, and implementing
Federal procurement, financial management,
information, and regulatory policies. OMB
helps to strengthen agency management, develop better performance measures, and improve coordination among Executive Branch
agencies.
OMB manages a number of significant
Government-wide efforts. Examples include:
(1) the Chief Financial Officers Act; (2) the
Government Performance and Results Act,
integrating budget and performance data and
compiling a Government-wide performance
plan; (3) the Government Management Reform
Act, which has led to agencies issuing accountability reports for the first time; (4) the
Clinger-Cohen Act, which requires information
technology resources capital planning and
investment control, with performance-based
acquisition strategies, all linked to budget
requests; and (5) the Federal Acquisition
Streamlining Act, to improve the efficiency
and results of the Federal Government’s procurement efforts.

18.

GENERAL GOVERNMENT

OMB produced the annual budget for 2002
using a state-of-the-art off-site secure data
facility to improve efficiency and timeliness,
and improve services to agency customers.
OMB is investing in additional information
technology applications to improve efficiency
and effectiveness of the OMB’s staff in completing an increasing workload under pressing
deadlines.
Tax Incentives
The Federal Government provides significant tax incentives that benefit State and
local governments. It permits tax-exempt borrowing for public purposes, costing $23.5
billion in Federal revenue losses in 2002

141
and $122 billion over five years, from 2002
to 2006. (The budget describes tax-exempt
borrowing for non-public purposes in chapters
on other Government functions.) In addition,
taxpayers can deduct State and local income
taxes against their Federal income tax, costing
$48.7 billion in 2002 and $276 billion over
five years. Corporations with business in
Puerto Rico and other U.S. possessions receive
a special tax credit, costing an estimated
$2.6 billion in 2002 and $11.4 billion over
four years. This tax credit is phasing out
and will expire at the end of 2005. Finally,
up to certain limits, taxpayers can credit
State inheritance and estate taxes against
Federal estate taxes, costing $38 billion over
five years.

19.

NET INTEREST
Table 19–1.

Net Interest

(In millions of dollars)
Function 900

Spending:
Mandatory Outlays:
Existing law ...............................
Proposed legislation ...................
Tax Expenditures:
Existing law ...................................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

223,218
..............

206,369
..............

188,126
5

175,223
21

161,456
37

144,626
53

127,132
68

470

490

520

540

570

600

630

The Federal Government pays large
amounts of interest to the public, mainly
on the debt it incurred to finance the excess
of past budget deficits over surpluses. Net
interest closely measures these Federal interest transactions with the public.
The Government also pays interest from
one budget account to another, mainly because
the Government invests its various trust
fund balances in Treasury securities. Net
interest does not include these internal payments.
A Falling Interest Burden
Largely as a result of the strong economic
performance over the past several years,
and policy actions to reduce the deficits,
the long upward trend for net interest has
ended. Since 1998, the budget surpluses have
led to a reduction in debt and interest
costs. This trend will accelerate over the
next several years.
The amount of net interest depends on
the amount of debt held by the public,
as well as on the interest rates on the
Treasury securities that comprise the debt.
Net interest grew from 1.4 percent of GDP
in 1970 to a peak of 3.3 percent of GDP
in 1991 as a consequence of growing budget
deficits. In dollar terms, net interest began
to decline in 1998 with the first budget
surplus in recent years. In 2006, net interest

is projected to be $127.2 billion, about $116.8
billion below its 1997 peak. As a percentage
of GDP, net interest will fall to an estimated
1.0 percent in 2006. And the interest burden
as a percent of total outlays will plunge
from a peak of 15.4 percent in 1996 to
5.8 percent in 2006. (See Chart 19–1.)
With the prospect of continuing surpluses,
the Administration plans to reduce debt held
by the public, and thus net interest will
continue to decline rapidly over the next
few years. The reduction in the debt burden
will help to increase the resources for private
sector investment, lower interest rates, and
raise productivity growth.
Components of Net Interest
Net interest is defined as interest on Treasury debt securities (gross), minus the interest
received by on-budget and off-budget trust
funds, and adjusted for the receipts and
outlays that are recorded as ‘‘other interest’’
(discussed later in this chapter).
An important part of the net interest
function is to bring together the payment
and receipt of interest from one Government
account to another. The largest portion of
these transactions involves the payment of
interest to trust funds, which have invested
their cash surpluses in Treasury securities.
Within the interest function, the payments
of interest to trust funds are included in
143

144

THE BUDGET FOR FISCAL YEAR 2002

Chart 19-1. Declining Net Interest
Percent of total outlays

0
1990

1992

1994

1996

interest on Treasury debt securities (gross)
and the receipts of interest by trust funds
are shown, as negative amounts, in interest
received by trust funds. A similar treatment
is given to several special funds, such as
the Nuclear Waste Disposal Fund and Abandoned Mine Reclamation Fund. For these
special funds, payments of interest are
included in interest on Treasury debt securities (gross) and the receipts of interest are
shown, as negative amounts, in ‘‘other interest.’’ A smaller category of intragovernmental
interest payment occurs primarily in connection with Federal credit programs, when
certain Government accounts borrow from
the Treasury, which, in turn, must borrow
from the public. In these instances, the
payment of interest on the Treasury’s borrowing from the public is shown as interest
on Treasury debt securities (gross) and Treasury’s receipt of interest from the borrowing
agency is shown as ‘‘other interest.’’

1998

2000

2002

2004

2006

Thus, the net interest total includes, where
possible, both the paying side and receiving
side of intragovernmental interest payments.
The exception to this practice occurs where
only the paying side is included in the
interest function, as happens with payments
of interest to revolving funds, such as the
Bank Insurance Fund, Exchange Stabilization
Fund, or Employee Life Insurance Fund.
The payments to these funds are shown
as interest on Treasury debt securities (gross),
but the receipts by these funds are reported
as offsetting collections within the fund, rather
than offsetting receipts in the interest function. This practice leaves net interest as
a close, though not precise, measure of the
interest paid to the public.
In 2008 through 2011, the surplus exceeds
the amount of maturing debt. When this
happens, excess balances begin to accumulate
and reach $1,288 billion by the end of
2011. These balances are assumed to earn
interest. Because no institutional arrange-

19.

NET INTEREST

ments are assumed regarding how or where
the excess balances might be deposited, these
interest earnings on excess balances are
included, as offsetting receipts, in ‘‘interest
on Treasury debt securities (gross).’’ The
relationships among the surplus, debt held
the public, and excess balances are discussed
further in Chapter 12, ‘‘Federal Borrowing
and Debt’’ in Analytical Perspectives.
Interest on Treasury Debt Securities
(gross): Interest on Treasury debt securities
(gross) is estimated to increase slightly from
$351.0 billion in 2002 to $352.7 billion in 2006.
The underlying debt includes the rising
amount of trust fund balances in on-budget
and off-budget Government accounts. At the
end of 2000, the gross Federal debt totaled
$5.6 trillion, compared to $4.0 trillion at the
end of 1992. However, most of the growth in
the gross Federal debt occurred by 1998;
during the last two years, gross debt has
increased only slightly. It will continue to
increase through 2006 as the increase in trust
fund balances exceeds the decline in debt held
by the public.
Interest Received by Trust Funds: As was
noted earlier, interest received by trust funds
is deducted from the interest on Treasury debt
securities (gross) to determine net interest.
Total trust fund interest receipts are estimated
to rise from $152.4 billion in 2002 to $213.4
billion in 2006.
The receipts of Social Security’s Old-Age
and Survivors Insurance and Disability Insurance (OASDI) trust funds are the largest
of all the trust funds (and are excluded
from the budget, and thus shown as ‘‘offbudget,’’ under current law). OASDI trust
fund interest is estimated to increase from

145
$76.1 billion in 2002 to $120.1 billion in
2006. The other large trust funds which
earn interest (and which are on-budget)
include the civil service retirement and disability fund (whose interest is expect to
rise from $36.5 billion in 2002 to $41.6
billion in 2006); the military retirement fund
(whose interest is expected to rise from
$12.6 billion in 2002 to $13.6 billion in
2006); and the Medicare Hospital Insurance
(HI) trust fund (whose interest is expected
to rise from an estimated $13.7 billion in
2002 to $22.6 billion in 2006).
Other Interest: Other interest includes both
interest payments and interest collections.
Receipts of interest are included for credit
liquidating accounts and the Federal Financing Bank (which borrowed from the Treasury,
mostly to support certain Federal credit
programs). Receipts of interest are also included for special funds, as described above.
Payments of interest include IRS payments on
certain refunds, and payments to credit financing accounts that have deposited cash balances
with the Treasury.
Budgetary Effect, Including the Federal
Reserve
The Federal Reserve System buys and
sells Treasury securities in the open market
to implement monetary policy. The interest
that Treasury pays on the securities owned
by the Federal Reserve is included in net
interest as a cost, but virtually all of it
comes back to the Treasury as ‘‘deposits
of earnings of the Federal Reserve System.’’
These budget receipts will total an estimated
$31.8 billion in 2002, rising to $36.7 billion
in 2006.

20.

ALLOWANCES

Table 20–1.

Allowances

(In millions of dollars)
Function 920

Spending:
Discretionary Budget Authority ...

Estimate

2000
Actual

2001

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

National Emergency Reserve
This allowance is part of the Administration’s budget process reform proposal. The
proposed National Emergency Reserve will
help cover emergency costs associated with
extraordinarily large domestic disasters. The
amount of the reserve, $5.6 billion in 2002,

2002

5,321

2003

5,440

2004

5,561

2005

5,685

2006

5,812

is based on the average cost of previous
large domestic disasters.
Adjustments to Certain Accounts
This allowance provides for growth in the
budgets of certain agencies at rates closer
to historical levels.

147

21.

UNDISTRIBUTED OFFSETTING
RECEIPTS
Table 21–1.

Undistributed Offsetting Receipts
(In millions of dollars)

Function 950

Spending:
Mandatory Outlays:
Existing law ...............................
Proposed legislation ...................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

–42,581
..............

–47,656
..............

–51,803
2,400

–60,710
331

–62,399
–8,184

–56,213
–2,651

–57,761
–4,617

Undistributed offsetting receipts, totaling
$49.4 billion in 2002, fall into two categories:
(1) the Government’s receipts from performing
certain business-like activities, such as proceeds from oil and gas leases on the Outer
Continental Shelf; and (2) collections of
Federal agencies’ contributions to Federal
employees’ retirement plans. Receipts from
all business-like activities are offset against
budget authority and outlays, instead of being
recorded as governmental receipts, so that
the budget totals represent the amount of
resources allocated by the Government rather
than by the market mechanism. Unlike most
business-like receipts, which are offset within
the same function as the spending that
gives rise to the receipt, some are so large
that it would distort the functional totals
to distribute them by function. Instead, they
are undistributed by function and offset
against the budget totals.
Receipts of agency retirement contributions
are offset against the payments, so that
the budget totals measure the Government’s
transactions
with
the
public.
These
intrabudgetary transactions are important for
allocating costs to programs that incur the
cost, but they have no net impact on total
budget authority and outlays. They are offset
against total budget authority and outlays
because offsetting them within the functions
in which the payments are recorded would

cause the totals for those functions to seriously
understate current expenditures.
Rents and Royalties on the Outer
Continental Shelf (OCS)
The Department of the Interior’s Outer
Continental Shelf lands leasing program,
which began in 1954, currently generates
about 26 percent of total U.S. domestic production and 27 percent of total natural gas
production. Since the OCS program’s inception,
it has held 131 lease sales, covering areas
three to 200 miles offshore and generating
over $134 billion in rents, bonuses, and
royalties—mainly for the general fund of
the Treasury—with an estimated $5.9 billion
in OCS receipts in 2002. OCS revenues
also provide nearly all funding for the Land
and Water Conservation Fund.
Employee Retirement
In 2002, Federal agencies are expected
to pay an estimated $41.6 billion on behalf
of their employees to the Federal retirement
trust funds, 1 the Medicare health insurance
trust fund, and the Social Security trust
funds. As civilian and military employees’
pay rises, agencies must make commensurate
increases in their payments to recognize the
rising cost of retirement. The amount of
1 The major programs are the Military Retirement System, the
Civil Service Retirement System, and the Federal Employees’ Retirement System.

149

150
receipts also changes with increases or decreases in the number of employees and
changes in the retirement accruals charged
to agencies. The agency payments and trust
fund receipts are offsetting and do not affect
the unified budget totals. Under the 1997
Balanced Budget Act, agency contributions
for employees covered by the Civil Service
Retirement System were increased from seven
percent of salary to 8.51 percent beginning
in 1998. These higher contributions are set
to expire in 2003.
Spectrum Auction Receipts
In 1993, the President and Congress gave
the Federal Communications Commission
(FCC) authority to assign spectrum licenses
through competitive bidding, which has proven
to be a very efficient and effective way
to allocate this finite public resource. Since
the beginning of the auctions program, the
FCC has auctioned over 14,300 licenses for
over $31 billion in actual and expected cash
receipts—encouraging the development of innovative telecommunications services and ensuring that the public receives compensation
for the private use of a public resource.
Over the next five years, spectrum auctions
are expected to generate more than $25
billion in receipts.
The Administration is proposing authorization language that provides a legislative

THE BUDGET FOR FISCAL YEAR 2002

framework for FCC to develop regulations
that promote clearing the spectrum in channels 60–69 (747–762 and 777–792 MHz) for
new wireless services in a manner that
ensures incumbent broadcasters are fairly
compensated. The legislative language would
also shift the statutory deadline for the
60–69 auction from 2000 to 2004 and shift
the statutory deadline for the auction of
channels 52–59 (698–746 MHz) from 2002
to 2006. As a result of the increased certainty
about how and when the spectrum in channels
60–69 will become available for new entrants
and shifting the deadlines for both auctions
closer to when the spectrum is expected
to become available, revenues for these auctions are expected to increase by $7.5 billion.
Arctic National Wildlife Refuge Lease
Receipts
The Administration proposes to open up
the coastal plain of the Arctic National Wildlife
Refuge in northern Alaska to environmentally
sound oil and natural gas leasing. The budget
assumes leasing begins in 2004, generating
$2.4 billion in lease bonus bids, with the
bid receipts shared 50/50 with the State
of Alaska. The remaining $1.2 billion would
be dedicated for research and development
of solar and renewable energy technology,
to be conducted by the Department of Energy
over seven years.

22.

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program
(In millions of dollars)

Function and Program

050 National defense:
Discretionary:
Department of Defense—Military:
Military personnel ....................
Operation and maintenance .....
Procurement ..............................
Research, development, test
and evaluation .......................
Military construction ................
Family housing ..........................
Revolving, management, and
trust funds and other ............
Total, Department of Defense—Military ...........
Atomic energy defense activities:
Department of Energy ..............
Formerly utilized sites remedial action ..............................
Defense nuclear facilities safety board ..................................
Total, Atomic energy defense activities ............

2000
Actual

Estimate
2001

2002

73,838
108,108
54,972

75,435
107,954
62,111

80,266 ................... ................... ................... ...................
115,445 ................... ................... ................... ...................
59,493 ................... ................... ................... ...................

38,707
5,107
3,544

40,829
5,336
3,623

44,396 ................... ................... ................... ...................
5,549 ................... ................... ................... ...................
4,100 ................... ................... ................... ...................

3,060

1,044

1,218 ................... ................... ................... ...................

287,336

296,332

310,467

318,998

327,924

337,093

346,555

12,270

13,499

13,357

13,653

13,959

14,271

14,589

150

140

143

146

150

153

12,437

13,657

13,516

13,815

14,125

14,441

14,763

1,107

1,132

1,155

1,182

1,209

–11

–10

–12

Defense-related activities:
Discretionary programs ............
994
1,282
Proposed Legislation (nonPAYGO) .............................. ................... ...................

2003

2004

2005

2006

Total, Defense-related
activities ......................

994

1,282

1,096

1,121

1,145

1,170

1,197

Total, Discretionary .................

300,767

311,271

325,079

333,934

343,194

352,704

362,515

323
–1,457

410
–1,449

320
–1,408

319
–1,437

317
–1,395

–1,272

–1,110

–1,015

–1,064

–1,094

–1,054

358

597

477

253

222

149

Mandatory:
Department of Defense—Military:
Military personnel .................... ................... ...................
Revolving, trust and other DoD
mandatory ..............................
4,924
326
Offsetting receipts .....................
–1,764
–1,598
Total, Department of Defense—Military ...........

3,160

Atomic energy defense activities:
Energy employee occupational
illness compensation fund .... ...................

151

152

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Energy employee occupational
illness compensation fund,
administrative expenses ....... ...................

136

100

Total, Atomic energy defense activities ............ ...................

408

733

577

308

272

182

212

222

232

238

246

162

150

Defense-related activities:
Mandatory programs ................
209
216
Proposed Legislation
(PAYGO) ............................. ................... ...................
Total, Defense-related
activities ......................

209

216

374

372

382

318

306

Total, Mandatory .......................

3,369

–648

–3

–66

–374

–504

–566

Total, National defense ............

304,136

310,623

325,076

333,868

342,820

352,200

361,949

1,805

2,120

2,173

2,221

2,271

2,322

2,373

1,121

1,145

1,210

1,236

1,265

1,292

1,319

528
839
635

808
835
713

808
835
730

826
854
746

845
873
763

863
892
780

882
912
797

425

675

610

624

637

652

666

307
244

295
264

296
275

303
281

309
287

316
294

323
300

1,179
123

324
447

948
224

969
229

991
234

1,013
239

1,035
245

835

805

697

708

704

718

729

Total, International development, humanitarian assistance .........

8,041

8,431

8,806

8,997

9,179

9,381

9,581

International security assistance:
Foreign military financing
grants and loans ....................
Economic support fund .............
Other security assistance .........

4,787
2,896
564

3,568
2,315
496

3,674
2,289
547

3,756
2,340
558

3,840
2,392
572

3,925
2,445
584

4,013
2,500
598

Total, International security assistance .........

8,247

6,379

6,510

6,654

6,804

6,954

7,111

Conduct of foreign affairs:
State Department operations ...
Foreign buildings ......................

3,033
727

3,276
1,078

3,929
1,291

4,009
1,320

4,097
1,349

4,188
1,379

4,282
1,410

150 International affairs:
Discretionary:
International development,
humanitarian assistance:
Development assistance and
child survival and disease
programs ................................
Multilateral development
banks (MDB’s) .......................
Assistance for the New Independent States .......................
Food aid .....................................
Refugee programs .....................
Assistance for Central and
Eastern Europe ......................
Voluntary contributions to
international organizations ..
Peace Corps ...............................
International narcotics control
and law enforcement—Andean counterdrug initiative ......
Debt restructuring ....................
Other development and humanitarian assistance ...........

22.

153

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

Assessed contributions to international organizations ..........
Assessed contributions for
international peacekeeping ...
Arrearage payment for international organizations and
peacekeeping ..........................

351 ................... ................... ................... ................... ................... ...................

Other conduct of foreign affairs

122

135

149

151

155

159

163

Total, Conduct of foreign
affairs ..........................

5,612

6,202

7,092

7,242

7,402

7,567

7,737

406

450

470

481

491

502

513

361

286

302

308

315

323

329

767

736

772

789

806

825

842

799

910

687

706

727

741

760

Foreign information and exchange activities:
International broadcasting .......
Other information and exchange activities ....................
Total, Foreign information and exchange activities ..........................
International financial programs:
Export-Import Bank .................
Special defense acquisition
fund ........................................

881

869

879

899

919

939

960

498

844

863

882

902

922

–7

–7 ................... ................... ................... ................... ...................

Total, International financial programs ........

792

903

687

706

727

741

760

Total, Discretionary .................

23,459

22,651

23,867

24,388

24,918

25,468

26,031

Mandatory:
International development,
humanitarian assistance:
Credit liquidating accounts ......
Receipts and other ....................

–1,246
–54

–1,280
–98

–1,205
–9

–1,166
–9

–1,127
–9

–1,067
–9

–1,022
–9

Total, International development, humanitarian assistance .........

–1,300

–1,378

–1,214

–1,175

–1,136

–1,076

–1,031

International security assistance:
Foreign military loan reestimates ......................................
Foreign military loan liquidating account .......................

–670

–550

–443

–365

–325

–319

–314

Total, International security assistance .........

–484

–758

–443

–365

–325

–319

–314

–2

–9

Foreign affairs and information:
Conduct of foreign affairs .........
Japan-U.S. Friendship Commission ...................................

186

–208 ................... ................... ................... ................... ...................

154

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

Vietnam debt repayment fund,
transfers from liquidating
fund ........................................ ...................
Total, Foreign affairs
and information ..........
International financial programs:
Foreign military sales trust
fund (net) ...............................
Export-Import Bank—subsidy
reestimates .............................
Other international financial
programs ................................

2002

2003

2004

2005

2006

–6

–5

–1

–5

–11

1,687

460

170

–420

–370

–120

–573

–1,975 ................... ................... ................... ................... ...................

–150

–359

–70

–85

–88

–94

–108

Total, International financial programs ........

964

–1,874

100

–45

–508

–464

–228

Total, Mandatory .......................

–814

–4,011

–1,562

–1,596

–1,980

–1,870

–1,584

Total, International affairs .....

22,645

18,640

22,305

22,792

22,938

23,598

24,447

3,849

4,354

4,409

4,507

4,607

4,711

4,816

2,813

3,179

3,160

3,230

3,303

3,376

3,451

Total, General science
and basic research ......

6,662

7,533

7,569

7,737

7,910

8,087

8,267

Space flight, research, and
supporting activities:
Science, aeronautics and technology .....................................
Human space flight ...................
Mission support .........................
Other NASA programs .............

4,964
5,488
2,069
20

5,663
6,302
7,249
7,961
8,358
8,701
5,451
7,296
6,881
6,545
6,439
6,494
2,191 ................... ................... ................... ................... ...................
23
24
25
25
26
26

Total, Space flight, research, and supporting
activities ......................

12,541

13,328

13,622

14,155

14,531

14,823

15,221

Total, Discretionary .................

19,203

20,861

21,191

21,892

22,441

22,910

23,488

Mandatory:
General science and basic research:
National Science Foundation
donations ................................

153

175

176

250 General science, space, and
technology:
Discretionary:
General science and basic research:
National Science Foundation
programs ................................
Department of Energy general
science programs ...................

22.

155

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
Space flight, research, and
supporting activities:
National Space Grant Program

2000
Actual

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

Estimate
2001

2002

2003

2004

2005

2006

3 ................... ................... ................... ................... ...................

Total, Mandatory .......................

156

175

176

Total, General science, space,
and technology .......................

19,291

21,017

21,366

22,068

22,473

22,943

23,522

270 Energy:
Discretionary:
Energy supply:
Research and development .......
905
1,214
1,039
978
1,000
1,023
1,045
Naval petroleum reserves operations ...................................... ...................
2
17
17
18
18
19
Uranium enrichment activities
307 ................... ................... ................... ................... ................... ...................
Decontamination transfer ........
–420
–419
–420
–442
–454
–466
–478
Nuclear waste program ............
236
191
135
138
141
144
147
Federal power marketing .........
231
180
179
189
193
198
203
Elk Hills school lands fund ...... ...................
36
36
37
38
38
39
Rural electric and telephone
discretionary loans ................
44
67
29
30
31
31
32
Non-defense environmental
management and other .........
282
666
584
605
618
633
646
Proposed Legislation (nonPAYGO) .............................. ................... ................... ................... ...................
150
170
200
Subtotal, Non-defense environmental management and other ...............

282

666

584

605

768

803

846

Total, Energy supply ......

1,585

1,937

1,599

1,552

1,735

1,789

1,853

Energy conservation and preparedness:
Energy conservation .................
Emergency energy preparedness .........................................

737

815

795

923

948

972

997

158

149

169

173

177

181

185

895

964

1,096

1,125

1,153

1,182

–18

–25

–26

–27

–28

–29

220

185

192

200

205

210

Total, Energy information, policy, and regulation ............................

226

194

210

221

240

257

264

Total, Discretionary .................

2,706

3,095

2,773

2,869

3,100

3,199

3,299

Total, Energy conservation and preparedness
Energy information, policy,
and regulation:
Nuclear Regulatory Commission (NRC) ..............................
Federal Energy Regulatory
Commission fees and recoveries, and other ......................
Department of Energy departmental administration, OIG,
and EIA administration ........

156

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

Mandatory:
Energy supply:
Naval petroleum reserves oil
and gas sales ..........................
–10
–8
–8
Federal power marketing .........
–729
–840
–692
Tennessee Valley Authority .....
–446
–550
–282
United States Enrichment Corporation ..................................
–5 ................... ...................
Nuclear waste fund program ...
–702
–620
–640
Elk Hills school lands fund ...... ................... ...................
36
Research and development .......
5 ................... ...................
Rural electric and telephone
liquidating accounts ..............
–2,000
–1,768
–1,589
Rural electric and telephone
loan subsidy reestimates ...... ...................
–161 ...................
Total, Energy supply ......
Energy information, policy,
and regulation:
Miscellaneous revenues, departmental administration ...

–3,887

–3,947

–3,175

2003

2004

2005

2006

................... ................... ................... ...................
–715
–801
–769
–799
–473
–976
–1,032
–1,100
................... ................... ................... ...................
–625
–612
–637
–621
................... ................... ................... ...................
................... ................... ................... ...................
–1,284

–1,260

–1,127

–997

................... ................... ................... ...................
–3,097

–3,649

–3,565

–3,517

–3 ................... ................... ................... ................... ................... ...................

Total, Mandatory .......................

–3,890

–3,947

–3,175

–3,097

–3,649

–3,565

–3,517

Total, Energy ..............................

–1,184

–852

–402

–228

–549

–366

–218

3,936
768

4,374
776

3,731
783

3,815
799

3,900
816

3,986
836

4,076
856

217

265

145

149

162

150

158

4,921

5,415

4,659

4,763

4,878

4,972

5,090

300 Natural resources and environment:
Discretionary:
Water resources:
Corps of Engineers ....................
Bureau of Reclamation .............
Watershed, flood prevention,
and other ................................
Total, Water resources ...

Conservation and land management:
Forest Service ............................
3,032
4,243
3,600
3,681
3,761
3,845
3,932
Management of public lands
(BLM) .....................................
1,301
1,916
1,589
1,628
1,663
1,700
1,738
Recreation fee (Proposed Legislation non-PAYGO) ............... ................... ................... ...................
–5
–5
–6
–6
Conservation of agricultural
lands .......................................
701
760
816
834
853
872
891
Proposed Legislation (nonPAYGO) .............................. ................... ...................
–89 ................... ................... ................... ...................
Subtotal, Conservation of
agricultural lands ...........

701

760

727

834

853

872

891

Other conservation and land
management programs .........

582

810

583

597

612

624

639

Total, Conservation and
land management .......

5,616

7,729

6,499

6,735

6,884

7,035

7,194

Recreational resources:
Operation of recreational resources ....................................

2,829

3,389

3,604

3,737

3,804

3,870

3,939

22.

157

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

Recreation fee (Proposed Legislation non-PAYGO) ............... ................... ................... ...................
Other recreational resources
activities .................................
201
184
153
Total, Recreational resources .........................

3,030

3,573

Pollution control and abatement:
Regulatory, enforcement, and
research programs .................
2,680
2,877
State and tribal assistance
grants .....................................
3,448
3,621
Hazardous substance superfund ........................................
1,400
1,267
Other control and abatement
activities .................................
144
145
Proposed Legislation (nonPAYGO) .................................. ................... ...................
Total, Pollution control
and abatement ............

2004

2005

2006

–76

–77

155

154

155

3,757

3,816

3,882

3,949

4,017

2,714

2,773

2,837

2,899

2,964

3,289

3,333

3,379

2,925

2,172

1,268

1,296

1,326

1,355

1,385

145

148

151

155

159

–4

–8

7,672

7,910

7,412

7,542

7,685

7,326

6,672

2,459

3,043

3,124

3,193

3,265

3,333

3,407

948

1,017

950

971

993

1,015

1,038

Total, Other natural resources .........................

3,407

4,060

4,074

4,164

4,258

4,348

4,445

Total, Discretionary .................

24,646

28,687

26,401

27,020

27,587

27,630

27,418

–83

–81

–117

–134

–143

–73

–66

–97

–109

–118

2,022
507

2,112
509

2,124
511

2,115
509

8
–2,784

8
–2,798

8
–2,816

8
–2,796

–242

–164

–167

–158

902

923

948

969

188

191

194

197

Other natural resources:
NOAA .........................................
Other natural resource program activities .......................

Mandatory:
Water resources:
Offsetting receipts and other
mandatory water resource
programs ................................
–118
–173
Proposed Legislation
(PAYGO) ............................. ................... ...................
Total, Water resources ...

–118

–173

Conservation and land management:
Conservation Reserve Program
and other ................................
1,848
2,104
2,050
Other conservation programs ..
349
516
519
Recreation fee (Proposed Legislation PAYGO) ....................... ................... ................... ...................
Offsetting receipts .....................
–2,075
–3,001
–2,791
Recreation fee (Proposed Legislation PAYGO) ....................... ................... ................... ...................
Total, Conservation and
land management .......

122

–381

–222

Recreational resources:
Operation of recreational resources ....................................
932
990
1,004
Recreation fee (Proposed Legislation PAYGO) ....................... ................... ................... ...................

158

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

Offsetting receipts .....................
–359
–458
–374
Proposed Legislation
(PAYGO) ............................. ................... ................... ...................
Subtotal, Offsetting receipts ...............................

–359

–458

Recreation fee (Proposed Legislation PAYGO) ....................... ................... ...................

2004

2005

2006

–309

–312

–313

–315

–374

–233

–236

–238

–10

–209

–217

–224

–227

Total, Recreational resources .........................

573

532

620

648

661

682

701

Pollution control and abatement:
Superfund resources and other
mandatory ..............................

–182

–148

–127

Other natural resources:
Fees and mandatory programs

–10

Total, Mandatory .......................

385

–167

202

218

277

284

303

Total, Natural resources and
environment ............................

25,031

28,520

26,603

27,238

27,864

27,914

27,721

475

389

466

476

487

498

509

104
947

135
951

136
1,024

139
1,047

142
1,069

145
1,093

149
1,118

1,526

1,475

1,626

1,662

1,698

1,736

1,776

1,362

1,392

1,423

1,455

1,487

350 Agriculture:
Discretionary:
Farm income stabilization:
Agriculture credit loan program .......................................
P.L.480 market development
activities .................................
Administrative expenses ..........
Total, Farm income stabilization ......................

Agricultural research and
services:
Research and education programs ......................................
1,375
1,484
Discretionary changes to mandatory research programs ..... ................... ...................
Integrated research, education,
and extension programs ........
40
42
Extension programs ..................
424
432
Marketing programs .................
53
66
Animal and plant inspection
programs ................................
660
866
Proposed Legislation (nonPAYGO) .............................. ................... ...................

–180

180 ................... ................... ...................

42
413
72

43
422
74

44
432
75

45
441
77

46
451
79

727

658

673

687

703

–5

Subtotal, Animal and plant
inspection programs .......

660

866

722

653

668

682

698

Economic intelligence ...............

163

167

181

203

188

187

193

22.

159

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

Grain inspection and packers
program ..................................
26
32
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Grain inspection
and packers program .....

2003

2004

2005

2006

–4

Foreign agricultural service .....
Other programs and
unallocated overhead ............

125

115

122

125

128

130

133

333

432

444

458

466

480

488

Total, Agricultural research and services .....

3,199

3,636

3,207

3,580

3,454

3,528

3,607

Total, Discretionary .................

4,725

5,111

4,833

5,242

5,152

5,264

5,383

28,534

21,565

8,309

6,035

5,933

5,963

6,057

1,033

3,070

3,046

3,213

3,376

3,532

3,732

–866

–851

–811

–772

–741

–708

–676

Total, Farm income stabilization ......................

28,701

23,784

10,544

8,476

8,568

8,787

9,113

Agricultural research and
services:
Miscellaneous mandatory programs ......................................
Offsetting receipts .....................

441
–160

590
–200

625
–162

637
–160

575
–160

582
–158

588
–158

Total, Agricultural research and services .....

281

390

463

477

415

424

430

Total, Mandatory .......................

28,982

24,174

11,007

8,953

8,983

9,211

9,543

Total, Agriculture .....................

33,707

29,285

15,840

14,195

14,135

14,475

14,926

370 Commerce and housing credit:
Discretionary:
Mortgage credit:
Federal Housing Administration (FHA) loan programs .....
Government National Mortgage Association (GNMA) .....
Other housing and urban development ...............................
Rural housing insurance fund

–1,142

–1,261

–1,629

–1,892

–2,078

–2,160

–2,071

–303

–347

–345

–350

–351

–352

–56
585

–97
662

–239
664

–239
678

–238
693

–239
710

–238
726

Total, Mortgage credit ...

–916

–1,043

–1,549

–1,803

–1,974

–2,040

–1,935

Postal service:
Payments to the Postal Service
fund (On-budget) ...................

100

Deposit insurance:
National credit union administration .....................................

Mandatory:
Farm income stabilization:
Commodity Credit Corporation
Crop insurance and other farm
credit activities ......................
Credit liquidating accounts
(ACIF and FAC) ....................

160

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
Other advancement of commerce:
Small and minority business
assistance ...............................
Science and technology .............
Economic and demographic
statistics .................................
Regulatory agencies ..................
International Trade Administration .....................................
Patent and trademark salaries
and expenses ..........................
Other discretionary ...................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

602
653

715
616

492
509

503
519

514
532

526
544

538
556

4,798
–379

482
–465

607
–496

946
–551

772
–562

785
–667

817
–789

320

333

330

337

345

353

360

–120
56

–113
68

–207
–50

–181
75

–177
80

–167
79

–186
84

Total, Other advancement of commerce .......

5,930

1,636

1,185

1,648

1,504

1,453

1,380

Total, Discretionary .................

5,115

687

–286

–75

–389

–504

–470

–304

–200

–42

–99

–17

–15

–81

–251

–430

–610

–405

–429

–453

–479

Mandatory:
Mortgage credit:
FHA General and special risk
negative subsidies .................
FHA mutual mortgage insurance receipts
(intragovernmental) ..............
GNMA receipts
(intragovernmental) ..............
Indian housing loan guarantee
receipts ...................................
Mortgage credit reestimates ....
FHA general and special risk
insurance liquidating account .......................................
Other credit liquidating accounts .....................................
Other mortgage credit activities ..........................................
Total, Mortgage credit ...

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

–4,027 ...................

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

–6,610

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

1,306

1,138

1,950

2,210

1,436

1,150

784

610

495

860

–1,526

–1,427

–1,512

–1,628

...................
1,916

274 ................... ................... ................... ................... ...................
–4,967

Postal service:
Payments to the Postal Service
fund for nonfunded liabilities
(On-budget) ............................ ................... ...................
Postal Service (Off-budget) .......
3,712
4,840
Total, Postal service .......

3,712

4,840

Deposit insurance:
Bank Insurance Fund ...............
–25
–26
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Bank Insurance
Fund ................................
FSLIC Resolution Fund ............
Savings Association Insurance
Fund .......................................

–439

2,171

156

–770

–1,262

–1,948

67 ................... ................... ................... ...................
2,519
1,944
916
879
1,006
2,586

1,944

916

879

1,006

–26

–27

–5

–11

–18

–24

–31

–92

–97

–101

–106

–112

–25

–26

–123

–134

–145

–157

–170

–4

–3

–4

22.

161

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
Other deposit insurance activities ..........................................
Total, Deposit insurance

Estimate

2000
Actual

2001

2002

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

2003

2004

2005

2006

–97

–106

–115

–127

–139

Other advancement of commerce:
Universal service fund ..............
4,547
5,599
5,638
6,171
6,730
7,309
7,906
Payments to copyright owners
214
230
239
253
265
229
186
Spectrum auction subsidy ........ ...................
–12,219
8
8
8
8
8
Regulatory fees ..........................
–26
–26
–26
–26
–26
–26
–26
Credit liquidating accounts ......
4
5
2
1
1
1
1
Business loan program, subsidy reestimate ......................
–284
–722 ................... ................... ................... ................... ...................
Other mandatory ......................
233
104
94
94
94
94
94
Proposed Legislation
(PAYGO) ............................. ................... ...................
2 ................... ................... ................... ...................
Subtotal, Other mandatory

233

104

Total, Other advancement of commerce .......

4,688

–7,029

5,957

6,501

7,072

7,615

8,169

Total, Mandatory .......................

10,317

–7,156

10,617

8,495

7,103

7,105

7,088

Total, Commerce and housing
credit ........................................

15,432

–6,469

10,331

8,420

6,714

6,601

6,618

400 Transportation:
Discretionary:
Ground transportation:
Highways ...................................
2
2,759 ................... ................... ................... ................... ...................
Highway safety .........................
88
119
124
127
130
132
135
Mass transit ..............................
1,166
1,255
1,348
1,444
1,476
1,508
1,542
Railroads ....................................
739
753
705
721
736
754
770
Proposed Legislation (nonPAYGO) .............................. ................... ...................
–55
–110
–113
–116
–119
Subtotal, Railroads ............

739

753

650

611

623

638

651

Regulation .................................

Total, Ground transportation ...........................

2,011

4,903

2,140

2,200

2,248

2,297

2,348

Air transportation:
Airports and airways (FAA) .....
Aeronautical research and
technology ..............................

8,147

9,369

9,661

10,534

10,768

11,009

11,255

1,060

926

890

831

852

836

852

Total, Air transportation

9,207

10,295

10,551

11,365

11,620

11,845

12,107

Water transportation:
Marine safety and transportation ......................................
Ocean shipping ..........................

3,609
110

3,327
142

3,773
132

3,856
134

3,944
138

4,031
141

4,121
143

Total, Water transportation ...........................

3,719

3,469

3,905

3,990

4,082

4,172

4,264

162

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

Other transportation:
Department of Transportation
administration and other ......
235
245
Proposed Legislation (nonPAYGO) .............................. ................... ...................

2003

2004

2005

2006

252

257

262

267

275

–12

–22

–23

–24

Total, Other transportation ...........................

235

245

240

235

240

244

251

Total, Discretionary .................

15,172

18,912

16,836

17,790

18,190

18,558

18,970

30,002
460
6,285

33,584
553
5,017

35,354
685
5,398

31,474
581
5,781

32,349
597
5,947

33,228
612
6,113

34,182
628
6,293

–99
–50

–33
–29

–33
–24

36,598

39,092

41,375

37,774

38,831

39,891

41,046

2,607
50

3,300
40

3,400
40

3,488
40

3,579
40

3,672
40

2,799

2,657

3,340

3,440

3,528

3,619

3,712

730

778

876

955

990

1,029

1,069

–8

–11

–13

–15

808

829

893

947

979

1,016

1,054

Mandatory:
Ground transportation:
Highways ...................................
Highway safety .........................
Mass transit ..............................
Offsetting receipts and credit
subsidy reestimates ...............
Credit liquidating accounts ......
Total, Ground transportation ...........................

Air transportation:
Airports and airways (FAA) .....
2,799
Payments to air carriers ........... ...................
Total, Air transportation
Water transportation:
Coast Guard retired pay ...........
Other water transportation
programs ................................
Total, Water transportation ...........................

Other transportation:
Sale of Governors Island .......... ................... ...................
Other mandatory transportation programs .....................
–1
–1

–340 ................... ................... ................... ...................
–1

–1

Total, Other transportation ...........................

–1

–341

–1

Total, Mandatory .......................

40,204

42,577

45,267

42,160

43,337

44,525

45,811

Total, Transportation ...............

55,376

61,489

62,103

59,950

61,527

63,083

64,781

4,702

4,807

4,914

5,024

5,136

100

102

105

106

109

450 Community and regional development:
Discretionary:
Community development:
Community development block
grant .......................................
4,809
5,113
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Community development block grant ...

4,809

5,113

4,802

4,909

5,019

5,130

5,245

Community development loan
guarantees .............................

22.

163

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

Community adjustment and investment program .................
Community development financial institutions ......................
Brownfields redevelopment ......
Other community development
programs ................................

115
25

2002

8 ...................

2003

2004

2005

2006

118
25

68
25

70
26

71
26

73
27

74
27

410

570

546

557

571

582

597

Total, Community development .........................

5,397

5,856

5,457

5,578

5,704

5,829

5,960

Area and regional development:
Rural development ....................

895

1,191

841

980

942

961

980

449
1,415

366
1,461

374
1,486

382
1,514

391
1,540

400
1,568

77
41
20

66
41
20

67
42
20

69
42
21

71
44
21

72
45
22

3,193

2,795

2,969

2,970

3,028

3,087

1,593

1,366

1,396

1,428

1,459

1,492

184

Economic Development Administration ..................................
451
Indian programs ........................
1,211
Appalachian Regional Commission .........................................
66
Denali Commission ...................
25
Delta Regional Authority ......... ...................
Total, Area and regional
development ................

2,648

Disaster relief and insurance:
Disaster relief ............................
2,765
Small Business Administration
disaster loans .........................
317
Disaster loan program, negative subsidies ......................... ...................
Other disaster assistance programs ......................................
1,083

–595 ................... ................... ................... ................... ...................
734

657

673

684

699

711

Total, Disaster relief and
insurance .....................

4,165

1,916

2,098

2,146

2,190

2,238

2,285

Total, Discretionary .................

12,210

10,965

10,350

10,693

10,864

11,095

11,332

Mandatory:
Community development:
Pennsylvania Avenue activities
and other programs ...............
Credit liquidating accounts ......

1 ................... ................... ................... ................... ................... ...................
–3
–4
–4 ................... ................... ................... ...................

Total, Community development .........................

–2

–4

Area and regional development:
Indian programs ........................
Rural development programs ...
Credit liquidating accounts ......
Offsetting receipts .....................

152
49
121
–134

161
163
48
–317

168
81
–62
–151

173
36
–193
–156

180
36
–252
–164

186
36
–297
–169

192
36
–290
–172

Total, Area and regional
development ................

188

–140

–200

–244

–234

Disaster relief and insurance:
National flood insurance fund

–671

–256

–287

–183

–192

–199

–207

–4 ................... ................... ................... ...................

164

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Radiological emergency preparedness fees ........................
–1 ................... ................... ................... ................... ...................
Disaster loans program account .......................................
68
45 ................... ................... ................... ...................
SBA disaster loan subsidy reestimates ................................
–516
–384 ................... ................... ................... ...................
Disaster assistance, downward
reestimates ............................. ...................
–10 ................... ................... ................... ...................
Credit liquidating accounts ......
–9
–44 ................... ................... ................... ...................

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

Total, Disaster relief and
insurance .....................

–1,129

–649

–287

–183

–192

–199

–207

Total, Mandatory .......................

–943

–598

–255

–323

–392

–443

–441

Total, Community and regional development ...............

11,267

10,367

10,095

10,370

10,472

10,652

10,891

500 Education, training, employment, and social services:
Discretionary:
Elementary, secondary, and
vocational education:
Education for the disadvantaged .......................................
Impact aid ..................................
School improvement ..................
Education reform ......................
Bilingual and immigrant education ......................................
Special education ......................
Vocational and adult education
Reading excellence ....................
Indian education .......................
Other ..........................................
Total, Elementary, secondary, and vocational
education .....................
Higher education:
Student financial assistance ....
Higher education .......................
Federal family education loan
program ..................................
Other higher education programs ......................................
Total, Higher education
Research and general education aids:
Library of Congress ..................
Public broadcasting ...................
Smithsonian institution and related agencies ........................
Education research, statistics,
and improvement ..................

8,701
906
1,492
1,765

8,979
11,011
11,257
11,507
11,764
12,027
993
1,130
1,155
1,181
1,208
1,234
4,619
6,389
6,531
6,677
6,826
6,978
1,881 ................... ................... ................... ................... ...................

406
2,294
891
65
606
10

460
460
470
481
491
502
6,110
8,426
8,614
8,806
9,002
9,203
1,826
1,802
1,842
1,883
1,925
1,968
286 ................... ................... ................... ................... ...................
712
732
746
763
780
797
12
12
12
13
13
13

17,136

25,878

29,962

30,627

31,311

32,009

32,722

9,375
1,530

10,674
1,912

11,674
1,723

11,934
1,757

12,343
2,076

12,618
2,159

12,900
2,207

375

391

398

406

415

424

433

11,328

13,025

13,845

14,148

14,886

15,254

15,595

315
342

429
403

352
413

357
429

365
441

374
450

383
461

546

577

616

624

640

652

666

591

722

382

390

399

408

417

22.

165

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Other ..........................................

813

925

868

888

906

926

947

Total, Research and general education aids .....

2,607

3,056

2,631

2,688

2,751

2,810

2,874

2,990
440

5,670
440

5,129
440

5,485
450

5,607
460

5,732
470

5,860
481

1,252

1,319

1,305

1,335

1,363

1,394

1,426

101

110

113

116

118

120

123

Total, Training and employment ......................

4,783

7,539

6,987

7,386

7,548

7,716

7,890

Other labor services:
Labor law, statistics, and other
administration .......................

1,242

1,444

1,468

1,498

1,533

1,570

1,604

411
322

420
269

430
331

439
364

449
395

8,117

8,307

8,502

8,703

8,909

Training and employment:
Training and employment services ..........................................
Older Americans employment ..
Federal-State employment
service .....................................
Other employment and training ...........................................

Social services:
Corporation for National and
Community Service ...............
433
457
National Service ........................
219
279
Children and families services
programs ................................
5,327
7,956
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Children and
families services programs ..............................

5,327

7,956

8,181

8,372

8,569

8,771

8,979

Aging services program ............
Other ..........................................

933
370

1,103
409

1,098
519

1,122
530

1,148
542

1,173
555

1,199
566

Total, Social services ......

7,282

10,204

10,531

10,713

11,020

11,302

11,588

Total, Discretionary .................

44,378

61,146

65,424

67,060

69,049

70,661

72,273

Mandatory:
Elementary, secondary, and
vocational education:
Advance appropriations—Education for the disadvantaged
Advance appropriations—
School improvement programs ......................................
Advance appropriations—Special education .........................
Advance appropriations—Vocational and adult education ....
Advance appropriations—Reading excellence .........................

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

6,758 ................... ................... ................... ...................

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

1,765 ................... ................... ................... ...................

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

5,072 ................... ................... ................... ...................

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

791 ................... ................... ................... ...................

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

195 ................... ................... ................... ...................

Total, Elementary, secondary, and vocational
education ..................... ................... ...................

14,581 ................... ................... ................... ...................

166

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

Higher education:
Federal family education loan
program ..................................
4,576
–876
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Federal family
education loan program

4,576

–876

Federal direct loan program ....
–2,776
–392
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Federal direct
loan program ..................
Other higher education programs ......................................
Credit liquidating account
(Family education loan program) ......................................
Total, Higher education
Research and general education aids:
Mandatory programs ................

2003

2004

2005

2006

4,218

3,701

3,027

3,177

3,332

4,226

3,705

3,031

3,181

3,336

–636

–484

–66

–98

–194

–2,776

–392

–632

–482

–64

–96

–192

–62

–35

–97

–50

–66

–27

132

–1,188

–742

–604

–466

–340

–239

–167

550

–2,045

2,893

2,707

2,561

2,819

3,109

Training and employment:
Trade adjustment assistance ...
132
132 ................... ................... ................... ................... ...................
Proposed Legislation (nonPAYGO) .............................. ................... ...................
132
132
132
132
132
Subtotal, Trade adjustment assistance ..............
Welfare to work grants .............
Advance appropriations and
other mandatory training
and employment services ......

132
–137

132

–50 ................... ................... ................... ................... ...................

180

2,676

213 ................... ................... ...................

Total, Training and employment ......................

262

2,808

345

Other labor services:
Other labor services ..................

Social services:
Payments to States for foster
care and adoption assistance
5,697
6,401
Education and training for
older foster children (Proposed Legislation PAYGO) ... ................... ...................
Promoting safe and stable families .........................................
295
305
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Promoting safe
and stable families .........

295

305

132

16 ................... ................... ...................

6,622

7,015

7,483

8,108

8,775

305

200

505

22.

167

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

Advance appropriations—Children and families services
programs ................................ ................... ...................
Social services block grant .......
1,775
1,725
Rehabilitation services .............
2,339
2,400
Other social services .................
24
25

2002

2003

2004

2005

2006

1,400 ................... ................... ................... ...................
1,700
1,700
1,700
1,700
1,700
2,481
2,541
2,607
2,675
2,742
20
13
9
6
4

Total, Social services ......

10,130

10,856

12,788

11,834

12,364

13,054

13,786

Total, Mandatory .......................

10,788

9,178

33,122

14,932

15,084

16,031

17,048

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

55,166

70,324

98,546

81,992

84,133

86,692

89,321

2,651
2,391

2,957
2,629

3,029
2,707

3,181
2,767

3,337
2,829

3,468
2,892

3,599
2,957

4,162

4,991

4,682

4,830

5,055

5,313

5,572

2,728

3,571

3,611

3,692

3,774

3,858

3,944

1,017

802

585

598

611

623

636

12,949

14,950

14,614

15,068

15,606

16,154

16,708

17,800
345

20,361
593

23,112
345

27,244
353

27,852
360

28,473
368

29,108
376

359

400

268

274

280

286

293

18,504

21,354

23,725

27,871

28,492

29,127

29,777

550 Health:
Discretionary:
Health care services:
Substance abuse and mental
health services .......................
Indian health .............................
Health Resources and Services
Administration .......................
Disease control, research, and
training ..................................
Departmental management
and other ................................
Total, Health care services ...............................
Health research and training:
National Institutes of Health ...
Clinical training ........................
Other health research and
training ..................................
Total, Health research
and training ................
Consumer and occupational
health and safety:
Food safety and inspection .......
Occupational safety and health
FDA and Consumer Product
Safety Commission salaries
and expenses ..........................

649
623

695
686

716
688

732
702

748
718

765
735

782
752

1,098

1,173

1,265

1,290

1,318

1,349

1,378

Total, Consumer and occupational health and
safety ...........................

2,370

2,554

2,669

2,724

2,784

2,849

2,912

Total, Discretionary .................

33,823

38,858

41,008

45,663

46,882

48,130

49,397

143,029

153,786

167,410

182,381

198,256

–606

–1,071

–1,450

–1,844

–1,906

142,423

152,715

165,960

180,537

196,350

Mandatory:
Health care services:
Medicaid grants ........................
117,744
128,853
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Medicaid grants

117,744

128,853

168

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
State children’s health insurance fund ................................
Health care tax credit—refundable portion (Proposed Legislation PAYGO) .......................
Immediate helping hand prescription drug plan (Proposed
Legislation PAYGO) ..............
Federal employees’ and retired
employees’ health benefits ....
DoD Medicare-eligible retiree
health care fund ....................
UMWA Funds (coal miner retiree health) ...........................
Ricky Ray hemophilia relief
fund ........................................
Other mandatory health services activities .........................

2000
Actual

4,259

Estimate
2001

4,249

5,027

2003

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

2005

2006

3,175

4,082

1,914

1,221

1,909

2,027

2,500

11,200

12,900

14,800

5,549

6,079

6,623

7,224

7,886

8,601

6,117

6,385

6,665

6,958

187

178

171

164

................... ................... ...................
196

2004

3,115

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

2002

252

235

4,200 ...................

580 ................... ................... ................... ................... ...................

391

587

605

573

495

517

536

Total, Health care services ...............................

127,617

142,570

163,738

184,204

199,438

205,967

218,718

Health research and safety:
Health research and training ..

–20

107

109

Total, Mandatory .......................

127,676

142,550

163,845

184,313

199,445

205,972

218,722

Total, Health ...............................

161,499

181,408

204,853

229,976

246,327

254,102

268,119

1,547

1,581

1,617

1,653

1,689

–20

1,527

1,561

1,597

1,633

1,669

2,034

2,083

2,129

2,176

2,226

–95

570 Medicare:
Discretionary:
Medicare:
Hospital insurance (HI) administrative expenses ..................
1,222
1,504
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Hospital insurance (HI) administrative
expenses ..........................

1,222

1,504

Supplementary medical insurance (SMI) administrative
expenses .................................
1,776
1,848
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Supplementary
medical insurance (SMI)
administrative expenses
Total, Discretionary .................

1,776

1,848

1,939

1,988

2,034

2,081

2,131

2,998

3,352

3,466

3,549

3,631

3,714

3,800

169,809

175,332

136,079

142,268

8,300
–1,744
–33,276

12,800
–1,855
–36,087

Mandatory:
Medicare:
Hospital insurance (HI) ............
129,008
141,018
145,660
151,639
158,299
Supplementary medical insurance (SMI) ..............................
87,349
99,379
107,821
117,046
125,132
Medicare modernization (Proposed Legislation PAYGO) ... ................... ................... ................... ................... ...................
HI premiums and collections ...
–1,392
–1,397
–1,488
–1,551
–1,643
SMI premiums and collections
–20,515
–22,036
–25,546
–28,345
–29,851

22.

169

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Quinquennial adjustment (HI) ...................
–1,332 ................... ................... ................... ................... ...................
HI interfunds .............................
–9,512
–8,110
–8,581
–8,890
–9,461
–9,981
–10,620
SMI interfunds ..........................
–65,561
–69,788
–81,347
–88,783
–92,549 –102,042 –110,380
Proposed Legislation (nonPAYGO) .............................. ................... ...................
70
75
70
70
70
Subtotal, SMI interfunds ..

–65,561

–69,788

General fund payment to HI
and SMI trust funds .............
78,213
77,874
Proposed Legislation (nonPAYGO) .............................. ................... ...................

–81,277

–88,708

–92,479

–101,972

–110,310

90,002

97,967

102,469

112,683

121,819

–176

–379

–531

–732

–891

Subtotal, General fund
payment to HI and SMI
trust funds ......................

78,213

77,874

89,826

97,588

101,938

111,951

120,928

Total, Mandatory .......................

197,590

215,608

226,415

238,779

251,935

279,166

292,456

Total, Medicare ..........................

200,588

218,960

229,881

242,328

255,566

282,880

296,256

600 Income security:
Discretionary:
General retirement and disability insurance:
Railroad retirement ..................
Pension Benefit Guaranty Corporation ..................................
Pension and Welfare Benefits
Administration and other .....

269

261

250

255

261

267

273

101

110

112

115

117

120

381

383

372

379

388

396

405

105

107

109

112

114

–80
71

–80
72

–82
74

–85
76

–87
78

Total, General retirement and disability insurance ........................

Federal employee retirement
and disability:
Civilian retirement and disability program administrative expenses ..........................
85
92
Federal workers’ compensation
benefits ................................... ................... ...................
Armed forces retirement home
70
70
Total, Federal employee
retirement and disability ...........................

155

162

101

103

105

Unemployment compensation:
Unemployment programs administrative expenses ...........

2,270

2,369

2,419

2,473

2,528

2,584

2,642

Housing assistance:
Public housing operating fund
Public housing capital fund .....
Subsidized, public, homeless
and other HUD housing ........
Rural housing assistance .........

3,138
2,884

3,235
2,993

3,385
2,293

3,460
2,343

3,537
2,396

3,617
2,450

3,697
2,504

11,313
742

18,203
787

21,534
795

23,316
842

24,397
920

25,529
940

26,302
940

Total, Housing assistance ..............................

18,077

25,218

28,007

29,961

31,250

32,536

33,443

170

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Food and nutrition assistance:
Special supplemental food program for women, infants,
and children (WIC) ................
Other nutrition programs .........

4,032
517

4,043
581

4,137
579

4,229
591

4,324
605

4,420
619

4,519
632

Total, Food and nutrition assistance ............

4,549

4,624

4,716

4,820

4,929

5,039

5,151

498

445

455

465

475

486

2,000

1,700

1,707

1,745

1,784

1,824

1,183

2,000

2,200

2,249

2,299

2,350

2,403

2,440

2,582

2,850

2,914

2,978

3,046

3,112

Total, Other income assistance ........................

6,121

6,727

7,195

7,325

7,487

7,655

7,825

Total, Discretionary .................

31,553

39,483

42,805

45,057

46,683

48,313

49,571

Mandatory:
General retirement and disability insurance:
Railroad retirement ..................

4,437

5,119

4,646

4,764

4,915

5,069

5,429

996

953

893

857

815

773

732

–11

–12

–13

–14

–33

213

227

239

250

262

273

Other income assistance:
Refugee assistance ....................
Low income home energy assistance ...................................
Child care and development
block grant .............................
Supplemental security income
(SSI) administrative expenses .....................................

–3 ................... ................... ................... ................... ................... ...................
147

151

149

154

5,533

6,424

5,903

6,001

6,121

6,245

6,574

45,838
32,912

48,172
34,332

50,383
35,377

52,804
36,393

55,172
37,421

57,632
38,430

60,127
39,480

125

151

156

165

180

Total, Federal employee
retirement and disability ...........................

78,855

82,594

85,916

89,379

92,781

96,260

99,821

Unemployment compensation:
Unemployment insurance programs ......................................

20,470

25,165

28,046

28,744

30,550

32,197

33,970

Total, General retirement and disability insurance ........................
Federal employee retirement
and disability:
Federal civilian employee retirement and disability .........
Military retirement ...................
Federal employees workers’
compensation (FECA) ...........
Federal employees life insurance fund ................................

22.

171

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

Trade adjustment assistance ...
283
275
Proposed Legislation (nonPAYGO) .............................. ................... ...................

2003

2004

2005

2006

11 ................... ................... ................... ...................
273

280

294

306

320

Subtotal, Trade adjustment assistance ..............

283

275

284

280

294

306

320

Total, Unemployment
compensation ..............

20,753

25,440

28,330

29,024

30,844

32,503

34,290

Housing assistance:
Advance appropriations—Housing certificate fund ................ ................... ...................
Mandatory housing assistance
programs ................................
35
40
Total, Housing assistance ..............................
Food and nutrition assistance:
Food stamps (including Puerto
Rico) ........................................
State child nutrition programs
Funds for strengthening markets, income, and supply
(Sec.32) ...................................
Total, Food and nutrition assistance ............

4,200 ................... ................... ................... ...................
40

4,240

21,067
9,579

20,097
9,610

21,976
10,083

22,878
11,028

23,590
11,591

24,511
12,103

25,402
12,646

730

737

709

31,376

30,444

32,768

34,615

35,890

37,323

38,757

32,873
3,801

34,302
4,166

38,372
4,451

37,303
4,686

–887

–899

–927

–972

16,679

17,679

16,679

2,717

27,875
720

28,545
660

29,373
630

30,165
590

215

453

710

960

Other income support:
Supplemental security income
(SSI) ........................................
31,028
30,561
29,090
Family support payments ........
1,010
3,321
3,448
Federal share of child support
collections ...............................
–913
–896
–878
Temporary assistance for
needy families and related
programs ................................
16,689
16,689
16,679
Child care entitlement to
states ......................................
2,367
2,567
2,717
Earned income tax credit
(EITC) .....................................
26,099
25,923
26,983
Child tax credit .........................
809
790
760
Proposed Legislation
(PAYGO) ............................. ................... ................... ...................
Subtotal, Child tax credit ..

809

790

760

935

1,113

1,340

1,550

Other assistance ........................
SSI recoveries and receipts ......

39
–1,637

40
–1,561

62
–1,730

56
–1,801

56
–1,894

57
–2,100

57
–2,041

Total, Other income support ..............................

75,491

77,434

77,131

82,248

85,785

89,962

90,144

Total, Mandatory .......................

212,043

222,376

234,288

241,307

251,461

262,333

269,626

Total, Income security .............

243,596

261,859

277,093

286,364

298,144

310,646

319,197

172

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
650 Social security:
Discretionary:
Social security:
Old-age and survivors insurance (OASI)administrative
expenses (Off-budget) ............
Disability insurance (DI) administrative expenses (Offbudget) ...................................
Office of the Inspector General—Social Security Adm.
(On-budget) ............................
Total, Discretionary .................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

1,782

1,898

1,895

1,937

1,981

2,024

2,070

1,413

1,532

1,606

1,641

1,679

1,715

1,754

3,210

3,447

3,520

3,597

3,680

3,759

3,845

Mandatory:
Social security:
Old-age and survivors insurance (OASI)(Off-budget) ........
353,608
373,192
389,494
406,673
425,044
444,709
466,069
Disability insurance (DI)(Offbudget) ...................................
55,219
59,546
63,416
68,797
75,045
81,865
89,360
Quinquennial OASI and DI adjustments (On-budget) .......... ...................
–836 ................... ................... ................... ................... ...................
Intragovernmental transactions (On-budget) ...............
13,262
12,541
14,148
14,876
16,076
17,230
18,428
Impact of tax cut (On-budget)
(Proposed Legislation nonPAYGO) .................................. ................... ...................
–140
–418
–645
–921
–1,169
Intragovernmental transactions (Off-budget) ...............
–13,252
–12,541
–13,734
–14,876
–16,076
–17,230
–18,428
Impact of tax cut (Off-budget)
(Proposed Legislation nonPAYGO) .................................. ................... ...................
140
418
645
921
1,169
Total, Mandatory .......................

408,837

431,902

453,324

475,470

500,089

526,574

555,429

Total, Social security ...............

412,047

435,349

456,844

479,067

503,769

530,333

559,274

700 Veterans benefits and services:
Discretionary:
Income security for veterans:
Special benefits for certain
World War II veterans ..........

Veterans education, training,
and rehabilitation:
Loan fund program account .....
1
Veterans employment and
training .................................. ...................

1 ................... ................... ................... ................... ...................
25

Total, Veterans education, training, and
rehabilitation ..............

Hospital and medical care for
veterans:
Medical care and hospital services ..........................................
Collections for medical care .....

19,843
–573

21,222
–608

22,028
–620

22,520
–630

23,021
–640

23,535
–650

24,059
–660

22.

173

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Construction for medical care,
benefits, and cemeteries .......

315

339

416

425

434

444

455

Total, Hospital and medical care for veterans ..

19,585

20,953

21,824

22,315

22,815

23,329

23,854

167

171

174

178

182

–1

158

163

166

170

173

177

181

Other veterans benefits and
services:
National Cemetery Administration ..........................................
General operating expenses .....
Other operating expenses .........

97
941
119

110
1,080
129

121
1,195
136

124
1,221
139

126
1,249
142

129
1,277
145

132
1,306
148

Total, Other veterans
benefits and services ..

1,157

1,319

1,452

1,484

1,517

1,551

1,586

Total, Discretionary .................

20,904

22,463

23,469

23,996

24,533

25,085

25,651

26,435

27,875

29,205

30,431

–15

–43

–66

–91

Mandatory:
Income security for veterans:
Special benefits for certain
World War II veterans ..........
1
9
8
Compensation, Pensions and
Burial benefits .......................
21,568
23,355
24,944
Proposed Legislation
(PAYGO) ............................. ................... ................... ...................
Subtotal, Compensation,
Pensions and Burial benefits ..................................

21,568

23,355

24,944

26,420

27,832

29,139

30,340

National service life insurance
trust fund ...............................
All other insurance programs ..
Insurance program receipts .....

1,236
36
–202

1,282
37
–191

1,314
53
–180

1,320
57
–169

1,317
67
–157

1,297
69
–143

1,281
80
–129

Total, Income security
for veterans .................

22,639

24,492

26,139

27,636

29,066

30,368

31,577

1,469

1,981

2,135

2,200

2,282

2,383

2,503

–158

–296

–211

–221

–242

–269

–312

1,311

1,685

1,924

1,979

2,040

2,114

2,191

Veterans education, training,
and rehabilitation:
Readjustment benefits (Montgomery GI Bill and related
programs) ...............................
All-volunteer force educational
assistance trust fund .............
Total, Veterans education, training, and
rehabilitation ..............

174

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
Hospital and medical care for
veterans:
Fees, charges and other mandatory medical care ...............

2000
Actual

–1

Estimate
2001

2002

–1

Veterans housing:
Housing program loan subsidies .......................................
1,548
351
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Housing program
loan subsidies .................
Housing program loan reestimates ......................................
Housing program loan liquidating account .......................
Total, Veterans housing

1,548
–1,064

351

2003

2004

2005

2006

–1

–2

–3

203

235

238

243

245

–15

–38

–37

–41

–42

188

197

201

202

203

–1,420 ................... ................... ................... ................... ...................

132 ................... ................... ................... ................... ................... ...................
616

–1,069

188

197

201

202

203

Other veterans programs:
National homes, Battle Monument contributions and other

Total, Mandatory .......................

24,610

25,204

28,297

29,849

31,344

32,721

34,009

Total, Veterans benefits and
services .....................................

45,514

47,667

51,766

53,845

55,877

57,806

59,660

4,467

4,600

4,960

5,071

5,184

5,299

5,417

564

771

804

822

840

859

878

4,898

5,540

6,014

6,142

6,277

6,439

6,583

281

303

310

317

324

331

339

379

374

390

399

408

417

426

1,848

2,019

1,752

1,790

1,836

1,878

1,922

12,437

13,607

14,230

14,541

14,869

15,223

15,565

2,788

2,974

3,222

3,270

3,356

3,445

3,534

304

329

336

344

352

359

3,804

4,131

4,761

4,717

4,833

4,948

5,070

6,896

7,434

8,312

8,323

8,533

8,745

8,963

750 Administration of justice:
Discretionary:
Federal law enforcement activities:
Criminal investigations (DEA,
FBI, FinCEN, ICDE) .............
Alcohol, tobacco, and firearms
investigations (ATF) ..............
Border enforcement activities
(Customs and INS) ................
Equal Employment Opportunity Commission ................
Tax law, criminal investigations (IRS) ..............................
Other law enforcement activities ..........................................
Total, Federal law enforcement activities ....
Federal litigative and judicial
activities:
Civil and criminal prosecution
and representation ................
Representation of indigents in
civil cases ...............................
Federal judicial and other
litigative activities .................
Total, Federal litigative
and judicial activities

22.

175

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
Correctional activities:
Federal prison system and detention trustee program ........

2000
Actual

3,670

Estimate
2001

2002

4,307

Criminal justice assistance:
Crime victims fund obligation
limit ........................................ ................... ...................
Law enforcement assistance,
community policing, and
other justice programs ..........
4,053
4,607

2003

2004

2005

4,829

2006

4,667

4,690

4,971

5,082

–1,008

708

3,581

3,656

3,738

3,821

3,907

300 ................... ...................

Total, Criminal justice
assistance ....................

4,053

4,607

2,573

4,364

4,038

3,821

3,907

Total, Discretionary .................

27,056

29,955

29,782

31,918

32,269

32,760

33,517

480

377

337

344

351

359

366

1,568
–1,483
–1,282

2,061
–2,262
–1,303

2,412
–2,240
–1,343

2,354
–2,176
–1,395

2,241
–1,686
–3

2,249
–1,681
–3

2,286
–1,676
–3

416

513

488

513

516

520

523

Total, Federal law enforcement activities ....

–301

–614

–346

–360

1,419

1,444

1,496

Federal litigative and judicial
activities:
Federal judicial officers salaries and expenses and other
mandatory programs .............

468

491

538

521

535

551

565

Correctional activities:
Mandatory programs ................

–3

–4

–5

Criminal justice assistance:
Crime victims fund ...................
Public safety officers’ benefits ..

–523
33

517
33

1,583
33

400
34

400
35

400
36

Total, Criminal justice
assistance ....................

–490

550

1,616

434

435

436

Total, Mandatory .......................

–326

424

1,805

591

2,385

2,425

2,492

Total, Administration of justice .............................................

26,730

30,379

31,587

32,509

34,654

35,185

36,009

800 General government:
Discretionary:
Legislative functions:
Legislative branch discretionary programs ...................

2,133

2,188

2,558

2,547

2,602

2,662

2,721

363

405

454

469

483

495

514

272

300

316

323

328

334

343

Mandatory:
Federal law enforcement activities:
Assets forfeiture fund ...............
Border enforcement activities
(Customs and INS) ................
INS fees .....................................
Customs fees .............................
Other mandatory law enforcement programs ......................

Executive direction and management:
Drug control programs .............
Executive Office of the President .........................................

176

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
Presidential transition and
former Presidents ..................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

637

715

774

796

815

833

861

Central fiscal operations:
Tax administration ...................
Other fiscal operations .............

7,839
737

8,469
815

9,032
858

9,233
873

9,440
897

9,650
916

9,865
938

Total, Central fiscal operations ........................

8,576

9,284

9,890

10,106

10,337

10,566

10,803

–211
222

281
311

307
253

309
258

314
264

323
270

330
276

177

171

194

223

217

185

190

Total, General property
and records management .............................

188

763

754

790

795

778

796

Central personnel management:
Discretionary central personnel
management programs .........

161

170

178

182

185

191

194

343

334

178

182

186

190

194

11
133

11
200

11
150

11
153

11
157

12
160

12
164

Total, General purpose
fiscal assistance ..........

487

545

339

346

354

362

370

Other general government:
Discretionary programs ............

256

300

280

286

293

299

Total, Discretionary .................

12,438

13,965

14,773

15,047

15,374

15,685

16,044

Mandatory:
Legislative functions:
Congressional members compensation and other ..............

104

120

111

110

109

Central fiscal operations:
Federal financing bank .............
Other mandatory programs .....

5
–58

17
–88

15
–114

18
–111

21
–110

25
–109

28
–107

Total, Central fiscal operations ........................

–53

–71

–99

–93

–89

–84

–79

General property and records
management:
Mandatory programs ................

Total, Executive direction and management

General property and records
management:
Real property activities ............
Records management ................
Other general and records
management ..........................

General purpose fiscal assistance:
Payments and loans to the District of Columbia ...................
Payments to States and counties from Federal land management activities .................
Payments in lieu of taxes .........

22.

177

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program
Offsetting receipts .....................

2000
Actual
–21

Total, General property
and records management ............................. ...................

Estimate
2001

2002

2003

1,571

2005

2006

–67

–28

–32

–27

–26

–24

–45

–6

–10

–4

–2

–6

1,519

1,534

1,533

331

1,201

123

3,174

1,989

1,988

General purpose fiscal assistance:
Payments to States and counties ..........................................
1,015
1,336
1,503
1,502
Tax revenues for Puerto Rico
(Treasury, BATF) ..................
387
411
347
331
Arctic National Wildlife Refuge—Payment to Alaska
(Proposed Legislation
PAYGO) .................................. ................... ................... ................... ...................
Other general purpose fiscal
assistance ...............................
169
123
123
122
Total, General purpose
fiscal assistance ..........

2004

1,870

1,973

1,955

Other general government:
Territories ..................................
162
162
187
186
187
185
185
Treasury claims .........................
1,831
1,175
1,000
1,000
1,000
1,000
1,000
Presidential election campaign
fund ........................................
61
61
61
61
61
61
61
Other mandatory programs .....
–159
382 ................... ................... ................... ................... ...................
Proposed Legislation (nonPAYGO) .............................. ................... ...................
7 ................... ................... ................... ...................
Subtotal, Other mandatory
programs .........................

–159

382

Total, Other general government .......................

1,895

1,780

1,255

1,247

1,248

1,246

Deductions for offsetting receipts:
Offsetting receipts .....................

–2,478

–1,386

–1,393

–1,386

Total, Mandatory .......................

1,039

2,268

1,841

1,823

3,052

1,872

Total, General government .....

13,477

16,233

16,614

16,870

18,426

17,557

17,916

350,947

350,572

352,615

352,574

352,981

–55

–125

–208

–291

900 Net interest:
Mandatory:
Interest on Treasury debt securities (gross):
Interest on Treasury debt securities (gross) ...........................
361,978
357,907
Proposed Legislation (nonPAYGO) .............................. ................... ...................

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

Total, Interest on Treasury debt securities
(gross) ..........................

361,978

357,907

350,951

350,517

352,490

352,366

352,690

Interest received by on-budget trust funds:
Civil service retirement and
disability fund ........................

–33,608

–35,108

–36,531

–37,946

–39,360

–40,467

–41,635

178

THE BUDGET FOR FISCAL YEAR 2002

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

Military retirement ...................
–12,251
–12,413
SMI interest ..............................
–3,160
–3,033
HI interest .................................
–10,470
–12,285
Other on-budget trust funds ....
–9,624
–10,823
Proposed Legislation (nonPAYGO) .............................. ................... ...................

2002

2003

2004

2005

2006

–12,626
–2,733
–13,749
–10,678

–12,850
–2,688
–15,465
–11,323

–13,082
–2,628
–17,601
–12,024

–13,323
–2,508
–19,978
–12,698

–13,573
–2,573
–22,579
–13,274

162

261

359

Subtotal, Other on-budget
trust funds ......................

–9,624

–10,823

–10,677

–11,247

–11,862

–12,437

–12,915

Total, Interest received
by on-budget trust
funds ............................

–69,113

–73,662

–76,316

–80,196

–84,533

–88,713

–93,275

Interest received by off-budget trust funds:
Interest received by social security trust funds ..................

–59,796

–68,886

–76,086

–85,421

–95,855

–107,348

–120,111

–1,974

–2,035

–2,136

–1,830

–2,160

–2,387

–2,535

2,684

2,791

2,913

3,025

3,143

3,221

3,297

1,164

1,728

1,357

2,124

2,231

2,117

2,188

4,287

3,787

3,734

3,731

3,748

3,759

3,787

–9,129

–10,279

–11,339

–12,013

–12,909

–13,668

–14,188

–1,785

–1,455

–1,340

Other interest:
Interest on loans to Federal Financing Bank .........................
Interest on refunds of tax collections ...................................
Payment to the Resolution
Funding Corporation .............
Interest paid to loan guarantee
financing accounts .................
Interest received from direct
loan financing accounts ........
Interest on deposits in tax and
loan accounts .........................
Interest received from Outer
Continental Shelf escrow account, Interior ........................
All other interest .......................

–1,352 ................... ................... ................... ................... ................... ...................
–3,744
–3,526
–3,606
–3,352
–3,321
–3,327
–3,312

Total, Other interest ......

–9,849

–8,989

–10,417

–9,655

–10,608

–11,625

–12,103

Total, Net interest .....................

223,220

206,370

188,132

175,245

161,494

144,680

127,201

920 Allowances:
Discretionary:
National emergency reserve ..... ................... ...................
Adjustments to certain accounts ..................................... ................... ...................

5,591

5,716

5,843

5,973

6,107

–270

–276

–282

–288

–295

Total, Allowances ...................... ................... ...................

5,321

5,440

5,561

5,685

5,812

950 Undistributed offsetting receipts:
Mandatory:
Employer share, employee retirement (on-budget):
Contributions to HI trust fund
Contributions to military retirement fund .........................
Postal Service contributions to
Civil Service Retirement and
Disability Fund ......................

–2,630

–2,693

–2,809

–2,940

–3,079

–3,244

–3,381

–11,402

–11,369

–12,166

–12,622

–13,098

–13,567

–14,040

–6,445

–6,768

–6,854

–6,975

–7,111

–7,249

–7,327

22.

179

DETAILED FUNCTIONAL TABLES

Table 22–1.

Budget Authority By Function, Category, and Program—
Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

Employing agency contributions, DoD Retiree Health
Care Fund .............................. ................... ................... ...................
Other contributions to civil and
foreign service retirement
and disability fund ................
–9,737
–10,446
–10,813
Proposed Legislation (nonPAYGO) .............................. ................... ................... ...................

2003

2004

2005

2006

–2,943

–3,072

–3,211

–3,355

–10,723

–11,316

–11,990

–12,699

–469

–482

–449

–415

Subtotal, Other contributions to civil and foreign
service retirement and
disability fund ................

–9,737

–10,446

–10,813

–11,192

–11,798

–12,439

–13,114

Total, Employer share,
employee retirement
(on-budget) ..................

–30,214

–31,276

–32,642

–36,672

–38,158

–39,710

–41,217

Employer share, employee retirement (off-budget):
Contributions to social security
trust funds .............................

–7,637

–7,877

–8,917

–9,161

–9,868

–10,706

–11,443

Rents and royalties on the
Outer Continental Shelf:
OCS Receipts .............................

–4,580

–6,931

–5,884

–5,358

–5,185

–4,971

–4,836

Sale of major assets:
Privatization of Elk Hills ......... ................... ................... ...................
Other undistributed offsetting receipts:
Spectrum auction ......................
–150
–1,572
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Spectrum auction

–150

–1,572

–323 ................... ................... ...................

–4,360

–9,665

–9,670

–1,275

–680

2,600

1,000

–5,100

–2,000

–4,000

–1,760

–8,665

–14,770

–3,275

–4,680

–200

–2,402

–2

Analog spectrum lease fee (Proposed Legislation PAYGO) ... ................... ...................
–200
–200
Arctic National Wildlife Refuge
(Proposed Legislation
PAYGO) .................................. ................... ................... ................... ...................
Total, Other undistributed offsetting receipts

–150

–1,572

–1,960

–8,865

–17,372

–3,477

–4,882

Total, Undistributed offsetting receipts ............................

–42,581

–47,656

–49,403

–60,379

–70,583

–58,864

–62,378

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

1,824,957

1,893,513

2,004,551

2,041,930

2,101,762

2,187,802

2,251,024

On-budget .........................................
Off-budget .........................................

(1,489,908) (1,541,809) (1,644,218) (1,669,978) (1,718,251) (1,790,973) (1,839,578)
(335,049) (351,704) (360,333) (371,952) (383,511) (396,829) (411,446)

Note: The Administration proposes to reverse the misleading budget practice of using advance appropriations simply to
avoid spending limitations and is requesting sufficient appropriations in 2002 to cover normal funding, instead of requesting advance appropriations for 2003. This increases budget authority by $22.7 billion in 2002 only.

180

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

75,950
105,253
51,696

72,089
110,199
52,734

79,310 ................... ................... ................... ...................
113,030 ................... ................... ................... ...................
56,131 ................... ................... ................... ...................

37,606
5,109
3,413

37,962
5,198
3,683

42,656 ................... ................... ................... ...................
4,792 ................... ................... ................... ...................
3,815 ................... ................... ................... ...................

2,875

3,084

4,766 ................... ................... ................... ...................

281,902

284,949

304,500

307,192

318,262

332,084

338,807

12,031

13,206

13,442

13,609

13,882

14,210

14,422

113

149

140

142

145

149

152

12,161

13,373

13,600

13,771

14,047

14,379

14,594

1,125

1,146

1,152

1,171

1,199

–7

–11

–10

–12

Defense-related activities:
Discretionary programs ............
901
1,259
Proposed Legislation (nonPAYGO) .............................. ................... ...................

2003

2004

2005

2006

Total, Defense-related
activities ......................

901

1,259

1,118

1,135

1,142

1,159

1,187

Total, Discretionary .................

294,964

299,581

319,218

322,098

333,451

347,622

354,588

382
–1,457

430
–1,449

311
–1,408

344
–1,437

308
–1,395

–1,034

–1,051

–995

–1,073

–1,069

–1,063

358

597

477

253

222

149

120

114

373

717

591

324

276

187

Mandatory:
Department of Defense—Military:
Military personnel .................... ................... ...................
Revolving, trust and other DoD
mandatory ..............................
1,085
564
Offsetting receipts .....................
–1,764
–1,598
Total, Department of Defense—Military ...........

–679

Atomic energy defense activities:
Energy employee occupational
illness compensation fund .... ...................
Energy employee occupational
illness compensation fund,
administrative expenses ....... ...................
Total, Atomic energy defense activities ............ ...................

22.

181

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

Defense-related activities:
Mandatory programs ................
209
216
Proposed Legislation
(PAYGO) ............................. ................... ...................

2002

2003

2004

2005

2006

212

222

232

238

246

155

150

108

Total, Defense-related
activities ......................

209

216

309

377

382

346

314

Total, Mandatory .......................

–470

–445

–25

–27

–367

–447

–562

Total, National defense ............

294,494

299,136

319,193

322,071

333,084

347,175

354,026

1,530

1,839

2,057

2,090

2,125

2,152

2,238

1,351

1,726

1,440

1,485

1,521

1,308

1,300

678
946
864

448
887
791

594
843
795

701
848
784

760
862
773

816
878
775

841
897
792

423

349

442

504

564

635

645

294
246

299
273

301
279

307
277

311
286

316
292

323
299

162

228

100

375
75

863
251

811
244

927
274

959
236

989
233

1,012
238

1,013

732

726

710

724

723

746

Total, International development, humanitarian assistance .........

7,957

8,686

8,632

8,948

9,133

9,117

9,331

International security assistance:
Foreign military financing
grants and loans ....................
Economic support fund .............
Other security assistance .........

3,928
2,463
480

4,276
2,286
516

4,314
2,270
560

4,253
2,295
590

4,083
2,327
592

3,906
2,374
581

3,983
2,414
591

Total, International security assistance .........

6,871

7,078

7,144

7,138

7,002

6,861

6,988

2,805
502

3,314
662

4,199
834

4,142
993

4,129
1,169

4,161
1,283

4,254
1,340

986

882

891

911

918

938

960

334

1,136

867

863

881

902

921

150 International affairs:
Discretionary:
International development,
humanitarian assistance:
Development assistance and
child survival and disease
programs ................................
Multilateral development
banks (MDB’s) .......................
Assistance for the New Independent States .......................
Food aid .....................................
Refugee programs .....................
Assistance for Central and
Eastern Europe ......................
Voluntary contributions to
international organizations ..
Peace Corps ...............................
Central America and Caribbean emergency disaster recovery fund .............................
International narcotics control
and law enforcement—Andean counterdrug initiative ......
Debt restructuring ....................
Other development and humanitarian assistance ...........

Conduct of foreign affairs:
State Department operations ...
Foreign buildings ......................
Assessed contributions to international organizations ..........
Assessed contributions for
international peacekeeping ...

12 ................... ...................

182

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

Arrearage payment for international organizations and
peacekeeping .......................... ................... ...................
244 ................... ................... ................... ...................
Proposed Legislation (nonPAYGO) .............................. ...................
582 ................... ................... ................... ................... ...................
Subtotal, Arrearage payment for international
organizations and peacekeeping ............................ ...................

582

244 ................... ................... ................... ...................

Other conduct of foreign affairs

140

139

151

153

157

159

Total, Conduct of foreign
affairs ..........................

4,767

6,715

7,186

7,060

7,250

7,441

7,634

391

466

480

496

492

499

512

423

397

341

339

310

317

325

814

863

821

835

802

816

837

864

761

755

730

731

737

773

–5 ...................
5 ................... ................... ................... ...................
17
9 ................... ................... ................... ................... ...................

Total, International financial programs ........

876

770

760

730

731

737

773

Total, Discretionary .................

21,285

24,112

24,543

24,711

24,918

24,972

25,563

Mandatory:
International development,
humanitarian assistance:
Credit liquidating accounts ......
Receipts and other ....................

–1,385
–54

–1,563
–96

–1,377
–8

–1,242
–9

–1,211
–9

–1,149
–9

–1,104
–9

Total, International development, humanitarian assistance .........

–1,439

–1,659

–1,385

–1,251

–1,220

–1,158

–1,113

International security assistance:
Foreign military loan reestimates ......................................
Foreign military loan liquidating account .......................

–670

–550

–443

–365

–325

–319

–314

Total, International security assistance .........

–484

–758

–443

–365

–325

–319

–314

–58

–7

Foreign affairs and information:
Conduct of foreign affairs .........
Japan-U.S. Friendship Commission ...................................

186

–208 ................... ................... ................... ................... ...................

22.

183

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Vietnam debt repayment fund,
transfers from liquidating
fund ........................................ ...................
Total, Foreign affairs
and information ..........
International financial programs:
Foreign military sales trust
fund (net) ...............................
International monetary fund ...
Exchange stabilization fund .....
Credit liquidating account
(Exim) .....................................
Export-Import Bank—subsidy
reestimates .............................
Other international financial
programs ................................

–55

Estimate
2001

2002

2003

2004

2005

2006

–6

–5

–2

–9

–277 ................... ................... ................... ................... ................... ...................
1,103 ................... ................... ................... ................... ................... ...................
–1,160
–1,273
–1,246
–1,357
–1,438
–1,488
–1,513
–1,034
–573

–630

–397

–355

–358

–340

–304

–1,975 ................... ................... ................... ................... ...................

–150

–359

–70

–85

–88

–94

–108

Total, International financial programs ........

–2,091

–4,237

–1,713

–1,797

–1,884

–1,922

–1,925

Total, Mandatory .......................

–4,069

–6,651

–3,543

–3,422

–3,438

–3,408

–3,361

Total, International affairs .....

17,216

17,461

21,000

21,289

21,480

21,564

22,202

3,396

3,767

4,154

4,309

4,517

4,587

4,686

2,778

2,993

3,160

3,203

3,265

3,339

3,413

Total, General science
and basic research ......

6,174

6,760

7,314

7,512

7,782

7,926

8,099

4,858
5,497
2,021
51

5,248
5,421
2,169
34

6,055
6,829
443
31

6,672
6,947
64
24

7,549
6,644
24
25

8,077
8,475
6,488
6,481
2 ...................
25
26

Total, Space flight, research, and supporting
activities ......................

12,427

12,872

13,358

13,707

14,242

14,592

14,982

Total, Discretionary .................

18,601

19,632

20,672

21,219

22,024

22,518

23,081

Mandatory:
General science and basic research:
National Science Foundation
donations ................................

126

158

150

184

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
Space flight, research, and
supporting activities:
National Space Grant Program

2000
Actual

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

Estimate
2001

2002

2003

2004

2005

2006

3 ................... ................... ................... ................... ...................

Total, Mandatory .......................

126

158

150

Total, General science, space,
and technology .......................

18,637

19,726

20,798

21,377

22,174

22,610

23,134

270 Energy:
Discretionary:
Energy supply:
Research and development .......
1,105
1,152
1,175
1,199
1,120
1,107
1,093
Naval petroleum reserves operations ......................................
27
28
17
16
18
18
19
Uranium enrichment activities
243 ................... ................... ................... ................... ................... ...................
Decontamination transfer ........
–420
–419
–420
–442
–454
–466
–478
Nuclear waste program ............
268
173
164
137
140
143
146
Federal power marketing .........
249
215
177
187
190
195
199
Elk Hills school lands fund ...... ...................
36
36
37
38
38
39
Rural electric and telephone
discretionary loans ................
76
69
63
50
42
40
38
Non-defense environmental
management and other .........
350
703
591
595
613
626
642
Proposed Legislation (nonPAYGO) .............................. ................... ................... ................... ...................
68
137
181
Subtotal, Non-defense environmental management and other ...............

350

703

591

595

681

763

823

Total, Energy supply ......

1,898

1,957

1,803

1,779

1,775

1,838

1,879

Energy conservation and preparedness:
Energy conservation .................
Emergency energy preparedness .........................................

666

743

798

837

911

952

976

162

167

171

174

178

183

828

905

965

1,008

1,085

1,130

1,159

–18

–25

–26

–27

–28

–29

218

169

191

224

196

202

208

Total, Energy information, policy, and regulation ............................

233

184

206

251

234

252

256

Total, Discretionary .................

2,959

3,046

2,974

3,038

3,094

3,220

3,294

Mandatory:
Energy supply:
Naval petroleum reserves oil
and gas sales ..........................
Federal power marketing .........

–10
–934

–8
–1,002

–8 ................... ................... ................... ...................
–764
–715
–801
–769
–799

22.

185

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Tennessee Valley Authority .....
–347
–505
–260
–451
–953
–1,010
–1,078
United States Enrichment Corporation ..................................
–5
–64
–67
–71
–75
–79
–83
Nuclear waste fund program ...
–701
–620
–640
–625
–612
–637
–621
Elk Hills school lands fund ...... ................... ...................
36 ................... ................... ................... ...................
Research and development .......
2 ................... ................... ................... ................... ................... ...................
Rural electric and telephone
liquidating accounts ..............
–2,021
–1,341
–1,593
–1,288
–1,263
–1,131
–1,001
Rural electric and telephone
loan subsidy reestimates ...... ...................
–161 ................... ................... ................... ................... ...................
Total, Energy supply ......
Energy information, policy,
and regulation:
Miscellaneous revenues, departmental administration ...

–4,016

–3,701

–3,296

–3,150

–3,704

–3,626

–3,582

–3 ................... ................... ................... ................... ................... ...................

Total, Mandatory .......................

–4,019

–3,701

–3,296

–3,150

–3,704

–3,626

–3,582

Total, Energy ..............................

–1,060

–655

–322

–112

–610

–406

–288

4,186
802

4,338
961

4,158
780

4,020
791

4,094
809

4,160
830

4,072
849

291

301

261

182

180

147

156

5,279

5,600

5,199

4,993

5,083

5,137

5,077

3,726

3,750

3,833

3,917

1,782

1,660

1,696

1,733

–4

–5

–6

845

857

871

890

–9

–8

–3

Conservation and land management:
Forest Service ............................
3,223
4,235
3,763
Management of public lands
(BLM) .....................................
1,356
1,525
1,768
Recreation fee (Proposed Legislation non-PAYGO) ............... ................... ................... ...................
Conservation of agricultural
lands .......................................
698
807
825
Proposed Legislation (nonPAYGO) .............................. ................... ...................
–7
Subtotal, Conservation of
agricultural lands ...........

698

807

818

836

849

868

887

Other conservation and land
management programs .........

546

655

618

587

598

624

629

Total, Conservation and
land management .......

5,823

7,222

6,967

6,927

6,852

7,016

7,160

3,522

3,609

3,797

3,946

–57

–76

–77

Recreational resources:
Operation of recreational resources ....................................
2,742
3,210
3,415
Recreation fee (Proposed Legislation non-PAYGO) ............... ................... ................... ...................

186

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Other recreational resources
activities .................................

222

133

188

192

166

156

155

Total, Recreational resources .........................

2,964

3,343

3,603

3,657

3,699

3,877

4,024

2,958

2,959

2,931

2,953

2,997

3,534

3,596

3,543

3,544

3,421

1,287

1,285

1,287

1,308

142

154

157

162

161

–4

–8

Pollution control and abatement:
Regulatory, enforcement, and
research programs .................
2,641
2,900
State and tribal assistance
grants .....................................
3,192
3,393
Hazardous substance superfund ........................................
1,603
1,380
Other control and abatement
activities .................................
138
141
Proposed Legislation (nonPAYGO) .................................. ................... ...................
Total, Pollution control
and abatement ............

7,574

7,814

7,917

7,986

7,908

7,938

7,879

2,317

2,556

2,899

3,059

3,180

3,289

3,357

1,037

1,048

1,002

1,010

1,015

1,013

1,033

Total, Other natural resources .........................

3,354

3,604

3,901

4,069

4,195

4,302

4,390

Total, Discretionary .................

24,994

27,583

27,587

27,632

27,737

28,270

28,530

–76

–142

–158

–168

–66

–127

–138

–143

2,031
513

2,120
513

2,112
511

2,103
509

6
–2,784

8
–2,798

8
–2,816

8
–2,796

–229

–152

–179

–170

942

1,037

925

928

155

189

Other natural resources:
NOAA .........................................
Other natural resource program activities .......................

Mandatory:
Water resources:
Offsetting receipts and other
mandatory water resource
programs ................................
–198
–169
–206
Proposed Legislation
(PAYGO) ............................. ................... ................... ...................
Total, Water resources ...

–198

–169

–206

Conservation and land management:
Conservation Reserve Program
and other ................................
1,793
2,061
2,065
Other conservation programs ..
360
526
555
Recreation fee (Proposed Legislation PAYGO) ....................... ................... ................... ...................
Offsetting receipts .....................
–2,075
–3,001
–2,791
Recreation fee (Proposed Legislation PAYGO) ....................... ................... ................... ...................
Total, Conservation and
land management .......

–414

–171

Recreational resources:
Operation of recreational resources ....................................
814
923
921
Recreation fee (Proposed Legislation PAYGO) ....................... ................... ................... ...................

22.

187

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

–359

–458

Recreation fee (Proposed Legislation PAYGO) ....................... ................... ...................

2004

2005

2006

–309

–312

–313

–315

–374

–233

–236

–238

–10

–209

–217

–224

–227

Total, Recreational resources .........................

455

465

537

543

677

620

652

Pollution control and abatement:
Superfund resources and other
mandatory ..............................

–172

–148

–164

–184

–170

–141

–127

Other natural resources:
Fees and mandatory programs

–126

–89

–26

Total, Mandatory .......................

–213

–93

229

165

214

Total, Natural resources and
environment ............................

25,031

27,370

27,494

27,670

27,966

28,435

28,744

391

482

465

476

487

497

508

342
860

408
979

267
1,080

160
1,064

141
1,111

144
1,104

146
1,114

1,593

1,869

1,812

1,700

1,739

1,745

1,768

1,462

1,550

1,483

1,464

1,473

Agricultural research and
services:
Research and education programs ......................................
1,349
1,467
Discretionary changes to mandatory research programs ..... ................... ...................
Integrated research, education,
and extension programs ........
1
17
Extension programs ..................
437
421
Marketing programs .................
53
58
Animal and plant inspection
programs ................................
526
894
Proposed Legislation (nonPAYGO) .............................. ................... ...................

–9

–54 ...................

31
460
72

41
432
73

42
436
75

43
437
77

44
447
78

860

669

671

685

699

–5

Subtotal, Animal and plant
inspection programs .......

526

894

855

664

666

680

694

Economic intelligence ...............

173

165

179

200

189

186

192

188

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

Grain inspection and packers
program ..................................
25
32
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Grain inspection
and packers program .....

2003

2004

2005

2006

–4

Foreign agricultural service .....
Other programs and
unallocated overhead ............

125

105

122

124

128

130

134

369

457

447

458

469

480

487

Total, Agricultural research and services .....

3,058

3,616

3,648

3,518

3,546

3,625

Total, Discretionary .................

4,651

5,485

5,460

5,218

5,257

5,291

5,393

30,484

18,447

10,986

7,213

5,963

5,808

5,902

2,473

2,697

2,758

2,949

3,105

3,254

3,439

–1,098

–917

–883

–867

–786

–743

–676

Total, Farm income stabilization ......................

31,859

20,227

12,861

9,295

8,282

8,319

8,665

Agricultural research and
services:
Miscellaneous mandatory programs ......................................
Offsetting receipts .....................

291
–160

410
–200

463
–162

684
–160

637
–160

628
–158

592
–158

Total, Agricultural research and services .....

131

210

301

524

477

470

434

Total, Mandatory .......................

31,990

20,437

13,162

9,819

8,759

8,789

9,099

Total, Agriculture .....................

36,641

25,922

18,622

15,037

14,016

14,080

14,492

–1,128

–1,176

–1,599

–1,893

–2,080

–2,162

–2,074

–303

–347

–345

–350

–351

–352

–61
559

–100
658

–239
675

–236
674

–234
686

–235
699

–238
721

Total, Mortgage credit ...

–933

–965

–1,508

–1,805

–1,979

–2,049

–1,943

Postal service:
Payments to the Postal Service
fund (On-budget) ...................

100

Deposit insurance:
National credit union administration .....................................

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

–1 ................... ................... ................... ...................

22.

189

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

581
635

686
690

629
729

539
657

510
565

522
555

532
552

4,169
–401

1,355
–462

652
–492

874
–543

809
–554

782
–660

810
–781

336

305

321

337

341

350

357

–134
120

–230
222

–198
141

–208
142

–224
144

–220
149

–246
154

Total, Other advancement of commerce .......

5,306

2,566

1,782

1,798

1,591

1,478

1,378

Total, Discretionary .................

4,474

1,694

350

–308

–489

–481

–304

–200

–42

–99

–17

–15

–81

–251

–430

–610

–405

–429

–453

–479

Mandatory:
Mortgage credit:
FHA General and special risk
negative subsidies .................
FHA mutual mortgage insurance receipts
(intragovernmental) ..............
GNMA receipts
(intragovernmental) ..............
Indian housing loan guarantee
receipts ...................................
Mortgage credit reestimates ....
FHA general and special risk
insurance liquidating account .......................................
GNMA liquidating account ......
Other credit liquidating accounts .....................................
Other mortgage credit activities ..........................................
Total, Mortgage credit ...

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

–4,027 ...................

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

–6,610

...................
...................
443
–389
–2,455
–1
–2,402

–6 ................... ................... ................... ................... ...................
4,073 ................... ................... ................... ................... ...................
1,600
1,950
1,716
722
537
263
6,216 ................... ................... ................... ................... ...................
1,044

2,029

2,260

2,596

Deposit insurance:
Bank Insurance Fund ...............
–909
–756
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Bank Insurance
Fund ................................
FSLIC Resolution Fund ............
Savings Association Insurance
Fund .......................................

–2,768

–2,811

–2,841

–2,934

–3,160

274 ................... ................... ................... ................... ...................

–439

–1,457

–1,623

–2,898

–3,297

–4,001

67 ................... ................... ................... ...................
3,061
–502
–719
–1,318
–1,812
3,128

–502

–719

–1,318

–1,812

–195

672

997

1,638

904

–5

–11

–18

–24

–31

–92

–97

–101

–106

–112

–909

–756

–292

564

878

1,508

761

–1,396

116

262

–60

–97

–63

–562

–112

–248

–119

190

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
National credit union administration .....................................
Other deposit insurance activities ..........................................
Total, Deposit insurance

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

–208

–244

–395

–345

–360

–380

–401

–3,052

–986

–651

594

1,115

424

Other advancement of commerce:
Universal service fund ..............
4,074
6,483
5,468
6,487
6,730
7,309
7,906
Payments to copyright owners
375
257
161
251
229
242
254
Spectrum auction subsidy ........
–1,821
–12,201
8
8
8
8
8
Regulatory fees ..........................
–25
–26
–26
–26
–26
–26
–26
Credit liquidating accounts ......
–258
–137
–63
–48
–36
–29
–22
Business loan program, subsidy reestimate ......................
–284
–722 ................... ................... ................... ................... ...................
Other mandatory ......................
101
14
26
26
26
26
26
Proposed Legislation
(PAYGO) ............................. ................... ...................
2 ................... ................... ................... ...................
Subtotal, Other mandatory

101

Total, Other advancement of commerce .......

2,162

–6,332

5,576

6,698

6,931

7,530

8,146

Total, Mandatory .......................

–1,263

–2,462

6,596

4,632

3,908

4,030

2,757

Total, Commerce and housing
credit ........................................

3,211

–768

6,946

4,704

3,600

3,541

2,276

28,696
8
754
5,726
1,046

30,025
6
729
5,805
725

31,148
5
724
6,309
737

–55

–110

–113

–116

–119

400 Transportation:
Discretionary:
Ground transportation:
Highways ...................................
23,990
26,049
State infrastructure banks .......
19
8
Highway safety .........................
485
673
Mass transit ..............................
5,331
5,508
Railroads ....................................
761
836
Proposed Legislation (nonPAYGO) .............................. ................... ...................

32,265
33,227
2 ...................
741
761
7,002
7,259
754
767

Subtotal, Railroads ............

761

836

991

615

624

638

648

Regulation .................................

Total, Ground transportation ...........................

30,602

33,092

36,193

37,199

38,829

40,667

41,915

12,192

13,223

13,794

14,345

14,716

Air transportation:
Airports and airways (FAA) .....
Aeronautical research and
technology ..............................
Payments to air carriers ...........

9,562

11,019

1,014
–5

901
20

Total, Air transportation

10,571

11,940

13,077

14,188

14,634

15,189

15,560

Water transportation:
Marine safety and transportation ......................................
Ocean shipping ..........................

3,271
86

3,383
149

3,637
99

3,685
128

3,842
136

3,961
141

4,067
145

889
965
840
844
844
–4 ................... ................... ................... ...................

22.

191

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
Panama Canal Commission .....
Total, Water transportation ...........................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

15 ................... ................... ................... ................... ................... ...................
3,372

3,532

Other transportation:
Department of Transportation
administration and other ......
202
296
Proposed Legislation (nonPAYGO) .............................. ................... ...................

3,736

3,813

3,978

4,102

4,212

248

252

262

267

272

–12

–22

–23

–24

Total, Other transportation ...........................

202

296

236

230

240

244

248

Total, Discretionary .................

44,747

48,860

53,242

55,430

57,681

60,202

61,935

1,244

1,428

1,269

1,137

1,034

928

863

–99
–50

–33
–29

–33
–24

1,095

1,366

1,207

1,075

972

866

806

Mandatory:
Ground transportation:
Highways ...................................
Offsetting receipts and credit
subsidy reestimates ...............
Credit liquidating accounts ......
Total, Ground transportation ...........................

Air transportation:
Payments to air carriers ........... ...................
Water transportation:
Coast Guard retired pay ...........
Other water transportation
programs ................................

713

760

861

943

985

1,024

1,063

309

–11

–14

–16

–18

Total, Water transportation ...........................

1,022

825

886

932

971

1,008

1,045

Other transportation:
Sale of Governors Island .......... ................... ...................
Other mandatory transportation programs .....................
–10
–2

–340 ................... ................... ................... ...................
–1

–1

Total, Other transportation ...........................

–10

–2

–341

–1

Total, Mandatory .......................

2,107

2,219

1,796

2,046

1,982

1,913

1,890

Total, Transportation ...............

46,854

51,079

55,038

57,476

59,663

62,115

63,825

5,034

4,914

4,817

4,840

4,936

104

106

450 Community and regional development:
Discretionary:
Community development:
Community development block
grant .......................................
4,955
4,940
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Community development block grant ...

4,955

4,940

5,044

4,979

4,913

4,944

5,042

Community development loan
guarantees .............................

192

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
Community adjustment and investment program .................
Community development financial institutions ......................
Brownfields redevelopment ......
Other community development
programs ................................

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

96
4

115
25

114
30

103
33

78
33

72
29

72
27

403

461

504

548

549

572

591

Total, Community development .........................

5,471

5,569

5,713

5,683

5,593

5,634

5,750

Area and regional development:
Rural development ....................

755

964

899

1,028

954

935

912

460
1,151

459
1,351

436
1,403

409
1,517

390
1,529

382
1,556

115
7
23
2

107
2
49
6

72
1
42
12

72
1
42
15

83
1
43
18

82
1
45
21

2,722

2,873

2,994

3,010

2,999

2,236

2,364

2,496

2,274

2,117

1,780

266

110

Economic Development Administration ..................................
383
Indian programs ........................
1,097
Appalachian Regional Commission .........................................
132
Tennessee Valley Authority .....
40
Denali Commission ...................
43
Delta Regional Authority ......... ...................
Total, Area and regional
development ................

2,450

Disaster relief and insurance:
Disaster relief ............................
2,628
Small Business Administration
disaster loans .........................
306
Disaster loan program, negative subsidies ......................... ...................
Other disaster assistance programs ......................................
570

–595 ................... ................... ................... ................... ...................
1,021

973

757

696

697

705

Total, Disaster relief and
insurance .....................

3,504

2,928

3,447

3,346

3,048

2,894

2,566

Total, Discretionary .................

11,425

11,219

12,033

12,023

11,651

11,527

11,315

Mandatory:
Community development:
Pennsylvania Avenue activities
and other programs ...............
Credit liquidating accounts ......

45
–36

Total, Community development .........................

–20

–32

–23

–15

–12

–10

Area and regional development:
Indian programs ........................
Rural development programs ...
Credit liquidating accounts ......
Offsetting receipts .....................

153
58
11
–134

164
161
27
–317

168
97
–159
–151

173
39
–383
–156

180
35
–418
–164

186
35
–508
–169

192
35
–527
–172

Total, Area and regional
development ................

–45

–327

–367

–456

–472

13 ................... ................... ................... ................... ...................
–33
–32
–23
–15
–12
–10

22.

193

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

Disaster relief and insurance:
National flood insurance fund
–197
–209
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, National flood insurance fund ...................

–197

–209

2003

2004

2005

2006

–239

–325

–347

–365

–383

–12

–61

–123

–232

–377

–251

–386

–470

–597

–760

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

Total, Disaster relief and
insurance .....................

–893

–662

–213

–373

–460

–597

–760

Total, Mandatory .......................

–796

–647

–290

–723

–842

–1,065

–1,242

Total, Community and regional development ...............

10,629

10,572

11,743

11,300

10,809

10,462

10,073

8,529
877
2,521
1,243

8,471
1,140
3,098
1,963

9,396
1,114
3,919
1,627

10,709
1,154
6,201
652

11,190
11,466
11,721
1,177
1,204
1,231
6,527
6,634
6,782
94 ................... ...................

363
4,949
1,462
27
595
12

448
5,815
1,723
186
647
17

442
6,934
1,775
233
698
13

458
8,013
1,804
247
748
13

468
8,503
1,833
84
767
13

20,578

23,508

26,151

29,999

30,656

31,205

31,863

9,060
1,091

10,061
1,559

11,158
1,777

11,728
1,740

12,030
1,781

12,401
1,992

12,681
2,111

357

390

396

406

414

425

434

10,546

12,066

13,381

13,925

14,277

14,872

15,280

299
337

305
374

359
396

356
419

361
437

365
448

376
459

517

636

638

598

615

635

655

478
488
8,733
8,928
1,871
1,912
29 ...................
777
788
13
13

194

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Education research, statistics,
and improvement ..................
Other ..........................................

557
794

719
916

666
949

451
916

399
922

402
913

411
932

Total, Research and general education aids .....

2,504

2,950

3,008

2,740

2,734

2,763

2,833

4,282
400

5,191
477

6,225
440

5,947
441

5,464
451

5,580
461

5,715
471

1,314

1,267

1,303

1,321

1,345

1,373

1,403

101

118

113

115

118

121

123

Total, Training and employment ......................

6,097

7,053

8,081

7,824

7,378

7,535

7,712

Other labor services:
Labor law, statistics, and other
administration .......................

1,194

1,394

1,445

1,495

1,531

1,566

1,597

436
375

373
322

416
374

429
357

437
381

7,794

8,125

8,341

8,537

8,737

Social services:
Corporation for National and
Community Service ...............
386
498
National Service ........................
298
312
Children and families services
programs ................................
6,151
6,642
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Children and
families services programs ..............................

6,151

6,642

7,797

8,160

8,399

8,603

8,804

Aging services program ............
Other ..........................................

885
296

1,017
666

1,086
448

1,119
510

1,138
534

1,162
548

1,189
561

Total, Social services ......

8,016

9,135

10,142

10,484

10,861

11,099

11,372

Total, Discretionary .................

48,935

56,106

62,208

66,467

67,437

69,040

70,657

3,658

3,397

2,850

2,771

2,907

3,665

3,400

2,853

2,774

2,911

–639

–449

–65

–96

–193

Mandatory:
Higher education:
Federal family education loan
program ..................................
4,307
–1,145
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Federal family
education loan program

4,307

–1,145

Federal direct loan program ....
–2,862
–442
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Federal direct
loan program ..................

–2,862

–442

–635

–447

–63

–94

–191

Other higher education programs ......................................

–240

–174

–193

–98

–129

–38

149

22.

195

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
Credit liquidating account
(Family education loan program) ......................................
Total, Higher education
Research and general education aids:
Mandatory programs ................

Estimate

2000
Actual

2001

2002

2005

2006

–700

–604

–466

–340

–239

–167

–430

–2,461

2,233

2,389

2,321

2,403

2,702

26 ................... ................... ...................

133

Welfare to work grants .............
527
Payments to States for AFDC
work programs .......................
15
Other mandatory training and
employment services ............. ...................

106

132

141

136

132

850

690

275

9
75

134

185

203

100

592

420

232

158

675

1,075

963

Other labor services:
Other labor services ..................

Social services:
Payments to States for foster
care and adoption assistance
5,453
6,055
Education and training for
older foster children (Proposed Legislation PAYGO) ... ................... ...................
Promoting safe and stable families .........................................
245
276
Proposed Legislation
(PAYGO) ............................. ................... ...................
245

Social services block grant .......
1,827
Rehabilitation services .............
2,463
Other social services ................. ...................

85 ................... ...................

3 ................... ................... ................... ...................

Total, Training and employment ......................

Subtotal, Promoting safe
and stable families .........

2004

–1,635

Training and employment:
Trade adjustment assistance ...
133
141
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Trade adjustment assistance ..............

2003

16 ................... ................... ...................

6,540

6,959

7,415

8,018

8,677

293

304

305

158

192

196

200

276

323

462

497

501

505

1,907
2,196
7

1,809
2,455
11

1,804
2,521
15

1,804
2,585
16

1,804
2,652
12

1,729
2,719
8

Total, Social services ......

9,988

10,441

11,147

11,807

12,375

13,047

13,698

Total, Mandatory .......................

10,266

9,145

14,394

14,837

15,144

15,708

16,581

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

59,201

65,251

76,602

81,304

82,581

84,748

87,238

2,499
2,344

2,666
2,439

2,882
2,729

3,051
2,767

3,203
2,831

3,353
2,881

3,490
2,943

3,785

4,224

4,662

4,720

4,885

5,120

5,357

196

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
Disease control, research, and
training ..................................
Departmental management
and other ................................
Total, Health care services ...............................
Health research and training:
National Institutes of Health ...
Clinical training ........................
Other health research and
training ..................................
Total, Health research
and training ................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

2,317

2,903

3,382

3,586

3,686

3,781

3,863

796

736

729

624

600

614

628

11,741

12,968

14,384

14,748

15,205

15,749

16,281

15,373
332

17,809
427

20,605
459

23,604
371

26,414
363

27,568
367

28,284
370

243

371

368

304

287

285

286

15,948

18,607

21,432

24,279

27,064

28,220

28,940

Consumer and occupational
health and safety:
Food safety and inspection .......
Occupational safety and health
FDA and Consumer Product
Safety Commission salaries
and expenses ..........................

647
607

695
676

733
687

731
701

748
716

764
731

781
751

1,070

1,150

1,227

1,275

1,311

1,341

1,367

Total, Consumer and occupational health and
safety ...........................

2,324

2,521

2,647

2,707

2,775

2,836

2,899

Total, Discretionary .................

30,013

34,096

38,463

41,734

45,044

46,805

48,120

143,029

153,786

167,410

182,381

198,256

–606

–1,071

–1,450

–1,844

–1,906

Mandatory:
Health care services:
Medicaid grants ........................
117,921
128,853
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Medicaid grants
State children’s health insurance fund ................................
Health care tax credit—refundable portion (Proposed Legislation PAYGO) .......................
Immediate helping hand prescription drug plan (Proposed
Legislation PAYGO) ..............
Federal employees’ and retired
employees’ health benefits ....
DoD Medicare-eligible retiree
health care fund ....................
UMWA Funds (coal miner retiree health) ...........................
Ricky Ray hemophilia relief
fund ........................................
Other mandatory health services activities .........................
Total, Health care services ...............................

117,921

128,853

142,423

152,715

165,960

180,537

196,350

1,220

4,032

3,355

4,072

4,260

4,290

4,370

1,914

1,221

1,909

2,027

2,500

11,200

12,900

14,800

4,761

4,881

5,407

6,189

7,063

7,786

4,784

4,994

5,213

5,442

187

178

171

164

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

...................
4,818

................... ................... ...................
196

4,200 ...................

252

235

333

244

335

539

542

573

504

523

124,490

141,270

162,961

182,555

198,106

203,887

216,662

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

3 ................... ................... ...................

22.

197

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Health research and safety:
Health research and training ..

–60

101

Total, Mandatory .......................

124,521

141,210

163,038

182,656

198,207

203,937

216,674

Total, Health ...............................

154,534

175,306

201,501

224,390

243,251

250,742

264,794

1,547

1,581

1,617

1,653

1,690

–20

1,527

1,561

1,597

1,633

1,670

2,023

2,073

2,118

2,165

2,213

–95

570 Medicare:
Discretionary:
Medicare:
Hospital insurance (HI) administrative expenses ..................
1,222
1,440
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Hospital insurance (HI) administrative
expenses ..........................

1,222

1,440

Supplementary medical insurance (SMI) administrative
expenses .................................
1,776
1,816
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Subtotal, Supplementary
medical insurance (SMI)
administrative expenses
Total, Discretionary .................

1,776

1,816

1,928

1,978

2,023

2,070

2,118

2,998

3,256

3,455

3,539

3,620

3,703

3,788

Mandatory:
Medicare:
Hospital insurance (HI) ............
128,808
141,328
145,684
151,475
158,535
169,743
175,148
Supplementary medical insurance (SMI) ..............................
87,216
99,463
107,830
117,006
125,192
136,063
142,222
Medicare modernization (Proposed Legislation PAYGO) ... ................... ................... ................... ................... ...................
8,300
12,800
HI premiums and collections ...
–1,392
–1,397
–1,488
–1,551
–1,643
–1,744
–1,855
SMI premiums and collections
–20,515
–22,036
–25,546
–28,345
–29,851
–33,276
–36,087
Quinquennial adjustment (HI) ...................
–1,332 ................... ................... ................... ................... ...................
HI interfunds .............................
–9,512
–8,110
–8,581
–8,890
–9,461
–9,981
–10,620
SMI interfunds ..........................
–65,561
–69,788
–81,347
–88,783
–92,549 –102,042 –110,380
Proposed Legislation (nonPAYGO) .............................. ................... ...................
70
75
70
70
70
Subtotal, SMI interfunds ..

–65,561

–69,788

General fund payment to HI
and SMI trust funds .............
75,071
77,874
Proposed Legislation (nonPAYGO) .............................. ................... ...................

–81,277

–88,708

–92,479

–101,972

–110,310

90,002

97,967

102,469

112,683

121,819

–176

–379

–531

–732

–891

Subtotal, General fund
payment to HI and SMI
trust funds ......................

75,071

77,874

89,826

97,588

101,938

111,951

120,928

Total, Mandatory .......................

194,115

216,002

226,448

238,575

252,231

279,084

292,226

Total, Medicare ..........................

197,113

219,258

229,903

242,114

255,851

282,787

296,014

198

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
600 Income security:
Discretionary:
General retirement and disability insurance:
Railroad retirement ..................
Pension Benefit Guaranty Corporation ..................................
Pension and Welfare Benefits
Administration and other .....
Total, General retirement and disability insurance ........................

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

267

261

250

255

262

267

273

108

110

112

114

117

119

372

381

372

379

388

396

404

105

107

110

112

114

–80
69

–80
82

–82
85

–85
88

–87
90

Federal employee retirement
and disability:
Civilian retirement and disability program administrative expenses ..........................
85
92
Federal workers’ compensation
benefits ................................... ................... ...................
Armed forces retirement home
64
64
Total, Federal employee
retirement and disability ...........................

149

156

109

113

115

117

Unemployment compensation:
Unemployment programs administrative expenses ...........

2,270

2,369

2,419

2,473

2,528

2,584

2,642

Housing assistance:
Public housing operating fund
Public housing capital fund .....
Subsidized, public, homeless
and other HUD housing ........
Rural housing assistance .........

2,836
3,690

3,217
3,718

3,336
3,583

3,421
3,446

3,497
3,235

3,575
3,094

3,655
2,990

21,622
640

23,273
723

24,728
778

25,440
806

25,795
841

26,284
881

26,901
917

Total, Housing assistance ..............................

28,788

30,931

32,425

33,113

33,368

33,834

34,463

Food and nutrition assistance:
Special supplemental food program for women, infants,
and children (WIC) ................
Other nutrition programs .........

3,950
513

4,084
572

4,129
580

4,222
590

4,316
603

4,412
617

4,511
630

Total, Food and nutrition assistance ............

4,463

4,656

4,709

4,812

4,919

5,029

5,141

383

451

445

449

455

463

473

1,495

2,241

1,525

1,560

1,585

1,623

1,659

1,070

1,686

2,069

2,209

2,275

2,328

2,380

22.

199

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Supplemental security income
(SSI) administrative expenses .....................................

2,424

2,589

2,818

2,906

2,971

3,037

3,105

Total, Other income assistance ........................

5,372

6,967

6,857

7,124

7,286

7,451

7,617

Total, Discretionary .................

41,414

45,460

46,876

48,010

48,602

49,409

50,384

Mandatory:
General retirement and disability insurance:
Railroad retirement ..................

4,429

5,111

4,631

4,751

4,903

5,053

5,414

992

955

904

860

819

776

735

–1,156

–1,212

–1,616

–1,518

–1,681

–1,721

–1,735

200

213

227

239

250

262

273

Special benefits for disabled
coal miners .............................
Pension Benefit Guaranty Corporation ..................................
District of Columbia pension
funds .......................................
Proceeds from sale of DC retirement fund assets .............
Special workers’ compensation
program ..................................
Total, General retirement and disability insurance ........................
Federal employee retirement
and disability:
Federal civilian employee retirement and disability .........
Military retirement ...................
Federal employees workers’
compensation (FECA) ...........
Federal employees life insurance fund ................................
Total, Federal employee
retirement and disability ...........................

–3 ................... ................... ................... ................... ................... ...................
141

146

149

150

149

4,603

5,213

4,292

4,481

4,441

4,519

4,836

45,619
32,808

47,956
34,223

50,157
35,266

52,565
36,278

54,932
37,302

57,380
38,309

59,871
39,355

137

147

182

173

176

186

–1,451

–1,296

–1,266

–1,233

–1,215

–1,166

–1,109

77,003

81,020

84,304

87,792

91,192

94,699

98,303

Unemployment compensation:
Unemployment insurance programs ......................................
20,471
25,164
Trade adjustment assistance ...
271
275
Proposed Legislation (nonPAYGO) .............................. ................... ...................

28,046
28,744
30,550
32,197
33,970
11 ................... ................... ................... ...................
273

280

294

306

320

Subtotal, Trade adjustment assistance ..............

271

275

284

280

294

306

320

Total, Unemployment
compensation ..............

20,742

25,439

28,330

29,024

30,844

32,503

34,290

Housing assistance:
Mandatory housing assistance
programs ................................

Food and nutrition assistance:
Food stamps (including Puerto
Rico) ........................................

18,290

19,714

20,911

21,820

22,536

23,457

24,353

200

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program
State child nutrition programs
Funds for strengthening markets, income, and supply
(Sec.32) ...................................
Total, Food and nutrition assistance ............

2000
Actual

Estimate
2001

2002

2003

2005

2006

9,188

9,886

10,333

10,935

11,502

12,022

12,562

542

749

636

637

28,020

30,349

31,880

33,392

34,675

36,116

37,552

32,862
3,742

34,289
4,110

38,364
4,405

37,296
4,649

–887

–899

–927

–972

17,360

17,750

18,020

18,170

400

300

17,760

18,050

18,170

2,658

2,749

2,806

2,841

27,875
720

28,545
660

29,373
630

30,165
590

215

453

710

960

Other income support:
Supplemental security income
(SSI) ........................................
31,065
27,852
31,507
Family support payments ........
2,906
3,439
3,453
Federal share of child support
collections ...............................
–913
–896
–878
Temporary assistance for
needy families and related
programs ................................
15,464
17,080
17,260
Proposed Legislation
(PAYGO) ............................. ................... ................... ...................
Subtotal, Temporary assistance for needy families and related programs ..............................

2004

15,464

17,080

17,260

Child care entitlement to
states ......................................
2,237
2,423
2,555
Earned income tax credit
(EITC) .....................................
26,099
25,923
26,983
Child tax credit .........................
809
790
760
Proposed Legislation
(PAYGO) ............................. ................... ................... ...................

150 ...................

Subtotal, Child tax credit ..

809

790

760

935

1,113

1,340

1,550

Other assistance ........................
SSI recoveries and receipts ......

71
–1,637

45
–1,561

43
–1,730

50
–1,801

59
–1,894

57
–2,100

57
–2,041

Total, Other income support ..............................

76,101

75,095

79,953

83,194

86,122

91,488

91,715

Total, Mandatory .......................

206,481

217,157

228,799

237,923

247,314

259,365

266,736

Total, Income security .............

247,895

262,617

275,675

285,933

295,916

308,774

317,120

1,800

2,042

1,914

1,934

1,978

2,022

2,067

1,575

1,564

1,611

1,638

1,676

1,713

1,751

Total, Discretionary .................

3,388

3,623

3,544

3,593

3,674

3,755

3,838

Mandatory:
Social security:
Old-age and survivors insurance (OASI)(Off-budget) ........

351,609

371,714

388,127

405,228

423,458

443,029

464,225

650 Social security:
Discretionary:
Social security:
Old-age and survivors insurance (OASI)administrative
expenses (Off-budget) ............
Disability insurance (DI) administrative expenses (Offbudget) ...................................
Office of the Inspector General—Social Security Adm.
(On-budget) ............................

22.

201

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

Disability insurance (DI)(Offbudget) ...................................
54,437
59,122
63,034
68,316
74,509
81,283
88,725
Quinquennial OASI and DI adjustments (On-budget) .......... ...................
–836 ................... ................... ................... ................... ...................
Intragovernmental transactions (On-budget) ...............
13,254
12,541
14,148
14,876
16,076
17,230
18,428
Impact of tax cut (On-budget)
(Proposed Legislation nonPAYGO) .................................. ................... ...................
–140
–418
–645
–921
–1,169
Intragovernmental transactions (Off-budget) ...............
–13,252
–12,541
–13,734
–14,876
–16,076
–17,230
–18,428
Impact of tax cut (Off-budget)
(Proposed Legislation nonPAYGO) .................................. ................... ...................
140
418
645
921
1,169
Total, Mandatory .......................

406,048

430,000

451,575

473,544

497,967

524,312

552,950

Total, Social security ...............

409,436

433,623

455,119

477,137

501,641

528,067

556,788

700 Veterans benefits and services:
Discretionary:
Income security for veterans:
Special benefits for certain
World War II veterans ..........

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

Veterans education, training,
and rehabilitation:
Loan fund program account .....
Veterans employment and
training ..................................

–1

19,637
–573

21,011
–608

22,047
–620

22,529
–630

23,034
–640

23,522
–650

24,045
–660

454

397

371

361

408

418

436

19,518

20,800

21,798

22,260

22,802

23,290

23,821

167

171

174

178

182

–1

Total, Veterans education, training, and
rehabilitation .............. ...................
Hospital and medical care for
veterans:
Medical care and hospital services ..........................................
Collections for medical care .....
Construction for medical care,
benefits, and cemeteries .......
Total, Hospital and medical care for veterans ..

Veterans housing:
Housing program loan administrative expenses ..................
158
163
Proposed Legislation (nonPAYGO) .............................. ................... ...................
Total, Veterans housing
Other veterans benefits and
services:
National Cemetery Administration ..........................................
General operating expenses .....

158

163

166

170

173

177

181

95
881

109
1,166

120
1,184

123
1,219

126
1,246

129
1,274

132
1,303

202

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

Other operating expenses .........

100

116

134

140

147

145

148

Total, Other veterans
benefits and services ..

1,076

1,391

1,438

1,482

1,519

1,548

1,583

Total, Discretionary .................

20,753

22,359

23,421

23,939

24,521

25,043

25,613

26,316

27,803

31,783

30,358

–15

–43

–66

–91

Mandatory:
Income security for veterans:
Special benefits for certain
World War II veterans ..........
1
9
8
Compensation, Pensions and
Burial benefits .......................
23,820
21,238
24,855
Proposed Legislation
(PAYGO) ............................. ................... ................... ...................
Subtotal, Compensation,
Pensions and Burial benefits ..................................

23,820

21,238

24,855

26,301

27,760

31,717

30,267

National service life insurance
trust fund ...............................
All other insurance programs ..
Insurance program receipts .....

1,241
11
–202

1,290
29
–191

1,322
36
–180

1,337
46
–169

1,338
53
–157

1,319
59
–143

1,305
71
–129

Total, Income security
for veterans .................

24,871

22,375

26,041

27,523

29,001

32,958

31,519

1,497
9

1,970
13

2,136
10

2,201
10

2,283
10

2,402
10

2,513
10

–164

–296

–211

–221

–242

–269

–312

Total, Veterans education, training, and
rehabilitation ..............

1,342

1,687

1,935

1,990

2,051

2,143

2,211

Hospital and medical care for
veterans:
Fees, charges and other mandatory medical care ...............

–2

–3

–17

–3

–4

213

245

248

256

245

–15

–38

–37

–41

–42

198

207

211

215

203

Veterans education, training,
and rehabilitation:
Readjustment benefits (Montgomery GI Bill and related
programs) ...............................
Post-Vietnam era education .....
All-volunteer force educational
assistance trust fund .............

Veterans housing:
Housing program loan subsidies .......................................
1,503
357
Proposed Legislation
(PAYGO) ............................. ................... ...................
Subtotal, Housing program
loan subsidies .................

1,503

Housing program loan reestimates ......................................

–1,064

357

–1,420 ................... ................... ................... ................... ...................

22.

203

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

Housing program loan liquidating account .......................
–255
–87
Proposed Legislation
(PAYGO) ............................. ................... ...................

2003

2004

2005

2006

–71

–61

–53

–45

–42

Subtotal, Housing program
loan liquidating account

–255

–87

–37

–32

–28

–25

–26

Total, Veterans housing

184

–1,150

161

175

183

190

177

Other veterans programs:
National homes, Battle Monument contributions and other

–65

Total, Mandatory .......................

26,330

23,004

28,161

29,701

31,264

35,320

33,937

Total, Veterans benefits and
services .....................................

47,083

45,363

51,582

53,640

55,785

60,363

59,550

4,597

4,578

4,710

5,120

5,164

5,260

5,375

557

768

823

848

838

857

876

4,865

5,547

5,738

6,050

6,318

6,439

6,568

290

306

315

316

323

330

338

377

374

389

398

407

416

425

1,483

2,147

1,878

1,835

1,832

1,877

1,913

12,169

13,720

13,853

14,567

14,882

15,179

15,495

2,681

2,797

3,100

3,243

3,335

3,424

3,513

303

327

329

336

344

351

359

3,688

4,112

4,637

4,799

4,820

4,934

5,054

6,672

7,236

8,066

8,378

8,499

8,709

8,926

3,669

4,241

4,283

4,824

4,922

4,919

5,033

–1

–605

123

292

161

Criminal justice assistance:
Crime victims fund obligation
limit ........................................ ...................

204

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

Law enforcement assistance,
community policing, and
other justice programs ..........

4,314

3,561

5,228

6,373

4,334

3,715

3,784

Total, Criminal justice
assistance ....................

4,314

3,560

4,623

6,496

4,626

3,876

3,814

Total, Discretionary .................

26,824

28,757

30,825

34,265

32,929

32,683

33,268

496

529

429

495

347

354

362

1,576
–1,483
–1,282

2,030
–2,262
–1,303

2,409
–2,240
–1,343

2,351
–2,176
–1,395

2,237
–1,686
–3

2,246
–1,681
–3

2,282
–1,676
–3

637

513

523

537

541

546

550

Total, Federal law enforcement activities ....

–56

–493

–222

–188

1,436

1,462

1,515

Federal litigative and judicial
activities:
Federal judicial officers salaries and expenses and other
mandatory programs .............

594

470

547

548

559

575

588

Correctional activities:
Mandatory programs ................

–3

–4

–5

Criminal justice assistance:
Crime victims fund ...................
Public safety officers’ benefits ..

392
28

666
33

1,103
33

727
34

518
35

400
35

400
36

Total, Criminal justice
assistance ....................

420

699

1,136

761

553

435

436

Total, Mandatory .......................

996

673

1,458

1,117

2,543

2,467

2,534

Total, Administration of justice .............................................

27,820

29,430

32,283

35,382

35,472

35,150

35,802

800 General government:
Discretionary:
Legislative functions:
Legislative branch discretionary programs ...................

2,124

2,291

2,568

2,613

2,608

2,661

2,717

346

383

517

490

475

487

504

283

289

309

322

328

334

347

631

682

830

816

807

825

855

7,950

8,592

8,931

9,138

9,406

9,615

9,829

Executive direction and management:
Drug control programs .............
Executive Office of the President .........................................
Presidential transition and
former Presidents ..................
Total, Executive direction and management
Central fiscal operations:
Tax administration ...................

22.

205

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

Estimate

2000
Actual

2001

2002

2003

2004

2005

2006

Other fiscal operations .............

504

954

921

913

906

920

943

Total, Central fiscal operations ........................

8,454

9,546

9,852

10,051

10,312

10,535

10,772

–84
199

383
301

–101
313

74
284

184
264

214
268

145
274

155

249

210

234

217

188

190

Total, General property
and records management .............................

270

933

422

592

665

670

609

Central personnel management:
Discretionary central personnel
management programs .........

184

171

174

181

184

189

194

353

351

191

180

184

191

194

General property and records
management:
Real property activities ............
Records management ................
Other general and records
management ..........................

11
11
11
11
11
12
12
133
200
150
153
157
160
164
1 ................... ................... ................... ................... ................... ...................

Total, General purpose
fiscal assistance ..........

498

562

352

344

352

363

370

Other general government:
Discretionary programs ............

252

315

305

302

294

303

309

Total, Discretionary .................

12,413

14,500

14,503

14,899

15,222

15,546

15,826

Mandatory:
Legislative functions:
Congressional members compensation and other ..............

111

117

122

115

105

Central fiscal operations:
Federal financing bank .............
Other mandatory programs .....

34
–143

21
–54

15
–105

18
–118

21
–118

25
–108

28
–106

Total, Central fiscal operations ........................

–109

–33

–90

–100

–97

–83

–78

General property and records
management:
Mandatory programs ................
Offsetting receipts .....................

–24
–21

36
–67

23
–28

21
–32

22
–27

23
–26

17
–24

Total, General property
and records management .............................

–45

–31

–5

–11

–5

–3

–7

General purpose fiscal assistance:
Payments and loans to the District of Columbia ...................

8 ................... ................... ................... ................... ................... ...................

206

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

2003

Payments to States and counties ..........................................
1,016
1,335
1,496
1,502
Tax revenues for Puerto Rico
(Treasury, BATF) ..................
387
411
347
331
Arctic National Wildlife Refuge—Payment to Alaska
(Proposed Legislation
PAYGO) .................................. ................... ................... ................... ...................
Other general purpose fiscal
assistance ...............................
175
123
125
122
Total, General purpose
fiscal assistance ..........

1,586

1,869

1,968

1,955

2004

2005

2006

1,518

1,534

1,533

331

1,201

123

3,173

1,989

1,988

Other general government:
Territories ..................................
176
184
211
210
211
209
185
Treasury claims .........................
1,815
1,223
1,000
1,000
1,000
1,000
1,000
Presidential election campaign
fund ........................................
211
5 ...................
30
218
3 ...................
Other mandatory programs .....
–213
392
–10
–11
–10
–11
–11
Proposed Legislation (nonPAYGO) .............................. ................... ...................
7 ................... ................... ................... ...................
Subtotal, Other mandatory
programs .........................

–213

392

–3

–11

–10

–11

Total, Other general government .......................

1,989

1,804

1,208

1,229

1,419

1,201

1,174

Deductions for offsetting receipts:
Offsetting receipts .....................

–2,478

–1,386

–1,393

–1,386

Total, Mandatory .......................

1,041

2,334

1,805

1,809

3,219

1,823

1,796

Total, General government .....

13,454

16,834

16,308

16,708

18,441

17,369

17,622

350,947

350,572

352,615

352,574

352,981

–55

–125

–208

–291

361,978

357,907

350,951

350,517

352,490

352,366

352,690

Interest received by on-budget trust funds:
Civil service retirement and
disability fund ........................
Military retirement ...................
SMI interest ..............................
HI interest .................................

–33,608
–12,251
–3,160
–10,470

–35,108
–12,413
–3,033
–12,285

–36,531
–12,626
–2,733
–13,749

–37,946
–12,850
–2,688
–15,465

–39,360
–13,082
–2,628
–17,601

–40,467
–13,323
–2,508
–19,978

–41,635
–13,573
–2,573
–22,579

22.

207

DETAILED FUNCTIONAL TABLES

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

Other on-budget trust funds ....
–9,624
–10,823
Proposed Legislation (nonPAYGO) .............................. ................... ...................

2002

2003

2004

2005

2006

–10,678

–11,323

–12,024

–12,698

–13,274

162

261

359

Subtotal, Other on-budget
trust funds ......................

–9,624

–10,823

–10,677

–11,247

–11,862

–12,437

–12,915

Total, Interest received
by on-budget trust
funds ............................

–69,113

–73,662

–76,316

–80,196

–84,533

–88,713

–93,275

Interest received by off-budget trust funds:
Interest received by social security trust funds ..................

–59,796

–68,886

–76,086

–85,421

–95,855

–107,348

–120,111

–1,974

–2,035

–2,136

–1,830

–2,160

–2,387

–2,535

2,684

2,791

2,913

3,025

3,143

3,221

3,297

1,164

1,728

1,357

2,124

2,231

2,117

2,188

4,287

3,787

3,734

3,731

3,748

3,759

3,787

–9,129

–10,279

–11,339

–12,013

–12,909

–13,668

–14,188

–1,785

–1,455

–1,340

–1,352 ................... ................... ................... ................... ................... ...................
–3,746
–3,527
–3,607
–3,353
–3,322
–3,328
–3,313

Total, Other interest ......

–9,851

–8,990

–10,418

–9,656

–10,609

–11,626

–12,104

Total, Net interest .....................

223,218

206,369

188,131

175,244

161,493

144,679

127,200

2,600

4,214

4,970

5,642

5,963

–249

–273

–282

–288

–295

Total, Allowances ...................... ................... ...................

2,351

3,941

4,688

5,354

5,668

–2,940

–3,079

–3,244

–3,381

–12,622

–13,098

–13,567

–14,040

–6,975

–7,111

–7,249

–7,327

–2,943

–3,072

–3,211

–3,355

950 Undistributed offsetting receipts:
Mandatory:
Employer share, employee retirement (on-budget):
Contributions to HI trust fund
–2,630
–2,693
–2,809
Contributions to military retirement fund .........................
–11,402
–11,369
–12,166
Postal Service contributions to
Civil Service Retirement and
Disability Fund ......................
–6,445
–6,768
–6,854
Employing agency contributions, DoD Retiree Health
Care Fund .............................. ................... ................... ...................

208

THE BUDGET FOR FISCAL YEAR 2002

Table 22–2.

Outlays by Function, Category, and Program—Continued
(In millions of dollars)

Function and Program

2000
Actual

Estimate
2001

2002

Other contributions to civil and
foreign service retirement
and disability fund ................
–9,737
–10,446
–10,813
Proposed Legislation (nonPAYGO) .............................. ................... ................... ...................

2003

2004

2005

2006

–10,723

–11,316

–11,990

–12,699

–469

–482

–449

–415

Subtotal, Other contributions to civil and foreign
service retirement and
disability fund ................

–9,737

–10,446

–10,813

–11,192

–11,798

–12,439

–13,114

Total, Employer share,
employee retirement
(on-budget) ..................

–30,214

–31,276

–32,642

–36,672

–38,158

–39,710

–41,217

Employer share, employee retirement (off-budget):
Contributions to social security
trust funds .............................

–7,637

–7,877

–8,917

–9,161

–9,868

–10,706

–11,443

Rents and royalties on the
Outer Continental Shelf:
OCS Receipts .............................

–4,580

–6,931

–5,884

–5,358

–5,185

–4,971

–4,836

–150

–1,572

–323 ................... ................... ...................

–4,360

–9,665

–9,670

–1,275

–680

2,600

1,000

–5,100

–2,000

–4,000

–1,760

–8,665

–14,770

–3,275

–4,680

–200

–2,402

–2

–150

–1,572

–1,960

–8,865

–17,372

–3,477

–4,882

Total, Undistributed offsetting receipts ............................

–42,581

–47,656

–49,403

–60,379

–70,583

–58,864

–62,378

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

1,788,826

1,856,238

1,960,564

2,016,226

2,076,718

2,168,745

2,223,902

On-budget .........................................
Off-budget .........................................

(1,458,061) (1,508,504) (1,601,414) (1,648,652) (1,696,970) (1,776,379) (1,817,759)
(330,765) (347,734) (359,150) (367,574) (379,748) (392,366) (406,143)

22.

209

DETAILED FUNCTIONAL TABLES

Table 22–3.

Direct and Guaranteed Loans by Function
(In millions of dollars)
Function

NATIONAL DEFENSE:
DIRECT LOANS:
Defense Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GUARANTEED LOANS:
Defense Loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
INTERNATIONAL AFFAIRS:
DIRECT LOANS:
Public Law 480:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Foreign Military Financing Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Overseas Private Investment Corporation:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
USAID Development Assistance Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Export-Import Bank:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Other, International Affairs:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Total, direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GUARANTEED LOANS:
Foreign Military Financing Loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Loan Guarantees to Israel:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Overseas Private Investment Corporation:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
USAID Development Assistance Loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Export-Import Bank:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Total, guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
ENERGY:
DIRECT LOANS:
Rural electrification and telecommunications:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Other, Energy:
Loan disbursements ........................................................................................

2000
Actual

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

47
69

Estimate
2001

2002

32
30

72
96

39
102

120
215

................. ................. .................
8,542
7,588
7,353
436
6,012

589
5,762

338
5,241

4
58

23
52

38
56

155
9,218

133
8,508

1,123
11,126

1,458
10,940

1,513
11,264

8
106

27
131

25
154

1,571
35,972

2,252
33,691

2,047
32,576

.................
10,128

................. ................. .................
4,551
4,194
3,844
................. ................. .................
9,226
9,226
9,226
426
3,142

500
3,353

525
3,628

87
2,299

162
2,187

161
2,163

10,930
29,782

10,448
33,742

10,858
33,220

11,443
49,000

11,110
52,702

11,544
52,081

1,408
30,864

1,875
30,541

2,225
30,740

210

THE BUDGET FOR FISCAL YEAR 2002

Table 22–3.

Direct and Guaranteed Loans by Function—Continued
(In millions of dollars)
Function

2000
Actual

Estimate
2001

2002

Outstandings ....................................................................................................

Total, direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

1,423
30,920

1,896
30,603

2,246
30,808

GUARANTEED LOANS:
Rural electrification and telecommunications:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

152
550

52
575

105
653

NATURAL RESOURCES AND ENVIRONMENT:
DIRECT LOANS:
Water and related resources:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Natural Resources and Environment:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Total, direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GUARANTEED LOANS:
Presidio Trust:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
AGRICULTURE:
DIRECT LOANS:
Agricultural credit insurance fund:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Farm storage facility direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Apple loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Emergency boll weevil direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Commodity credit corporation fund:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Public Law 480:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Financial Assistance Corp. Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Total, direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GUARANTEED LOANS:
Agricultural credit insurance fund:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Commodity credit corporation export guarantees:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

................. ................. .................
3
2
2
21
280

33
302

29
321

21
283

33
304

29
323

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

50
49

1,149
8,976

780
8,315

855
7,716

32
32

174
195

126
285

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

100
100

.................
67

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

10
10

.................
9

9,691
3,464

8,689
2,238

9,171
1,795

133
2,616

527
3,069

240
3,233

................. ................. .................
883
868
853
11,005
15,971

10,280
14,795

10,392
13,958

2,591
9,072

2,700
10,617

2,879
12,336

2,844
6,483

3,792
6,186

3,904
6,112

22.

211

DETAILED FUNCTIONAL TABLES

Table 22–3.

Direct and Guaranteed Loans by Function—Continued
(In millions of dollars)
Function

Other, Agriculture:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Total, guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
COMMERCE AND HOUSING CREDIT:
DIRECT LOANS:
Rural Housing insurance fund:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
FHA-Mutual mortgage and cooperative housing insurance:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
FHA-General and special risk insurance:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Housing for the elderly or handicapped fund:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GNMA-Guarantees of mortgage-backed securities:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
SBA-Business Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Spectrum Auction Direct Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
FSLIC resolution fund:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Other, Commerce and Housing Credit:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Total, direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GUARANTEED LOANS:
Rural Housing insurance fund:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Emergency oil and gas guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Emergency steel guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
FHA-Mutual mortgage and cooperative housing insurance:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
FHA-General and special risk insurance:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
GNMA-Guarantees of mortgage-backed securities:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
SBA-Business Loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

Estimate

2000
Actual

2001

2002

................. ................. .................
24
24
24
5,435
15,579

6,492
16,827

6,783
18,472

1,241
28,419

1,283
28,260

1,283
28,080

3
3

248
177

245
282

4
24

4
14

6
7,923

5
7,777

5
7,595

42
109

38
65

2
49

20
485

22
286

18
208

.................
45

1
8,177

................. .................
8,139
8,101

................. ................. .................
4 ................. .................
9
208

125
300

45
310

1,322
45,373

1,725
45,028

1,602
44,639

2,243
11,319

2,870
13,340

3,004
15,355

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

5
5

.................
3

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

516
516

.................
413

86,274
449,579

106,016
509,842

119,712
552,109

12,507
98,889

15,175
100,628

15,732
103,522

105,518
602,887

96,262
620,394

103,199
631,962

12,150
33,749

10,489
29,150

9,111
31,878

212

THE BUDGET FOR FISCAL YEAR 2002

Table 22–3.

Direct and Guaranteed Loans by Function—Continued
(In millions of dollars)
Function

Estimate

2000
Actual

2001

2002

Other, Commerce and Housing Credit:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

5
143

7
130

7
115

218,697
1,196,566

231,340
1,274,005

250,765
1,335,357

300
300

239
539

599
1,138

TRANSPORTATION:
DIRECT LOANS:
Transportation infrastructure finance and innovation program direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Alameda corridor direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Other, Transportation:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Total, direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GUARANTEED LOANS:
Minority business resource center:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Transportation infrastructure finance and innovation program loan guarantees:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Maritime Loan Guarantees:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Total, guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
COMMUNITY AND REGIONAL DEVELOPMENT:
DIRECT LOANS:
Distance learning and medical link loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Rural development insurance fund:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Rural water and waste disposal direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Rural telephone bank loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Rural community facility direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Community development loan guarantees:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
SBA, Disaster Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

................. ................. .................
488 ................. .................
23
194

164
325

110
394

323
982

403
864

709
1,532

14
14

18
25

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

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

200
200

886
4,325

620
4,651

200
4,601

886
4,325

634
4,665

418
4,826

1
2

32
31

113
133

1
3,269

................. .................
3,078
2,899

668
3,942

740
4,626

800
5,360

43
1,192

124
1,183

136
1,227

154
864

209
1,048

264
1,280

................. ................. .................
13
13
13
942
5,897

947
4,321

485
3,118

22.

213

DETAILED FUNCTIONAL TABLES

Table 22–3.

Direct and Guaranteed Loans by Function—Continued
(In millions of dollars)
Function

2000
Actual

Estimate
2001

2002

Other, Community and Regional Development:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

82
911

128
967

120
1,005

1,891
16,090

2,180
15,267

1,918
15,035

GUARANTEED LOANS:
Rural development insurance fund:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Rural community facility guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Rural business and industry guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Community development loan guarantees:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Other, Community and Regional Development:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Total, guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES:
DIRECT LOANS:
Historically black college and university capital financing:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Student financial assistance:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Federal direct student loan program:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Other, Education, Training, Employment and Social Services:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

1
109

................. .................
85
67

63
225

135
347

155
484

967
3,180

2,091
4,991

1,777
6,444

322
1,799

500
2,024

400
2,201

65
215

72
257

118
338

1,418
5,528

2,798
7,704

2,450
9,534

10
21

9
30

15
44

25
394

25
377

25
364

16,383
57,713

19,027
74,077

16,539
86,853

7
510

................. .................
470
435

16,425
58,638

19,061
74,954

16,579
87,696

GUARANTEED LOANS:
Federal family education loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

26,602
144,225

29,501
152,680

30,742
160,042

HEALTH:
DIRECT LOANS:
Other, Health:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

................. ................. .................
11
3 .................

GUARANTEED LOANS:
Health Professions Graduate Student Loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

................. ................. .................
2,802
2,683
2,553

214

THE BUDGET FOR FISCAL YEAR 2002

Table 22–3.

Direct and Guaranteed Loans by Function—Continued
(In millions of dollars)
Function

Health maintenance organization loan and loan guarantee fund:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Other, Health:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Total, guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
INCOME SECURITY:
DIRECT LOANS:
Low-rent public housing—loans and other expenses:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Other, Income Security:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Total, direct loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
GUARANTEED LOANS:
Low-rent public housing—loans and other expenses:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
Other, Income Security:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

Estimate

2000
Actual

2001

2002

................. ................. .................
1 ................. .................
5
29

32
40

21
58

5
2,832

32
2,723

21
2,611

................. ................. .................
1,350
1,279
1,208
17
704

20
649

12
586

17
2,054

20
1,928

12
1,794

................. ................. .................
2,742
2,458
2,174
19
61

33
90

59
142

19
2,803

33
2,548

59
2,316

2
17

3
19

3
20

1,447
1,720

1,706
2,208

1,718
2,292

2
1

3
1

1,451
1,738

1,712
2,228

1,724
2,313

GUARANTEED LOANS:
Veterans Housing Loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

20,159
224,308

29,548
234,789

28,969
244,468

Total, guaranteed loans:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................
VETERANS BENEFITS AND SERVICES:
DIRECT LOANS:
Miscellaneous veterans housing loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Veterans Housing Loans:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Other, Veterans Benefits:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

GENERAL GOVERNMENT:
DIRECT LOANS:
Payments to the United States territories, fiscal assistance:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................
Assistance to American Samoa:
Loan disbursements ........................................................................................

................. ................. .................
15
13
11
.................

22.

215

DETAILED FUNCTIONAL TABLES

Table 22–3.

Direct and Guaranteed Loans by Function—Continued
(In millions of dollars)
Function

Outstandings ....................................................................................................
Columbia Hospital for Women:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

2000
Actual
.................
14
14

Estimate
2001
15

2002
17

................. .................
14
14

14
29

16
42

3
42

DIRECT LOANS:
Loan disbursements ........................................................................................
Outstandings ....................................................................................................

35,463
208,061

39,610
219,737

37,333
230,812

GUARANTEED LOANS:
New guaranteed loans .....................................................................................
Outstandings ....................................................................................................

284,863
1,645,785

311,579
1,749,320

332,026
1,830,624

216

THE BUDGET FOR FISCAL YEAR 2002

Table 22–4.

Tax Expenditures by Function
(In millions of dollars)
Total Revenue Loss

Function and Provision
2000
National Defense:
Current law income tax expenditures:
Exclusion of benefits, allowances, and certain pays to armed forces personnel ...........

2,140

2001

2,160

2002

2,190

2003

2,210

2004

2,240

2005

2,260

2006

2,290

Total
2002–
2006

11,190

International affairs:
Current law income tax expenditures:
Exclusion of income earned abroad by U.S.
citizens ..........................................................
2,500
2,680
2,850
3,010
3,180
3,350
3,550
15,940
Exclusion of certain allowances for Federal
employees abroad .........................................
680
720
750
790
830
870
920
4,160
Exclusion of income of foreign sales corporations ...............................................................
3,890 .............. .............. .............. .............. .............. .............. ................
Extraterritorial income exclusion ................... ..............
4,490
4,810
5,150
5,500
5,880
6,290
27,630
Inventory property sales source rules exception ................................................................
2,170
2,280
2,390
2,510
2,630
2,760
2,900
13,190
Deferral of income from controlled foreign
corporations (normal tax method) ..............
6,200
6,600
7,000
7,450
7,900
8,400
8,930
39,680
Deferred taxes for financial firms on certain
income earned overseas ...............................
1,190
1,290
540 .............. .............. .............. ..............
540
Total, current law income tax expenditures ..

16,630

18,060

18,340

18,910

20,040

21,260

22,590

101,140

General science, space, and technology:
Current law income tax expenditures:
Expensing of research and experimentation
expenditures (normal tax method) .............
Credit for increasing research activities ........

1,680
1,630

1,650
6,050

1,680
6,760

1,770
5,390

1,880
4,710

1,980
2,720

2,100
1,160

9,410
20,740

Total, current law income tax expenditures ..

3,310

7,700

8,440

7,160

6,590

4,700

3,260

30,150

100

110

100

490

340
970

340
920

340
860

340
540

340
130

350
130

1,720
1,790

20
70
90
310
40
20

20
70
90
370
60
20

20
80
90
440
70
20

20
80
100
530
90
20

20
80
110
630
90
20

20
90
130
770
90
20

20
90
140
910
90
20

100
420
570
3,280
430
100

30 ..............

–30

–50 ................

430

2,030

2,100

2,120

1,930

1,620

1,770

1,890

9,330

100

320

330

350

1,610

510

560

610

2,540

420

640

660

680

3,220

Energy:
Current law income tax expenditures:
Expensing of exploration and development
costs, fuels ....................................................
Excess of percentage over cost depletion,
fuels ...............................................................
Alternative fuel production credit ..................
Exception from passive loss limitation for
working interests in oil and gas properties
Capital gains treatment of royalties on coal
Exclusion of interest on energy facility bonds
Enhanced oil recovery credit ..........................
New technology credit .....................................
Alcohol fuel credits 1 ........................................
Tax credit and deduction for clean-fuel burning vehicles ...................................................
Exclusion from income of conservation subsidies provided by public utilities ...............
Total, current law income tax expenditures ..

Natural resources and environment:
Current law income tax expenditures:
Expensing of exploration and development
costs, nonfuel minerals ................................
20
20
20
20
Excess of percentage over cost depletion,
nonfuel minerals ..........................................
270
280
300
310
Exclusion of interest on bonds for water,
sewage, and hazardous waste facilities ......
400
400
410
450
Capital gains treatment of certain timber income ..............................................................
70
70
80
80
Expensing of multiperiod timber growing
costs ...............................................................
570
580
610
630
Investment credit and seven-year amortization for reforestation expenditures ............. .............. .............. .............. ..............

22.

217

DETAILED FUNCTIONAL TABLES

Table 22–4.

Tax Expenditures by Function—Continued
(In millions of dollars)
Total Revenue Loss

Function and Provision
2000

2001

2002

2003

2004

2005

2006

Total
2002–
2006

Tax incentives for preservation of historic
structures ......................................................

190

200

210

220

240

250

260

1,180

Total, current law income tax expenditures ..

1,520

1,550

1,630

1,710

1,820

1,920

2,020

9,100

160

170

180

860

Agriculture:
Current law income tax expenditures:
Expensing of certain capital outlays ..............
Expensing of certain multiperiod production
costs ...............................................................
Treatment of loans forgiven for solvent
farmers ..........................................................
Capital gains treatment of certain income ....
Income averaging for farmers .........................
Deferral of gain on sale of farm refiners .......

110

120

130

620

10
700
50
10

10
740
50
10

10
780
50
10

10
820
50
10

10
860
60
10

10
900
60
10

10
950
60
10

50
4,310
280
50

Total, current law income tax expenditures ..

1,040

1,080

1,130

1,180

1,230

1,290

1,340

6,170

1,550

1,650

1,770

1,890

2,020

2,160

2,280

10,120

10 ..............

110

13,950

15,170

16,520

17,990

19,610

21,370

23,330

98,820

230
100

240
100

250
100

270
100

280
100

300
100

310
100

1,410
500

790

800

820

870

990

1,090

1,200

4,970

160

170

200

230

260

1,030

60,270

63,190

65,750

68,050

70,470

73,100

76,150

353,520

22,140

23,920

25,570

27,220

29,080

30,980

33,220

146,070

1,010
18,540

1,035
19,095

1,050
19,670

1,070
20,260

1,090
20,870

1,110
21,490

1,130
22,140

5,450
104,430

4,720
3,210

4,450
3,310

4,220
3,460

4,000
3,600

3,790
3,790

3,600
3,940

3,410
4,080

19,020
18,870

4,740

5,140

5,520

5,830

6,040

6,140

6,210

29,740

30
80

20
80

10
80

20
80

70
400

40,520

41,720

42,950

44,220

45,530

46,870

48,260

227,830

40
27,090
180

70
28,240
190

90
29,370
200

120
30,540
210

160
31,760
220

200
33,030
230

250
34,360
240

820
159,060
1,100

200

3,260

3,170

3,290

2,880

2,860

2,730

3,220

14,980

Commerce and housing:
Current law income tax expenditures:
Financial institutions and insurance:
Exemption of credit union income ..............
Excess bad debt reserves of financial institutions .......................................................
Exclusion of interest on life insurance savings ............................................................
Special alternative tax on small property
and casualty insurance companies ..........
Tax exemption of certain insurance companies owned by tax-exempt organizations ...........................................................
Small life insurance company deduction ....
Housing:
Exclusion of interest on owner-occupied
mortgage subsidy bonds ...........................
Exclusion of interest on rental housing
bonds .........................................................
Deductibility of mortgage interest on
owner-occupied homes ..............................
Deductibility of State and local property
tax on owner-occupied homes ..................
Deferral of income from post 1987 installment sales .................................................
Capital gains exclusion on home sales .......
Exception from passive loss rules for
$25,000 of rental loss ...............................
Credit for low-income housing investments
Accelerated depreciation on rental housing
(normal tax method) ....................................
Commerce:
Cancellation of indebtedness .......................
Exceptions from imputed interest rules .....
Capital gains (except agriculture, timber,
iron ore, and coal) (normal tax method)
Capital gains exclusion of small corporation stock ...................................................
Step-up basis of capital gains at death ......
Carryover basis of capital gains on gifts ....
Ordinary income treatment of loss from
small business corporation stock sale .....
Accelerated depreciation of buildings other
than rental housing (normal tax method) ..............................................................

218

THE BUDGET FOR FISCAL YEAR 2002

Table 22–4.

Tax Expenditures by Function—Continued
(In millions of dollars)
Total Revenue Loss
2000

2001

2002

2003

2004

2005

2006

Total
2002–
2006

30,660

33,050

35,400

37,680

39,760

41,530

43,330

197,700

2,100

2,570

2,690

2,670

2,570

2,480

2,510

12,920

200

210

220

1,070

6,480
290

6,700
300

7,140
310

7,460
330

7,540
360

7,760
410

7,960
450

37,860
1,860

Function and Provision
Accelerated depreciation of machinery and
equipment (normal tax method) ..............
Expensing of certain small investments
(normal tax method) .................................
Amortization of start-up costs (normal tax
method) .....................................................
Graduated corporation income tax rate
(normal tax method) .................................
Exclusion of interest on small issue bonds

Total, current law income tax expenditures .. 242,455 254,680 266,700 277,810 289,470 301,230 314,770 1,449,980
Transportation:
Current law income tax expenditures:
Deferral of tax on shipping companies ..........
Exclusion of reimbursed employee parking
expenses ........................................................
Exclusion for employer-provided transit
passes ............................................................
Total, current law income tax expenditures ..

100

1,880

1,980

2,090

2,190

2,300

2,420

2,550

11,550

190

220

260

310

350

400

440

1,760

2,090

2,220

2,370

2,520

2,670

2,840

3,010

13,410

150

630

640

690

780

850

950

3,910

320

320
10

660
90

1,140
200

1,210
310

1,340
440

1,480
640

5,830
1,680

350

410

330

–130

–80

560

1,180

1,400

1,890

2,450

2,420

2,600

3,090

12,450

1,110
4,210
2,420
20
360
100

1,120
4,480
2,570
30
370
130

1,130
4,610
2,580
50
380
180

1,140
4,280
2,960
60
380
230

1,150
4,110
4,490
80
390
250

1,160
4,360
4,460
100
400
290

1,180
4,630
4,660
120
410
330

5,760
21,990
19,150
410
1,960
1,280

210

230

240

270

290

330

1,360

520
10

540
20

550
40

580
50

650
60

740
70

810
70

3,330
290

950

1,010

1,070

1,110

1,170

1,220

1,270

5,840

2,730

2,830

2,930

3,090

3,200

3,300

3,540

16,060

240

260

90 .............. .............. .............. ..............

390
50
670

400
70
700

Community and regional development:
Current law income tax expenditures:
Investment credit for rehabilitation of structures (other than historic) ...........................
30
Exclusion of interest for airport, dock, and
similar bonds ................................................
620
Exemption of certain mutuals’ and cooperatives’ income .................................................
60
Empowerment zones and enterprise communities .............................................................
310
New markets tax credit .................................. ..............
Expensing of environmental remediation
costs ...............................................................
160
Total, current law income tax expenditures ..
Education, training, employment, and social services:
Current law income tax expenditures:
Education:
Exclusion of scholarship and fellowship income (normal tax method) .......................
HOPE tax credit ...........................................
Lifetime Learning tax credit .......................
Education Individual Retirement Accounts
Deductibility of student-loan interest ........
Deferral for state prepaid tuition plans .....
Exclusion of interest on student-loan
bonds .........................................................
Exclusion of interest on bonds for private
nonprofit educational facilities ................
Credit for holders of zone academy bonds
Exclusion of interest on savings bonds redeemed to finance educational expenses
Parental personal exemption for students
age 19 or over ...........................................
Deductibility of charitable contributions
(education) .................................................
Exclusion of employer-provided educational assistance ....................................
Training, employment, and social services:
Work opportunity tax credit ........................
Welfare-to-work tax credit ..........................
Exclusion of employer provided child care

300
70
730

180
50
760

80
20
810

30
10
10 ..............
850
900

600
150
4,050

22.

219

DETAILED FUNCTIONAL TABLES

Table 22–4.

Tax Expenditures by Function—Continued
(In millions of dollars)
Total Revenue Loss

Function and Provision
2000
Adoption assistance .....................................
Assistance for adopted foster children .......
Exclusion of employee meals and lodging
(other than military) ................................
Credit for disabled access expenditures .....
Deductibility of charitable contributions,
other than education and health .............
Exclusion of certain foster care payments
Exclusion of parsonage allowances .............
Total, current law income tax expenditures ..
Health:
Current law income tax expenditures:
Exclusion of employer contributions for medical insurance premiums and medical care
Self-employed medical insurance premiums
Workers’ compensation insurance premiums
Medical Savings Accounts ...............................
Deductibility of medical expenses ..................
Exclusion of interest on hospital construction bonds .....................................................
Deductibility of charitable contributions
(health) ..........................................................
Tax credit for orphan drug research ..............
Special Blue Cross/Blue Shield deduction .....
Total, current law income tax expenditures ..
Income security:
Current law income tax expenditures:
Exclusion of railroad retirement system benefits ................................................................
Exclusion of workers’ compensation benefits
Exclusion of public assistance benefits (normal tax method) ...........................................
Exclusion of special benefits for disabled coal
miners ...........................................................
Exclusion of military disability pensions .......
Net exclusion of pension contributions and
earnings:
Employer plans ............................................
Individual Retirement Accounts .................
Keogh plans ..................................................
Exclusion of other employee benefits:
Premiums on group term life insurance ....
Premiums on accident and disability insurance ......................................................
Income of trusts to finance supplementary
unemployment benefits ...............................
Special ESOP rules .........................................
Additional deduction for the blind .................
Additional deduction for the elderly ..............
Tax credit for the elderly and disabled ..........
Child credit 2 ....................................................
Credit for child and dependent care expenses
Deductibility of casualty losses ......................
Earned income tax credit 3 ..............................

2001

2002

2003

2004

2005

2006

Total
2002–
2006

120
160

130
190

120
210

30
240

30
250

20
260

20
270

220
1,230

680
40

710
40

740
50

780
50

810
50

850
50

890
50

4,070
250

20,150
550
330

21,020
570
350

22,030
300
370

23,160
630
400

24,240
660
430

25,380
700
460

26,780
730
490

121,590
3,020
2,150

36,030

37,780

38,770

40,410

43,210

45,010

47,500

214,900

76,530
1,340
4,620
20
4,250

84,350
1,510
4,850
20
4,560

92,230
1,760
5,090
30
4,870

99,800 107,620 115,770 124,690
2,470
3,580
3,900
4,220
5,350
5,620
5,900
6,190
20
20
20
20
5,170
5,480
5,790
6,110

540,110
15,930
28,150
110
27,420

1,080

1,100

1,130

1,210

1,350

1,490

1,660

6,840

2,910
100
230

3,000
110
250

3,100
130
280

3,270
140
320

3,380
160
290

3,480
180
280

3,740
200
250

16,970
810
1,420

99,750 108,620 117,750 127,500 136,810 147,080

637,760

91,080

360
5,120

360
5,560

360
5,810

360
6,070

360
6,320

360
6,600

360
6,900

1,800
31,700

360

370

390

400

420

430

450

2,090

80
120

70
120

70
130

60
130

60
140

50
140

300
670

89,120
15,200
5,500

93,220
15,920
5,830

97,510 103,010 108,480 114,220 121,990
16,600 17,230 17,770 18,220 18,520
6,180
6,540
6,930
7,330
7,750

545,210
88,340
34,730

1,720

1,750

1,780

1,830

1,860

1,900

1,930

9,300

200

210

220

230

240

250

260

1,200

10
1,240
30
1,920
30
19,330
2,390
230
4,644

10
1,290
30
1,990
30
19,310
2,360
250
4,692

10
1,340
30
2,060
30
18,980
2,330
260
4,963

10
1,400
30
2,130
30
18,410
2,300
280
5,225

10
1,460
40
2,210
30
18,000
2,280
290
5,456

10
1,540
40
2,260
30
17,430
2,250
300
5,688

10
1,610
40
2,350
30
16,790
2,220
320
5,965

50
7,350
180
11,010
150
89,610
11,380
1,450
27,297

Total, current law income tax expenditures .. 147,604 153,372 159,053 165,675 172,346 179,058 187,685

863,817

Social Security:
Current law income tax expenditures:
Exclusion of social security benefits:
Social Security benefits for retired workers
Social Security benefits for disabled ..........

18,250
2,640

19,070
2,880

19,930
3,160

20,520
3,490

21,050
3,910

21,840
4,360

22,780
4,840

106,120
19,760

220

THE BUDGET FOR FISCAL YEAR 2002

Table 22–4.

Tax Expenditures by Function—Continued
(In millions of dollars)
Total Revenue Loss

Function and Provision
2000

2001

2002

2003

2004

2005

2006

Total
2002–
2006

Social Security benefits for dependents
and survivors ............................................

3,910

4,030

4,210

4,440

4,730

5,070

5,380

23,830

Total, current law income tax expenditures ..

24,800

25,980

27,300

28,450

29,690

31,270

33,000

149,710

3,090
70
80

3,290
70
90

3,460
80
90

3,640
80
100

3,820
90
100

4,010
90
110

4,210
100
110

19,140
440
510

220

3,280

3,490

3,670

3,860

4,050

4,260

4,470

20,310

22,600

23,050

23,510

23,980

24,460

24,950

25,450

122,350

42,650

45,730

48,730

51,780

55,030

58,390

62,160

276,090

2,470

2,520

2,560

2,580

2,610

2,630

1,060

11,440

Veterans benefits and services:
Current law income tax expenditures:
Exclusion of veterans death benefits and disability compensation ....................................
Exclusion of veterans pensions .......................
Exclusion of Montgomery GI bill benefits .....
Exclusion of interest on veterans housing
bonds .............................................................
Total, current law income tax expenditures ..
General purpose fiscal assistance:
Current law income tax expenditures:
Exclusion of interest on public purpose State
and local bonds .............................................
Deductibility of nonbusiness state and local
taxes other than on owner-occupied homes
Tax credit for corporations receiving income
from doing business in U.S. possessions ....
Total, current law income tax expenditures ..

67,720

71,300

74,800

78,340

82,100

85,970

88,670

409,880

Interest:
Current law income tax expenditures:
Deferral of interest on U.S. savings bonds ....

470

490

520

540

570

600

630

2,860

Total, current law income tax expenditures ..

470

490

520

540

570

600

630

2,860

Notes:
Tax expenditure proposals are presented in Table S–10.
All current law tax expenditure estimates have been rounded to the nearest $10 million.
Current law tax expenditure estimates here are the arithmetic sums of corporate and individual income tax revenue loss
estimates from Table 5–2 in Analytical Perspectives, and do not reflect possible interactions across these two taxes.
1 In addition, the partial exemption from the excise tax for alcohol fuels results in a reduction in excise tax receipts (in
millions of dollars) as follows: 2000 $840; 2001 $880; 2002 $930; 2003 $950; 2004 $960; 2005 $960; 2006 $960.
2 The figures in the table indicate the effect of the child credit on receipts. The effect on outlays in (in millions of dollars)
is as follows: 2000 $809; 2001 $790; 2002 $760; 2003 $720; 2004 $660; 2005 $630; 2006 $590.
3 The figures in the table indicate the effect of the earned income tax credit on receipts. The effect on outlays in (in millions of dollars) is as follows: 2000 $26,099; 2001 $25,923; 2002 $26,983; 2003 $27,875; 2004 $28,545; 2005 $29,373; 2006
$30,165.

IV.

SUMMARY TABLES

221

Table S–1.

President’s 10-Year Plan
(In billions of dollars)

Total
2002–2011
Baseline surplus ..................................................................................................................
Social Security surplus ....................................................................................................
Tax relief ..........................................................................................................................

5,637
2,591
1,612

Additional needs, debt service, and contingencies:
Immediate Helping Hand and Medicare modernization ...........................................
Additional spending and other ....................................................................................
Debt service ..................................................................................................................
Contingencies ................................................................................................................

153
19
420
841

Memorandum:
Maximum debt retirement ..............................................................................................

2,017

223

224

Table S–2.

Proposed Policy

(In billions of dollars)
Estimate
2001
Baseline unified surplus ................................................

284

Policy changes:
Tax package .................................................................
–*
Discretionary programs ..............................................
–1
Immediate Helping Hand and Medicare modernization ...........................................................................
–3
Other mandatory initiatives and offsets ................... ............
Debt service .................................................................
–*

2002

2003

2004

2005

2006

Totals
2007

2008

2009

2010

2011

2002–2006 2002–2011

283

334

387

439

515

585

651

725

814

903

1,958

5,637

–29
–8

–66
–5

–99
–6

–132
–8

–169
–4

–193
1

–208
–*

–221
–1

–243
–*

–251
–1

–495
–31

–1,612
–28

–11
–2
–2

–13
–2
–6

–15
6
–12

–13
2
–20

–13
4
–29

–13
–1
–40

–16
–*
–54

–17
*
–69

–20
*
–86

–24
1
–104

–64
8
–68

–153
9
–420

Total, policy changes ......................................................

–3

–52

–92

–125

–170

–211

–246

–278

–305

–349

–377

–649

–2,204

Debt reduction and reserve for contingencies 1 ............

281

231

242

262

269

305

340

373

420

465

526

1,309

3,433

* $500 million or less.
1 The actual amount of annual debt retirement will vary depending upon the availability of eligible redeemable debt, and the use, if any, of the contingency reserve.

THE BUDGET FOR FISCAL YEAR 2002

Budget Summary

(In billions of dollars)
Estimate
2001

2002

2003

2004

2005

2006

Total
2007

2008

2009

2010

2011

2002–2011

Outlays:
Discretionary ..............................................................
Mandatory:
Social Security ........................................................
Medicare ..................................................................
Medicaid ..................................................................
Other mandatory ....................................................

649

692

712

731

754

770

787

809

830

854

877

7,816

430
216
129
226

452
226
142
260

474
239
153
264

498
252
166
268

524
279
181
286

553
292
196
285

584
314
214
296

618
336
232
312

656
358
253
324

698
384
275
336

744
419
298
349

5,801
3,100
2,109
2,981

Subtotal, mandatory ..................................................
Net interest .................................................................

1,001
206

1,081
188

1,129
175

1,184
161

1,270
145

1,326
127

1,408
109

1,498
90

1,591
69

1,693
46

1,810
20

13,991
1,130

Total outlays ..................................................................
Receipts ..........................................................................

1,856
2,137

1,961
2,192

2,016
2,258

2,077
2,339

2,169
2,438

2,224
2,529

2,303
2,643

2,398
2,771

2,490
2,910

2,593
3,058

2,706
3,233

22,938
26,370

Unified surplus ...........................................................
On-budget surplus/contingency .................................
Off-budget surplus .....................................................

281
125
156

231
59
172

242
49
193

262
52
211

269
32
237

305
52
252

340
69
270

373
85
287

420
117
303

465
142
323

526
184
343

SUMMARY TABLES

Table S–3.

3,433
841
2,591

225

226

Table S–4.

Bridge to 2002 Proposed Discretionary Spending
(Budget authority, dollar amounts in billions)

2001 Enacted ...............................................................................................................................................

634.9

Department of Defense:
Additions:
Campaign initiatives ............................................................................................................................
Pay, inflation, health, and other .........................................................................................................

4.4
9.7

Non-Department of Defense:
Additions:
Campaign initiatives ............................................................................................................................
Pay and programmatic increases ........................................................................................................
National Emergency Reserve ..............................................................................................................
Technical adjustments (contract renewals, new advances, etc.) ......................................................
Offsets:
Non-repetition of earmarked funding .................................................................................................
Non-repetition of one-time funding ....................................................................................................
Program decreases ...............................................................................................................................

–4.3
–4.1
–11.5

2002 Total Discretionary ............................................................................................................................

660.6

2002 Discretionary Baseline .......................................................................................................................

660.6

10.9
9.3
5.6
5.6

Increase over 2001 Enacted ......................................................................................................

25.7

Percentage Increase ..................................................................................................................

4.0%
THE BUDGET FOR FISCAL YEAR 2002

Discretionary Policy Initiatives

(Budget authority, in billions of dollars)
2002
Estimate

Totals
2002–2006

2002–2011

Strengthen and Reform Education ................................................................................
Revitalize National Defense ...........................................................................................
Champion Compassionate Conservatism ......................................................................
Assist Americans with Disabilities ................................................................................
Combat Crime and Drug Abuse .....................................................................................
Create a Comprehensive Energy Policy and Protect the Environment ......................
Strengthen Families. .......................................................................................................
Invest in Health Care.. ...................................................................................................
Reform the Immigration System ....................................................................................
Promote Volunteerism ....................................................................................................

3.6
4.4
0.7
0.3
1.4
1.4
0.3
2.9
0.2
0.2

19.9
39.6
5.0
1.4
6.3
6.6
1.4
33.5
1.2
1.3

42.6
95.4
11.4
3.0
12.2
13.1
2.5
77.5
2.1
2.9

Total, Discretionary Initiatives .................................................................

15.3

116.2

SUMMARY TABLES

Table S–5.

262.6

Note: Totals in this table differ from those in A Blueprint for New Beginnings due to the subsequent development of detailed budget and
outyear estimates.

227

228

Table S–6.

Discretionary Budget Authority by Agency
(Dollar amounts in billions)
Actual

Estimate

Agency
2002

Change: 2001
to 2002

Average
Growth: 1998
to 2002

1999

2000

2001

Agriculture .....................................................................
Commerce 1 ....................................................................
Defense ...........................................................................
Education .......................................................................
Energy ............................................................................
Health and Human Services ........................................
Housing and Urban Development ................................
Interior ...........................................................................
International Affairs Programs 2 ..................................
Justice ............................................................................
Labor ..............................................................................
Transportation ...............................................................
Treasury .........................................................................
Veterans Affairs .............................................................
Corps of Engineers ........................................................
Environmental Protection Agency ...............................
Federal Emergency Management Agency ...................
National Aeronautics and Space Administration .......
National Science Foundation ........................................
Small Business Administration ....................................
Social Security Administration ....................................
Legal Services Corporation ...........................................
National Endowment for the Arts ................................
National Endowment for the Humanities ...................
Smithsonian Institution ................................................
Other Agencies ...............................................................
National Emergency Reserve .......................................

15.8
4.2
259.8
29.8
16.8
37.1
20.1
8.1
18.2
17.6
10.7
15.0
11.5
18.9
4.2
7.4
2.4
13.6
3.4
0.7
5.5
0.3
0.1
0.1
0.4
10.2
....................

16.5
5.4
274.6
28.8
17.9
41.5
22.5
8.0
22.3
18.4
11.0
12.9
12.8
19.2
4.1
7.6
2.9
13.7
3.7
0.8
5.5
0.3
0.1
0.1
0.4
11.4
....................

17.1
8.7
287.3
29.4
17.8
45.5
21.1
8.5
22.7
18.8
8.8
14.5
12.5
20.9
4.1
7.6
3.9
13.6
3.9
0.9
5.7
0.3
0.1
0.1
0.4
10.4
....................

19.3
5.1
296.3
39.9
19.7
53.9
28.5
10.2
21.9
20.9
11.9
18.4
14.0
22.4
4.5
7.8
2.4
14.3
4.4
0.3
6.0
0.3
0.1
0.1
0.5
11.7
....................

17.9
4.8
310.5
44.5
19.2
56.7
30.4
9.8
23.1
19.9
11.3
16.3
14.7
23.4
3.9
7.3
2.2
14.5
4.5
0.5
6.4
0.3
0.1
0.1
0.5
12.2
5.6

–1.4
–0.4
14.1
4.6
–0.5
2.8
1.9
–0.4
1.2
–1.1
–0.6
–2.1
0.7
1.0
–0.6
–0.5
–0.2
0.3
0.1
0.3
0.3
........................
........................
*
*
0.5
5.6

3.1%
3.3%
4.5%
10.6%
3.4%
11.2%
10.9%
5.1%
6.2%
3.1%
1.4%
2.0%
6.4%
5.5%
–1.7%
–0.2%
–2.4%
1.5%
6.8%
–6.9%
3.9%
3.8%
1.7%
2.2%
5.3%
4.4%
........................

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

531.9

562.2

584.4

634.9

660.6

25.7

5.6%

* $500 million or less.
1 2000 Commerce data includes funding for Census 2000.
2 International Affairs Program totals do not include P.L. 480 Title II food aid, which is included in the totals for Agriculture; 1999 data is also adjusted to
remove $18.2 billion in one-time funding for the International Monetary Fund.

THE BUDGET FOR FISCAL YEAR 2002

1998

Discretionary Proposals By Appropriations Subcommittee
(In billions of dollars)
2000 Enacted

2001 Estimate

2002 Proposed

Appropriations Subcommittee
Outlays

Outlays

Agriculture and Rural Development ............................
15.0
14.7
16.1
16.3
Commerce, Justice, State, and the Judiciary ..............
38.8
36.9
37.6
37.5
Defense ...........................................................................
278.8
273.5
287.5
276.2
District of Columbia ......................................................
0.5
0.4
0.5
0.5
Energy and Water Development ..................................
21.6
21.7
23.6
23.3
Foreign Operations ........................................................
16.2
14.8
14.9
15.7
Interior and Related Agencies ......................................
15.4
15.6
19.0
17.9
Labor, Health and Human Services, and Education ..
87.1
87.4
109.4
100.3
Legislative ......................................................................
2.5
2.5
2.7
2.6
Military Construction ....................................................
8.7
8.5
9.0
8.9
Transportation and Related Agencies ..........................
14.4
44.0
18.3
48.2
Treasury and General Government .............................
13.7
13.7
15.8
16.1
Veterans Affairs and Housing and Urban Development ............................................................................
71.8
81.1
80.7
85.9
Allowances ...................................................................... ................ ................ ................ ................
Total ............................................................................

584.4

614.8

634.9

649.4

Outlays

Change: 2002 to
2000
BA

Outlays

Change: 2002 to
2001
BA

Outlays

15.4
37.9
301.0
0.3
22.5
15.2
18.1
116.4
3.0
9.6
16.2
16.6

16.4
39.6
296.1
0.3
23.2
15.7
18.3
110.3
3.0
8.6
52.7
16.3

0.4
–1.0
22.1
–0.1
0.9
–1.1
2.7
29.3
0.5
1.0
1.9
2.9

1.6
2.7
22.6
–0.1
1.4
0.9
2.7
22.9
0.5
0.1
8.6
2.6

–0.7
0.2
13.4
–0.1
–1.1
0.3
–0.9
7.0
0.3
0.7
–2.0
0.8

0.1
2.1
19.9
–0.1
–0.1
*
0.4
10.0
0.3
–0.3
4.4
0.2

83.1
5.3

89.0
2.4

11.4
5.3

8.0
2.4

2.4
5.3

3.1
2.4

660.6

691.7

76.2

76.9

25.7

SUMMARY TABLES

Table S–7.

42.4

* $500 million or less.

229

230

Table S–8.

Proposed Discretionary Spending Limits
(In billions of dollars)
Estimate
2001

Original Balanced Budget Act Limits:
Budget authority ....................................................................................................
Outlays ...................................................................................................................

542.0
595.8

Spending in excess of Original Caps:
Budget authority ....................................................................................................
Outlays ...................................................................................................................

92.9
53.6

Actual and Proposed Discretionary Spending Limits: 1
Budget authority ....................................................................................................
Outlays ...................................................................................................................

634.9
649.4

1 Data

2002

552.8
594.7

2003

1.9
35.9

2004

2.1
2.0

2005

2.2
2.2

2006

2.4
2.4

107.8 .............. .............. .............. ..............
97.0 .............. .............. .............. ..............
660.6
691.7

685.1
711.8

702.7
731.2

720.1
754.5

737.9
770.4

for 2001 is a current estimate and is not a proposed discretionary spending limit.

THE BUDGET FOR FISCAL YEAR 2002

Mandatory Proposals

(In millions of dollars)
Estimate
2001
Immediate Helping Hand Prescription
Drug Plan and Medicare Reform .........
Charity and other initiatives:
Education:
Expand Teacher Loan Forgiveness ........
HHS:
Child Welfare Preventative Services .....
Education and Training for Older Foster Children ...........................................
Charity State Tax Credit, TANF outlays .........................................................
Interior:
Use recreation fees to reduce NPS backlog (NPS/FWS/BLM) .............................
Correct trust accounting deficiencies (individual Indian money investments) ...
Justice:
Radiation exposure compensation ...........
Treasury:
Tax credits ................................................
Reclassification of advance appropriations:
Postal Service ............................................
Elk Hills school lands fund ......................

2002

2003

2004

2005

2006

2007

2008

2009

2,500

11,200

12,900

14,800

12,500

12,800

13,400

15,500

16,700

19,700

23,500

64,200

153,000

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

158

192

196

200

776

1,776

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

233

533

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

400

300

150 .............. ..............

–200

–250

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

–39

–2

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

134

2010

2011

2002–2006 2002–2011

850 ...................

44 ................ ................

358

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

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

155

150

108

578

710

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

2,129

1,674

2,619

2,987

3,424

3,423

3,385

3,342

3,302

9,490

26,366

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

67 .............. .............. .............. .............. .............. .............. .............. ................ ................
36 .............. .............. .............. .............. .............. .............. .............. ................ ................

67
36

12,157

29,917

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

338

2,854

2,377

3,187

3,401

3,879

3,621

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

–25

–13

–2

3,515

3,421

3,324

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

–42 ...................

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

–1,200 .............. .............. .............. .............. .............. ................ ................

–1,200

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

–1,071

–1,450

–1,844

–1,906

–1,965

–2,024

–2,098

–2,170

–2,242

–6,876

–17,374

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

–1,201
1,201
–1

–1
1
–1

–1,203
1,203
–3

–1,208
1,208
–8

–606

231

Total, other initiatives ..........................
Offsets:
Agriculture:
Long-term recreation fee program with
four-year reauthorization .....................
Energy:
ANWR, lease bonuses .............................
HHS:
Medicaid savings proposals ....................
Interior:
ANWR, lease bonuses:
State of Alaska’s share:
Receipts .............................................
Expenditure ......................................
Federal share .......................................

Totals

SUMMARY TABLES

Table S–9.

232

Table S–9.

Mandatory Proposals—Continued
(In millions of dollars)
Estimate

2001

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

2004

2005

2006

2007

2008

2009

2010

2011

2002–2006 2002–2011

–6

–18

–48

–37

–60

–85

–107

–133

–163

–188

–208

–196

–996

.............. .............. .............. .............. .............. .............. .............. ..............
.............. .............. .............. .............. .............. .............. .............. ..............
..............
19
–9
–12
–21
–26
–29
–34

–127
–275
–37

–138
–280
–36

–149 ...................
–286 ...................
–40
–49

–415
–841
–225

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

–15

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

–10

–5

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

2,600
–198

1,000
–200

–5,100
–200

–2,000
–200

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

–92

–97

–101

–106

–112

–118

–123

–129

–136

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

–12

–41

–93

–194

–334

–410

–416

–421

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

–20

–30

–38

–43

–46

–49

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

–469

–482

–449

–415

–380

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

–2

–4

–7

1,631

–1,028

–8,810

–5,012

13,239

14,800

8,443

10,754

Total, offsets .......................................... ..............
Total, mandatory proposals

2003

2,500

–5 .............. .............. .............. .............. ................ ................

–25

–7,500
–998

–7,500
–1,423

–143

–508

–1,157

–421

–674

–2,763

–51

–53

–55

–131

–385

–343

–306

–268

–222

–1,815

–3,334

–6

–3

–4

–7

–20

–44

–7,220

–3,303

–3,361

–3,788

–3,827

–3,885

–20,439

–38,604

9,064

14,064

15,852

16,523

19,395

23,044

56,300

145,178

–4,000 .............. .............. .............. ................ ................
–200
–175
–150
–75
–25 ................

THE BUDGET FOR FISCAL YEAR 2002

Veterans Affairs:
OBRA Extenders:
IRS income verification on means
tested veterans and survivors benefits .......................................................
Round-down disability benefits to
nearest dollar after COLA ................
Limit VA pensions to Medicaid recipients in nursing homes (includes
Medicaid offsets) ................................
Continue current housing loan fees ...
Eliminate ‘‘Vendee’’ loan program .........
Army Corps of Engineers:
Recreation user fee increase ...................
FCC:
Shift spectrum auction deadlines and
promote clearing ...................................
Analog spectrum lease fee ......................
FDIC:
State Bank Examination fees:
Reduction in FDIC outlays .................
FEMA:
Phase out subsidized premiums for nonprimary residences in the flood insurance program .........................................
Reform flood insurance program for repetitive loss properties that experience
chronic flooding .....................................
OPM:
Extend higher agency contributions to
the Civil Service Retirement Fund ......
Other:
Indirect impact of other proposals ..........

2002

Totals

Effect of Proposals on Receipts
(In millions of dollars)
Estimate

2001
President’s Tax Plan presented to
Congress on February 8th:
Create new 10-percent individual
income tax bracket ..........................
Reduce individual income tax rates ...
Increase the child tax credit 1 .............
Reduce the marriage penalty .............
Provide
charitable
contribution
deduction for nonitemizers ..............
Permit tax-free withdrawals from
IRAs for charitable contributions ...
Raise the cap on corporate charitable
contributions ....................................
Increase and expand education savings accounts ....................................
Permanently extend the R&E tax
credit .................................................
Phase out death tax ............................
Total, President’s Tax Plan presented to Congress on February 8th 1 ...................................

2003

2004

............ –5,678 –13,847 –21,932
............ –11,793 –21,047 –33,493
............ –1,238 –7,505 –11,455
............ –1,435 –4,844 –7,773

2005

2006

2007

2008

2009

2010

2011

2002–2006 2002–2011

–29,849
–42,306
–16,347
–10,343

–37,407
–57,299
–20,963
–12,675

–39,734
–63,741
–25,296
–14,125

–40,281
–65,454
–26,277
–14,645

–40,602
–67,020
–27,098
–15,154

–40,685
–68,550
–27,876
–15,657

–40,603
–69,963
–28,602
–16,183

–108,713
–165,938
–57,508
–37,070

–310,618
–500,666
–192,657
–112,834

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

–482

–1,690

–2,963

–4,448

–6,065

–6,988

–7,087

–7,306

–7,500

–7,642

–15,648

–52,171

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

–53

–181

–195

–210

–225

–241

–258

–277

–299

–322

–864

–2,261

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

–85

–136

–143

–149

–159

–169

–178

–202

–222

–649

–1,579

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

–3

–25

–88

–204

–373

–593

–829

–1,037

–1,206

–1,287

–693

–5,645

............ .............. .............. –1,055
–154 –4,930 –10,435 –11,442

–3,431
–13,411

–5,415
–16,263

–6,543
–21,152

–7,388
–30,603

–8,019
–38,369

–8,567
–55,691

–9,158
–58,961

–9,901
–56,481

–49,576
–261,257

–154 –25,697 –59,710 –90,532 –120,692 –156,834 –178,572 –192,991 –205,060 –226,233 –232,943

Provide refundable tax credit for
the purchase of health insurance 1 ................................................... ............
Additional tax incentives 2 ................
–18
One-year extension of provisions
expiring in 2001 2 ............................. ............
Total tax reduction 1, 2 ....................

2002

Totals

SUMMARY TABLES

Table S–10.

–219
–1,812

–1,513
–3,602

–3,966
–4,322

–5,796
–5,090

–6,143
–6,001

–6,777
–7,340

–7,007
–8,406

–7,101
–9,255

–7,153
–9,997

–7,183
–10,706

–17,637
–20,827

–52,858
–66,531

–1,614

–1,355

–170

–94

–66

–37

–20

–18

–3,299

–3,410

–172 –29,342 –66,180 –98,990 –131,672 –169,044 –192,726 –208,424 –221,434 –243,401 –250,850

Other
provisions
that
affect
receipts:
Recover State bank supervision and
regulation expenses 1, 2 .................... ............

–453,465 –1,489,264

101

105

–495,228 –1,612,063

384

866

1 Affects
2 Net

both receipts and outlays. Only the receipt effect is shown here; the outlay effect is shown in Table S–9.
of income offsets.

233

234

Table S-11.

Receipts by Source—Summary
(In billions of dollars)

2000
Actual

Estimate
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Individual income taxes .............................
Corporation income taxes ...........................
Social insurance and retirement receipts ..
(On-budget) ..............................................
(Off-budget) ..............................................
Excise taxes .................................................
Estate and gift taxes ..................................
Customs duties ............................................
Miscellaneous receipts ................................

1,004.5
207.3
652.9
(172.3)
(480.6)
68.9
29.0
19.9
42.8

1,072.9
213.1
689.7
(185.8)
(503.9)
71.1
31.1
21.4
37.6

1,078.8
218.8
725.8
(194.9)
(530.9)
74.0
28.7
22.5
43.1

1,092.3
227.3
766.0
(205.2)
(560.8)
76.3
26.6
24.3
45.4

1,117.9
235.5
806.0
(215.8)
(590.3)
78.3
28.3
25.0
47.8

1,157.0
244.2
855.8
(226.8)
(629.0)
80.5
24.9
26.0
49.3

1,196.6
252.2
896.4
(237.9)
(658.5)
82.3
22.5
27.7
51.0

1,255.2
259.9
942.0
(248.7)
(693.3)
84.8
20.4
29.3
51.6

1,330.4
268.1
984.4
(258.2)
(726.2)
87.3
15.7
30.7
54.1

1,410.2
275.8
1,030.8
(269.8)
(761.0)
90.0
13.4
33.0
56.8

1,499.6
283.5
1,087.9
(284.3)
(803.5)
92.8
0.7
34.5
59.5

1,598.2
294.3
1,145.1
(298.8)
(846.3)
95.7
0.7
36.2
62.4

Total receipts ............................................
(On-budget) ..............................................
(Off-budget) ..............................................

2,025.2
(1,544.6)
(480.6)

2,136.9
(1,633.1)
(503.9)

2,191.7
(1,660.8)
(530.9)

2,258.2
(1,697.4)
(560.8)

2,338.8
(1,748.5)
(590.3)

2,437.8
(1,808.8)
(629.0)

2,528.7
(1,870.2)
(658.5)

2,643.3
(1,950.0)
(693.3)

2,770.6
(2,044.4)
(726.2)

2,909.9
(2,148.9)
(761.0)

3,058.4
(2,254.9)
(803.5)

3,232.6
(2,386.3)
(846.3)

THE BUDGET FOR FISCAL YEAR 2002

Budget Authority Totals by Function
(In billions of dollars)

Function

2000
Actual

Estimate
2001

National defense ..............................................................................
304.1
310.6
International affairs ........................................................................
22.6
18.6
General science, space, and technology .........................................
19.3
21.0
Energy ..............................................................................................
–1.2
–0.9
Natural resources and environment ..............................................
25.0
28.5
Agriculture .......................................................................................
33.7
29.3
Commerce and housing credit ........................................................
15.4
–6.5
On-Budget ....................................................................................
(11.7)
(–11.3)
Off-Budget ....................................................................................
(3.7)
(4.8)
Transportation .................................................................................
55.4
61.5
Community and regional development ..........................................
11.3
10.4
Education, training, employment, and social services .................
55.2
70.3
Health ...............................................................................................
161.5
181.4
Medicare ...........................................................................................
200.6
219.0
Income security ................................................................................
243.6
261.9
Social security ..................................................................................
412.0
435.3
On-Budget ....................................................................................
(13.3)
(11.7)
Off-Budget ....................................................................................
(398.8)
(423.6)
Veterans benefits and services .......................................................
45.5
47.7
Administration of justice ................................................................
26.7
30.4
General government ........................................................................
13.5
16.2
Net interest ......................................................................................
223.2
206.4
On-Budget ....................................................................................
(283.0)
(275.3)
Off-Budget ....................................................................................
(–59.8)
(–68.9)
Allowances ........................................................................................ ......................... ........................
Undistributed offsetting receipts ...................................................
–42.6
–47.7
On-Budget ....................................................................................
(–34.9)
(–39.8)
Off-Budget ....................................................................................
(–7.6)
(–7.9)
Total ................................................................................................
On-Budget ....................................................................................
Off-Budget ....................................................................................

1,825.0
(1,489.9)
(335.0)

1,893.5
(1,541.8)
(351.7)

2002

2003

2004

2005

2006

325.1
22.3
21.4
–0.4
26.6
15.8
10.3
(7.8)
(2.5)
62.1
10.1
98.5
204.9
229.9
277.1
456.8
(14.0)
(442.8)
51.8
31.6
16.6
188.1
(264.2)
(–76.1)
5.3
–49.4
(–40.5)
(–8.9)

333.9
22.8
22.1
–0.2
27.2
14.2
8.4
(6.5)
(1.9)
60.0
10.4
82.0
230.0
242.3
286.4
479.1
(14.5)
(464.6)
53.8
32.5
16.9
175.2
(260.7)
(–85.4)
5.4
–60.4
(–51.2)
(–9.2)

342.8
22.9
22.5
–0.5
27.9
14.1
6.7
(5.8)
(0.9)
61.5
10.5
84.1
246.3
255.6
298.1
503.8
(15.5)
(488.3)
55.9
34.7
18.4
161.5
(257.3)
(–95.9)
5.6
–70.6
(–60.7)
(–9.9)

352.2
23.6
22.9
–0.4
27.9
14.5
6.6
(5.7)
(0.9)
63.1
10.7
86.7
254.1
282.9
310.6
530.3
(16.3)
(514.0)
57.8
35.2
17.6
144.7
(252.0)
(–107.3)
5.7
–58.9
(–48.2)
(–10.7)

361.9
24.4
23.5
–0.2
27.7
14.9
6.6
(5.6)
(1.0)
64.8
10.9
89.3
268.1
296.3
319.2
559.3
(17.3)
(542.0)
59.7
36.0
17.9
127.2
(247.3)
(–120.1)
5.8
–62.4
(–50.9)
(–11.4)

2,004.6
(1,644.2)
(360.3)

2,041.9
(1,670.0)
(372.0)

2,101.8
(1,718.3)
(383.5)

2,187.8
(1,791.0)
(396.8)

SUMMARY TABLES

Table S–12.

2,251.0
(1,839.6)
(411.4)

Note: The Administration proposes to reverse the misleading budget practice of using advance appropriations simply to avoid spending limitations. In order to avoid
overstating discretionary budget authority in 2002, language is proposed to exclude the advance appropriation budget authority, appropriated in 2001, from discretionary
budget authority.

235

236

Table S–13.

Outlay Totals by Function
(In billions of dollars)

Function

2000
Actual

Estimate
2001

Total ................................................................................................
On-Budget ....................................................................................
Off-Budget ....................................................................................

1,788.8
(1,458.1)
(330.8)

1,856.2
(1,508.5)
(347.7)

2003

2004

2005

2006

319.2
21.0
20.8
–0.3
27.5
18.6
6.9
(3.9)
(3.1)
55.0
11.7
76.6
201.5
229.9
275.7
455.1
(14.0)
(441.1)
51.6
32.3
16.3
188.1
(264.2)
(–76.1)
2.4
–49.4
(–40.5)
(–8.9)

322.1
21.3
21.4
–0.1
27.7
15.0
4.7
(5.2)
(–0.5)
57.5
11.3
81.3
224.4
242.1
285.9
477.1
(14.5)
(462.7)
53.6
35.4
16.7
175.2
(260.7)
(–85.4)
3.9
–60.4
(–51.2)
(–9.2)

333.1
21.5
22.2
–0.6
28.0
14.0
3.6
(4.3)
(–0.7)
59.7
10.8
82.6
243.3
255.9
295.9
501.6
(15.5)
(486.2)
55.8
35.5
18.4
161.5
(257.3)
(–95.9)
4.7
–70.6
(–60.7)
(–9.9)

347.2
21.6
22.6
–0.4
28.4
14.1
3.5
(4.9)
(–1.3)
62.1
10.5
84.7
250.7
282.8
308.8
528.1
(16.3)
(511.7)
60.4
35.2
17.4
144.7
(252.0)
(–107.3)
5.4
–58.9
(–48.2)
(–10.7)

354.0
22.2
23.1
–0.3
28.7
14.5
2.3
(4.1)
(–1.8)
63.8
10.1
87.2
264.8
296.0
317.1
556.8
(17.3)
(539.5)
59.6
35.8
17.6
127.2
(247.3)
(–120.1)
5.7
–62.4
(–50.9)
(–11.4)

1,960.6
(1,601.4)
(359.2)

2,016.2
(1,648.7)
(367.6)

2,076.7
(1,697.0)
(379.7)

2,168.7
(1,776.4)
(392.4)

2,223.9
(1,817.8)
(406.1)

THE BUDGET FOR FISCAL YEAR 2002

National defense ..............................................................................
294.5
299.1
International affairs ........................................................................
17.2
17.5
General science, space, and technology .........................................
18.6
19.7
Energy ..............................................................................................
–1.1
–0.7
Natural resources and environment ..............................................
25.0
27.4
Agriculture .......................................................................................
36.6
25.9
Commerce and housing credit ........................................................
3.2
–0.8
On-Budget ....................................................................................
(1.2)
(–3.4)
Off-Budget ....................................................................................
(2.0)
(2.6)
Transportation .................................................................................
46.9
51.1
Community and regional development ..........................................
10.6
10.6
Education, training, employment, and social services .................
59.2
65.3
Health ...............................................................................................
154.5
175.3
Medicare ...........................................................................................
197.1
219.3
Income security ................................................................................
247.9
262.6
Social security ..................................................................................
409.4
433.6
On-Budget ....................................................................................
(13.3)
(11.7)
Off-Budget ....................................................................................
(396.2)
(421.9)
Veterans benefits and services .......................................................
47.1
45.4
Administration of justice ................................................................
27.8
29.4
General government ........................................................................
13.5
16.8
Net interest ......................................................................................
223.2
206.4
On-Budget ....................................................................................
(283.0)
(275.3)
Off-Budget ....................................................................................
(–59.8)
(–68.9)
Allowances ........................................................................................ ......................... ........................
Undistributed offsetting receipts ...................................................
–42.6
–47.7
On-Budget ....................................................................................
(–34.9)
(–39.8)
Off-Budget ....................................................................................
(–7.6)
(–7.9)

2002

Discretionary Budget Authority by Function
(In billions of dollars)

Function

2000
Actual

Estimate
2001

National defense ..............................................................................
300.8
311.3
International affairs ........................................................................
23.5
22.7
General science, space, and technology .........................................
19.2
20.9
Energy ..............................................................................................
2.7
3.1
Natural resources and environment ..............................................
24.6
28.7
Agriculture .......................................................................................
4.7
5.1
Commerce and housing credit ........................................................
5.1
0.7
Transportation .................................................................................
15.2
18.9
Community and regional development ..........................................
12.2
11.0
Education, training, employment, and social services .................
44.4
61.1
Health ...............................................................................................
33.8
38.9
Medicare ...........................................................................................
3.0
3.4
Income security ................................................................................
31.6
39.5
Social security ..................................................................................
3.2
3.4
On-Budget ....................................................................................
(*)
(*)
Off-Budget ....................................................................................
(3.2)
(3.4)
Veterans benefits and services .......................................................
20.9
22.5
Administration of justice ................................................................
27.1
30.0
General government ........................................................................
12.4
14.0
Allowances ........................................................................................ ......................... ........................
Total ................................................................................................
On-Budget ....................................................................................
Off-Budget ....................................................................................

584.4
(581.2)
(3.2)

634.9
(631.5)
(3.4)

2002

2003

2004

2005

2006

325.1
23.9
21.2
2.8
26.4
4.8
–0.3
16.8
10.4
65.4
41.0
3.5
42.8
3.5
(*)
(3.5)
23.5
29.8
14.8
5.3

333.9
24.4
21.9
2.9
27.0
5.2
–0.1
17.8
10.7
67.1
45.7
3.5
45.1
3.6
(*)
(3.6)
24.0
31.9
15.0
5.4

343.2
24.9
22.4
3.1
27.6
5.2
–0.4
18.2
10.9
69.0
46.9
3.6
46.7
3.7
(*)
(3.7)
24.5
32.3
15.4
5.6

352.7
25.5
22.9
3.2
27.6
5.3
–0.5
18.6
11.1
70.7
48.1
3.7
48.3
3.8
(*)
(3.7)
25.1
32.8
15.7
5.7

362.5
26.0
23.5
3.3
27.4
5.4
–0.5
19.0
11.3
72.3
49.4
3.8
49.6
3.8
(*)
(3.8)
25.7
33.5
16.0
5.8

660.6
(657.1)
(3.5)

685.1
(681.5)
(3.6)

702.7
(699.1)
(3.7)

720.1
(716.4)
(3.7)

SUMMARY TABLES

Table S–14.

737.9
(734.1)
(3.8)

* $50 million or less.

237

238

Table S–15.

Discretionary Outlays by Function
(In billions of dollars)

Function

2000
Actual

Estimate
2001

National defense ..............................................................................
295.0
299.6
International affairs ........................................................................
21.3
24.1
General science, space, and technology .........................................
18.6
19.6
Energy ..............................................................................................
3.0
3.0
Natural resources and environment ..............................................
25.0
27.6
Agriculture .......................................................................................
4.7
5.5
Commerce and housing credit ........................................................
4.5
1.7
Transportation .................................................................................
44.7
48.9
Community and regional development ..........................................
11.4
11.2
Education, training, employment, and social services .................
48.9
56.1
Health ...............................................................................................
30.0
34.1
Medicare ...........................................................................................
3.0
3.3
Income security ................................................................................
41.4
45.5
Social security ..................................................................................
3.4
3.6
On-Budget ....................................................................................
(*)
(*)
Off-Budget ....................................................................................
(3.4)
(3.6)
Veterans benefits and services .......................................................
20.8
22.4
Administration of justice ................................................................
26.8
28.8
General government ........................................................................
12.4
14.5
Allowances ........................................................................................ ......................... ........................
Total ................................................................................................
On-Budget ....................................................................................
Off-Budget ....................................................................................

649.4
(645.8)
(3.6)

2003

2004

2005

2006

319.2
24.5
20.7
3.0
27.6
5.5
0.4
53.2
12.0
62.2
38.5
3.5
46.9
3.5
(*)
(3.5)
23.4
30.8
14.5
2.4

322.1
24.7
21.2
3.0
27.6
5.2
0.1
55.4
12.0
66.5
41.7
3.5
48.0
3.6
(*)
(3.6)
23.9
34.3
14.9
3.9

333.5
24.9
22.0
3.1
27.7
5.3
–0.3
57.7
11.7
67.4
45.0
3.6
48.6
3.7
(*)
(3.7)
24.5
32.9
15.2
4.7

347.6
25.0
22.5
3.2
28.3
5.3
–0.5
60.2
11.5
69.0
46.8
3.7
49.4
3.8
(*)
(3.7)
25.0
32.7
15.5
5.4

354.6
25.6
23.1
3.3
28.5
5.4
–0.5
61.9
11.3
70.7
48.1
3.8
50.4
3.8
(*)
(3.8)
25.6
33.3
15.8
5.7

691.7
(688.2)
(3.5)

711.8
(708.3)
(3.6)

731.2
(727.6)
(3.7)

754.5
(750.7)
(3.7)

770.4
(766.6)
(3.8)
THE BUDGET FOR FISCAL YEAR 2002

* $50 million or less.

614.8
(611.5)
(3.4)

2002

Comparison of Economic Assumptions
(Calendar years)
Projections

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Average
2002–2011

Real GDP (chain-weighted): 1
CBO January ................................................................
Blue Chip Consensus March .......................................
2002 Budget ..................................................................

2.4
1.9
2.4

3.4
3.4
3.3

3.3
3.5
3.2

3.0
3.4
3.2

3.0
3.4
3.1

3.0
3.3
3.1

3.1
3.3
3.1

3.1
3.4
3.2

Chain-weighted GDP Price Index: 1
CBO January ................................................................
Blue Chip Consensus March .......................................
2002 Budget ..................................................................

2.3
2.1
2.1

2.1
2.0
2.1

2.0
2.1
2.1

1.9
2.1
2.1

1.9
2.2
2.1

Consumer Price Index (all-urban): 1
CBO January ................................................................
Blue Chip Consensus March .......................................
2002 Budget ..................................................................

2.8
2.8
2.7

2.8
2.4
2.6

2.7
2.6
2.6

2.5
2.6
2.5

2.5
2.5
2.5

2.5
2.6
2.5

2.6
2.6
2.5

Unemployment rate: 2
CBO January ................................................................
Blue Chip Consensus March .......................................
2002 Budget ..................................................................

4.4
4.5
4.4

4.5
4.6
4.6

4.5
4.6
4.5

4.7
4.6
4.5

4.8
4.6
4.5

4.9
4.6
4.5

5.0
4.6
4.5

5.1
4.6
4.6

5.2
4.6
4.6

4.9
4.6
4.6

Interest rates: 2
91-day Treasury bills:
CBO January .............................................................
Blue Chip Consensus March ....................................
2002 Budget ...............................................................

4.8
4.6
5.3

4.9
4.8
5.6

5.0
5.2
5.6

4.9
5.3
5.6

4.9
5.3
5.3

4.9
5.2
5.0

4.9
5.2
5.2

10-year Treasury notes:
CBO January .............................................................
Blue Chip Consensus March ....................................
2002 Budget ...............................................................

4.9
5.1
5.4

5.3
5.4
5.6

5.5
5.7
5.7

5.6
5.7
5.7

5.7
5.7
5.7

5.8
5.7
5.7

SUMMARY TABLES

Table S–16.

5.7
5.7
5.7

1 Year

over year, percent.
averages, percent.

2 Annual

239

240

Table S–17.

Baseline Category Totals
(In billions of dollars)
Estimate

2001

2002

2003

2004

2005

2006

Total
2007

2008

2009

2010

2011

2002–2011

Outlays:
Discretionary:
Defense function .................................................
Nondefense ..........................................................

300
349

312
372

319
388

330
396

341
405

351
416

360
427

370
439

381
450

392
462

403
475

3,559
4,230

Subtotal, discretionary ....................................

649

684

707

726

746

766

788

809

831

854

878

7,789

Mandatory:
Social Security .....................................................
Medicare ..............................................................
Medicaid ..............................................................
Other mandatory ................................................

430
216
129
223

452
226
143
246

474
239
154
248

498
252
167
258

524
271
182
281

553
279
198
287

584
301
216
294

618
320
234
310

656
342
254
323

698
365
276
335

744
396
300
348

5,801
2,990
2,125
2,930

Subtotal, mandatory .......................................

998

1,067

1,114

1,176

1,259

1,317

1,394

1,482

1,575

1,674

1,787

13,846

Net interest:
Interest earnings. ................................................ .............. .............. .............. ..............
Other ....................................................................
206
186
169
150

–3
128

–14
113

–32
100

–56
92

–84
85

–118
78

–159
74

–466
1,176

Subtotal, net interest ......................................

206

186

169

150

125

–40

–85

710

Total outlays ...............................................................
Receipts .......................................................................

1,853
2,137

1,938
2,221

1,991
2,324

2,051
2,438

2,130
2,569

2,182
2,698

2,250
2,836

2,328
2,979

2,406
3,131

2,488
3,302

2,580
3,483

22,345
27,981

Unified surplus .......................................................
On-budget surplus ..................................................
Off-budget surplus ..................................................

284
128
156

283
111
172

334
140
194

387
176
211

439
202
237

515
262
253

585
314
272

651
363
289

725
421
304

814
489
324

903
560
344

5,637
3,038
2,599
THE BUDGET FOR FISCAL YEAR 2002

* $500 million or less.
Note: Baseline assumes earnings on cash balances, which represent the return on investing excess Treasury cash in the private sector. The size of the balances that
would be invested would vastly overwhelm existing institutional arrangements for investing Treasury operating balances, raising both operational and policy issues.

Federal Government Financing and Debt
(In billions of dollars)
Actual
2000

Financing:
Unified budget surplus .....................................................................
On-budget surplus/reserve for contingencies 1 ............................
Off-budget surplus ........................................................................
Financing other than the change in debt held by the public:
Premiums paid (–) on buybacks of Treasury securities 2 ...........
Changes in: 3
Treasury operating cash balance .............................................
Checks outstanding, deposit funds, etc. 4 ................................
Seigniorage on coins .....................................................................
Less: Net financing disbursements:
Direct loan financing accounts .................................................
Guaranteed loan financing accounts .......................................
Total, financing other than the change in debt held by the
public ...................................................................................
Total, amount available to repay debt held by the public .....................................................................................
Change in debt held by the public: 5 6
Change in debt held by the public ...........................................
Less change in excess balances ................................................
Change in net indebtedness ..................................................
Debt Subject to Statutory Limitation, End of Year:
Debt issued by Treasury ..................................................................
Adjustment for Treasury debt not subject to limitation and
agency debt subject to limitation 7 ...............................................
Adjustment for discount and premium 8 .........................................
Total, debt subject to statutory limitation 9 ................................
Debt Outstanding, End of Year:
Gross Federal debt: 10
Debt issued by Treasury ..............................................................
Debt issued by other agencies ......................................................
Total, gross Federal debt ..........................................................
Held by:
Debt securities held as assets by Government accounts ...............
Debt securities held as assets by the public: 6
Debt held by the public ................................................................
Less excess balances .....................................................................
Net indebtedness 11 ...................................................................

Estimate
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

236
87
150

281
125
156

231
59
172

242
49
193

262
52
211

269
32
237

305
52
252

340
69
270

373
85
287

420
117
303

465
142
323

526
184
343

–6

–10

..........

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

4
3
2

3
–*
2

..........
–1
2

..........
..........
2

............
............
2

–22
4

–39
–1

–4
–1

–17
1

–18
–*

–17
–*

–16
1

–15
1

–13

–45

–4

–15

–16

–15

–14

–13

223

236

227

246

254

291

326

359

406

452

513

–223
............
–223

–236
..........
–236

–227
..........
–227

–246
..........
–246

–254
..........
–254

–291
..........
–291

–326
..........
–326

–198
–162
–359

–125
–281
–406

–71
–381
–452

–50
–463
–513

5,601

5,598

5,637

5,698

5,759

5,832

5,890

5,932

6,118

6,395

6,749

7,140

–15
6

5,592

5,588

5,627

5,688

5,749

5,822

5,881

5,922

6,108

6,385

6,740

7,130

5,601
28

5,598
27

5,637
27

5,698
26

5,759
25

5,832
24

5,890
23

5,932
21

6,118
21

6,395
21

6,749
20

7,140
20

5,629

5,625

5,664

5,724

5,784

5,856

5,913

5,953

6,138

6,415

6,770

7,160

2,219

2,451

2,717

3,004

3,310

3,636

3,985

4,352

4,735

5,137

5,562

6,002

3,410
............
3,410

3,174
..........
3,174

2,947
..........
2,947

2,720
..........
2,720

2,473
..........
2,473

2,219
..........
2,219

1,928
..........
1,928

1,602
..........
1,602

1,404
–162
1,242

1,279
–443
836

1,208
–824
384

SUMMARY TABLES

Table S–18.

1,158
–1,287
–129

241

*$500 million or less.
actual amount of annual debt retirement will vary depending upon the availability of eligible redeemable debt, and the use, if any, of the contingency reserve.
2 This table includes estimates for Treasury buybacks of outstanding securities only through 2001. These estimates assume that Treasury will buy back $35 billion (face value) of securities in
2001. The premiums paid on buybacks are based on experience to date and the interest rates in the economic assumptions.
3 A decrease in the Treasury operating cash balance (which is an asset) would be a means of financing a deficit and therefore has a positive sign. An increase in checks outstanding or deposit fund balances (which are liabilities) would also be a means of financing a deficit and therefore would also have a positive sign.
4 Besides checks outstanding and deposit funds, includes accrued interest payable on Treasury debt, miscellaneous liability accounts, allocations of special drawing rights, and, as an offset,
cash and monetary assets other than the Treasury operating cash balance, miscellaneous asset accounts, and profit on sale of gold.
5 Indian tribal funds that are owned by the Indian tribes and held and managed in a fiduciary capacity by the Government on the tribes’ behalf were reclassified from trust funds to deposit
funds as of October 1, 1999. Their holdings of Treasury securities were accordingly reclassified from debt held by Government accounts to debt held by the public, which affected the change in
debt held by the public without affecting borrowing or the repayment of debt.
6 The amount of the unified budget surplus that is available to repay debt held by the public is estimated to be more than the amount of debt that is available to be redeemed in 2008 and
subsequent years. The difference is assumed to be held as ‘‘excess balances.’’ (‘‘Excess’’ means in excess of the amounts held for operational and programmatic purposes.) The debt held by the
public is the amount of Federal debt securities held by the public. The net indebtedness is the debt held by the public less the excess balances.
7 Consists primarily of Federal Financing Bank debt.
8 Consists of unamortized discount (less premium) on public issues of Treasury notes and bonds (other than zero-coupon bonds) and unrealized discount on Government account series securities.
9 The statutory debt limit is $5,950 billion.
10 Treasury securities held by the public and zero-coupon bonds held by Government accounts are almost entirely measured at sales price plus amortized discount or less amortized premium.
Agency debt is almost entirely measured at face value. Treasury securities in the Government account series are measured at face value less unrealized discount (if any).
11 At the end of 2000, the Federal Reserve Banks held $511 billion of Federal securities and the rest of the public held $2,899 billion. Debt held by the Federal Reserve Banks is not estimated for future years.

1 The

242
THE BUDGET FOR FISCAL YEAR 2002

LIST OF CHARTS AND
TABLES

243

LIST OF CHARTS AND TABLES
LIST OF CHARTS
Page

III. Creating a Better Government
Commerce and Housing Credit
8–1. Historical Homeownership Rates ...........................................................................
Transportation
9–1. Department of Transportation Budgetary Resources ..........................................
Social Security
15–1. Social Security Rates of Return Falling with Each Generation ..........................
Veterans Benefits and Services
16–1. Estimated Veteran Population ...............................................................................
Administration of Justice
17–1. Administration of Justice Expenditures ................................................................
17–2. Federal Justice Expenditures .................................................................................
Net Interest
19–1. Declining Net Interest ............................................................................................

62
70
117
122
130
131
144

LIST OF TABLES
Page

III. Creating a Better Government
Improving Government Performance
1–1. Federal Resources by Function ...............................................................................
National Defense
2–1. Federal Resources in Support of National Defense ..............................................
International Affairs
3–1. Federal Resources in Support of International Affairs .........................................
General Science, Space, and Technology
4–1. Federal Resources in Support of General Science, Space, and Technology ........
Energy
5–1. Federal Resources in Support of Energy ...............................................................
Natural Resources and Environment
6–1. Federal Resources in Support of Natural Resources and Environment ..............
Agriculture
7–1. Federal Resources in Support of Agriculture ........................................................
Commerce and Housing Credit
8–1. Federal Resources in Support of Commerce and Housing Credit ........................
8–2. Selected Federal Commerce and Housing Credit Programs: Credit Programs
Portfolio Characteristics ......................................................................................
Transportation
9–1. Federal Resources in Support of Transportation ..................................................
Community and Regional Development
10–1. Federal Resources in Support of Community and Regional Development .........

15
19
23
29
37
45
53
61
63
69
77
245

246

THE BUDGET FOR FISCAL YEAR 2002

LIST OF TABLES—Continued
Page

Education, Training, Employment, and Social Services
11–1. Federal Resources in Support of Education, Training, Employment, and Social
Services .................................................................................................................
Health
12–1. Federal Resources in Support of Health ................................................................
Medicare
13–1. Federal Resources in Support of Medicare ............................................................
13–2. Immediate Helping Hand and Medicare Modernization ......................................
Income Security
14–1. Federal Resources in Support of Income Security ................................................
Social Security
15–1. Federal Resources in Support of Social Security ..................................................
15–2. Social Security Beneficiaries ...................................................................................
Veterans Benefits and Services
16–1. Federal Resources in Support of Veterans Benefits and Services .......................
Administration of Justice
17–1. Federal Resources in Support of Administration of Justice .................................
General Government
18–1. Federal Resources in Support of General Government ........................................
Net Interest
19–1. Net Interest ..............................................................................................................
Allowances
20–1. Allowances ................................................................................................................
Undistributed Offsetting Receipts
21–1. Undistributed Offsetting Receipts ..........................................................................
Detailed Functional Tables
22–1. Budget Authority by Function, Category, and Program .......................................
22–2. Outlays by Function, Category, and Program .......................................................
22–3. Direct and Guaranteed Loans by Function ...........................................................
22–4. Tax Expenditures by Function ...............................................................................
IV. Summary Tables
S–1. President’s 10–Year Plan ........................................................................................
S–2. Proposed Policy ........................................................................................................
S–3. Budget Summary .....................................................................................................
S–4. Bridge to 2002 Proposed Discretionary Spending .................................................
S–5. Discretionary Policy Initiatives ..............................................................................
S–6. Discretionary Budget Authority by Agency ...........................................................
S–7. Discretionary Proposals by Appropriations Subcommittee ..................................
S–8. Proposed Discretionary Spending Limits ...............................................................
S–9. Mandatory Proposals ...............................................................................................
S–10. Effect of Proposals on Receipts ...............................................................................
S–11. Receipts by Source—Summary ...............................................................................
S–12. Budget Authority Totals by Function ....................................................................
S–13. Outlay Totals by Function ......................................................................................
S–14. Discretionary Budget Authority by Function ........................................................
S–15. Discretionary Outlays by Function ........................................................................
S–16. Comparison of Economic Assumptions ...................................................................
S–17. Baseline Category Totals .........................................................................................
S–18. Federal Government Financing and Debt .............................................................

83
97
105
107
109
115
116
121
129
137
143
147
149
151
180
209
216
223
224
225
226
227
228
229
230
231
233
234
235
236
237
238
239
240
241

VI. OMB CONTRIBUTORS TO
THE 2002 BUDGET

247

OMB CONTRIBUTORS TO THE 2002 BUDGET
The following personnel contributed to the preparation of this publication. Hundreds, perhaps
thousands, of others throughout the Government also deserve credit for their valuable contributions.

A
Rein Abel
Claudia Magdalena
Abendroth
Andrew Abrams
Marsha D. Adams
Brenda Aguilar
Ricardo Aguilera
Michele Ahern
David Aidekman
Steven D. Aitken
Susan Alesi
Cheryl Alexander
Richard M. Allen
Lois E. Altoft
Robert B. Anderson
Donald R. Arbuckle
Elizabeth Askey
Renee Austin
Patrick Aylward

B
Chandini M. Bachman
Jennifer M. Baffi
Paul W. Baker
Francisco Balicao
Pamela S. Barr
Mary C. Barth
Juliana Basile
Amy Bassano
Anthony Baumann
Richard B. Bavier
Jean D. Baxter
Jennifer Wagner Bell
Gary L. Bennethum
Deborah L. Benoit
Meredith Benson
Rodney G. Bent
Melissa N. Benton
Elizabeth Bernhard
Evett Best
Pamela L. Beverly
Karen N. Blank
Lauren E. Bloomquist
Jonathan Blum
Mathew C. Blum
James Boden
Debra J. Bond
Evangelia Bouzis
Constance J. Bowers
Yvonne T. Bowlding
James Bradford, Jr.
Betty I. Bradshaw
Denise M. Bray

Jonathan D. Breul
Anna M. Briatico
Manuel Briskin
Denise A. Brown
James A. Brown
Jennifer E. Brown
Lucinda Brown
Thomas Brown
Paul Bugg
Benjamin Burnett
John D. Burnim

C
Kathleen Cahill
Steven E. Cahill
Philip T. Calbos
James C. Capretta
Michelle Caravana
Kevin Carroll
Michael Casella
Mary I. Cassell
Michael J. Cassidy
Gary Ceccucci
Alejandra O. Ceja
Henry Chang
Winifred Y. Chang
Fredrick J. Charney
Edward H. Chase
Daniel J. Chenok
David C. Childs
Joanne W. Chow
Margaret B. Davis
Christian
James P. Christopoulos
Mary M. Chuckerel
Joanne Cianci
Edward H. Clarke
Toni M. Claud
Matthew I. Clement
Barry T. Clendenin
Robin Cleveland
John Cogan
Ron Cogswell
Debra M. Collins
Douglas A. Comstock
Sheila Conley
Joseph Connor
Janis Coughlin
A Heather Coyne
Reid Cramer
Jill Gibbons Crann
Susan G. Crawford
Dennis Craythorn
Tammy Croote
Michael F. Crowley

Craig Crutchfield
William P. Curtis

D
Josie R. Dade
Philip R. Dame
Melvin T. Daniels
Mitchell E. Daniels Jr.
M. Kelly Davis
Arline P. Dell
Carol R. Dennis
Yvette M. Dennis
Aurelia A. DeRubis
Eugene J. Devine
Brooke Dickson
Elizabeth M. DiGennaro
Clare C. Doherty
Sherron R. Duncan
Catherine DuRant

E
Jacqueline A. Easley
Eugene M. Ebner
Jeanette Edwards
Stephen G. Elmore
Kay Ely
Rocco Emelio
Richard P. Emery Jr.
Noah Engelberg
Michelle A. Enger
Adrienne C. Erbach Lucas
Danny A. Ermann
Diana Espinosa
Rowe Ewell
Allison Eydt

F
Lisa B. Fairhall
Robert S. Fairweather
Michael Falkenheim
Jeffrey A. Farkas
William R. Feezle
Mark Ferrandino
Patricia A. Ferrell
Lesley A. Field
John W. Fielding
E. Holly Fitter
Kami Fitzpatrick
Alastair Fitzpayne
Darlene B. Fleming
Joseph A. Fleming

Keith Fontenot
Jennifer M. Forshey
Gillian J. Foster
Wanda J. Foster
Anthony Frater
Jennifer L. Friedman

G
Tad Gallion
Dina L. Gallo
Michael Garcia
Olga O. Garcia
Yvette D. Garner
Marc Garufi
Darlene O. Gaymon
Kimberly A. Geier
John Gentile
Michael D. Gerich
Alexandra Gianinno
Brian Gillis
Ursula Gillis
Michael L. Goad
Robert Goldberg
Anne M. Goldsmith
Jeffrey Goldstein
Oscar Gonzalez
Arecia A. Grayton
Richard E. Green
Walter Groszyk

H
Kelli A. Hagen
Dianne M. Ham
Patricia S. Haney
Jennifer Hanson-Kilbride
Dionne M. Hardy
David Harmon
Brenda F. Harper
Adriel Harvey
David J. Haun
Daniel Heath
Renee P. Helm
Judy D. Henn
Gregory G. Henry
Michael Hickey
Linda K. Hicklin
Mary Lou Hildreth
Jefferson B. Hill
Britta Hillstrom
Andrew Hire
Adam Hoffberg
Jean W. Holcombe
Michael J. Holland

249

250

THE BUDGET FOR FISCAL YEAR 2002

James Holm
Christine P. Holmes
Edith D. Hopkins
Libby Horan
Sarah G. Horrigan
Kathy M. Hudgins
Eric W. Hunn
Alexander T. Hunt
James C. Hurban
Jaki Hurwitz
Lawrence W. Hush
Toni S. Hustead

Jay P. Lefkowitz
Cameron M. Leuthy
Richard A. Lichtenberger
Judy C. Lin
Tung-Yen Lin
Susanne D. Lind
Christine Lindsey
Attia Little
Lin C. Liu
Neil Lobron
Patrick G. Locke
Richard C. Loeb
Bruce D. Long
Brett S. Loper
Kimberley Luczynski
Randolph M. Lyon

Janet Irwin
Steven J. Isakowitz

M
J
Andrea E. Jacobson
Laurence R. Jacobson
William H. James
Carol D. Jenkins
Barbara Jennings
Christopher Johns
Barbara A. Johnson
Darrell A. Johnson
Jerald Johnson
Kim I. Johnson
Don L. Jones
Ronald E. Jones
James F. Jordan
James J. Jukes

K
Stuart Kasdin
Stanley Kaufman
James B. Kazel
Alex S. Keenan
Karen E. Keller
Dennis Kelley
John W. Kelly
Kenneth S. Kelly
Ann H. Kendral
Robert Kerr
Irene Kho
Robert W. Kilpatrick
Katherine Kirchgraber
Carole Kitti
Nathan Knuffman
Lori A. Krauss
Kevin Kreutner
Jennifer Kron
James M. Kulikowski
Joseph L. Kull

L
Joseph F. Lackey Jr.
Christina Lagdameo
Leonard L. Lainhart
Lourdes M. Lamela
Daniel LaPlaca
Lauren Larson
Ron LeBlanc
Sarah S. Lee

Lisa Macecevic
Mark Magee
Robert Mahaffie
Paul Mahanna
Margaret A. Malanoski
Dalton L. Mann
Karen A. Maris
Caroline Marriott
Elizabeth M. Martin
Kate Massey
Larry R. Matlack
Brian Matteson
Shelly McAllister
Christine C. McCarlie
Erin McCartney
Alexander J. McClelland
Douglas D. McCormick
Michael J. McDermott
Katrina A. McDonald
Matthew McKearn
William N. McLeod
William J. McQuaid
Loretta McRae
William H. McVay
Mark David Menchik
William C. Menth
Diana L. Meredith
Richard A. Mertens
Steven M. Mertens
P. Thaddeus Messenger
Erin Metzinger
James D. Mietus
Maria F. Mikitka
Julie L. Miller
Kimberly Miller
Ginger Moench
John B. Moore
Gloria Morales
Rusty Moran
Gaylee Morgan
Gretchen Morley
John F. Morrall III
Delphine C. Motley
Jane T. Moy
Timothy Muris
David L. Muzio

N
Melany Nakagiri-Yeung
Kim C. Nakahara
Barry Napear

Robert J. Nassif
Zoe Neuberger
Kimberly A. Newman
Sheila D. Newman
Kevin F. Neyland
Teresa Nguyen
Anna Niles
James A. Nix
Desiree C. Noble
S. Aromie Noe
Douglas A. Norwood
John Novak

O
Sean C. O’Keefe
Lewis W. Oleinick
Marvis G. Olfus
Linda B. Oliver
Quirina Orozco

P
William D. Palmer
Anna K. Pannell
Darrell Park
Sangkyun Park
Jacqueline Parrish
Stefani J. Pashman
Marcus Peacock
Jacqueline M. Peay
Eric C. Pelletier
Robert J. Pellicci
Alison Perkins-Cohen
Kathleen Peroff
John R. Pfeiffer
Carolyn R. Phelps
Patrick A. Piercey
Joseph G. Pipan
Pamela L. Piper
Douglas Pitkin
Keith Posen
Benjamin Powell
Jason Pugh

R
David P. Radzanowski
Latonda G. Raft
Terrill W. Ramsey
Lorenzo Rasetti
Edward M. Rea
Susanna Reckord-Raymer
Beatice A. Reaud
Francis S. Redburn
McGavock D. Reed
Thomas M. Reilly
Gary C. Reisner
Rosalyn J. Rettman
Alan B. Rhinesmith
Sarah B. Richardson
Shannon Richter
Nancy S. Ridenour
Verne Rinker
George A. Rippey
Crystal Roach
Donovan O. Robinson
Elizabeth M. Robinson
Marshall Rodgers
Justine F. Rodriguez

Annette E. Rooney
Timothy A. Rosado
Esther S. Rosenbaum
Lynn C. Ross
Elizabeth L. Rossman
David Rostker
David Rowe
Mario D. Roy
Stephen W. Ruszczyk

S
Robert Sandoli
Narahari Sastry
Ruth D. Saunders
Susan Schechter
Glenn R. Schlarman
Andrew M. Schoenbach
Ingrid M. Schroeder
Rudolph J. Schuhbauer
Kenneth L. Schwartz
Mark J. Schwartz
Andrew J. Scott
Ardy D. Scott
Mark Seastrom
Jasmeet K. Seehra
Albert Seferian
Frank J. Seidl III
Retha M. Senke
Karen M. Shaffer
Stuart Shapiro
Yvette Shenouda
Mary Jo Siclari
Leticia Sierra
Ronald L. Silberman
Pamula Simms
Danielle M. Simonetta
Ronald Sissel
Ruth Slade
Harold Smalley
Jack A. Smalligan
Amy C. Smith
Jan Smith
Austin T. Smythe
Silvana Solano
Brant Sponberg
Edward C. Springer
Lillian S. Spuria
Kathryn B. Stack
Norman H. Starler
Anne R. Stauffer
Randolph J. Steer
Lauren Steinfeld
Theresa Stoll
Carla B. Stone
John Strachan
Shannon Stuart
Stephen Suh
Sandra R. Swab
Carolyn Swinney

T
Sahar Taman
Teresa Tancre
Vernetta Tanner
Myra Taylor
Wendy A. Taylor
Kathryn C. Thompson
Jeanette Thornton
Courtney B. Timberlake

251

OMB CONTRIBUTORS TO THE 2002 BUDGET
Thomas Tobasko
Christina Townsell
Gilbert Tran
Maurice Travers Sr.
David Trinkle
Lily Tsao
Robert J. Tuccillo
Donald L. Tuck
James J. Tymon

U
Lauren Uher
Christopher Ullman

V
Dana Vader
Matthew J. Vaeth
Doris Valentin-Meyer
Ofelia Valeriano

Cynthia A. Vallina
Areletha L. Venson
Sandra L. Via
Allan Villabroza
Sylvie Volel
Hitesh Vyas

W
Craig Wacker
Wendell Waites
Joyce M. Wakefield
Martha A. Wallace
Katherine K. Wallman
Maureen H. Walsh
Elizabeth Ward
Sharon A. Warner
Mark A. Wasserman
Victoria Wassmer
Iratha H. Waters
Wanda Watson
Gary Waxman

Rebecca A. Wayne
Mark A. Weatherly
Bessie M. Weaver
Tawana F. Webb
Stephen A. Weigler
Jeffrey A. Weinberg
Dianne M. Wells
Philip R. Wenger
Ophelia D. West
Alease White
Arnette C. White
Chiquita White
Kamela White
Kim S. White
Suzanne White
Ora L. Whitman
Anthony Wier
Debra L. Williams
Jerry Williams
JoAnne Williams
Latoria Williams
Jennifer A. Willis
Katherine Winchester

Doris J. Wingard
Lauren Wittenberg
Jonathan P. Womer
Jennifer J. Wood
Lauren Wright
Anthony B. Wu

Y
Laura Yancer
Kevin J. Yorke
Louise D. Young
Julia E. Yuille

Z
David M. Zavada
Gail S. Zimmerman

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Budget of the United States Government, Fiscal Year 2002
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