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SPECIAL ANALYSES




BUDGETOFTHE UNITED STATES

FISCAL YEAR

SPECIAL ANALYSES




BUDGET OFTHE UNITED STATES

FISCALYEAR

I

FOREWORD
This volume of Special Analyses, Budget of the United States, 1968,
contains facts and figures on special aspects of the President's budgetary recommendations transmitted in The Budget of the United States
Government, 1968. Thirteen special analyses are included, of which
four (A through D) are reprints of analyses already printed in the
budget document.

GENERAL NOTES
1. All years referred to are fiscal years, unless otherwise noted.
2. Detail in the tables, text, and charts of this volume may not
add to the totals because of rounding.
3. Amounts shown for the Department of Transportation include, for 1966, 1967, and 1968, those separately funded organizations being transferred in their entirety. Other activities are shown
in their old locations for the time prior to their transfer into the
Department.

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price 55 cents




TABLE OF CONTENTS
Page

A. Three measures of Federal financial transactions

5

B. Public enterprises, trust funds, and gross expenditures of the Government

14

C. Civilian employment in the executive branch

27

D. Investment, operating, and other expenditures

35

E. Federal credit programs

57

F. Federal activities in public works

71

G. Federal education, training, and related programs

87

H. Federal health programs

110

I. Federal research, development, and related programs

123

J. Federal aid to State and local governments

145

K. Principal Federal statistical programs

162

L. Foreign currency availabilities and uses

170

M. International transactions of the Federal Government




177

3




SPECIAL ANALYSIS A
THREE MEASURES OF FEDERAL FINANCIAL TRANSACTIONS

There are many ways that Government finances can be analyzed,
depending on the uses to which the information is to be put. Special
Analysis A presents the meaning and relationship between the three
most commonly used concepts of Federal Government finances: (1)
the administrative budget, (2) the consolidated cash statement, and
(3) the Federal sector of the national income accounts.
The administrative budget is the narrowest concept of Federal
finances. It serves for administrative decisionmaking, but its coverage
is not comprehensive enough for economic analysis. The consolidated
cash budget is the broadest concept discussed in this special analysis.
It aids in determining the impact of Federal finances on the money
market by showing the flow of money between the public and the
Federal Government. The Federal sector of the national income
accounts provides a measure of Federal finances comparable to the
national income and product totals as measured for the rest of the
economy and is specially designed for the analysis of the fiscal impact
of the Federal Government.
For certain types of problems, none of these measures of receipts
and expenditures will serve adequately. Economic activity may be
affected by Government transactions which are not reflected immediately or fully in receipts and expenditures. For example, a rapid
expansion in new appropriations and in Government orders could
stimulate a rise in business activity well before either the delivery of
goods, the performance of services, or the payment for them. The
management of public debt, loan guarantees, and loan insurance programs has a significant impact in the money and credit markets of
the economy not fully reflected by the level of budget expenditures.
Consequently, in evaluating the economic impact of Federal Government activities, there is no substitute for complete and detailed analysis
of the Government program in all its aspects.
ADMINISTRATIVE BUDGET

The administrative budget covers receipts and expenditures of funds
owned by the Federal Government. These include general fund,
special funds, public enterprise funds, and intragovernmental revolving
and management funds. Internal transactions between these Federal
accounts (i.e., "interfund" transactions) are excluded from the total.
Gross collections of business-type activities (such as the Post Office)
are normally subtracted from their gross outlays and the difference
is recorded in the administrative budget as "net expenditures."
Although budget documents placed before the Congress have
regularly presented detailed information on the financial transactions
of both federally owned funds and funds held in trust by the Government, only the former have been traditionally used as representing
the budget totals. For many years, the administrative budget has
served as the principal financial plan for conducting the affairs of
Government. I t is the focal point for management and decision-




6

THE BUDGET FOR FISCAL TEAR 1968

making with respect to Government activities which are financed by
the Government's own funds.
Table A-1. RELATION OF THREE MEASURES OF FEDERAL RECEIPTS
AND EXPENDITURES, 1966-68'
[In billions of dollars]
1966
actual

1967

1968

RECEIPTS
Administrative budget receipts
Plus: Trust fund receipts
Less: Intragovernmental transactions
Receipts from exercise of the monetary authority
Equals: Federal receipts from the public
Less: Exclusions from the Federal sector, national income
accounts:
Loans repaid
Items classified in another sector:
District of Columbia
Foreign military assistance trust fund
_..-..
Plus: Exclusions from Federal receipts from the public:
Excess of accruals ( + ) over collections (—)
Employer and employee contributions to Federal
retirement funds
..
Plus: Miscellaneous netting, grossing, and related adjustments:
Receipts netted against expenditures
Other
Equals: Federal receipts, national income and product accounts

104.7
34.9
4.5

117.0
44.9
6.2

.6
134.5

1.1
154.7

6.5
.5
168.1

.3

.4

.2

.3
.7

.3
1.1

.4
1.4

-1.2

-3.9

+.4

2.3

2.3

2.3

-1.2
-.5

-1.0
-.5

-1.0
7

132.6

149.8

167.1

107.0

126.7

34.9
4.5
-.4
137.8

.6
160.9

135.0
44.5
6.5
.7
172.4

3.2
1.9

4.3
1.7

1.8
.2

126.9
48.1

EXPENDITURES
Administrative budget expenditures
Plus: Trust fund expenditures 2
Less: Intragovernmental transactions
Debt issued in lieu of checks and other adjustments..
Equals: Federal payments to the public
Less: Exclusions from the Federal sector:
Loans and financial transactions:
Lending: net
Federal land banks and Federal home loan banks..
Acquisition of foreign currency for financing agricultural exports
Items classified in other sectors:
District of Columbia
Foreign military assistance trust fund
Plus: Exclusions from Federal payments to public:
Excess of deliveries or accruals ( + ) over payments (—)
Employer and employee contributions to Federal
retirement funds
Plus: Miscellaneous netting, grossing, and related adjust'
merits:
Receipts netted against expenditures
Other
Equals: Federal expenditures, national income, and product
accounts...

40.9
6.2

1.0

1.0
.4
.8

.5
1.1

.6
1.4

-.3

+.2

+.4

2.3

2.3

2.3

-1.2
1.0

-1.0

-1.0
.1

132.3

153.6

169.2

*Less than $50 million.
1
The Federal sector receipts and expenditures are identical to those published by the Department
of 2Commerce in the "Survey of Current Business."
Includes Government sponsored enterprises, net.




SPECIAL ANALYSES

As long as almost all Federal financial transactions were carried
out with federally owned funds, the administrative budget provided
adequate coverage. In recent years, however, trust fund operations
which are not included in administrative budget totals have grown
rapidly. As a result, the flow of financial transactions between the
Federal Government and the public is considerably larger than is
shown by the administrative budget. For this reason, the consolidated cash statement of Federal receipts from and payments to the
public was developed to present more fully the flow of total cash
transactions (excluding Federal borrowing) between the Federal Government and the public. The consolidated cash statement is particularly useful for determining Government financing needs and for
analyzing the financial interrelationships between the Federal Government and the private credit markets.
CONSOLIDATED CASH STATEMENT

The consolidated cash statement is the sum of the administrative
budget and trust funds, less any transactions which do not actually
represent a cash receipt from or payment to the public. Table A-2
provides summary information on both the receipts and expenditures
of the administrative budget and the trust funds.
Table A-2. ADMINISTRATIVE BUDGET AND TRUST FUND RECEIPTS
AND EXPENDITURES (in billions of dollars)
Administrative budget
funds

Trust funds

Description
1966
actual

RECEIPTS
Individual income taxes
Corporation income taxes
Employment taxes
Excise taxes
Unemployment tax deposits by States.
Other receipts
Interfund transactions
Total receipts.

EXPENDITURES
National defense
International affairs and finance
Space research and technology.
Agriculture and agricultural resources..
Natural resources
Commerce and transportation
Housing and community development _
Health, labor, and welfare
Education
Veterans benefits and services
Interest
General government
Deposit funds (net)
Allowances
Interfund transactions
Total expenditures
._
Excess of receipts ( + ) or expenditures ( - )
'Less than $50 million.




1967
estimate

1968
estimate

1966
actual

55.4
30.1

62.2
34.4
9.3

8.8

10.7
-.6
104.7

11.9
-.8
117.0

20.0
3.9
3.1
8.6

126.9

34.9

57.7
4.2
5.9
3.3
3.1
3.0
.3
7.6
2.8
5.0
12.1
2.5

70.2
4.6
5.6
3.0
3.2
3.5
.9
10.4
3.3
6.4
13.5
2.7

75.5
4.8
5.3
3.2
3.5
3.1
1.0
11.3
2.8
6.1
14.2
2.8

.2
*
1.2
.1
3.8
3.2
26.4
*
.6

-.6
107.0

126.7

2.2
-.7
135.0

-2.3

-9.7

-8.1

1968
estimate

73.2
33.9

9.1

1967
estimate

26.4
4.5
3.0
11.7
-.7
44.9

1.4
.1
3.7
3.0
31.5
*

28.4

4.9
3.0
12.5
-.7
48.1
1.4
.2
*
1.2
.1
3.7
1.0
37.1
*
.6

*
-.2
34.9

*
-.1

-.7
40.9

-.7
44.5

+4.0

+3.6

8

THE BUDGET FOR FISCAL YEAR

1968

Trust funds are derived from special taxes or other special sources,
held in trust, and then spent for the specific purposes of the trust.
While the administrative budget totals do not include the transactions
of trust funds, several important parts of the Government's program
are carried out through such funds, particularly unemployment insurance, social security, and highway construction.
Trust fund expenditures also include the net expenditures of five
Government-sponsored enterprises: The Federal Deposit Insurance
Corporation, the Federal home loan banks, the Federal land banks, the
banks for cooperatives, and the Federal intermediate credit banks.
Deposit funds, which are used to account for money that is either held
in suspense temporarily or is held by the Government as banker or
agent for others, are also recorded net along with the trust funds.
Table A-3. DERIVATION OF CONSOLIDATED CASH TOTALS
(Fiscal years.

In billions of dollars]

Description

1966
actual

1967

1968

FEDERAL RECEIPTS FROM THE PUBLIC
Administrative budget receipts
Trust fund receipts
Adjustments:
Intragovemmental transactions: Federal receipts which are
also Federal expenditures (table A-4)_.
Receipts from the exercise of monetary authority 1
Total, Federal receipts from the public

104.7
34.9

117.0
44.9

126.9
48.1

-4.5
-.6

-6.2
-1.1

-6.5
-.5

134.5

154.7

168.1

107.0
34.9

126.7
40.9

135.0
44.5

-4.5
-.5

-6.5
-.6

+1.0

-6.2
_ 5
*
-.1

137.8

160.9

172.4

-3.3

-6.2

-4.3

FEDERAL PAYMENTS TO THE PUBLIC
Administrative budget expenditures
Trust fund expenditures
Adjustments:
Intragovemmental transactions (table A-4)
Debt issuance in lieu of checks
Revolving fund receipts from exercise of monetary authority.
Increase ( + ) or decrease (—) in outstanding checks, etc
Total, Federal payments to the public.
Excess of Federal receipts from ( + ) or payments to (—) the
public

-.1

*Less than $50 million.
Includes small amount for excess profits tax refund bonds.

1

RELATIONSHIP

OF THE CONSOLIDATED CASH STATEMENT TO THE
ADMINISTRATIVE BUDGET

The following adjustments are needed to derive cash transactions
with the public from the sum of the administrative budget and trust
funds:
1. Intragovemmental transactions.—Administrative budget receipts
include amounts paid into the Treasury by trust funds, such as reimbursement for the cost of collecting payroll taxes and other services.
(These amounts are also reported as trust fund expenditures.) Simi-




SPECIAL ANALYSES

larly, there are trust fund receipts, such as interest on trust fund
holdings of U.S. securities, which are also reported as administrative
budget expenditures. In consolidating the transactions of budget
and trust funds, these intragovernmental transactions are eliminated
from the combined receipts and expenditures since no exchange of
cash with the public is involved in these operations.
Table A-4. INTRAGOVERNMENTAL TRANSACTIONS EXCLUDED FROM
THE CONSOLIDATED CASH STATEMENT
[In millions of dollars]
Description

1966

1967

1968

Administrative budget receipts which are trust fund expenditures:

Franchise taxes from Government-sponsored enterprises
Dividends, interest, etc., from Federal National Mortgage
Association
Reimbursements for expenses and services
Repayment of interest and advances from unemployment trust
fund and other
Total, administrative budget receipt items.

30
83

120

124

116

1,908
17

2,268
227
623
327

2,685
123
658
273

125
1,160

192
1,208

204
1,206

25
5

50
5

50
5

Trust fund receipts which are administrative budget expenditures:

Interest on trust funds
Contributions for military service credits
Federal supplementary medical insurance
Transitional coverage for hospital insurance
Payments to District of Columbia (including Federal grantsin-aid)
Employing agencies' payments to employees' retirement funds.
Awards to Indian tribal funds
Contributions to veterans life insurance funds
Other
-

1

1

3,239
1,092

4,900
1,135

5,204
1,135

4,451

Total, trust fund receipt items

6,159

6,454

Deductions from employees' salaries for retirementTotal intragovernmental transactions

2. Exercise of monetary authority.—-These receipts now come mostly
from seigniorage; that is, they represent the difference between the
cost of the metal in coins and the face value of the coins as money.
Seigniorage is included in administrative budget receipts, but is not
a cash receipt from the public.
3. Debt issuance in lieu of checks.—In a few cases, Government expenditures are made by issuing bonds or notes, or increasing the value
of bonds outstanding in lieu of issuing checks. For example, the administrative budget records interest on savings bonds when it accrues
while the cash budget records it when the bonds are cashed. The
Federal Government also paid part of its subscriptions to international
financial institutions in non-interest-bearing notes. These notes
were recorded as administrative budget expenditures when they were
issued, but only become cash expenditures when they are redeemed
for cash.
4. Changes in outstanding checks.—Administrative budget and trust
fund expenditures are recorded at the time checks are issued. To



10

THE BUDGET FOR FISCAL YEAR 1968

reflect more accurately the point in time at which cash payments
actually affect Treasury cash balances, an adjustment is made to
place expenditures on a checks-paid basis.
A separate document entitled Receipts From and Payments to the
Public is prepared each year in conjunction with the budget providing
more detailed information concerning the derivation of the consolidated cash budget. This booklet is available on request from the
Bureau of the Budget, 17th and Pennsylvania Avenue NW.,
Washington, D.C. 20503.
FEDERAL SECTOR OF THE NATIONAL INCOME ACCOUNTS

The third major measure of Government finances is the Federal
sector of the national income accounts. This measure records transactions that affect current income or output, and shows them as part
of the total system of national income accounts. The concepts and
accounting system used in the national income accounts budget have
been formulated by the Office of Business Economics of the Department of Commerce as part of the official national income statistics of
the United States.
RELATIONSHIP OP CONSOLIDATED CASH TO THE FEDERAL SECTOR
OF THE NATIONAL INCOME ACCOUNTS

1. Loans and financial transactions.—The national income accounts
are designed to record current income and production. Certain cash
transactions are not an addition to the Nation's total income or gross
national product but are rather an exchange of financial instruments.
There are three categories of such activty.
a. Cash loans transactions are excluded from the national income
accounts. Loans and repayment of loans are included in the cash
budget either as net expenditures or as receipts. However, the
amount of loan repayment included in cash receipts is small—most
loan repayments flow into revolving funds and are reflected in reduced
cash expenditures.
b. Two privately owned Government-sponsored enterprises—the
Federal land banks and the Federal home loan banks—are not included in the Federal sector accounts. Since most of their activities
are lending, they are shown in table A-l under loans and financial
transactions.
c. The Commodity Credit Corporation facilitates exports of agricultural products by purchasing foreign currencies from U.S. exporters. This expenditure of dollars for foreign currency is excluded
in the national income accounts because it is an exchange of financial
assets. When the foreign currency is expended it is then included in
the national income accounts.
2. Items classified in another sector.—The District of Columbia is
included with the State and local governments in the national income
accounts, so their cash receipts and expenditures are excluded from
the Federal sector. The foreign military assistance trust fund records
the receipt and expenditure of money received from foreign governments for the purchase of military equipment. The purchase of
equipment is recorded in the GNP as part of net exports. Since
the exports are financed by the receipts, both the receipts and expenditures of the trust fund are excluded from the Federal sector.



11

SPECIAL ANALYSES

3. Excess of deliveries or accruals ( + ) over payments (—).—Most
taxes are recorded in the national income accounts as they are accrued
by the private sector, rather than when they are collected by the Government. The principal timing adjustments for expenditures are: (a)
Federal purchases are measured, insofar as is possible, in terms of the
delivery of goods and the performance of services to the Government;
(b) interest on savings bonds and Treasury bills is treated as an expenditure in the Federal sector account when the interest is accrued,
and (c) the issuance of checks is considered a better reflection of timing, so the adjustment for checks outstanding that is made in deriving
the cash totals is reversed.
4. Employer and employee contributions to Federal retirement funds.—
Contributions to Federal employees' retirement funds are excluded
from the consolidated cash statement as intragovernmental transactions. In the national income accounts, however, these contributions are considered to be part of the compensation of Government
employees and part of Federal tax receipts.
5. Miscellaneous netting, grossing, and related adjustments.—Expenditures of government enterprises are recorded in the national income
accounts net of receipts derived from the sale of their products or
services. Where these receipts appear in consolidated cash receipts,
they are netted against expenditures in the Federal sector account.
The other miscellaneous adjustments include purchase or sale of
land, certain geographical exclusions (such as Guam) and a number
of adjustments which can be identified in total but cannot readily
be broken into their component adjustments using budget data.
The net results of these adjustments are shown in table A-5 which
shows the Federal sector receipts and expenditures by category.
Table A-5. FEDERAL RECEIPTS A N D EXPENDITURES IN THE NATIONAL
INCOME ACCOUNTS [in billions of dollars]
Description

1966
actual

1967
estimate

1968

RECEIPTS, NATIONAL INCOME BASIS
Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance.
Total receipts, national income basis

57.9
30.7
15.9
28.1

65.5
32.3
16.5
35.5

76.8
35.3
16.9
38.1

132.6

149.8

167.1

71.7
34.3
12.9
9.1
4.5

83.6
39.8
14.8
10.0
5.4

91.9
46.6
16.7
10.5
3.5

132.3

153.6

169.2

+0.3

-3.8

-2.1

EXPENDITURES, NATIONAL INCOME BASIS
Purchases of goods and services
Transfer payments
Grants-in-aid to State and local governments
Net interest paid
Subsidies less current surplus of Government enterprises _
Total expenditures, national income basis
Surplus ( + ) or deficit (—), national income basis




12

THE BUDGET FOR FISCAL YEAR

1968

CATEGORIES INCLUDED IN THE FEDERAL SECTOR OF THE NATIONAL
INCOME ACCOUNTS

Fede?al sector receipts.—Federal receipts on a national income basis
largely reflect the tax payments or liabilities of individuals, corporations, and other businesses arising out of incomes earned as well as
other tax and nontax receipts. These receipts are classified into the
following four categories: (1) Personal tax and nontax receipts, (2)
corporate profits tax accruals, (3) indirect business tax and nontax
accruals, and (4) receipts from contributions for social insurance.
1. Personal tax and nontax receipts consist mostly of individual
income taxes, estate and gift taxes, fines, fees, and rental receipts.
2. Corporate profits tax accruals represent the Federal tax liability
incurred and accrued by resident corporations on their corporate
earnings during the specified year or period. Collections of Federal
corporate income taxes have usually lagged the accruals, but the
program of accelerating corporate tax payments to reduce the lag
between accrual of liability and actual collections results in a negative
timing adjustment in fiscal 1967 which will become much smaller in
fiscal 1968.
3. Indirect business tax and nontax accruals consist primarily of
excise taxes, customs duties, and Federal receipts from rent and
royalties.
4. Contributions jor social insurance are composed chiefly of employment taxes, contributions to the retirement funds for Government
employees, and deposits by the States to the unemployment trust
fund.
Federal sector expenditures.—Federal expenditures on a national
income basis represent either purchases of currently produced goods
and services or outlays which directly affect current levels of income.
These expenditures are classified in the following five categories: (1)
purchases of goods and services, (2) transfer payments, (3) grantsin-aid to State and local governments, (4) net interest paid, and (5)
subsidies less current surplus of Government enterprises. The definitions of the categories have been developed by the Department of
Commerce consistent with the framework of accounts covering the
Nation's total economic activity:
1. Purchases of goods and services represent the value of the Nation's
output bought directly by the Federal Government. Expenditures
for goods and services represent the production and use of resources
and constitute a part of the gross national product.
Purchases include the pay of active military and civilian employees
of the Federal Government, employer contributions for retirement,
insurance, and other benefits for Federal employees, deliveries of
equipment and supplies for defense and other programs, construction
payments on research and development contracts with corporations
and on similar purchases from private nonprofit institutions, expenditures for the purchase of commodities to be donated to schools or
similar institutions, and generally, the administrative expenses of
Government programs.
2. Transfer payments consist of expenditures by the Federal Government for which no current output or services have been rendered.
Examples of transfer payments are: veterans compensation, pensions,
and benefits; retired pay to Federal civilian or military personnel;




SPECIAL ANALYSES

13

unemployment benefits; old-age, survivors, and disability insurance;
nonrepayable outlays for scholarships and fellowships; and payments
for construction of private nonprofit hospitals and medical care for
the aged.
Although transfer payments do not directly enter GNP calculations
as a Federal Government component, they do enter into the income
stream and have an impact on national output when respent by the
recipients.
3. Grants-in-aid to State and local governments, for purposes of the
national income accounts, are Federal payments (other than for
interest on the public debt) to State and local governments, including State and local educational institutions. Most of the grants-inaid and the shared revenues in Special Analysis J of the budget
are included in grants in the national income accounts. Like transfer
payments and net interest paid, Federal grants-in-aid are counted
in the GNP when spent by recipients—in this case, as purchases by
State and local governments or as consumption expenditures of
individuals receiving State or local transfer payments.
4. Net interest paid consists of the interest outlays to residents
(including State and local governments) minus the interest received
from them.
5. Subsidies less current surplus of Government enterprises consists
of two elements which are consolidated for analytical and statistical
reasons: (a) subsidy payments to resident businesses, and (b) the
"current surplus" or "deficit," as the case may be, of Government
enterprises.
(a) In principle, a Government expenditure becomes a subsidy when
it enables a producer to sell goods and services below the cost-price
relationship determined by market forces or when it is a payment
made to curtail production. By definition, therefore, subsidies are
made only to businesses organized for profitmaking purposes (including farms). Examples of subsidies are Government payments to
farmers for land retirement, payments to air carriers, and the operating
differential subsidy of the Maritime Administration.
(b) Government enterprise is the term applied to those functions
of the Government (usually appearing in the budget as public enterprise revolving funds) whose operating costs are to a great extent
covered by the sale of goods and services to the public, as opposed
to being financed by tax receipts. In short, Government enterprises
conduct operations which are of a commercial nature. The difference
between their sales and operating expenses constitutes the surplus or
deficit of Government enterprises. The Post Office and the Tennessee
Valley Authority are two of the largest enterprises.




SPECIAL ANALYSIS B
PUBLIC ENTERPRISES, TRUST FUNDS, AND GROSS EXPENDITURES
OF THE GOVERNMENT

This analysis presents selected information on the financing of public
enterprise funds and the trust funds. It also covers certain receipts
and reimbursements from outside the Treasury to general fund
appropriations and other accounts which are netted in the administrative budget expenditures, and it indicates the magnitude of total
expenditures gross of such netting. Additional tables in this special
analysis relating to borrowing and investments in U.S. securities are
an integral part of the computation of the changes in public debt in
table 11 of part 2 of the budget.
PUBLIC ENTERPRISE FUNDS

The public enterprise funds are federally owned funds which carry
on a cycle of operations, primarily with the public, organized usually
on a business-type basis. Some of them are incorporated enterprises;
others are unincorporated. Their expenditures have been included,
on a net basis, in the administrative budget for many years. The
general fund usually supplies them with capital; the provision of such
capital, its return, and any dividends given to the general fund are
not counted in the budget totals as expenditures or receipts.
Expenditures and receipts.—Gross expenditures of public enterprise
funds are estimated to be $28.7 billion in 1968, and their receipts will
be $27.3 billion (table B-l), resulting in net expenditures of $1.4
billion which are included in the administrative budget totals. The
Commodity Credit Corporation and the postal fund together account
for slightly less than half of the expenditures. The figures for both
1967 and 1968 take account of both existing and proposed legislation.
The expenditures in table B-l include certain interfund payments
to the general fund, principally for interest (see note at end of table
13). The receipts shown in table B-l are generally from the public;
but they include some transactions from within the Government—
notably, the sales of Commodity Credit Corporation inventories
and services to appropriations for special activities, accounting for
$2.4 billion of the Commodity Credit Corporation receipts shown for
1968. The sales of Tennessee Valley Authority power to Government
agencies, payments by all agencies to the Post Office for postal services,
and interest paid to certain funds on their investments are other
examples of such intragovernmental receipts included in table B - l .
14




15

SPECIAL ANALYSES

Table B-1. GROSS EXPENDITURES AND APPLICABLE RECEIPTS OF
PUBLIC ENTERPRISE FUNDS (in millions of dollars)
Gross expenditures

Applicable receipts

Description
1966
actual

Funds appropriated to the President:
Economic assistance
Other
Department of Agriculture:
Commodity Credit Corporation 1
Farmers Home Administration
Rural Electrification Administration
(proposed new fund)
Consumer and Marketing Service (proposed new fund)
Other
Department of Commerce
Department of Defense:
Military
Civil (Panama Canal Company)
Department of Health, Education, and
Welfare:
Office of Education (proposed new
fund)
Other
Department of Housing and Urban Development:
College housing loan fund
Urban renewal fund
Federal National Mortgage Association.
Federal Housing Administration
Low-Rent Public Housing fund
Other
Department of the Interior:
Existing legislation
Proposed new funds
Department of Labor
Post Office Department
Department of Transportation
Treasury Department:
Existing legislation
Proposed new fund
General Services Administration
Veterans Administration
Other independent offices:
Export-Import Bank of Washington...
Federal Savings and Loan Insurance
Corporation
Small Business Administration
Tennessee Valley Authority
Other
Total _
Receipts from the public
Receipts from other accounts.

1967

1968

1,018
102

1,218
349

1,224
418

60
314

69
400

8,403
1,128

9,001
1,569

7,475
1,879

6,884
1,010

7,103
2,194

91
428
5,646
2,550

440

508

194

201

44
120

30
241

11
41
280

34
123

37
253

11
41
362

18
128

33
141

52
139

18
132

30
142

33
145

24

7
6

16
2

100
127

402
293
,274
985
426
452

448
640
2,924
1,025
470
582

397
379
2,421
1,006
527
753

90
256
2,739
798
189
27

701
592
3,107
904
205
109

1,659
360
2,548
998
252
209

128

124
224
304
6,699
19

52

210
5,927
32

132
205
295
6,373
25

56
151
298
5,165
22

56
165
308
6,155
22

1

1

*
638
1,147

*
749
1,629

2
95
*

1
26
*

2
95
*

641

1,269

767

1966
actual

213
5.039
20

*
,328
,532

1967

1968

1,501

2,085
238
318
687
599
390
392
31
30
24,953 29,705 28,705 22,291 25,377 27,258
56
583
405
22

108
558
469
23

1,720
638
503
21

312
729
351
29

(16,580) (18,638) (21.442)
(5,711) (6,739) (5,816)

* Less than one-half million dollars.
1
Includes advances from foreign assistance and special export programs of $1,686 million in 1966,
$1,617 million in 1967, and $1,796 million in 1968.




16

THE BUDGET FOR FISCAL YEAR 1968

Capital and borrowing.—Capital requirements of the public enterprise funds are usually supplied through new obligational authority
(either appropriations or some other form of NOA) from the general
fund. While most public enterprise funds are operated to be selfsustaining over a period of years, the largest—the Commodity Credit
Corporation—has incurred substantial losses in most years. Appropriations have been made regularly to make up for the loss in this fund,
the postal deficit, and other losses in a few smaller funds. Contract
authorizations have also been provided for the Commodity Credit
Corporation and for the Urban Renewal Fund of the Department of
Housing and Urban Development. Table B-2 reflects all such new
obligational authority.
Writeoffs shown here are primarily the return of capital or transfer
of dividends to the general fund of the Treasury; they include a few
cases of lapses of obligational authority.
The effect of these capital transactions, together with expenditures
and receipts, upon the public enterprise fund group may be summarized as follows (in millions of dollars):
Balances, start of year:
Cash and U.S. securities
Undrawn authorizations
Additional amounts becoming available:
New obligational authority
Transfers from other funds
Applicable receipts.....
Total available
Application of funds:
Gross expenditures
Transfers to other funds
Writeoffs of authority—
Balances, end of year:
Cash and U.S. securities
Undrawn authorizations.
Total application and balances

'966
8.548
26,297

1967
11,310
27,108

1968
13.983
30,100

6,896
74
22.291

8,826
1,492
25.377

6,063
27,258

64,105

74,114

77,403

24,953
7
725

29,705
9
318

28,705
2
632

11,310
27,108

13.983
30,100

16,494
31,570

64,105

74,114

77,403

Where the new obligational authority consists of authorizations to
expend debt receipts or appropriations to provide capital, rather than
to make up deficits or finance losses, it is customary for the amounts
thereof to become interest bearing when used or when credited to
the fund.
Upon the creation of new revolving funds, to finance programs
previously financed otherwise, capital may also be provided by the
transfer of assets, including appropriation balances, into the new
fund. Liabilities and obligations are taken over, also. This budget
proposes the conversion of several programs to a revolving fund
basis, among them the three power administrations in the Department of the Interior.
Minor adjustments in capital occasionally include other transfers
to or from appropriations when authorized by law, and the transfer
of real or personal property into or out of a fund.




17

SPECIAL ANALYSES
Table B-2. NEW OBLIGATIONAL AUTHORITY AND WRITEOFFS OF
PUBLIC ENTERPRISE FUNDS (in millions of dollars)

Description

New obligational authority
(including transfers in)
1966
actual

Funds appropriated to the President:
Economic assistance
._
_.
Other
Department of Agriculture:
Commodity Credit Corporation
Farmers Home Administration...
Proposed new funds . .
Department of Commerce
Department of Defense—Military
Department of Health, Education, and
Welfare
Department of Housing and Urban Development:
College housing loan fund.
Urban renewal fund
.
Federal National Mortgage Association.
Low-rent housing fund..
Other
Department of the Interior:
Existing legislation
Proposed new funds
Department of Labor
..
Post Office Department
Department of Transportation
Treasury Department
General Services Administration
Veterans Administration
Other independent offices:
Export-Import Bank of Washington
Small Business Administration
Tennessee Valley Authority
Other
Total

1967
estimate

1968
estimate

1,053
M07

973
M56

1.277
18

2.603
240

2.785

1.440

M.721

Writeoffs (including
capital transfers but)
1966
actual

35

1

36

1967
1968
estimate estimate

300

34

230

2-30

32

2 11

45
5
M

2

11

27

*

204

«5

300
689
100
237
242

7
740
610
«300
213

338
1,000
550
290
209

73
220

56
98

1.227

651

*
28

*

1

*
•70

917

9199

50

50

50

310
59

7
62

59

62

62

6,063

732

327

634

62
962
4

6,970

8

*

1.064
13
10.318

2
282

7-68
4

51
*
4

239

4
25
*

2
25

10

*
*
*

* Less than one-half million dollars.
1 Includes transfer of $74 million in 1966 and $134 million in 1967 from the military assistance
appropriation to the Foreign military sales fund.
* Consists of increase or decrease in advances from appropriations for certain other purposes,
spent through the Corporation's funds.
> Includes $1,224 million proposed to be transferred from existing accounts at inception of new
Rural Electrification fund.
* Balance transferred to civil defense appropriations.
* Includes $2 million for proposed new fund, Office of Education.
* Includes $22 million deficiency appropriation.
7
Net restoration.
s
Includes transfers from general fund accounts of $129 million to Bonneville Power Administration, and $3 million to Southwestern Power Administration.
* Includes unobligated balances transferred to Veterans insurance and indemnities appropriation
of $7 million in 1966, $8 million in 1967, and $2 million in 1968.
1° Consists of transfer from appropriation for trade adjustment loans.

Balances available.—The balances of public enterprise funds are
shown in table B-3. They are there divided between the balances
which are accounted for as assets of the funds, and the undrawn
authorizations to obtain capital from the Treasury, to borrow, or
(in two cases) to contract in excess of their cash availability.
255-300 O—67——2




18

THE BUDGET FOR FISCAL YEAR 1968

Table B-3. BALANCES OF PUBLIC ENTERPRISE F U N D S (in millions of dollars)
Cash balances in Treasury
and U.S. securities as of
June 30
Description

Funds appropriated to the President:
Economic assistance.
Other
Department of Agriculture:
Commodity Credit Corporation
Farmers Home Administration
Rural Electrification Administration
(proposed new fund)
Other
Department of Commerce
Department of Defense—Military
Department of Defense—Civil (Panama
Canal Company)..
Department of Health, Education, and
WelfareDepartment of Housing and Urban Development:
College housing loan fund
Urban renewal fund
__
Low-rent public housing. __
Federal National Mortgage Association..
Federal Housing Administration
Other
Department of the Interior:
Existing funds
Proposed new funds
Department of Labor
Post Office Department
Department of Transportation.
Treasury Department:
Existing legislation _
Proposed new fund General Services Administration
Veterans Administration
Other independent offices:
Export-Import Bank of Washington
Loans to Federal Deposit Insurance
Corporation
Loans to Federal home loan banks
Federal Savings and Loan Insurance
Corporation
Small Business Administration
Tennessee Valley Authority

Other

.

Total

1966
actual

1968
1967
esti mate estimate

Undrawn authorizations
as of June 30

1966
actual

1967
1968
estimate estimate

3,317

3,228

3,339

131

46

78

199
77

199
250

199
246

46
330

50
889

50
1,569

3,542
39

4,394
105

3.992
96

25
19

1,425
M3
32
26

1,154
M2
112

11

12

10

10

10

3

311

88
1,150
90
160
674
496

84
1,178
124
239
651
569

84
1,738
139
316
704
659

870
3,430
1.500
4,938
414
896

1.135
3,730
1,500
5,601
315
926

2,735
3,700
1.500
5.963
245
951

19

16
141
309
566
4

11
154
312
673
6

12

9

1

15

15

15

26

*
26
*
1,764

205

197

2

5.822

5,644

5.958

3,000
1,000

3,000
1,000

3.000
1.000

31

30>
547
7
*
*
1,380

1

1,264

1

34
17
466

1,576
723
29
149

1,706
854
29
162

2.023
821
26
171

750

750

750

382
6

1.305
14

1.197
12

11,310

13,983

16,494

27,108

30.100

31.570

* Less than one-half million dollars.
1
Includes cash of $4.7 million in 1967, and $3.9 million in 1968 under proposed legislation to establish a revolving fund for consumer protective, marketing, and regulatory programs.

In most cases, a large part of the balances are obligated or reserved—
to pay loan commitments, purchase and construction contracts, or
other obligations entered into but on which the other party has not
yet required or earned the money. The balances include inactive




19

SPECIAL ANALYSES

"standby" authority for loans to the Federal Deposit Insurance Corporation, the home loan banks, and the Federal Savings and Loan
Insurance Corporation. Also included is an unused balance for the
never-activated Federal Flood Indemnity Administration (HUD).
TRUST FUNDS

The trust funds are administered in a fiduciary capacity by the
Government. They are not included in the administrative budget
totals, and transactions between the general fund and the trust funds
are conducted "at arm's length"—that is, payments between them are
reported as expenditures and receipts of the funds involved.
Expenditures and receipts.—Trust fund expenditures are estimated
to be $44.5 billion in 1968, with receipts of $48.1 billion, as shown in
table B-4. The transactions of the Federal old-age and survivors
insurance fund are somewhat more than half of the totals.
Table B-4. EXPENDITURES AND RECEIPTS OF TRUST FUNDS
(in millions of dollars)
Expenditures
Description

Federal old-age and survivors insurance
trust fund
Federal disability insurance trust fund
Health insurance trust funds.
Unemployment trust fund
Railroad retirement accounts
Federal employees funds
Highway trust fund
.,
Beauty-Safety trust funds
Veterans life insurance funds . .
Federal national mortgage association trust
funds..
Other trust funds
Deposit funds, net
Interfund transactions (table 13, note)
Subtotal
Government-sponsored enterprises, net
Total

Receipts

1966
actual

1967
1968
estimate estimate

1966
actual

1968
1967
estimate estimate

18,769
1.937
64
2.687
1,246
1.680
3,966

19,944
1,982
3,526
2,655
1.366
2.004
3,938

18,461
1,616
916
4.126
1.411
2.834
3.925

23,043
2,308
4.328
4.146
1.580
3.000
4,523

554

24,442
2,389
4.171
2.534
1.511
2.063
3,816
2*6
587
773

1,478
1,589
-520
-770

1,283
2,082
-159
-734

32,680
2,184
34,864

740

24,399
2,407
5,066
4.235
1.613
3.069
4.607
402
754
750

442
2,506
-122
-730

1.593

1,954

2.320

-770

-734

-730

38,658
2,224

43.865

34.853

44,898

48.142

40.882

44,507

34.853

44,898

48.142

642

The trust funds include a small group of trust revolving funds (see
table B-5) which, like the public enterprise funds, are stated on a
net expenditure basis in figures used elsewhere in the budget. The
Secondary market operations fund of the Federal National Mortgage
Association is the most significant in this group.
Treasury financing.—The principal financing provided by the
general fund to the trust funds is interest paid on public debt investments of the trust funds. The Government also contributes, as
employer, to the employee retirement funds, and under recent legisla-




20

THE BUDGET FOR FISCAL YEAR 1968

Table B-5. TRANSACTIONS OF T R U S T REVOLVING F U N D S (in millions of dollars)
Applicable receipts

Gross expenditures
Description

Civil Service Commission (employees' life
insurance and health benefits)
Federal National Mortgage Association...
All other trust revolving funds
Total trust revolving funds

1966
actual

1967
1968
estimate estimate

1966
actual

1.968
1967
estimate estimate

708
1,934
213

767
1.980
56

85)
1,868
109

724
455
57

820
697
54

917
1,426
48

2,855

2,803

2,828

1,236

1,572

2,391

Receipts from the public
Receipts from other accounts

(850) (1.168) (1.939)
(386)
(404) (452)

tion, it contributes to the supplementary medical insurance and hospital insurance funds. Such payments are shown in table A-3 in the
special analysis, "Three Measures of Federal Financial Transactions."
Balances available.—Trust fund balances with the Treasury and
U.S. securities are shown in table B-6. These balances are reserved
to carry out the purposes of the trust.
Table B-6. T R U S T FUND BALANCES (in millions of dollars)
As of June 30
Description

Federal old-age and survivors insurance trust fund...
Federal disability insurance trust fund
Health insurance trust funds
Unemployment trust fund
Railroad retirement accounts
Federal employees funds
Highway trust fund
Beauty^afety trust fund
Veterans life insurance funds
Federal National Mortgage Association trust funds...
All other trust funds
Deposit funds
Total.
Balances available on an authorization basis (table
10)-..-.
.
Unappropriated receipts:
Available as needed on an indefinite basis
Available for appropriation by Congress:
District of Columbia
United States Soldiers' Home
Highway trust fund
Beauty-Safety trust fund
Unfinanced contract authorization
Undrawn authorizations to borrow
Balances available on a cash basis.

1965
actual

20,180
2,007

19,872

7,861

9,300

4,016
16,108
285

1,686
851

4,181
17,263
244

1967
estimate

1968
estimate

22.928
2,030
2,548
12,492
4,547
19.266

22,971
2,012
1,654
10,791
4,396
18,256
829

1.620
146
7,206
546
1,372

1,731
2,544

7,061
14
1,735
3,064

1.609
3,223

61.627

65,271

72,946

178.046

73,462

76,579

88,024

93.660

75

78

67

66

-133
107
209

-133
108
235

-121
106
789

-173
107
1.580

-9,982
-2,112

•10.783
-813

-12.490
-3,429

-14.473
-2.820

61.627

65,271

72.946

6,874
20

* Excludes participation certificates holding* of $300 millions




1966
actual

7.039

166

3.346

98

1

78,046

SPECIAL ANALYSES

21

The trust fund balances are affected by the transactions as follows
(in millions of dollars):
Balances, start of year

1966
61,627

1967
65,271

1968
72,946

Receipts...

34.853

44,898

48,142

1,472

1,434

823

Borrowingrromthepublic.net
Total available

97.951

Expenditures (excluding Government-sponsored enterprises)
Balances, end of year
Total application and balances

GOVERNMENT-SPONSORED

111.604 121.912

32,680
65.271
97,951

ENTERPRISES AND ANNEXED

38,658
72.946

43,865
78,046

111,604 121,912

BUDGETS

This budget includes with the trust fund expenditures certain
transactions of five Government-sponsored enterprises, stated on a
net basis. The transactions thus reported relate to investments in
U.S. securities and debt issuance for which the Treasury acts as fiscal
agent; amounts equal to the net debt issuance or net disinvestments
of such enterprises are used as an estimate of net expenditures.
The budget appendix includes detailed budget statements with
respect to seven self-supporting activities. All of the seven are
Federal activities. Three of the Government-sponsored enterprises
are in the annexed budget group. The other two—the Federal land
banks and the Federal home loan banks—are privately owned and
have been omitted from annexed budget coverage.
The principal volume of business in this group consists of loans
made by two mixed-ownership banking systems. The Federal intermediate credit banks—in which the Government interest is still
somewhat over half of the capital—are expected to continue a loan
business of over $7 billion a year. The Banks for cooperatives—in
which the Government interest has declined to less than a fourth of the
capital—will make loans of about $2 billion a year. Repayments of
loans to these enterprises are nearly as large.
Estimates for the Exchange Stabilization Fund of the Treasury for
1967 and 1968 are not available, except for administrative expenses.
Therefore, this title shows only the actual 1966 expenditures and
receipts of that fund. Table B-7 summarizes the expenditures and
receipts of these annexed budgets.




22

THE BUDGET FOR FISCAL YEAR 1968

Table B-7. EXPENDITURES AND APPLICABLE RECEIPTS OF ACTIVITIES
COVERED BY ANNEXED BUDGETS (in millions of dollars)
Applicable receipts

Gross expenditures
Description
1966
actual

Milk Marketing Administration
Comptroller of the Currency
Exchange Stabilization Fund
Board of Governors of Federal Reserve
System. . .
Banks for Cooperatives
.
Federal Intermediate Credit Banks
Federal Deposit Insurance Corporation
Total
1

13
20
127

1967
1968
estimate estimate

14
22

14
23

1966
actual

14
21
513

1967
1968
estimate estimate

14
24

14
23

0)

0)

0)

9
1,640
6.255
3

9
2.042
7.304
21

11
2.366
8.091
12

9
1.472
5.891
230

9
1.734
6.801
250

12
2,089
7.681
267

8.068

9,411

10,517

8.149

8,831

10.087

0)

Not available.
OTHER EXCLUSIONS FROM ADMINISTRATIVE BUDGET RECEIPTS

The law permits certain collections to be credited as reimbursements
to general fund appropriations. Such collections from outside the administrative budget accounts are identified in the detailed schedules
of the budget appendix as reimbursements from "non-Federal sources,"
distinguishing them from reimbursements within the administrative
budget sector. The intragovernmental revolving and management
funds also have some receipts from outside the Government. Table
B-^8 reflects the estimated amount of such collections which are
credited to appropriations or to intragovernmental funds.
Most of the collections reported here are for the sales of supplies
and materials from the Department of Defense stock funds to authorized outside parties. Two Veterans Administration life insurance trust
funds receive credits from optional income settlements and other
similar adjustments, also reflected in this table.




23

SPECIAL ANALYSES

Table B-8. REIMBURSEMENTS FROM NONFEDERAL SOURCES TO APPROPRIATIONS AND INTRAGOVERNMENTAL FUNDS (in millions of dollars)
Description

1967
estimate

1966
actual

1968
estimate

Total...

10
27
4

10
31
4

176

6
40
59
4
*
6
27
36
109
2
12
2
1
187

2,001.
6
144
45
4
3
4
28
32
98
7
14
2
1
189

2,302

Funds appropriated to the PresidentDepartment of Agriculture
Department of Commerce
Department of Defense:
Military...
Civil....
Department of Health, Education, and Welfare.
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation.
Treasury Department
Atomic Energy Commission..
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies
Trust funds..

2.418

2,624

2
24
4
1,788
6
37
65
2
26
34
130
4
*
2

•Lest than one-half million dollars.

GROSS EXPENDITURES OF THE GOVERNMENT

Table B-9 gives gross expenditures, on a checks-issued basis for
all Government-administered funds, except deposit funds; the latter
are excluded since they are for the most part suspense accounts.
The increase of nearly $46 billion from 1966 to 1968 is largely for
two functions—about $18 billion for national defense, in part due to
the buildup relating to Vietnam; and slightly over $13 billion for
health, labor, and welfare, mostly due to health service for the aged
and the increased expenditures from social economic trust funds.




24

THE BUDGET FOR FISCAL YEAR

Table B-9.

GROSS

1968

E X P E N D I T U R E S OF G O V E R N M E N T - A D M I N I S T E R E D
F U N D S (in millions of dollars)
Function

National defense
International affairs and finance
Space research and technology
Agriculture and agricultural resourcesNatural resources.
* Commerce and transportation
Housing and community development.
Health, labor, and welfare
Education
Veterans benefits and services.
Interest
General government
Undistributed—special allowances
Total.

The total is derived as follows:
Administrative budget expenditures (table 1 4 ) . .
Trust fund expenditures (tables 14 and B - 4 ) :
Total of such transactions
Elimination of deposit funds included in total
Intragovernmental transactions (table A - 4 ) :
Trust fund payments to the administrative budget.
Administrative budget payments to trust funds
Receipts from the public netted in conventional totals:
Receipts of public enterprise funds (table B - 1 ) . .
Receipts of trust revolving funds (table B-5)
Reimbursements to appropriations and intragovernmental
funds (table B-8)
Substitution of annexed budgets:
Gross expenditures of annexed budgets (table B-7)
Elimination of net expenditures of Government-sponsored
enterprises (included in table B-4)
Total.

1966
actual
60.570
5,340
5,934
16,523
3,580
12,382
4,953
32,689
2,792
7,026
10,224
2,606

1967
estimate
73,555
5,889
5,612
19,215
3,778
13,229
5,894
38,929
4,065
7,877
11,241
2,773

1968
estimate
79,089
6,763
5,316
19,463
4,085
13,900
6,037

46,241
4,683
8,129

100

11,468
2,899
2,150

164,619

192.156

210,222

106,978

126.729

135,033

34.864
520

40,882
159

44,507
122

-120
-3.239

-124
-4,900

-116
-5,204

16.580
850

18,638
1,168

21.442
1,939

2,302

2,418

2,624

8,068

9,411

10.517

-2.184

-2,224

-642

164.619

192,156

210,222

BORROWING OTHER THAN PROM THE GENERAL FUND

The Tennessee Valley Authority has authority to borrow $1,750
million from the public. The Federal Housing Administration has
an indefinite authorization to issue short-term debentures in connection with its settlements. The Federal National Mortgage Association trust revolving fund has authority to issue its own debt instruments in an amount equal to 15 times the aggregate of its capital
and retained earnings. A few funds in liquidation are retiring earlier
debt issuances. Government-sponsored enterprises also have their
own borrowing authority. Some Government enterprise debt is guaranteed by the Treasury; some is not formally guaranteed. Borrowing
and repayments pursuant to these authorities are shown in table B-10.
A small portion of such borrowing is from other funds such as the
sale of Federal Housing Administration debentures to Federal National
Mortgage Association; the larger part is from the public and in effect
reduces the Treasury borrowing from the public (see table 11 of part 2).




25

SPECIAL ANALYSES

Table B-10. DEBT ISSUANCES BY GOVERNMENT ENTERPRISES (OTHER
THAN BORROWING FROM THE GENERAL FUND) (in millions of dollars)

Description

Borrowing from the public:
By public enterprise funds:
Federal Housing Administrationl.
Federal Farm Mortgage Corporation K..
Home Owners Loan Corporation 1
Tennessee Valley Authority
By trust funds:
District of Columbia Armory Board >...
Federal National Mortgage Association.
By Government-sponsored enterprises:
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
Federal home loan banks
...
Total, borrowing from the public.
Borrowing from other funds:
By public enterprise funds:
Federal Housing Administration
By Government-sponsored enterprise funds:
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
Federal home loan banks
Total, borrowing from other funds.
Total, debt issuances by Government enterprises
-

1967
estimate

1968
estimate

End 1968,
estimate
outstanding

32
*

453
*

60

74
*
*
110

100

495

1,472

1,434

""823"

20
5,526

134
362

257
461
552
799

257
359
434
-606

1.330
3,628
5.088
6.465

4,064

3,687

1,399

23,006

-46

-15

-2

77

24
29
-22
28

18
40
76
92

191
206

64
127
271
335

13

210

454

874

1,853

23.880

1966
actual

-83

596
1,525

4,077

3,f

18
41

Note.—Negative figures represent net retirement of debt.
'"Less than one-half million dollars.
1
Guaranteed by the Treasury (except for a small part of the HOLC obligations).

INVESTMENTS IN U.S. SECURITIES

A few public enterprise funds, a substantial number of trust funds
and the Government-sponsored enterprises may purchase Treasury
bonds or notes for investments. In addition, several funds acquire
some of the debt issued by Government enterprises, and the Federal
Housing Administration acquires some of its own debentures as investments. These investment transactions in securities issued by the
Government or its agencies are shown in table B - l l .
The public debt bought by the various funds enters into the computation of the debt as shown in table 11 of part 2.




26

THE BUDGET FOR FISCAL YEAR 1968
Table B-11. PURCHASES OF U.S. SECURITIES BY GOVERNMENTADMINISTERED FUNDS (in millions of dollars)
Transaction i
Description
1967
estimate

1966
actual

1968
estimate

End 1968.
estimate
outstanding

Investment in Treasury issuances (public debt):

By public enterprise funds:
Housing and Urban Development:
Federal Housing Administration
Public Housing Administration
Federal National Mortgage Association
Federal Savings and Loan Insurance Corporation
.
Veterans Administration
Maritime Administration
.
By trust funds:
Federal old-age and survivors insurance trust
fund
Federal disability insurance trust fund
Federal supplementary medical insurance trust
fund
Federal hospital insurance trust fund.
Unemployment trust fund.. v
Railroad retirement accounts
Federal employees' funds
Highway trust fund
..
. ..
Veterans life insurance funds
.
-.
District of Columbia municipal government funds.
Allother
By Government-sponsored enterprises:
Federal Deposit Insurance Corporation
. .
Bank for cooperatives
Federal intermediate credit banks
.
Federal land banks
Federal home loan banks
..
By Exchange stabilization fund
Total, investments in Treasury issuances

-93
14
-4

13

52

560
21
2

204
37
*

181

318

52
*

60
3

2,016
301
7

-857
-413

3.425
391

-140
8

21.194
1.861

786
1.468
154
1.122
-28
208
3
71

260
608
1.466
274
1,084
582
-19
4
-3

34
860
1,696
178
993
570
169
3
6

295
2.253
12.415
4.521
19.175
1,390
7.201
65
102

230

256
3

*
260
387

2

3.829
49
111

-159

1,800

3.549

8,389

5,069

79,911

-36
80

-13
75

-2
77

74
259

-6
-25

151

382

533

-3

-2

-2

5

13

211

455

874

3,562

8.600

5,523

80,785

227
3
*

j

100
643

Investments in issuances of other funds:

By public enterprise funds:
Liquidating programs
Federal Housing Administration
Federal National Mortgage Association
By trust funds:
Federal National Mortgage Association
Veterans Administration
.
District of Columbia municipal government
funds . .
...
.
Total, investments in issuances of other
funds
Total, investments in U.S. securities.

3

Note.— Negative figures represent net reduction of investments.
"Less than one-half million dollars.




3

SPECIAL ANALYSIS C
CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH

The buildup of military support for Vietnam operations and rising
postal and other workloads will cause Federal civilian employment to
rise in fiscal years 1967 and 1968. A thorough review and evaluation
of employment requirements and stringent manpower utilization practices are being used to keep employment at the minimum required.
FULL-TIME PERMANENT CIVILIAN EMPLOYMENT

Civilian employment in full-time permanent positions is estimated
to be 2,546,500 in June of this year. This is an increase of 130,000 over
the estimate carried in the 1967 budget 1 year ago. The major factors
accounting for the increase are:
First, the increased Defense and civilian agency activities directly
associated with our commitments in southeast Asia, which are
up by 110 thousand civilian employees.
Second, the unprecedented mail volume accompanying the current
high level of economic activity which is substantially greater
than anticipated last January, resulting in a rise of 25,000
employees.
Aside from increases for these two purposes, full-time permanent
civilian employment at the end of June 1967 is now estimated to be
less than projected in last January's budget, as shown in the following
table:
June 1967
Estimate
a year
ago

Current
estimate

Change

Department of Defense, Military and military assistance. _ __•_ 1,073,000 1,180,500 107,500
Civilian agency direct support for Southeast Asia:
State Department and Agency for International Development
6,400
7,800,
1,400
Selective Service System
5,790
6,300
510
General Services Administration
4,350
4,500
150
United States Information Agency
1,000
1,200
200
Subtotal.

1,090,540 1,200,300 109,760

Post Office Department

500,000

525,000

25,000

Other civilian employment:
Veterans Administration....
Department of Health, Education, and Welfare
Department of Agriculture
Treasury Department
Department of the Interior
General Services Administration
Department of Commerce
Department of Housing and Urban Development
All other

150,850
99,010
82,850
80,900
58,640
32,400
2*. 650
15,350
274,510

149,300
95.900
84,400
80,900
60,200
32,100
25,100
14,200
277,200

-1,550
-3,110
1,550

Subtotal, other civilian employment

821,160

819,300 -1,860

4,800

1,900 —2,900

Allowance for contingencies
Total




1,560
—300
-1,550
— 1,150
2,690

2,416,500 2,546.500 130,000
27

28

THE BUDGET FOR FISCAL YEAR 1968

Full-time permanent civilian employment is estimated to rise by
68,500 to a total of 2,615,000 in the fiscal year 1968. Of this total labor
force, almost half will work in the military functions of the Department of Defense (including military assistance). Another one-fifth
will be employed by the Post Office Department. These two agencies,
therefore, account for two-thirds of the Federal civilian full-time
permanent employment.
The largest remaining Federal employers are the Veterans Administration with 6 percent, Health, Education, and Welfare with 4 percent, and Treasury and Agriculture with more than 3 percent each.
Table C-1.

SUMMARY OF FULL-TIME PERMANENT EMPLOYMENT IN
THE EXECUTIVE BRANCH
As of June
Agency

Department of Defense, Military and military
assistance
Civilian agency direct support for Southeast Asia:
State Department and Agency for International
Development
Selective Service System
General Services Administration
United States Information Agency

Subtotal.

1966
actual

1967

1,204,900

24,400

8,450
6,300
4,550
1,210

650

,200.300 1,225.410

25,110

1,052,998 1,180.500
4,791
6,969
3,789
900
1.069,447

1968

Increase
1968
over
1967

7,800
6,300
4,500
1,200

50
10

Post Office Department.

489,898

525,000

539,300

14,300

Other civilian employment:
Veterans Administration
Department of Health, Education, and Welfare. _.
Department of Agriculture
Treasury Department
Department of the Interior
General Services Administration
Department of Commerce
Department of Housing and Urban Development-.
All other..

147.634
91.650
84,070
80,176
59.432
32.166
25,133
14.009
272.702

149,300
95,900
84.400
80.900
60.200
32,100
25,100
14,200
277.200

154.200
99,800
85.800
83.200
62,100
32,950
26,800
15.400
285,240

4,900
3.900
1.400
2.300
1.900
850
1.700
1,200
8,040

806,972

819.300

845,490

26,190

1,900

4,800

2,900

2,366,317 2,546,500 2.615,000

68,500

Subtotal other civilian employment.
Allowance for contingencies
Total

The most significant changes for 1968 compared with 1967 are
shown in table C-1. Of the total increase of 26,190 for the civilian
activities of the Government, excluding Post Office, 4,900 or 19% is
for the Veterans Administration; 3,900 or 15% is for the Department
of Health, Education, and Welfare; and 2,300 or almost 9% is for the
Treasury Department.
The increase in the Veterans Administration is principally to provide staff for new hospitals being opened, new intensive care units, and
other recently completed specialized treatment facilities in veterans




SPECIAL ANALYSES

29

hospitals. It will result in substantially improving medical care for
veterans.
About one-third of the 1968 increase in employment for the Department of Health, Education, and Welfare is attributable to recently enacted legislation for medical insurance for the elderly. The remaining two-thirds is principally for direct medical care in public health
and Indian hospitals, increased control and enforcement over dangerous drugs, air pollution, and other toxic substances, and aids to education. The Social Security Administration is achieving a productivity
improvement of 2% per year through increased efficiency of operations, with a saving of 400 man-years in fiscal year 1968.
In addition—
• The increase in Treasury is primarily for rising workloads in
Internal Revenue operations due to a 2.3% increase in the number
of tax returns.
• The increase in the Department of Commerce is principally for
expanded weather observation and forecasting capabilities of Environmental Science Services Administration, further research at
the National Bureau of Standards, and augmentation of the Patent
Office staff in order to reduce the backlog of patent applications.
• The growth in the Department of the Interior is chiefly for the
education of Indians on Government reservations; operation of new
power facilities built with funds provided in earlier years; expanded efforts on water pollution control; and an anticipated increase of about 9% in visitors to the national parks.
TOTAL FEDERAL PERSONNEL

Almost nine-tenths of executive branch civilian employment consists of permanent full-time employees. The remainder is made up of
part-time and intermittent workers, who are mostly employed in shortrange or special projects or work of a purely seasonal nature.
In total, Federal (xovernment personnel includes both civilian and
military personnel. Adding the latter to the civilian employment figures shows a grand personnel total for the executive branch of approximately 5,793,000 for June 1966. In addition, the employment of the
legislative and judicial branches in June 1966 was about 33,000.
At of June
Civilian employment in the executive branch:

1966
actual

1967
estimate

1968
estimate

Permanent full-time
Other than permanent full-timeJ
Military personnel:
Department of Defense
Reimbursable details to other agencies
Department of Transportation (Coast Guard)

2,366,317 2,546,500 2,615,000
298,064
262,500
266,500

Total executive branch personnel

5,793,379 6,234,153 6,384,554

Legislative and judicial personnel
Total

3,091,552 3.386,818 3.464,302
2,157
2,523
2,513
35,289
35,812
36,239

32,692
5,826.071

1
Excludes summer workers under the President's Youth Opportunity Campaign and various
merchant seamen on vessels under Federal shipping contracts.




30

THE BUDGET FOR FISCAL YEAR 1968
GEOGRAPHICAL DISTRIBUTION OF EMPLOYMENT

Table C-2 presents data on the geographical distribution of Federal
employment. Most Federal employees—almost 83%'—work in the
various States. A little under 11% are located in the Washington,
D.C., metropolitan area (including nearby Maryland and Virginia).
An additional 6% are in foreign countries and in U.S. territories and
possessions.
Table C-2. FEDERAL CIVILIAN EMPLOYMENT BY GEOGRAPHICAL

LOCATION (as of June 1966)
Location

Washington, D.C., metropolitan
area
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan.
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada.
New Hampshire
New Jersey
New Mexico

New York
North Carolina
North Dakota
Ohio
1
2
3

Total

2

292,664
61,437
14.084
24,131
15.991

280.120
39.064
17.158
3.857
60.183
71,235
24,505
7,730
107,362
37.774
17.475
21.095
32,088
27,240
15,590
3
55,548
62,911
49,536
28,089
18.996
60.202
10,427
15.208
7.586
4,468
61,731
25,688
176,841

33,216
7.131

Total

Location

Oklahoma
Oregon
Pennsylvania
Rhode Island.
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Undistributed

51,626
22,866
137,842
13,850
27.097
9.671
42,847
136.389
36.847
3.078

--

Total United States
Outside United States:
Territories and possessions
Foreign countries
Total outside United
States.

3

75.599
51.775
12.235

23.668
5.193

* -4.983
2.530,731

5

34.329
132,013
166.342

Total employment
Legislative and judicial

2,697,073
-32,692

Total employment executive branch
Other than full-time permanent..

2.664,381
-298,064

Total full-time permanent
employment, executive
branch

2,366,317

96.770

Distribution by State is partially estimated.
Includes employees of the executive branch and of the legislative and judicial branches.
Excludes employment within the Washington, D.C. metropolitan'area, which includes the District of Columbia, and the adjacent counties and cities in Maryland and Virginia.
* Includes various merchant seamen on vessels under Federal shipping contracts who are distributed
by5 State of residence.
Includes 113,958 foreign nationals classified as Federal employees; excludes 128,549 foreign
nationals working for Department of Defense under contract agreements, or other arrangements
with foreign governments which provide for the furnishing of personal services.




31

SPECIAL ANALYSES
PERSONNEL COMPENSATION AND BENEFITS

Estimates of the Federal payroll and related costs are shown in
table C-3. Direct compensation includes regular pay, Sunday pay,
and special pay for overtime, holiday, and standby time; differentials
for nightwork and overseas duty, flight and hazardous duty, etc.
Eelated personnel benefits include the Government's share of Federal
retirement and old-age, survivors', and disability insurance costs;
employees' life insurance, health insurance and benefits, and similar
payments; they also include cost-of-living and quarters allowances,
uniform allowances (when paid in cash); and, in the case of the
military personnel, they also include allowances for subsistence, reenlistment bonuses, and certain other cash payments.
Table C-3. ESTIMATED PERSONNEL COMPENSATION AND BENEFITS
[Fiscal years.

In millions of dollars]
1966

Civilian personnel costs of trust and public enterprise funds:
Direct compensation
Personnel benefits

Remaining personnel costs (i.e., excluding trust and public
enterprise funds):
Direct compensation .
..
Personnel benefits
.

..

5.650
450

5.900
500

6.100

6.400

15,100
1,250

15.650
1.300

14.800

16,350

16,950

10,050
2,950

11,900
3,500

12,700
3,900

13,000

15,400

16,600

1968»

2

Total

Total

23,350

13.700
1.100

Total

22.450

5.100
400

...

21.550
1.800

5.500

_

20,750
1,700

20.300

Total civilian personnel costs:
Direct compensation
Personnel benefits..

1967

18.800
1,500

Description

.

MEMORANDUM
Total military personnel costs:3
Direct compensation
Personnel benefits.
Total

.

.

1
Excludes 1968 budget allowance of
2
Includes annexed budget agencies.
3

. .

._.
. .

$1 billion for military and civilian pay increases.

Excludes Reserve components.

The obligations to be incurred for civilian personnel compensation
and benefits in 1968 are estimated at $23 billion.
Some of the personnel are employed by trust funds (such as oldage and survivors insurance) and some are employed by public enterprise funds (such as the Post Office). After deducting for the costs
of such employees, the remaining personnel costs are $17 billion.
Government pay scales for "blue-collar" workers have for many
years been subject to administrative adjustment to correspond to local
prevailing rates in private industry. As wages in private industry
advanced, Federal compensation for such workers also increased.



32

THE BUDGET FOR FISCAL YEAR 1968

Pay for most other Federal workers has been set by statute. Pay
scale changes effective in October 1962, January 1964, July 1964,
October 1965, and July 1966 have resulted in significant progress
toward the comparability standard set forth in the 1962 Salary Eeform Act. The compensation figures reflect such pay changes as well
as changes in the number of employees.
Special efforts were made last year, and again in the preparation
of this budget, to hold down the rise in average grades and the resulting changes in average salary experienced over a number of preceding years. For the first time in a long period there was in 1965 no
Government-wide change in average grade of Classification Act employees. This trend was continued during 1966 when at year's end
the change in Government-wide average grade was slightly lower
than in 1965. Average compensation showed only a slight advancement (apart from changes in pay scales), mostly due to merited within-grade salary advancements and necessary reclassifications of new
positions in certain agencies.
CHANGE IN POSITION STRUCTURE

There have also been changes in the position structure which have
affected the average salary and the total compensation. Chiefly,
these are the result of changes in the character of the Government's
workload and in the level of employee skills required to deal with it.
For example, as a result of increasing specialization and greater
emphasis on research and development, the number of engineers in
the Federal service grew 61%, and the number of physical scientists
85%, in the period from 1954 through 1966. During this period, the
Government's need for professional medical personnel rose 39% and
for biological scientists, 52%. At the same time, the expanded efforts
to reduce employment and to increase productivity—in many cases
by shifting from manual to semi-automatic or automatic processing
methods—have decreased the need for unskilled employees. These
same trends have been occurring in private enterprise.
A recent analysis made by the Civil Service Commission shows the
following changes in position structure of Classification Act employees
between 1961 and 1966:
• Reduction in percentage of clerical and aide jobs (GS-1 to GS-6)
from 53.2% to 48.8% of total employment.
• Increase in percentage of professional, technical and administrative jobs (GS-7 to GS-15) from 46.7% to 50.9% of total
employment.
• Increase in GS-16 to GS-18 jobs from 0.1% to 0.3% of total
employment.
TRENDS IN NUMBERS OF EMPLOYEES AND WORKLOAD

With the continued growth in population, in national income, and
in economic activity generally, there has been a concomitant growth
in the volume of public services which the Government is called upon
to render. In the fiscal year 1968, for example, the participants in
the food stamp program will rise 25%; the lineal nautical miles surveyed by the Coast and Geodetic Survey will increase 90%; the num-




33

SPECIAL ANALYSES

ber of passports applied for will rise 11%; takeoffs and landings at airports served by Federal towers will increase 13%; establishments with
Federal meat inspectors will rise 4.5%; the number of pieces of mail
delivered by the Post Office will be up 4.5%; and customs inspections
of mailed packages will rise 71%. Staffing for new programs such as
hospital insurance for the elderly, and increased demands for services
can be accommodated only by increased productivity or additional
workers, or a combination of both.
Government Civilian Employment
Millions of Employees
14 —

12

(77%)

State and Local

(23%)

1942

1945

End of Fiscal Year

1950

1955

I960

1965

1968
Estimate

A historical comparison of total Federal civilian employment in
the executive branch (including temporary and part-time employment) with employment by State and local governments and U.S.
population for 1942-68 is shown in table C-4.
255-300 0—67-




34

THE

BUDGET FOR FISCAL YEAR

1968

Table C-4. GOVERNMENT EMPLOYMENT A N D POPULATION, 1942-68
Population

Government employment
Year

Total
Federal emFederal
State and All govern- Federal as
United
ployment
executive local governmental
percent of
States
units
per 1,000
branch '
all governments
(thousands) (thousands) (thousands) mental units (thousands) population

1942
1943
1944
1945
1946
1947
1948....
1949
1950.
1951
1952.
1953
1954
.
1955..
1956
1957
1958
1959
. .
1960 .
1961
1962. .
1963
1964
1965
1966 . .
1967 (estimated) 4
*....
1968 (estimated) _.__

2,272
3,274
3,304
3,787
2,666
2,082
2.044
2.075
1,934
2,456
2.574
2,532
2,382
2,371
2,372
2.391
2.355
2.355
»2,371
2,407
2,485
»2,490
3
2,469
2,496
2,664
2.809
2,881

3,310
3.184
3,092
3,104
3,305
3,568
3,776
3,906
4,078
4,031
4.134
4.282
4.552
4.728
5.064
5.380
5.630
5,806
6,073
6,295
6.533
6.834
7.236
7.700
8.314

5.582
6.458
6,396
6,891
5,971
5,650
5.820
5,981
6.012
6,487
6,708
6,814
6,934
7,099
7,436
7,771
7,985
8,161
8,444
8,702
9,018
9,324
9,705
10,196
10,978

40.7
50.7
51.7
55.0
44.6
36.8
35.1
34.7
32.2
37.9
38.4
37.2
34.4
33.4
31.9
30.8
29.5
28.9
28.1
27.7
27.6
26.7
25.4
24.5
24.3
23.7
22.7

135,361
137.250
138,916
140.468
141,936
144.698
147.208
149.767
152.271
154.878
157.553
160,184
163,026
165,931
168,903
171.984
174.882
177.830
180.684
183.756
186,656
189.417
192.119
194.572
196.842

16.8
23.9
23.8
27.0
18.8
14.4
13.9
13.9
12.7
15.9
16.3
15.8
14.6
14.3
14.0
13.9
13.5
13.2
13.1
13.1
13.3
13.1
12.9
12.8
13.5
14.1
14.3

1
Covers total end-of-year employment in full-time permanent, temporary, part-time, and intermittent positions except for summer workers under the President's Youth Opportunity Campaign;
and various merchant seamen on vessels under Federal shipping contracts:
1966 actual 1967 estimate 1968 estimate
56,780
60,604
62,018
Youth Opportunity Campaign.
4,983
11,083
11.136
Merchant seamen
2
Includes piece-rate census workers employed for the decennial census.
3
Excludes 7,411 project employees in 1963 and 406 project employees in 1964 for the public works
acceleration program.
4
An official projection of population and of State and local government employment for 1967 and
1968 is not available. The percentages and ratios shown for these years are consistent with a range
of reasonable estimates based on recent trends in population and State and local employment.




SPECIAL ANALYSIS D
INVESTMENT, OPERATING, AND OTHER EXPENDITURES

This analysis is designed to contribute to a greater understand'ng of
Government activities by dividing Federal administrative budget and
trust fund expenditures into several categories: (1) Additions to
Federal assets; (2) additions to State, local, and private assets; (3)
developmental expenditures; (4) current expenses for aids and special
services; (5) retirement and social insurance benefits (trust funds
only); (6) other services and current operating expenses; and (7) unclassified (expenditures which do not properly belong in any of
the other categories). In each category where applicable, national
defense expenditures are reported separately from those for all other
(civil) programs.
Basically, this analysis distinguishes between two types of expenditures: Those yielding benefits primarily in the future and those providing benefits largely in the year in which they are made. The
former are essentially outlays of an investment nature while the latter
are principally current expenses for aids, special services, and social
insurance benefits. Expenditures yielding benefits over a period of
years are shown in the first three classes, whi'e outlays providing
mainly current benefits are grouped in the remaining categories.
Expenditures from administrative budget funds are shown separate'y from trust funds in tables D-l and D-2. The sum of the budget
and trust fund totals is greater than the total of cash payments to
the public primarily because there are intragovernmental transactions.
1. Additions to Federal assets.—This category includes administrative budget expenditures for direct loans, such as loans to finance
private housing construction and encourage home ownership, to help
small businesses, to finance college dormitory construction, to aid farm
ownership and operation, to finance rural electric and telephone
systems, and to promote economic development abroad. (Most of
these programs are included in the budget total on a net basis; that is,
gross disbursements less receipts.) It al o includes financial investments in certain international organizations and mixed-ownership
enterprises. Expenditures for public works, for changes in major
commodity inventories, for major equipment (including military
equipment), and for the acquisition and improvement of real property
and other physical assets are also covered.
Trust fund expenditures in this category consist primarily of mortgage purchases (net of sales) by the Federal National Mortgage
Association in support of its secondary mortgage market operations,
md net loans by two Government-sponsored enterprises—banks for
cooperatives and the Federal intermediate credit banks.




35

36

THE BUDGET FOR FISCAL YEAR 1968

Table D-1. SUMMARY OF INVESTMENT, OPERATING, AND OTHER
EXPENDITURES (in millions of dollars)
Trust fundi

Administrative budget funds
Description

1966
actual

Additions to Federal assets:
Civil:
Loans and financial investments... . .
561
Physical assets.
2,750
National defense
16,891
Additions to State, local, and private
assets:
Civil
1,398
National defense
11
Developmental expenditures:
Civil
.
10,775
National defense
7,903
Subtotal, investment and developmental type expenditures:
Civil
National defense
Current expenses for aids and special
services:
Civil
.
....
National defense
- -Retirement and social insurance benefits—
civil
..
Other services and current operating
expenses:
Civil:
Interest
Other
National defense
District of Columbia, deposit funds, and
other unclassified items
- . ..
Participation sales fund
Allowances for:
Civilian and military pay increases
Possible shortfall in assets sales
Contingencies
Interfund transactions
.
Grand total

1967
1968
estimate estimate

1966
actual

556
1. 878
?1 618

-953
2.550
24,284

2 226

1 9??

? 553

•>, 773

9

13

I
1968
1967
estimate estimate

2,805
26
15

1, 622

1

5,497
1

4 014
*

1? 573 13 548
8 398 8 985

83

103

175

15,485
24,805

16 979 17 698
30 075 33 781

8 056
7

8,431

16

5 791
*

18.513
1,052

77 675 ?? 047
1 009
877

1 443
751

1,805
1,115

1 894
1 363

74 586 29,001

35,006

12,132
3,894
31,862

H 509 14 153
4 141 4 757
39.187 41 ,379

25
*

30

709

279

7

7

353
7

5R0

962

822

400
-682

-770

-734

-730

106.978 126.729 135,033

34,864

40,882

44,507

-129

-80

-77

1 000
750
-635

100
-766

"Less than one-half million dollars.

2. Additions to State, local, and private assets.—Federal outlays under
this heading add to State, local, and private assets. Grant-in-aid
expenditures which augment the physical assets of State and local
governments are primarily for the construction of highways (mainly
through the Highway trust fund), hospitals, airports, waste-treatment
works, watershed protection projects, schools in federally affected
areas, and public facilities under the area redevelopment program
and the temporary accelerated public works program. Federal expenditures which increase the value of privately owned assets are
largely for the conservation and improvement of private farmland
and water, for grants to States for the building of private hospitals




SPECIAL ANALYSES

37

and other health facilities, and for construction subsidies to the
merchant fleet. Trust fund expenditures in this category, in addition
to the highway program, include the net loans made by the Federal
land banks and the Federal home loan banks (Government-sponsored
enterprises in which the Federal Government no longer holds any
capital stock); these loans strengthen lending institutions which promote farming and individual home ownership.
3. Developmental expenditures.—federal expenditures of this type
include outlays principally for research and development, education
and health, and other programs which increase the Nation's fund of
knowledge and technical skills and improve the physical vigor of the
population. The total of Federal spending shown in this category
does not fully reflect the Government's contribution to the productivity of the economy, since it excludes additions to physical assets, as
well as certain other programs which further this end. The latter
are classified in accordance with their principal purpose; thus, veterans
educational benefits are listed as veterans aids rather than as developmental outlays. Similarly, the training of military personnel or other
Government personnel is treated as an operating expense and not as
part of the Government's education and training programs.
4. Current expenses for aids and special services.—Expenditures
classified under this heading provide aids or special services to certain
groups—mainly in the year in which the outlays are made. In addition to such items as realized losses of the Commodity Credit Corporation on its farm programs, maritime, operating subsidies, veterans
pensions, and grants to foreign nations for economic and military
assistance, this category includes (a) administrative and other operating expenses attributable to investment-type programs which benefit
specific groups, and (b) the costs of maintaining the physical assets
related to those programs.
Only part of the Federal Government's aid to special groups is
reflected in this classification, which is limited by definition to current*
expenses. For example, subsidies for the construction of private
merchant ships are classified as additions to private assets. Similarly,
outlays for which the Federal Government receives assets or collateral
(as the acquisition of farm commodities by the Commodity Credit
Corporation) are treated as additions to Federal assets. Many
indirect Government aids are excluded from this classification either
because they are not reflected in expenditures or cannot be readily
measured. Examples of such indirect benefits include low interest
rates on some loans and certain preferential tax treatments.
Although expenditures in this category essentially provide a direct
aid or special service yielding immediate benefits, some of the outlays
included contribute indirectly to the Nation's future development.
Amon? these are grants for slum clearance and urban renewal.
5. Retirement and social insurance benefits.—This category applies
only to trust funds. It covers benefit programs which (a) are financed from special taxes or contributions and (b) provide insurance
against the loss of income due to unemployment, retirement, disability,
or death. It does not include Government employees' health and
life insurance expenditures, which are in the form of subscription and
premium payments to approved private companies. It also excludes
such noncontributory programs as public assistance grants, military




38

THE BUDGET FOR FISCAL YEAR 1968

retired pay, and veterans disability and death compensation and
pensions which are financed through the administrative budget.
6. Other services and current operating expenses.—The outlays reported under this heading support a wide range of activities. They
consist mainly of current expenditures for: Pay and subsistence of
military personnel; repair, maintenance, and operation of physical
assets of the,national military establishment and general purpose
public buildings; conduct of foreign affairs; tax collection; payment of
interest on the national debt; and operation and administration of
other direct Federal programs not elsewhere classified.
7. Unclassified.—Certain expenditures represent financial transfers
to other trust or budget accounts and cannot be properly classified into
any of the categories described above. Advances and repayments
between the Railroad retirement account and the Unemployment
trust fund (for railroad unemployment benefits) are examples of such
transactions. The net accumulations in the participation sales funds
held for later distribution are another example. This grouping also
includes the expenditures of the District of Columbia which are for
the most part locally financed, but are accounted for as a Federal trust
fund. Deposit fund transactions (net) are also included here.
Recoverability of expenditures.—In general, Government expenditures
for assets are not expected to be recovered by specific revenues.
However, most loans, investment in commodity inventories, the
construction of powerplants, and outlays for range and forest improvements on public domain and national forest lands are offset in
whole or in part by receipts to the Treasury through repayments and
sales, specific charges, or recoveries. Where such activities are carried
on through revolving funds, as in most loan programs, receipts are
credited directly against the expenditures and only the difference is
included in the expenditure total in the budget and in this analysis.
In other cases, the returns are included as miscellaneous receipts to
the Treasury rather than as offsets to expenditures.
Whether recovered by specific revenues, or not, investment and
developmental expenditures in both physical and human capital add
to the wealth and income of the Nation and, by helping to expand the
tax base, augment the Government's potential future revenues.
However, this analysis does not attempt to measure the degree of
recoverability of these outlays, the potential gain in public revenues
which will be forthcoming from them, nor the duration of future
benefits and their discounted present value.
Comparison with capital accounting, budgeting, and funding.—The
purpose of this analysis is to provide a broad framework for understanding Federal expenditures, recognizing not only outlays to increase
physical capital and financial assets, but also developmental expenditures which represent an investment in human capital. It does not
distinguish precisely between capital and current items, although it
does provide useful general magnitudes. Moreover, it does not make
any allowance for depreciation and obsolescence on existing physical
assets, anticipated losses on loan programs, or profit or loss on sales of
assets at figures different from their book value. Agencies record such
allowances only for transactions where the data will serve program
and management needs, as in the case of the public enterprise funds.
As a result, it is not possible to determine directly from this analysis
the net addition to the value of federally owned assets.



39

SPECIAL ANALYSES

This analysis is not a capital budget in the sense of a long-range
program for the acquisition of assets, or a plan for separate financing
of capital expenditures. Some foreign governments and some State
and local governments fund a portion of their capital expenditures by
separate borrowing and exclude most or all such expenditures from
their computation of budget totals, except for annual charges to
amortize these capital outlays over a number of years. The U.S.
budget, on the other hand, treats outlays for investment items and
for other purposes alike in computing the budget surplus or deficit.
Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)
Description

1967
estimate

1966
actual

1968
estimate

Administrative Budget Funds
ADDITIONS TO FEDERAL ASSETS
Loans:
Civil:
To domestic private borrowers:
Funds appropriated to the President: Economic opportunity loan fund
Department of Agriculture:
Commodity Credit Corporation: Price support, supply
and related programs
Rural Electrification Administration: Loans
Farmers Home Administration:
Direct loan account..
Rural housing direct loan account
Rural housing insurance fund
Agricultural credit insurance fund
Other
..Other
--..
Department of Commerce:
Economic development assistance: Industrial development loans and guarantees
Other
Department of Health, Education, and Welfare:
Office of Education:
Higher educational activities
Defense educational activities
Higher education facilities loan fund
Other
Public Health Service and other
Department of Housing and Urban Development:
Renewal and housing assistance:
Housing for the elderly or handicapped
College housing loans
Other
Mortgage credit:
Federal Housing Administration fund
Federal National Mortgage Association:
Management and liquidating functions
Special assistance functions fund
Other
Other
-.-Department of Transportation: Civil supersonic aircraft
development
'Less than one-half million dollars.




30

27

21

-703
361

-717
258

-516
319

-394
-135
17
-80
-22
*

-474
-162
-14
-20
-6
1

25

49

30
177

20
188
-44

109
5
-27

23

37

1
34

53
151

64
-166
10

-19
-730
22

100

116

84

-114
-314
4
-3

-34
-72
4

-232
191
-4

99

170

90

40

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars) —Continued
1967

1966

Description

1968

Administrative Budget Funds—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued
Civil—Continued
To domestic private borrowers—Continued
Veterans Administration:
Housing loans:
Veterans direct loans
Loan guarantee revolving fund..
Federal Home Loan Bank Board
Small Business Administration:
Revolving fund.. . .
.
Disaster loan fund
Business loan and investment fund
Other agencies

-666
30

-30
•a

A

16

48

-25

-65

•a

.

193

-123
-345

-146

1

6

53
-94
11

-675

-679

-1,799

25

38
-44

27
-27

30
167
-2

37
-88
*

22
-555
*

29
11
24
33

-31
11
55
55

-28
12
53
53

318

35

-443

1,030
-263

1,257
236

1,274
-236

Total, to foreign borrowers, civil

768

1,494

1,038

Total, loans, civil

411

850

-1.205

-1

*

-4

-60

24

-61

25

-4

349

874

-1.209

Total, to domestic private borrowers, civil
To State and local governments:
Department of Health, Education, and Welfare:
Office of Education:
Higher educational activities
Higher education facilities loan fund
Utner
-.
— ._
Department of Housing and Urban Development:
Renewal and housing assistance:
Urban renewal fund
.
-•.
College housing loans
Other
Metropolitan development:
Public facility loans
-.
Other
District of Columbia
Other agencies
Total, to State and local governments, civil
To foreign borrowers:
Funds appropriated to the President: Economic assistance
Export-Import Bank of Washington

_.

..

National defense:
To domestic private borrowers: Other agencies
To foreign borrowers: Funds appropriated to the President:
Military assistance
Total, loans, national defense..
Total, loans
* Lett than one-half million dollars.




-109

i

41

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars) —Continued
Description

1966
al

1968

1967

Administrative Budget Funds—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Other financial investments—civil:

Investments in quasi-public institutions, trust funds, and international institutions:
Funds appropriated to the President:
Economic assistance
Inter-American Development Bank
International Development Association
International Monetary Fund
Other
T
Department of Housing and Urban Development: Federal
National Mortgage Association
Other agencies
Total, investments in quasi-public institutions, trust funds,
and international institutions

55
-76
59

50
80
122

-330
10

69

10

-12

-10

151

-294

251

50

65

25
65
1
1
-2

30
83
12
9

33
97
1
2
33

916
58
1
2

905
59
20

949

28
13

50
14

5
1
1
8

54
1
9

44
17

49
1
9

26
37

28
36

26
38

213
6
1
4
53
44
5
1
36

187
45
6
98
46
22
40

10
8
40
4
16
0

26

45

42

62
10

57
4

5
1

Public works—Sites and direct construction:

Civil:
Funds appropriated to the President:
Economic opportunity program
Department of Agriculture:
Forest Service:
Forest protection and utilization
Forest roads and trails
Other
Other
.
Department of Defense—Civil:
Corps of Engineers:
Construction, general
Flood control, Mississippi River and tributaries
Other
Department of Health, Education, and Welfare:
Public Health Service
Other
Department of the Interior:
Bureau of Indian Affairs:
Construction
Other
National Park Service:
Construction
Parkway and road construction
Bureau of Reclamation:
Construction and rehabilitation
Upper Colorado River storage project
Other
Bonneville Power Administration: Construction
Other
Post Office Department
Department of State
--Department of Transportation:
Coast Guard: Acquisition, construction, and improvements
Federal Aviation Administration: Facilities and equipment and other
-.Other




50
20

4
5
54
3
1

42

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
1967
estimate

1966
actual

Description

1968
estimate

Administrative Budget Funds—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Public works—Sites and direct construction—Continued
Civil—Continued
General Services Administration: Public buildings
National Aeronautics and Space Administration
Veterans Administration: Hospitals and other.
Tennessee Valley Authority
Other agencies
.

230
572
84
156
71

210
280
66
204
99

239
160
79
211
76

2,987

2,780

2,718

1,503
176

1,670
130

1.646
155

Total, public works, national defense

1,679

1,800

1,801

Total, public works, sites and direct construction

4,666

4,583

4,520

-779

-1,358

-681

19

28

27

-760

-1,330

-654

National defense:
Funds appropriated to the President: Expansion of defense
production
... ... .
Other agencies
. -.

-175
33

-125
30

-59
30

Total, major commodity inventories, national defense

-143

-95

-28

Total, major commodity inventories. . . . .

-902

-1,425

-682

69

104

127

47

37

51

4
33

3
30

3
32

.

153

174

213

...

14,488
151

19,091
150

21,768
155

Total, major equipment, national defense

14,639

19.241

21.923

Total, major equipment

14,791

19,415

22,136

Total, public works, civil

__
.
--

.

National defense:
Department of Defense—Military
Atomic Energy Commission

Major commodity inventories:
Civil:
Department of Agriculture: Commodity Credit Corporation: Agricultural commodities
Department of the Interior
Total, major commodity inventories, civil

Major equipment:
Civil:
Post Office Department.
Department of Transportation
Coast Guard
Other
..
Other agencies
.

.

.

Total, major equipment, civil..
National defense:
Department of Defense—Military
Atomic Energy Commission




......

43

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
1967
estimate

1966
actual

Description

1968
estimate

Administrative Budget Funds—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Other physical assets—acquisition and improvement:
Civil:
Department of Agriculture
..
_.
.
Department of Housing and Urban Development: Federal
Housing Administration and other
Department of the Interior
. . _ .
- . _.
Other agencies
Total, other physical assets, civil
National defense:
Department of Defense—Military
Atomic Energy Commission.._

...

Total, other physical assets—acquisition and improvement, national defense
Total, other physical assets—acquisition and improvementTotal, additions to Federal assets
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS
State and local assets:
Civil:
Funds appropriated to the President: Public works acceleration
Department of Agriculture:
Watershed protection
Rural water and waste disposal systems grants
Other
Department of Commerce:
Economic development assistance:
Appalachian development highway system
Development facilities and other_.. _
Department of Defense—Civil: Corps of Engineers
Department of Health, Education, and Welfare:
Office of Education:
School assistance in federally affected areas
Higher educational activities
Libraries and community services
Vocational education
._
Public Health Service:
Construction of health educational facilities
Hospital construction activities
..
Community mental health resources support
Other education and health,. ..
.
Department of Housing and Urban Development:
Metropolitan development:
Open space land programs.
- .-.
Grants for basic water and sewer facilities
Urban mass transportation
.. .
Other metropolitan development
Less than one-half million dollars




30

30

273
67
1

135
76
14

148
91
3

371

..

29

254

273

68
709

71
577

79
513

777

648

592

1.148

902

864

20.203

24.052

25.881

85

36

50
*
20

51
41
27

55
30
27

9
6
18

42
42
14

81
119
34

44
37
16
22

31
136
22
44

30
211
25
49

5
86

31
94

5

11

66
102
25
38

8

28
40
55
3

58
110
105
22

15

44

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
1967
estimate

1966
actual

Description

1968
estimate

Administrative Budget Funds—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued

State and local assets—Continued
Civil—Continued
Department of the Interior:
Bureau of Outdoor Recreation:
Land and water conservation
-.
Federal Water Pollution Control Administration:
Construction grants for waste treatment works and
other
Other
Department of Transportation:
Federal Aviation Administration:
Grants-in-aid for airports
Federal Highway Administration:
Forest highways and other
-Other agencies
_. . .
Total, State and local assets, civil

Total, State and local assets

..

83
4

85
17

161
29

54

54

59

41

46
1

4
6

979

1,496

9

13

621

--

51

11

National defense: Department of Defense—Military

29

610

-

3

988

1,508

134

141
463
I

Private assets—civil:

Department of Agriculture:
Soil conservation
Agricultural stabilization and conservation
Other
Department of Commerce: Merchant ships and other
Department of Health, Education, and Welfare:
Office of Education:
Higher educational activities
.
Construction of health educational facilities
Public Health Service:
Hospital construction activities
Construction of health research facilities...
Other
. National Science Foundation
Other agencies

131

382
*
78

454
1
71

11

58
13

90

104
26
6

114
38
6

51
1

50
3

116
38
21
69
9

-

788

943

1,057

Total, additions to State, local, and private assets

1.409

1.931

2.566

Total, private assets

* Less than one-half million dollars.




. -

80

28

45

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars) —Continued
Description

1967
estimate

1966
actual

1968
estimate

Administrative Budget Funds—Continued
DEVELOPMENTAL EXPENDITURES
Education, training, and health:
Civil:
Funds appropriated to the President: Economic opportunity program
Department of Agriculture: Extension service.
Department of Health, Education, and Welfare:
Office of Education:
Elementary and secondary educational activities
School assistance in federally affected areas..
Higher educational activities
.
.
.
Vocational education .
Libraries and community services
Educational improvement for the handicapped.. . . . .
Defense educational activities. .
Other
Vocational Rehabilitation Administration:
Grants for rehabilitation services and facilities. .
Research and training.
Other
. .
Public Health Service:
Health manpower
_ .
__
Chronic diseases
Communicable disease activities
..
Air pollution..
_
_
Communit}' health
Indian health activities
National Institutes of Health
National Institute of Mental Health
-. .
Comprehensive health planning and services
Other
..
. . .
Welfare Administration:
Grants for maternal and child welfare
Other
Other
Department of the Interior:
Bureau of Indian Affairs:
Education and welfare
Other
Federal Water Pollution Control Administration
Other
Department of Labor:
Manpower Administration:
Manpower development and training

587
90

892
93

1,119

815
355
46
102
29
12
164

1,220
382
255
167
92
21
212

1,423
383
370

38
176

72
284

101
341

1
70

22
36
40
33
38
74
135
107
108

48
26

30

97

175
120
30
166

158

14
59
72
103
82
4
200

211

151
25
15

205
32
18

264
32
25

89
*
23
1

90

101
8

275
134
28

276
28
142
45

295
31
151
60

Total, education, training, and health, civil.

3,622

5,178

6.120

National defense: Atomic Energy Commission...

14

17

17

3,636

5,196

6,138

National Science Foundation
Other agencies

. . .- .

Total education, training, and health
"Less than one-half million dollars.




. .

8
30
66
45

70

17
1

25
1

46

THE BUDGET FOR FISCAL YEAR

1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
1966
actual

Description

1967

estimate

1968
estimate

Administrative Budget Funds—Continued
DEVELOPMENTAL EXPENDITURES—Continued
Research and development:
Civil:
Department of Agriculture:
Agricultural Research Service
Cooperative State Research Service
.
Forest Service
Other
Department of CommerceNational Bureau of Standards
Other....
Department of Health. Education, and Welfare:
Office of Education: Research and training and other
Vocational Rehabilitation Administration: Research and
training and other
Public Health Service:
National Institutes of Health .
.
... .
National Institute of Mental Health
Other
..
Other
Department of the Interior:
Geological Survey
Bureau of Mines .
. .
_ . .
Other
Department of Transportation:
Federal Aviation Administration
_.

National Defense:
Department of Defense—Military:
Military personnel
Operation and maintenance . .
..
Procurement
Research, development, test, and evaluation
Other. . . . .
Atomic Energy Commission. .
.
Military assistance

.

Total, research and development, national defense
Total, research and development

25
29

31
39

37

65

80

26

30

32

536
94
108
18

630
114
144
23

662
112
166
25

27
26
77

32
21
89

36
31
117

42
13
5,350
38
176
81

37
28
5.310
43
196
98

37
33
5,126
45
226
111

7,175

7,180

292
41
60
6,700
11
1,275
2

277
56
50
7,200
13
1,369
2

8,381

8,967

14.839

.

32
24

7,890

Total, research and development, civil

154
60
37
20

288
38
80
6,259
10
1,213
2

.

148
56
36
21

6,949

Other
National Aeronautics and Space Administration
Veterans Administration
.. .
National Science Foundation
Other agencies
... . .. ..

132
52
38
21

15,555

16.147

28
21
20

24
25
23

27
32
32

46
31
28

47
35
29

49
39
29

Engineering and natural resource surveys—civil:

Department of Commerce..
... .
Department of Defense—Civil
Department of Housing and Urban DevelopmentDepartment of the Interior:
Geological Survey
.
National Park Service..
. .
Other




..

. _ .
.

47

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
Description

1967
estimate

1966
actual

1968
estimate

Administrative Budget Funds—Continued
DEVELOPMENTAL EXPENDITURES—Continued
Engineering and natural resource surveys—civil—Continued
Other agencies
Total, engineering and natural resource surveys.
Total, developmental expenditures

29

37

41

203

219

248

18,678

20,970

22,532

118
7
21

146
8

175
8
28

126
88
*

128
88

151
90
*

2,836
233

3,697
315
110
33
984
40

2,752
399
198
27
906
45
-2

48
-37
85
18

53
-10
60

58
6
70
6

4,750

5,685

4,916

33

35

38

196
54

185
59

207
71

122
-10
218

130
-13
504

134
-15
-225

248
496
3
75

300
510
2
66

308
535
15
63

48
3

63
27

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES
Agriculture—civil:

Department of Agriculture:
Consumer and Marketing Service:
Removal of surplus agricultural commodities
Other
Foreign Agricultural Service
Agricultural Stabilization and Conservation Service:
Expenses
Sugar Act
Other
Commodity Credit Corporation and special export programs:
Price support and related programs
Sale of agricultural commodities for dollars on credit terms- Export credit sales
Transfer to supplemental stockpile
Sale for foreign currencies
National Wool Act
Other.....
--:-—.Farmers Home Administration:
Salaries and expenses
Direct loans and other
.-.
Other
Other agencies
Total, agriculture.
Business:
Civil:
Department of Commerce:
Patent Office
Maritime Administration: Ship operating subsidies and
other
Other
Department of Defense—Civil:
Corps of Engineers: Operation and maintenance
Other
Post Office Department
Department of Transportation:
Coast Guard:
Navigation aids and other
Federal Aviation Aministration: Operations
Other
Civil Aeronautics Board: Payments to air carriers
Small Business Administration:
Business loan and investment fund
Other
*Less than one-half million dollars.




26
1,138
38
7

25

48

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
1968
stimate

1967
estimate

1966
actual

Description
Administrative Budget Funds—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Business—Continued
Civil—Continued
Other agencies..

40

29

19

--

1,481

1,858

1,239

National defense: Funds appropriated to the President—Expansion of defense production. . .
-.

26

35

29

1,506

1,893

1.268

24

27

31

326

376

239
-7
-190
2
-271

265
-3
-129

447
275
34

-228

-178

-292

*

3

99

337

243

210

105

Total, business, civil

Total, business

- .

-- -

Labor—civil: Other agencies
Homeowners and tenants—civil:
Department of Housing and Urban Development:
Renewal and housing assistance:
Urban renewal
Low-rent public housing program
Other.
.
Federal Housing Administration..

.-

Federal Home Loan Bank Board
Other agencies
Total, homeowners and tenants.
Veterans—civil:
Department of Health, Education, and Welfare: Payments for
military service credits . . .
Veterans Administration:
General operating expenses.
..
.. .
Medical c a r e . . . .
.... ..
_ .. . . .
Compensation and pensions. .
-.
.....
Readjustment benefits .
...
Veterans insurance programs
..
....
Other.
Other agencies
...
Total, veterans

. . . . . .

.

..

International aids:
Civil:
Funds appropriated to the President:
Foreign economic assistance
.
. .
Peace Corps
.
.. ..
Uther
. . .
Department of Agriculture:
Commodity Credit Corporation and special export pro
grams: Commodities disposed of and other costs incurrec
in connection with donations abroad.
Other
Export-Import Bank of Washington .
.
Other agencies
. . .
Total, international aids, civil._
*Less than one-half million dollars.



_

178

158
1,182
4,214
42
-48
37

176
1.264
4.349
366
-62
35

29

31

417
-65
47
32

5.614

6.369

6.591

1,035
94

1,096
99

1.099

413

410

494

-122
26

-108
30

-129

1,445

1,528

1.607

1.328
4.548

111

31

49

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
Description

1966
actual

1968

1967

Administrative Budget Funds—Continued

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
International aid:—Continued

National defense:
Funds appropriated to the President: Military assistance
Total, international aids

1,026

974

798

2,471

2,502

2,405

132
332

82
582

35
700

97
197
69

104
213
138

104
243
193

57
28

54
13

950

931

3,926
19
5
37

4,153
28
5
52

6
9

150
37

Other aids and special services—civil:

Funds appropriated to the President:
Disaster relief
Economic opportunity program
Department of Agriculture:
Special milk program
School lunch program
Food stamp program
Department of Health, Education, and Welfare:
Public Health Service:
Hospitals and medical care
Other.....
.--.- — -.
.Social Security Administration: Health insurance for the
Welfare Administration:
Grants to States for public assistance
Assistance to refugees in the United States
Other
Other
Department of Housing and Urban Development:
Comprehensive city demonstration programs
Other
;
Department of the Interior: Bureau of Indian Affairs and
other
Post Office Department
Department of Transportation
Other agencies
Total, other aids and special services
Total, current expenses for aids and special services

3,528

12
4
27

66

58
543
2
25

57
567
43

49

574
1
82

5,099

6,873

7.420

19.565

23,685

22,875

162

186

150

82

90
*

93
*

35
30
57
-26
-25
24

28
32
62
-28
-25
27

OTHER SERVICES AND CURRENT OPERATING
EXPENSES
Repair, maintenance and operation of physical assets (excluding
special services):

Civil:
Department of Agriculture: Forest Service
Department of Defense—Civil:
Corps of Engineers
Other
.
Department of the Interior:
Bureau of Land Management
National Park Service
Bureau of Reclamation
Bonneville Power Administration
Southeastern Power Administration
Other
•Less than one-half million dollars.
255-300 O—67


50

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
Description

1966
actual

1967

1968

Administrative Budget Funds—Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Repair, maintenance and operation of physical assets (excluding
special services—Continued

Civil—Continued
General Services Administration: Public buildings
Tennessee Valley Authority
Other agencies

302
-126
41

300
-162
41

324
-131

Total, repair, maintenance and operation, civil.

614

551

568

14,672
140

18,559
145
121

18,961
153
120
*

National defense:
Department of Defense—Military:
Operation and maintenance
Family housing
Atomic Energy Commission
Other agencies

140
*

36

Total, repair, maintenance and operation, national defense-

14,953

18.825

19,234

Total, repair, maintenance and operation of physical assets-

15,567

19,376

19,802

90

96

71

70

83

76

42
*

42
*

67

81
188

75
54

79

101

108

82
186
80
59
19
112

35
40
*
27
28
128

38
43
*
27
31
136

24
32
140

976

,076

103

Regulation and control:

The Judiciary
Department of Agriculture:
Agricultural Research Service
Consumer and Marketing Service:
Consumer protective, marketing, and regulatory programs.
Other
Other
Department of Health, Education, and Welfare:
Food and Drug Administration
Other
Department of Justice:
Legal activities and general administration
Federal Bureau of Investigation
Immigration and Naturalization Service
Federal prison system
Other
Treasury Department
Department of Transportation:
Coast Guard
Federal Aviation Administration
Other
Interstate Commerce Commission
National Labor Relations Board
Other agencies
Total, regulation and control .
'Less than one-half million dollars.




168

59

39
45

51

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
Description

1966
actual

1968

1967
estimate

Administrative Budget Funds—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration:

Civil:
International activities:
Department of State:
Administration of foreign affairs...
International organizations and conferences.
Educational exchange
Other
United States Information Agency
Other agencies
Total, international activities.
Federal financial activities:
Legislative branch: General Accounting OfficeTreasury Department:
Bureau of Accounts
Bureau of the Public Debt
Internal Revenue Service
Other....
Other agencies
Total, Federal financial activities Other direct Federal programs:
Legislative branch
Department of Commerce:
Environmental Science Services Administration
Other
.
Department of Defense—Civil
Treasury Department: Claims, judgments, and private
relief acts and other
General Services Administration
Civil Service Commission
Other agencies
Total, other direct Federal programs.

189
100
55
2
160
4

199
107
52
2
166
4

510

530

46

50

32
50
611
32
5

33
51

655

776

804

155

179

95
2
48

97
5

39
48
25
48

24
157
23

462

606

Retirement, unemployment, and accident compensation for
Federal employees:
Department of Labor:
Unemployment compensation for Federal employees
Employees compensation claims and expenses
Department of Transportation: Coast Guard: Retired pay
Civil Service Commission: Special payments and annuities
Other agencies
Total, retirement, unemployment, and accident compensation for Federal employees




61

57

65
56
41
111

5

286

277

52

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
Description

1966
actual

1967
estimate

1968
estimate

Administrative Budget Funds—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration—Continued

Civil—Continued
Shared revenues and grants-in-aid:
Department of Agriculture: Forest Service .
Department of the Interior:
Bureau of Land Management
Other
Treasury Department: Internal Revenue Service
District of Columbia: Federal payment
Other agencies
. . . . ...

36

43

44

68
47
52
44
24

71
52
52
60
20

75
54
52
71
21

271

297

315

Total, other operation and administration, civil. . . . . .

2,305

2,514

2,586

National defense:
Department of Defense—Military:
Military personnel (excluding research and development)._
Family housing..
Civil defense
Other
Selective Service System . . . .
__
_
Other agencies. . .

16,465
267
65

19,908
284
75

21,546
302
75

51

28

161

54
6

60
6

58
2

Total, other operation and administration, national
defense

16,909

20,362

22,145

Total, other operation and administration..

19,214

22,876

24,731

12,014

13,400

14,050

104
*

93
*

87
*

118

109

103

12,132

13,509

14,153

47,888

56,836

59,788

-129

-80

-77

-635

100
-766

1,000
750
400
-682

-764

-746

1,391

106,978

126,729

135,033

.
.

Total, shared revenues and grants-in-aid...

.

.

Interest:

On the public debt

...

..

__

Other interest:
On refunds:
Treasury Department
General Services Administration
On uninvested funds, Treasury Department . .

.

14

.

Total, other interest
Total, interest

..

Total, other services and current operating expenses

15

15

UNCLASSIFIED
Participation s a l e s f u n d . . . . . .

...

....

Allowances for:

Civilian and military pay increases
Possible shortfall in asset sales.
Contingencies
Interfund transactions

Total, unclassified.. . . .

.

Total, administrative budget funds.
"Less than onS-half million dollars.




. . .

53

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars) —Continued
Description

1966

1967

1968

Trust Funds

(Includes deposit funds and Government-sponsored enterprises)
ADDITIONS TO FEDERAL ASSETS
Loans—civil: To domestic private borrowers:
Department of Health, Education, and Welfare:
Federal old-age and survivors insurance
Federal hospital insurance
__
Department of Housing and Urban Development: Secondary
market operations
Department of Labor: Unemployment trust fund _
Veterans Administration: Life insurance funds
Civil Service Commission: Civil service retirement and disability
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Railroad Retirement Board: Railroad retirement account. .
Other agencies.. - . . . .
. . . . .. ..-

100
50
1.607

44

1,454
100
139

855
38

100
154
391

272
400

3

276
500
50
-2

2,200

2.768

1.564

Public works—sites and direct construction:
Civil:
Department of Defense—Civil: Corps of Engineers and
other . - - - .
. .
_--..
._
Other agencies
. .
..
...

23
4

26
11

28
30

Total, public works—sites and direct construction

27

37

58

1

15

24
*

26
*

30

25

26

30

2,252

2,846

1.652

State and local assets—civil:
Department of Transportation: Highway trust fund and other.

3,856

3.820

3.789

Private assets:
Civil:
Farm Credit Administration: Federal land banks
Federal home loan banks
_.

574
1,293

628
1,050

625
-400

1.867

1.678

225

Total, loans to domestic private borrowers. . . . .

-1

Major equipment:

National defense: Department of Defense—Military
Other physical assets—acquisition and improvement—civil:

Department of Agriculture: Forest Service
Other agencies .
....
. . . — -..
Total, other physical assets—acquisition and improvement
.
.. .
...
Total, additions to Federal assets

ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS

Total, private assets, civil
"Less than one-half million dollars.




.

_

.

54

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars) —Continued
Description

1966
actual

1967
estimate

1968
estimate

Trust Funds—Continusd
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
Private assets—Continued
National Defense: Atomic Energy Commission
Total, private assets _

*

1

1

1,868

1,679

225

5,724

5,499

4,014

2

19

19

75
4

76
4

91
6

79

80

97

3

3

8

..

83

103

125

.

1

2

1

5
7

36
7

35
6

-m
*
-215

-230
*

-256
2

-187

-213

._

__

_ _.

Total, additions to State, local, and private assets. _
DEVELOPMENTAL EXPENDITURES
Education, training, and health-—civil

___

Research and development—civil:
Department of Transportation: Highway trust fund and other.
Other agencies .
.
.
. --- .
Total, research and development, civil...
Engineering and natural resource surveys—civil
Total, developmental expenditures

___ .
. . . .__ .._

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES
Agriculture—civiL

...

Business—civil:
Department of Commerce:
Maritime Administration
Other
Federal Deposit Insurance Corporation
Other agencies
.
...
Total, business, civil

__

...

..
_.

_ _
... .

.. ..

__ _

Labor—civil: Department of Labor: Unemployment trust fund..

523

571

604

Homeowners and tenants—civil:
Department of Housing and Urban Development: Secondary
market operations . . . __
..
..
Other agencies
....
.
.. . . _ _ .. .

-38
1

-20

-20

__ _.

-37

-20

-21

Veterans—civil:
Veterans Administration: Life insurance funds and other
Other agencies..
. . . . . . ._ . . .
._.._

514
7

637
8

551

521

644

559

10

9

10

751

1,115

1,363

761

1,124

1,373

Total, homeowners and tenants, civiL.

Total, veterans, civil. . .

..

International aids:
Civil: Other agencies
National defense: Funds appropriated to the President: Military
assistance advances
... .. . . _
Total, international aids

.. .

*Less than one-half million dollars.



.

.

8

SPECIAL

55

ANALYSES

Table D-2. INVESTMENT, OPERATING, A N D OTHER
(in millions of dollars)—Continued
Description

EXPENDITURES

1967
estimate

1966
actual

1968
estimate

Trust Funds—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Other aids and special services—civil:
Department of Health, Education, and Welfare:
Federal old-age and survivors insurance: Operating expensesFederal disability insurance: Operating expenses
Health insurance: Operating expenses
.

253
189
64
*

341
92
220
*

358
106
220
*

35

42

57
133

84
3
12

72
3
14

62

.

640

785

954

Total, current expenses for aids and special services

2,194

2,920

3.256

18,071
1,721

18.964
1.845
3.256

23.591
2.242
3.945

19,793

24.065

29.778

2.062

1,894

1.848

1.528

1.782

1.953

1.194

1.239

1.390

10

9
12

23
13

2.731

3.042

3.380

24,586

29.001

35,006

Repair, maintenance and operation of physical assets (excluding
special services)—civil..
...
- ..
.

2

3

3

Regulation and control—civil:
Department of Agriculture: Consumer and Marketing Service:
Inspection and grading and other
Other agencies
._
. . .
. _

27
5

29
5

30
5

32

33

35

Department of Transportation: Federal Highway Administration:
Highway trust fund and other
Highway beautification
Department of the Interior:
Indian tribal funds
Other
Other agencies
.
- .
..
Total, other aids and special services.

3
14

RETIREMENT AND SOCIAL INSURANCE BENEFITS
Insurance benefits—civil: Department of Health, Education, and
Welfare:
Federal old-age and survivors insurance
. . -. . _ Federal disability insurance
Health insurance
Total, insurance benefits---

..

Unemployment benefits—civil: Department of Labor: Unemployment trust fund . _
__
-_ ..
-Other retirement and social insurance benefits:
Civil Service Commission: Civil Service retirement and disability
- - - - - - - - - Railroad Retirement Board:
Railroad retirement account
- - - - - - - Other
Other agencies,, _ . . . .
- - - - - - - - . .
Total, other retirement and social insurance benefits,
civil
Total, retirement and social insurance benefits .

-

OTHER SERVICES AND CURRENT OPERATING
EXPENSES

Total, regulation and control
"Less than one-half million dollars.




56

THE BUDGET FOR FISCAL YEAR 1968

Table D-2. INVESTMENT, OPERATING, AND OTHER EXPENDITURES
(in millions of dollars)—Continued
Description

1968
estimate

1967
estimate

1966
actual

Trust Funds—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration:
Civil:
International activities:
Department of Justice:
Alien property fund, World War II

3

3
*
5
3

91
7

35
]
147
9

11

101

192

*

*

*

158
-16

163
-53

162
-66

2

3

3

144

113

99

Shared revenues and grants-in-aid _ _ _ _ ___ _ _ _

20

28

25

Total, other operation and administration, civil. _

176

243

316

7

7

7

182

250

323

216

286

361

444
25
150
82

532
28

477
21
27
82

_____

. _.

Foreign Claims Settlement Commission: War claims fund..
Other agencies
Total, international activities
Federal financial activities

__

___

Other direct Federal programs:
Civil Service Commission:
Civil Service retirement and disability funds...
Health benefits and life insurance fund
_ _
Other
_Other agencies
-_
Total, other direct Federal programs

_

._.

.
_
.
..

National defense: Department of Defense—Military and other..
Total, other operation and administration..

.. ..

Total, other services and current operating expenses..
UNCLASSIFIED
Payments to other trust funds:
Federal old-age and survivors insurance
. .
.
Federal disability insurance
Alien property fund, World War II
Unemployment trust fund
Federal National Mortgage Association:
Secondary market operations
Participation sales fund
_ _ '
Railroad retirement account
Payment to general fund: Unemployment trust fund .
District of Columbia
Advances from District of Columbia
.
.
.
Deposit funds
_
Interfund transactions

"Less than one-half million dollars.




-92
-393

-

21
430

-151
55
8
561

*

7

635
10

-520
-770

-159
-734

-122
-730

-190

Total, unclassified
Total, trust funds

82

228

92

34,864

40.882

44,507

41

85

SPECIAL ANALYSIS E
FEDERAL CREDIT PROGRAMS
INTRODUCTION

Federal credit aids—direct loans and insurance or guarantees of
private loans—play a major role in Government programs for: (a)
improvement of housing and encouragement of homeownership; (b)
development of agricultural and other natural resources; (c) assistance
to economic development and military preparedness abroad; (d) promotion of business, especially exports, transportation, and small
business generally; (e) redevelopment of communities and regions;
and (f) aid to higher education.
Major Federal Credit Programs
New

Commitments

$B (lions
39.5i - 4 0

- 35

-30
—

.

—

-25

A

Total w
•

*

^

20

15-

-15
Guarantees
and Insurance

10

- 10

5 \

|

ft.
1957

1958

n

1959

Fiscal Years

I960

- 5
Direct Loo us

1
1961

1962

1963

1964

1965

1966

n

•

1967

1968

Estimate

The overall level of Federal credit assistance has been growing
because of broadening by the Congress of existing programs and
initiation of new programs to meet emerging needs. At the same
time, important changes in emphasis are occurring. Programs
established for temporary reasons in earlier years are liquidating their



57

58

THE BUDGET FOR FISCAL YEAR 1968

operations as outstanding loans are repaid or privately refinanced.
Moreover, as private investors accumulate experience with ongoing
programs, they often refinance outstanding Federal loans or directly
finance the new credit requirements of borrowers.
Federal credit programs help borrowers to help themselves. In
several programs, the credit aids are part of a package of Federal
assistance. Such a package might also include, for example, grants
to provide necessary public facilities for depressed areas; grants for
work-training, education, and other types of community action to
help combat poverty; technical aids to help underdeveloped countries
plan and construct basic transportation systems; or management
advice to help rural residents plan, develop and operate their farms
economically and productively.
As a general rule, these programs supplement, rather than substitute for, private credit. Some provide a type of credit not otherwise
generally available to important groups of borrowers—or share in
risks which private lenders initially cannot reasonably be expected
to undertake. Several make credH available on terms more liberal
than are generally available otherwise, e.g., longer maturities, smaller
downpayments or lower interest rates.
Unlike most other programs, Government expenditures on credit
programs are largely or wholly repayable with interest, so that the
ultimate net cost is normally low. Some programs are fully selfsupporting; in most others, income from interest payments or
insurance and guarantee fees covers most of the current expenses,
and sometimes provides reserves for future losses. Administrative
expenses are usually paid from income, but separate appropriations
are sometimes made to finance them.
COVERAGE OF SPECIAL ANALYSIS

The 1968 analysis deals predominantly with the major credit programs administered by eight Cabinet departments and four other
agencies. The estimates for the fiscal years 1967 and 1968 include
credit aid authorized by legislation enacted during the past year
(a) making post-Korean veterans eligible for direct and guaranteed
loans; (b) broadening authority for mortgage purchases by the
Federal National Mortgage Association and mortgage insurance by
the Federal Housing Administration; and (c) authorizing six departments and agencies to sell participations in pools of loans.1
Legislation is also being proposed to provide additional financing,
primarily from private sources, by (a) broadening Federal assistance
for student loans made by colleges under the National Defense Education Act; (b) revising the formulas governing interest rates on college
housing and academic facility loans; (c) creating two new cooperative
banks for rural electric and telephone loans; and (d) authorizing
federally-insured loans to Indians. ;
In addition to detailed informat on for major credit programs, the
analysis includes (in tables E-2 and E-3) the total amounts of
outstanding loans and guarantees and of gross disbursements and
repayments for numerous other credit programs administered by ten
departments and two other agencies. These account for about 0.9%
of total outstanding direct and guaranteed loans in 1968.
l See summary on pp. 68-70 for further details.




59

SPECIAL ANALYSES

The programs shown in tables E-l, E-2, E-4, and E-5 are limited
to those administered by wholly-owned Government agencies. Table
E-3 on disbursements and repayments, however, includes data also
for credit programs of mixed-ownership corporations and trust funds.
Table E-6 shows outstanding loans for these and other quasi-public
agencies.
The analysis excludes borrowing from the Treasury by these and
other agencies, whether for loans or for other purposes.
NEW COMMITMENTS

New commitments are the best single measure of the short-run
trends in most Federal credit programs. They also give the best
Table E-l. NEW COMMITMENTS FOR MAJOR FEDERAL CREDIT PROGRAMS CLASSIFIED BY TYPE OF ASSISTANCE, MAJOR AGENCY OR
PROGRAM (in millions of dollars)
1966 actual
Agency or program
Direct
loans

Office of Economic Opportunity
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration . .
Farmers Home Administration
Department of Commerce:
Economic Development AdministrationMaritime Administration
Department of Defense: Military assistance credits. .__Department of Health, Education, and
Welfare:
Office of Education
Public Health Service
Department of Housing and Urban Development:
Federal National Mortgage Association.
Federal Housing Administration
Public housing program
College housing program
Urban renewal program _. Other major programs
_
Department of Interior: Reclamation loans.
Department of State: Agency for International Development
Treasury Department: Loans to District
of Columbia
Veterans Administration
Export-Import Bank of Washington.. . . .
Small Business Administration
Allowance for possible shortfall in participation sales.
... .
...
Total by type of assistance
Grand total




1967 estimate

Guaranteed
and
insured
loans

Direct
loans

1968 estimate

Guaranteed
and
insured
loans

34

32

Direct
loans

Guaranteed
and
insured
loans

32
18
515
490

1.233

13
72

77

11
85

62

2

64

290

404

9

393

22

38

18
454
452

1,639

4
97

79

10

14
413
477

1,521

86
7
121

644
364
169
367
206
162
12

550

1,840
14.133
567
796

31
2,619
1,953
147

77
505
2,603
494

965

465
15

34

689

131
3,405
2,191
104

1,127
362
136
330
200
196
15

4,750
15,234
873

1,849

2,880
10,970
746

1,565

1,670
71
412
1,149
507

1.525
700
104
345
183
157
13

800

175

713

84

516
2,684
614

3,189
2,257
200
-750

7,195

24,268

31, 463

9,812

23,651

33,463
1

9.736

29,415

39, 151

60

THE BUDGET FOR FISCAL YEAR 19 68

advance indication of trends in the economic impact of these programs,
since changes in the level of new commitments usually precede corresponding changes in the volume of loans disbursed by either public
agencies or private lenders and in the purchase of goods and services
by the ultimate borrowers.
In this analysis, commitments are defined as approvals by Federal
agencies of direct loans or of insurance or guarantees of private loans.
They are shown on a gross basis, including administrative reservations or other commitments which do not later result in actual credit
extensions, as well as the unguaranteed portions of loans partially
covered by Federal guarantees.
Direct loans.—New commitments of $9.7 billion estimated for direct
loans in 1968 are slightly less than the revised estimate for 1967, but
$2.5 billion higher than the actual commitments made in 1966. The
largest increases for the 2-year period are for loans to foreign borrowers
by the Export-Import Bank and for housing mortgage purchases by
the Federal National Mortgage Association. These, together with
loans by the Agency for International Development, account for
about 60% of new commitments anticipated in 1968. The balance
will be divided among 17 other major credit programs.
Guarantees and insurance.—New commitments for guarantees and
insurance of private loans are now estimated to decline from $24.3
billion in 1966 to $23.7 billion in 1967, but will jump to an estimated
$29.4 billion in 1968. Roughly half of the total new commitments
each year are for housing loans insured by the Federal Housing
Administration. The sharp fluctuations in the level of housing
activity financed by such loans account for the bulk of the year-to-year
changes in the Government-wide total of guarantee and insurance
commitments.
In addition, guarantees by the Federal National Mortgage Association and the Export-Import Bank of certificates of participation in
pools of loans will increase from $2.6 billion in 1966 to $5.0 billion in
1968, in line with the expanding volume of participation sales planned.
Other substantial increases in guarantee commitments are anticipated
for the Veterans Administration, the Farmers Home Administration,
the Office of Education, and the public housing program.
Overlapping commitments.—Total estimated new commitments for all
major credit programs in 1968 of $39.2 billion include several cases
where two or more types of Federal assistance are provided for the
same borrower or on the same property or project at different stages
in the financing process. Guarantees of certificates of participation
in pools of loans represent the most important type of such overlapping. Other major examples include: (a) commitments by the
Federal National Mortgage Association for purchase of loans guaranteed or made by other Federal agencies, and (b) commitments under
the public housing program at successive stages in the financing of
local low-rent public housing.
OUTSTANDING DIRECT AND GUARANTEED LOANS

The best index of the level of Federal credit programs over a
period of years is provided by the total outstanding direct and guaranteed loans. By the close of 1968, these will total $148.7 billion.



61

SPECIAL ANALYSES

Table E-2. OUTSTANDING DIRECT LOANS, AND GUARANTEED AND INSURED LOANS FOR MAJOR FEDERAL CREDIT PROGRAMS CLASSIFIED BY AGENCY OR PROGRAM (in millions of dollars)

Agency or program
Direct
loans

Office of Economic Opportunity
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Department of Commerce:
Economic Development Administration.
Maritime Administration
Department of Defense: Military assistance credits
Department of Health, Education, and
Welfare:
Office of Education
Public Health Service
Department of Housing and Urban Development:
Federal National Mortgage Association..
Federal Housing Administration
Public housing program
College housing program
Urban renewal program
Other major programs
__.
Department of Interior: Reclamation loans.
Department of State: Agency for International Development
Treasury Department:
Loans to District of Columbia
Foreign loans
Veterans Administration
Export-Import Bank of Washington
Small Business Administration
Allowance for possible shortfall in participation sales

1968 estimate

1967 estimate

1966 actual
Guaranteed
and
insured
loans

Direct
loans

Guaranteed
and
insured
loans

71

46

Direct
loans

Guaranteed
and
insured
loans

90

1,376
4,274
2,142

855

631
4,532

675

1,009

1,538

1,844"

162
110

4
452

208
101

45

36

61

1,225

1,722
633
58
2,244
222
427
107

2,110
52,967

5,413
1,660

1.640
719
57
1,991
256
479
121

9,812

178 11,361

161
3,725
1,013
2,227
972

213
3,435
1,176
2.463
784

30,970

3,168

159

2,720

57

24

977
107

473
15

1,605
791
57
706
276
461
136

9.380
56.962

336

12,969

544

30.557
3.926
275

263
3.351
709
2.227
742

29,619
4,937
379

750

900
73

753
36

83
4,851
872
279
92

-750

18
422
30
9

4.810
54.467
5,945
1,975

30
510

6.612

2.261

Total by type of assistance:
Major agencies or programs.
Other agencies or programs.

32,267
730

98,981
244

32,810
993

105,289
250

32.451 114.941
232
1.076

All agencies

32,997

99,225

33,803

105,539

33.527 115,173

The level of outstanding direct loans of wholly-owned Federal
agencies will be relatively stable, with a net rise of $0.5 billion during
the 2 years, despite continued increases in certain programs. Outstanding direct loans held by the Agency for International Development are expected to grow by over $3 billion over the 2-year period.
Substantial increases are also anticipated for rural electrification and
telephone loans and for several other programs.



62

THE BUDGET FOR FISCAL YEAR 1968

In all other large direct loan programs reductions will occur in
outstanding portfolios—mainly because of the expanded program of
sales of participations in pools of loans. The largest net reductions
in the 2-year period will be concentrated in college housing Joans and
in direct loans of the Commodity Credit Corporation and the Farmers
Home Administration.
As the direct loan portfolio levels off, the increase in outstanding
Federal guarantees and insurance of private loans will accelerate,
amounting to almost $16 billion over the 2-year period. About half
of this net increase represents guarantees of participations in pools
of loans administered by the Federal National Mortgage Association
and the Export-Import Bank. Another quarter is the net expansion
in the mortgage and property loan insurance of the Federal Housing
Administration. Other substantial increases in guarantees are forecast for the Farmers Home Administration, the public housing and
urban renewal programs of the Department of Housing and Urban
Development, and the Federal student loan insurance program of the
Office of Education.
The amounts shown include both the guaranteed and unguaranteed
portion of outstanding loans in order to give a more complete picture
of the economic impact of these programs and to tie in better with
banking statistics. Thus, they do not indicate the estimated contingent liability of the Federal Government. The major program
for which the contingent liability differs materially from the principal
amount of the loans is the veterans loan guarantee program; by the
end of 1968, the Government's liability will be about $14.3 billion
lower than the amount of guaranteed loans outstanding under that
program.
DISBURSEMENTS AND REPAYMENTS

Direct loans by Federal agencies have a major impact on the administrative budget whenever disbursements substantially exceed or fall
short of repayments. Federal guarantees and insurance of private
loans, on the other hand, ordinarily have only a minor effect on
Federal expenditures and they help to minimize direct loans or to
increase sales of such loans. Net expenditures for Federal credit
assistance, in total, are hence only a minor fraction of the dollar
amount of credit assistance provided.
During the 1956-65 decade, net expenditures for loans in the administrative budget averaged $1.5 billion a year, producing a corresponding increase in the budget deficit or reduction in the budget
surplus. Expanded efforts since then to refinance privately outstanding direct loans, primarily by sales of certificates of participation in
pools of such loans, are substantially reducing budget expenditures for
net credit outflow. In the consolidated cash budget for 1968, a net
credit outflow of $0.9 billion is estimated compared to $2.3 billion in
1966 and $3.3 billion in 1967. The administrative budget, which
excludes trust funds, will show a net credit inflow of $0.7 billion compared to net outflows of $0.1 billion in 1966 and $0.4 billion in 1967.
Since lending activity is not recorded in the Federal sector of the
national income accounts, the increased emphasis upon sales of assets,
by reducing net cash lending flow, has tended to bring both the
administrative and cash budget totals into closer alignment with
the payments shown in the Federal sector of the national income



63

SPECIAL ANALYSES

Table E-3. DISBURSEMENTS AND REPAYMENTS FOR MAJOR FEDERAL
CREDIT PROGRAMS CLASSIFIED BY AGENCY OR PROGRAM (in millions of dollars)
1966 actual
Agency or program

Disbursements

1967 estimate

Repayments

Dis,
bursements

1968 estimate
Disbursements

Repayments

32

Repayments

13

1,251
508
1,688
169

1,768
189
2,363

ADMINISTRATIVE BUDGET
Office of Economic Opportunity
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Department of Commerce:
Economic Development Administration.
Maritime Administration
Department of Defense: Military assistance credits
Department of Health, Education, and
Welfare:
Office of Education
Public Health Service
Department of Housing and Urban Development:
Federal National Mortgage Association.
Federal Housing Administration
Public housing program
College housing program
Urban renewal program
Other major programs
Department of the Interior: Reclamation
loans
Department of State: Agency for International Development
Treasury Department:
Loans to District of Columbia
Foreign loans
Veterans Administration
Export-Import Bank of Washington
Small Business Administration
Other agencies or programs
Adjustments 1
Total, administrative budget 2 .

34

32
1,537
361
1,068

2,241
159
912

1,656
440
1,448

2,373
182
2,060

45

9
10
44

58

12
9

87

71

5
5

59

259
38

11
0

291
49

201
15
714
279
247
1,615
349
194

8
1
233
22

96
9

327
365
199
344
285
103

755
264
201
26
255
12

751
721
219
375
625
150

857
605
219
628
588
94

673
363
246
330
371
180

18

1

14

1

16

1,406

150

1,725

176

1.797

190

71

90

38
291
362
954
632
93
-56

53

461
685
510
226
-401

49
35
1,097
947
656
78
-53

3
97
1,008
1,536
573
104
-806

7,986

7,853 10,736 10,298 10,084 10,817

525
1,190
459
355
-483

540
1,300
532
193
-553

TRUST FUNDS
Department of Housing and Urban Development:
Federal National Mortgage Association
Veterans Administration
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Other agencies
Total, trust funds.
Total, budget and trust funds

1,804
114
1,585
6.140
9,651

1,719
215

265
76

1,337
116

482
78

1,412 1,970
5,758 7,120
404
4
7,440 11,428

1,651
6,617
5

2,275
7,883
4

1,990
7,475
5

196
70

8,614 11,615 10.030

17,637 15,293 22,164 18,912 21,699 20,847

1
Allowance for possible shortfall in participation sales, transactions in foreign currencies, and sales
credit extensions.
2
Includes transactions reflected in both receipts and expenditures of the administrative budget.




64

THE BUDGET FOR FISCAL YEAR

1968

accounts. The latter more accurately measures the direct impact of
Government taxing and spending on the flow of national income and
production.
As Table E-3 indicates, estimated gross loan disbursements in the
administrative budget will be much higher in both 1967 and 1968
than in 1966, primarily because of increases by the Export-Import
Bank, the Farmers Home Administration, the Federal National
Mortgage Association and the Agency for International Development.
Repayments, however, will rise even more than disbursements, predominantly because of the increase in participation sales over the
2-year period.
PRIVATE PARTICIPATION IN FEDERAL CREDIT PROGRAMS

Despite the number and variety of Federal credit programs, they
directly affect only a small fraction of the total volume of credit,
both public and private. In fact, direct Government loans and
guarantees of private loans to domestic private borrowers accounted
for only about 10% of the estimated gross private debt of $1,031
billion outstanding on June 30, 1966. Federal guarantees or insurance
of private loans were responsible for most of the Federal assistance.
In recent years, and especially during the past 2 years, emphasis
has been placed upon obtaining private participation in public credit
programs wherever consistent with achievement of the purposes of
such programs. Numerous methods are being employed to make this
policy effective, including: (a) limitation of direct lending to cases
where borrowers cannot otherwise obtain the funds on reasonable terms;
(b) liberalization in lending authority of private institutions; (c)
expanded use of Government guarantees and insurance of private
loans as an alternative to direct loans; and (d) increased sales of
Government loans to private lenders, either directly or through participation certificates.
The success demonstrated by the Export-Import Bank, the "Veterans
Administration, and the Federal National Mortgage Association in
selling participations in their outstanding loans during 1962-65
led to the enactment of the Participation Sales Act of 1966. Under
this act, five departments and agencies will set aside direct loans in a
pool administered by the Federal National Mortgage Association as
trustee. The Export-Import Bank will continue to sell participations
in its own loans under separate authority.
The new law also makes possible for the first time inclusion in the
pools of many loans which bear interest rates below current market
levels. For this purpose the law authorizes appropriations, which,
together with the interest on the loans in the pools, assure a level of
return adequate to attract private investment. Such payments to
cover interest insufficiencies do not introduce any significant additional budgetary costs. In effect, they substitute for costs already
incurred, since interest received on these loans is less than the
Treasury's borrowing costs.
Largely as a result of enactment of this legislation, sales of financial
assets are expected to increase from the $3.0 billion actually consummated in 1966 to $3.9 billion in 1967 and $5.3 billion in 1968.
These figures exclude sales made as part of the usual process of




65

SPECIAL ANALYSES

Table E-4. DIRECT SALES AND PARTICIPATION SALES OF LOANS BY
MAJOR FEDERAL CREDIT PROGRAMS (in millions of dollars)
1966 actual
Agency or program

Direct
sales

Department of Agriculture: Farmers
Home Administration
.. _
Department of Health, Education, and
Welfare:
Office of Education
...
Public Health Service .
Department of Housing and Urban Development:
Federal National Mortgage Association.
Federal Housing Administration......
College housing loans
Public facility loans
Housing for the elderly
. . . .
Veterans Administration:
Direct loan revolving fund
Loan guarantee revolving fund...
Export-Import Bank of Washington
Small Business Administration
..
Allowance for possible shortfall in participation sales
Total, by type of sale.
Grand total

.

Participation
sales

55

1967 estimate
Direct
sales

1968 estimate

Participation
sales

Direct
sales

Participation
sales

600

141

800

172

1200
15

100

6
8

740

605

685
200
761
350

165
5

154
106
700
500

605
1,600
80
100

600
80

3
9
96
63
120

34

10
40
50

250
600
1,000
500
-750

360
2,601
2, ?61

342
3,580
3. ( )22

275

5,000
275

'Includes $100 million under proposed legislation.

guaranteeing or insuring loans, and sales from one Government
agency to another, as well as regular amortization and prepayments of
principal.
Of the total sales anticipated in 1968, $5.0 billion will be accomplished through sales of participations and $275 million from direct
sales of individual loans. The timing of sales and the specific assets
to be sold are subject to variation depending upon market developments and shifts in the inventory of available assets. For these and
other reasons the 1968 budget totals assume that actual sales of
participations in 1968 will be $750 million less than the specific
authorizations requested for such sales.
INTEEEST RATES AND MATURITIES

Two of the major ways in which Federal credit programs help
achieve program objectives are by providing more favorable interest
rates or maturities than many borrowers can obtain from other
sources. Table E-5 summarizes the current range of interest rates
charged by the various major credit programs on direct loans (or prevailing on insured or guaranteed loans) and the customary maturities
for both direct and insured and guaranteed loans. These terms are
on newly committed loans by currently active programs, and do not
necessarily correspond to those on outstanding loans, or on loans
covered by commitments made in earlier years.
255-300 Or—67



5

66

THE BUDGET FOR FISCAL YEAR 1968

Table E-5. INTEREST RATES AND MATURITIES FOR MAJOR ACTIVE
CREDIT PROGRAMS CLASSIFIED BY AGENCY OR PROGRAM,
DECEMBER 1966
Direct loans
Agency or program
Interest
rate
(percent)

Maturity
(years)

Office of Economic Opportunity
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
2
Farmers Home Administration
3-5
Department of Commerce:
Economic Development Administration
4'/8-45/8
Maritime Administration
6
Department of Defense: Military assistance credits
0-5
Department of Health, Education, and Welfare:
Office of Education
3-43/8
Public Health Service
45/
Department of Housing and Urban Development:
Federal National Mortgage Association
3-6
Federal Housing Administration
3-6
Public housing program
College housing program
Urban renewal program
4%
Other major programs
0-4/2
Department of Interior: Reclamation loans
Department of State: Agency for International Development
Treasury Department: Loans to District of Columbia.. _
Veterans Administration
51/2-6
Export-Import Bank of Washington
Small Business Administration
3-5'/ 2

Guaranteed and
insured loans
Interest Maturity
(years)
rate
(percent)

15-30

f*

V2-4
5-35
1-50

5'/2
4i/ 4 -6i/ 2

5-40
9-25
3-10
2

6-8
53/
7-10

«0-40
12-19

6

25-40
7-40
V4-1
50
(4)
5-50
22-50
3-40
30-40
7-30
1V4-15
1-30

Vr*
33-40
2-10
25
3'/ 2 -5i/2

N.A.

1-15
33-6
1/2-40
33/8-37/8
3'/2-35/8

V2-I

5-9

3-20

4-6
4V2-9
3-8

7-30
0-7
1-30

1
When commodity loan is repaid by forfeiting collateral, no interest is charged.
2
On student loans, maturities begin when student leaves school and exclude periods of military
or 3 Peace Corps service.
In addition, property improvement loans are insured for 4—5% discount per year (equivalent
to 1 over 8% simple interest), and with maturities of 6 months to 7 years.
Payable on demand.

Interest rates charged on direct loans vary both among the various
Federal credit agencies and sometimes among the various types of
loans made by a single agency. Many of the differences in rates
reflect mainly differences in the cost of providing the loan (including
the cost of borrowing the necessary funds), of administering the
several types of loans and of incurring the varying degrees of risk of
probable loss. In many cases, the rate charged is governed by
statutory limits or formulas. Frequently, these are intended to
assure loans at rates below those prevailing in the private market or
below the cost to the Government, in order to provide special assistance to particular groups of borrowers as a method of accomplishing
Federal program objectives. In some cases, the rates charged reflect
mainly Government borrowing costs in earlier periods, rather than
current market yields of Government obligations.
Interest rates charged on insured and guaranteed loans tend to
correspond more closely to market rates of interest on comparable
loans by private lenders—allowing for the reduction or removal of
the normal private credit risk. In a few cases, however, interest rates



67

SPECIAL ANALYSES

on insured loans are set below the market rate and a secondary
market is provided to assure the willingness of the private lender to
make the initial loans. The Federal Housing Administration, for
example, was authorized in the Housing Act of 1961 to insure certain types of loans to finance moderate-income housing at rates well
below those prevailing in the private market (currently 3%), and
the Federal National Mortgage Association purchases all of such
mortgages. • In other cases, the Federal agency pays part of the interest costs necessary to obtain private financing, for example, for federally-insured student loans made by private lenders under the Higher
Education Act of 1965 and for guaranteed certificates of participation
under the Participation Sales Act of 1966.
Maturities, both on direct and on insured or guaranteed loans,
often are substantially more liberal than on private loans of similar
types. Private lenders are often limited by law or supervisory policy
to shorter maturities. When a Federal agency insures or guarantees
the loans, however, these limitations customarily do not apply.
Lenders can, safely, extend their loan maturities and borrowers can
take advantage of lower periodic installments to acquire assets
yielding income or tangible benefits over a long period of years.
QUASI-PUBLIC CREDIT PROGRAMS

The Federal Government also has certain responsibilities for the
credit programs of mixed-ownership corporations and other public
agencies operating in whole or in part with private funds. Table E-6
summarizes the outstanding loans for eight institutions or groups of
institutions of this type which have important lending operations.
Table E-6. OUTSTANDING LOANS FOR MAJOR QUASI-PUBLIC CREDIT
PROGRAMS CLASSIFIED BY AGENCY AND PROGRAM (in millions of dollars)
Outstan ding at end of fiscal year
Agency

1968
1967
estimate estimate

1965
actual

1966
actual

924
2.686

1.095
3,069

1.412
3.572

1.694
3.980

2.069

3.718

5.243

6,143

550

598

642

684

88

84

79

75

.

6,317

8,564

10,948

12,576

Farm Credit Administration: Federal land banks. . . . . .
Federal Home Loan Bank Board: Federal home loan banks..
Federal Reserve, Board of Governors: Federal Reserve
banks.

4.058
5.586

4,725
6,783

5,291
7,600

5,841
7,200

710

530

Subtotal, other quasi-public credit programs...

10.354

12,038

Total

16,671

20,602

Mixed ownership enterprises and trust funds:

Farm Credit Administration:
Banks for cooperatives.
..
Federal intermediate credit banks
Department of Housing and Urban Development: Federal
National Mortgage Association (Secondary market operations trust fund)
Veterans Administration:
National service life insurance fund
.. . .
U.S. Government life insurance fund
Subtotal, mixed ownership and trust funds
Other major quasi-public credit programs:

1

Estimates are not available.




«

0)

68

THE BUDGET FOR FISCAL YEAR 1968

Outstanding loans of mixed-ownership enterprises and trust funds
will double in the 3-year period, rising from a total of $6.3 billion in
1965 to an estimated $12.6 billion by the end of the fiscal year 1968.
He ivy net purchases of mortgages by the Secondary market operations
trust fund of the Federal National Mortgage Association are primarily
responsible for the large increase. In addition, the Federal intermediate credit banks and the banks for cooperatives are likewise
experiencing unusually rapid increases in their portfolios.
Similarly, the Federal land /banks and the Federal Home Loan
banks, which are privately-owned, expect a net expansion of onethird in their outstanding loans during the 3-year period from $9.6
billion in 1965 to $13.0 billion at the end of 1968. Discounts,
advances and acceptances of the Federal Reserve banks, however,
were lower on June 30, 1966, than at the end of the previous year.
SUMMARY

OF LEGISLATION AUTHORIZING NEW
FEDERAL CREDIT PROGRAMS

AND

BROADENED

The following summary lists all legislation authorizing new Federal
credit programs or revising existing programs in major respects enacted during the last session of Congress. It excludes simple extensions in expiring laws and increases in funds for continuing programs.
I. Office of Economic Opportunity
A. Economic Opportunity Amendments of 1966—Public Law
89-794
(1) Authorizes emergency low-interest loans up to $300 for lowincome families, and (2) transfers business loan authority to Small
Business Administration.
II. Department of Agriculture
A. Amendments to the Bankhead-Jones Farm Tenant Act—
Public Law 89-796
(1) Makes local nonprofit agencies eligible for rural renewal loans,
and (2) broadens eligible purposes to include recreational facility development and protection.
III. Department of Health, Education, and Welfare
A. Ailied Health Professions Personnel Training Act of 1966—
Public Law 89-751
(1) Increases loan forgiveness for doctors practicing in low-income
rural areas, (2) authorizes loans to colleges to finance student loans
made under the Health Professions Educational Assistance Act and
the Nurses Training Act and (3) makes such loans eligible for pooling
and participation sales by the Federal National Mortgage Association.
B. Veterinary Medical Education Act of 1966—Public Law 89709
Makes veterinary students eligible for student loans.




SPECIAL ANALYSES

69

IV. Department of Housing and Urban Development (and other
agencies)
A. Participation Sales Act of 1966—Public Law 89-429
(1) Empowers six departments and agencies to pool direct loans
and the Federal National Mortgage Association, as trustee, to sell
guaranteed participations in such loans, (2) provides for an indefinite
appropriation to cover any difference between principal and interest
payments received on the pooled loans and the contractual payments
owed to holders of participation certificates, (3) creates a revolving
fund for the academic facility loan program of the Department of
Health, Education, and Welfare, and (4) requires approval by the
Secretary of Treasury of all other sales of financial assets.
B. Disaster Relief Act of 1966—Public Law 89-769
(1) Authorizes adjustment of terms on loans held by the Rural
Electrification Administration, the Department of Housing and
Urban Development, and the Veterans Administration for borrowers
suffering losses in major natural disasters, (2) broadens insurance of
loans for housing for displaced families by the Federal Housing Administration to include families displaced by such disasters, and (3)
liberalizes authority of the Small Business Administration to lend
for restoration of damaged facilities of privately-owned colleges and
universities.
C. Demonstration Cities and Metropolitan Development Act
of 1966—Public Law 89-754
(1) Extends land development mortgage insurance by the Federal
Housing Administration and FNMA mortgage purchase authority to
new communities, (2) authorizes FHA mortgage insurance to help
finance group medical practice facilities, (3) authorizes loans and
grants to Alaska for housing and related facilities for Alaskan residents, (4) authorizes mortgage relief for certain homeowners previously
employed on or located near military installations closed since November 1964, and (5) makes numerous detailed revisions in existing
mortgage insurance, mortgage purchase, public facility loan, and
rural housing programs.
D. FNMA Amendments of 1966—Public Law 89-566
Provides new FNMA authority to purchase low-cost housing
mortgages to stimulate credit for residential construction.
V. Department of Interior
A. Small Reclamation Projects Act Amendments—Public Law
89-553
Revises statutory interest formula on small reclamation loans.
VI. Departments of State and Agriculture
A. Food for Peace Act of 1966—Public Law 89-808
(1) Requires conduct of program in a manner to assure progressive
transition, with certain exceptions, to dollar-repayable credit sales,
(2) liberalizes, under certain circumstances, the credit terms extended
to borrowers, and (3) excludes certain countries as credit recipients.




70

THE BUDGET FOR FISCAL YEAR 1968

B. Foreign Assistance Act of 1966—Public Law 89-583
(1) Adds three new criteria for development loans, (2) authorizes
the Agency for International Development to set minimum and
maximum interest rates on guaranteed housing loans based on the
current rate on loans insured by the Federal Housing Administration.
VII. Veterans Administration
A. Veterans Readjustment Benefits Act of 1966—Public Law
89-358
(1) Extends regular veterans loan guarantee and direct loan
benefits to post-Korean veterans and (2) revises statutory interest
ceiling to correspond to comparable Federal Housing Administrationinsured loans.
VIII. Farm Credit Administration
A. Amendment to Federal Farm Loan Act—Public Law 89-595
Deletes interest ceiling on debentures issued by Federal intermediate credit banks.*




SPECIAL ANALYSIS F
FEDERAL ACTIVITIES IN PUBLIC WORKS

Many types of structures are built by Federal, State, and local
governments to provide needed public services and to carry on other
governmental functions. This analysis brings together from various
parts of the budget the new obligational authority and expenditures
relating to Federal construction and federally aided State and local
public works. The analysis also includes, as a separate tabulation,
information on major Federal programs to assist construction by
private cooperatives and nonprofit groups. Federal programs which
affect the level of private construction, such as procurement, leases,
loans, loan guarantees, and tax concessions, are not within the scope
of this analysis.
Expenditures for Federal public works activities have been generally
increasing over the years, as indicated in table F - l . They represent a
significant portion of total Federal outlays. Direct Federal civil public
works reached a $3 billion peak in 1966 and are estimated to decrease
in 1967 and 1968. Expenditures for national defense public works,
which declined in the early 1960's, have increased since 1965, largely
because of the needs resulting from the war in Vietnam. Grants to
State and local governments are increasing in response to needs for
roads, schools, pollution abatement, and hospitals. As a result of
repayments and sales of participations in loans made in prior years,
net loan expenditures for public works are expected to decrease from
1967 to 1968.
Table F-l. FEDERAL EXPENDITURES FOR PUBLIC WORKS,
FISCAL YEARS 1959-68 (in millions of dollars)
From budget accounts and (rust funds
Total
Federal
expenditures

Year

1959
1960
1961
1962
1963
1964.. . .
1965
1966
1967 estimate
1968 estimate

.

6,684
6,846
6,823
6,938
7,196
8,346
8,886
9.428
9,296
9.119

Direct Federal construction
Total

3,653
3.463
3,758
3.693
3,704
4,019
4.152
4.693
4,620
4,577

Civil

1.521
1.643
1,878
2,085
2,321
2.691
2.800
3.014
2,820
2,776

Grants

Defense

2.132
,8?0
.880
,608
,383
.328
357
,679
800
.801

Loans
(net)

143
156
149
207
190
142
167
289
-25
-469

2,889
3.226
2.915
3.037
3,302
4.186
4.567
4,446
4.701
5.009

Note.—In this and the following tables, nonconstruction costs are excluded; proposed legislation is included for the years 1967 and 1968. Details may not add because of rounding.




71

72

THE BUDGET FOR FISCAL YEAR

1968

DIRECT FEDERAL PUBLIC WORKS

Direct Federal public works are those projects built and owned by
the Federal Government. They include complex multiple-purpose
water resource developments providing flood control, navigation,
water supply, and hydroelectric power; research facilities; public
buildings; defense and space installations; and other structures.
Budget expenditures for direct Federal projects approximate the
value of the work put in place, and cumulative expenditures reflect
the total Federal cost of the projects.
Table F-2 summarizes for the major Federal agencies direct Federal
construction according to civil and defense purposes. Of the total
$2.8 billion for civil public works in 1968, expenditures by the Corps
of Engineers will account for 37%. In the defense construction
total of $1.8 billion, the Department of the Army accounts for $638
million, or 35%.
Table F-2. DIRECT FEDERAL PUBLIC WORKS: EXPENDITURES AND 1968
NEW OBLIGATIONAL AUTHORITY, BY AGENCY (in millions of dollars)
From budget accounts and trust funds
expenditure
Type of program and agency

1966

Civil public works:
Office of Economic Opportunity
Forest Service
Corps of Engineers—Civil
Public Health Service
- . .
_.
Bureau of Indian Affairs
National Park Service . .
_.
Bureau of Reclamation
Bonneville Power Administration
Post Office Department
Coast Guard . - .
..
Federal Aviation Administration
General Services Administration
..
National Aeronautics and Space Administration...
Veterans Administration..
. . . .
Tennessee Valley Authority
Other

1967

1968

New
obligational
authority. 1968
estimate

50
101
997
29
73
64
278
54
51
26
62
230
572
84
156
187

65
125
989
50
62
64
238
99
22
47
57
210
280
66
204
242

7
142
1.025
52
68
65
224
107
54
42
51
239
160
79
211
250

6
196
1.021
33
63
59
217
119
48
37
32
133
54
53
42
152

3.014

2.820

2.776

2.265

329
452
527
195
*
176

514
436
626
93
1
130

641
342
581
82
1
155

592
657
631
511

Subtotal, national defense public works

1.679

1,800

1.801

2,583

Total, direct Federal public works . .

4,693

4.620

4.577

4,848

Subtotal, civil public works
National defense public works:
Army
Navy
. . .
Air Force
.
.
.
Interservice activities
Civil defense centers and shelters
Atomic Energy Commission

•Less than $500 thousand.




- - . - . .

192

73

SPECIAL ANALYSES
GRANTS AND LOANS FOR PUBLIC WORKS

Federal expenditures for grants and loans to aid construction by
State and local governments are summarized by agency in table F-3.
The Federal grant contribution varies by program and may in some
instances be a fixed percentage of the total cost of the project and in
other instances a variable proportion, depending on such factors as
population and relative financial ability of the States. Federal grants
and loans are generally supplemented by State or local revenues. In
most loan programs, gross disbursements are offset by repayments of
loans made in earlier years, to arrive at net budgetary expenditures.
In table F-3, loans for public works are shown on a gross basis with a
one-line deduction for repayments and participation sales to adjust to
net budget expenditures.
Table F-3. GRANTS AND LOANS FOR PUBLIC WORKS: EXPENDITURES
AND 1968 NEW OBLIGATIONAL AUTHORITY, BY AGENCY (in millions
of dollars)
From budget accounts and trust funds
expenditure s
Type of program and agency

Grants to State and local governments:
Public works acceleration
Soil Conservation Service
Farmers Home Administration.- .
..
Economic development assistance (Commerce)
Corps of Engineers—Civil
Office of Education
- Public Health Service
Department of Housing and Urban Development-.
Federal Water Pollution Control Administration..
Federal Aviation Administration.
Federal Highway Administration
_ _
Other civil
Subtotal, civil grants
Department of Defense
Total, grants
Loans to State and local governments:
Economic development assistance (Commerce)
Department of Agriculture
_
Office of Education
.. .
_ ..
Department of Housing and Urban Development..
Bureau of Reclamation
.
District of Columbia
Other
Repayments and participation sales
Total, net loans
"Less than $500 thousand.




1966

1967

1968

New
obligational
authority, 1968
estimate

85
69
*
15
18
119
91
4
83
54
3,897
4

36
69
47
84
14
233
128
66
85
54
3.860
20

212

181
161
59
3.697
34

71
34
290
34
418
360
293
218
71
4.880
31

4.439
7

4.696
5

5,001
8

6.700
5

4.446

4.701

5.009

6.705

4
5
25
428
18
28
6
-225

22
10
26
488
14
50
10
-645

38
7
50
493
15
52
9
-1,133

22
8

289

-25

-469

74
34
200
34
315

160
15
84
4
294

74

THE BUDGET FOR FISCAL YEAR 1 9 6 8
CIVIL PUBLIC WORKS

New and continuing work.—Large construction projects often require
a number of years from start to completion. Some of the complex
water control developments may require a decade or more to construct.
Table F-4 indicates the total cost of the Federal civil works projects
expected to be underway in 1968, the progress through the budget
year, and the expenditures required after 1968 to complete the
projects. The rate of completion during and after 1968 is contingent
on new obligational authority recommended for 1968 and, in the case
of water resources projects, on appropriations in future years. Expenditures for projects started in prior years are estimated at $2.6
billion in 1968, with an additional $10.9 billion required in later years
for completion.
Projects estimated to cost a total of $980 million are recommended
for starting in 1968. The new projects include nine projects for the
Corps of Engineers and two for the Bureau of Reclamation. The
General Services Administration will begin construction of eight
Federal buildings and the extension of the Franklin D. Roosevelt
Library. Major projects will be constructed in Honolulu, Hawaii;
San Juan, P.R.; and Bronx, N.Y. The Post Office will begin major
expansions of post offices in St. Louis and New York City. The
Veterans Administration will begin construction of a 1,040-bed
hospital at San Diego, and will start planning a hospital in Seattle.
Construction will be started on 15 schools by the Bureau of Indian
Affairs.
Planning and surveys.—Preliminary plans and surveys and general
investigations precede construction of some types of public works, and
help to assure economic design of facilities. Comprehensive river
basin planning requires coordinated long-range economic, hydrologic,
and land use projections prior to undertaking individual water resource
projects. Expenditures for such general studies are not within the
definition of public works used in this analysis and therefore are not
reflected in the summary tables.
As these general studies crystallize into needs for specific projects,
advance planning begins, and, in some instances, sites must be acquired. Expenditures for advance planning are shown in table F-4
for direct civil public works. The General Services Administration
will acquire sites and begin design of 17 Federal buildings. The
Post Office will acquire sites and begin design of 11 federally owned
postal facilities under a new program. In addition, the Department
of Housing and Urban Development will disburse $19 million in 1968
to State and local government agencies to facilitate advance planning
of their public works.
Authorized reserve of civil public works.—In addition to the projects
underway, agencies whose programs regularly include construction of
public works generally maintain a reserve of authorized projects.
Such projects require only financing and planning for starting. The
reserve provides a basis for the selection of projects which most
adequately fulfill program needs and budgetary policy. Table F-5
indicates the size and status of planning of the authorized reserve.




75

SPECIAL ANALYSES

Table F-4. ESTIMATED COST OF 1968 DIRECT FEDERAL CIVIL PUBLIC
WORKS BY CONTINUING AND NEW WORK (in millions of dollars)
From budget accounts and trust funds
Total

Continuing work:
Corps of Engineers—Civil.
_. . . .
Bureau of Reclamation _
.
General Services Administration . .
_.
Tennessee Valley Authority
. -National Aeronautics and Space Administration...
Forest Service
. .
Bonneville Power Administration
Veterans Administration
National Park Service
Bureau of Indian Affairs
Federal Aviation Administration
.. . .
Public Health Service
Post Office Department . . . . . . .
Social Security Administration (trust funds)
Other

New projects and features in 1968:
Forest Service
Coast Guard . . .
. . .
. ..
Post Office
. .
Bureau of Indian Affairs
Federal Aviation Administration
Public Health Service .
- . . . - - . . - - .
Corps of Engineers—Civil
Bureau of Reclamation
Bonneville Power Administration
National Aeronautics and Space Administration. .
General Services Administration .
.. _ ..
Veterans Administration.
.
. .
Other




plete

17,165
6,573
745
716
2,263
251
499
448
1,024

11,039
3,473
299
204
2,021
87
122
259
62

996
215
212
210
151
119
100
74
63

5,130
2,885
233
302
91
46
276
116
899

667

350

56

261

265
139
75
64
1,472

55
78
15
12
875

39
36
35
28
230

172
25
25
24
367

18,951

2,564

10,852

23
21
13
12
12
9

5
14
71
19
17
18

7
7

138
124

28
35
83
31
29
28
150
132

1
5
1

204

*
1

5
3
3
19

46
60
42
74

8

140

832

94

24

70
13
21
13
16
4
22
...

6

162

Advance planning:
General Services Administration * _
_. - _
Corps of Engineers—Civil _ _
.
Public Health Service
1
Post Office
National Aeronautics and Space Administration
National Park Service
Bureau of Reclamation
Other

* Less than $500 thousand.
1
Includes some site costs.

Required

expenditures

980

Total, new projects and features .

Total, direct civil public works

1968

prior to
1968

32,366

Total, continuing work..

Total, advance planning

Expendi-

Federal
cost

Agency or program

20
3

44
29

3
2
2
2

21
7
6
4
2
1
9

321

126

74

123

33,667

19,085

2,776

11,807

211
51
63
45
94

4
15
7
13

1
10

76

THE BUDGET FOR FISCAL YEAR

1968

Table F-5. RESERVE OF PRESENTLY AUTHORIZED PROJECTS AND
PROGRAMS FOR UNDERTAKING AFTER 1968 (in billions of dollars)
Cost of i uthorized reserve

Agency

Corps of Engineers—Civil
Forest Service .
_ .
Tennessee Valley Authority
Bonneville Power Administration
Bureau of Land Management-..
Federal Aviation Administration.
General Services Administration.
Public Health Service..
.
Veterans Administration
Other agencies
Total

Estimated
total
Federal
cost

7.4
1.3
.8

Status of plans as of
June 30, 1967

Status of plans as of
June 30. 1968

Contract
could
be let

In
process

Not
started

.9
.2
.2

4.5
1.1
.1

2.0

*
.1
*

.7
.5
.3
.4
.2
.2
.6

.1

*
.1
.4
.1
.1
.3

12.5

1.5

6.6

Contract
could
be let

In
process

Not
started

3.9
1.0
.1

1.7

.4

1.8
.2
.3

.7
.5
.1
.1
*
.1
.3

*
.2
.3
*
.1
.1

.1
*
.1
.1
.2
.1
.3

.7
.5
.1
*
*
*
.2

4.4

3.1

5.9

3.5

.3

*Less than $50 million.

Civil public works by junction.—-Table F-8 classifies public works
activities according to the major functional categories used in the
budget, with detail by agencies and type of program included under
each heading. Within the civil works programs, the largest expenditures are for the commerce and transportation and the natural resources functions.
Of the total $4.1 billion to be spent in 1968 for the commerce and
transportation function, grants for highways and airports predominate, although air navigational facilities and post office improvements
are also important segments. Within the Federal-aid highway programs, the Federal Government's share of the cost of the 41,000
miles of highways comprising the Interstate Highway System is 90%.
This system, now more than half completed, accounts for approximately three-fourths of the expenditures shown in table F-8 for the
Federal Highway Administration in 1968. For primary, secondary
and urban highways, the Federal share is 50%. Under the Federal
Airport Act, Federal grants generally cover 50% of the project costs
of airport construction.
In the natural resources function, expenditures for water resources
developments make up 84% of the $2.2 billion of expenditures in
1968. Although this function includes the major share of water resources developments, some water resources activities are carried on
under the agriculture and housing and community development functions. Between 1960 and 1968, expenditures for water resources and
related developments are estimated to increase by 81%—from $1.1
billion to almost $2 billion—as shown in the following chart.




SPECIAL ANALYSES

77

Budget Expenditures
Water Resources and Related Developments

Increasing Federal concern with the problems of water pollution and
water supply has resulted in increases in grants and loans for water
supply and waste disposal facilities built by State and local authorities.
The Federal Water Pollution Control Administration provides grants
to municipalities for waste treatment facilities. In 1968, the Federal
contribution will range from 30% to 55% of the total cost for an
individual project.
The Farmers Home Administration, in the agriculture function,
provides grants up to 50% of the cost for water and waste disposal
systems in rural communities. Additional information on the types
of water resources facilities, with detail by agency, is provided in
table F-6.
Within the remaining functional categories, expenditures for a
number of public works programs are expected to increase in response
to the urgent needs of an increasingly urban society.
In the housing and community development function, improvements
or extensions of water and sewer systems in over 300 communities will
be aided by Department of Housing and Urban Development grant
commitments amounting to $175 million in 1968. In addition, that
agency will provide grant assistance in 1968 for constructing transit
systems and other public facilities.
In the health, labor, and welfare function, the Department of
Health, Education, and Welfare will provide grants in 1968 for 87
community mental health centers. The department will also provide
grants or loans to assist in construction of hospitals, dental and medical
schools, and other facilities on a basis which applies not only to
publicly owned works shown in table F-3, but also to nonprofit institu


78

THE BUDGET FOR FISCAL YEAR 1968

Table F-6. BUDGET EXPENDITURES FOR WATER RESOURCES AND
RELATED DEVELOPMENTS (in millions of dollars)
Type and agency

1966
actual

Flood control works:
Corps of Engineers—Civil
Grants
Bureau of Reclamation
_ .
._
Soil Conservation Service (mostly grants)
. .
International Boundary and Water Commission. .
Tennessee Valley Authority
.

1967
estimate

1968
estimate

361.9
18.1
13.6
60.5
.1
1.5

400.9
14.4
11.7
58.7
1.2
3.8

382.8
33.7
12.5
61.2
1.1
4.6

455.7

490.7

495.9

2.0

2.0

2.3

. . .

99.8
18.0
14.7
12.0

60.5
14.4
15.6
12.0

28.2
15.4
15.1
12.0

.. ...

144.5

102.5

70.7

. . .
...

265.2
I.I
1.2

259.3
.2
.9

280.6
.1
.1

..

267.5

260.4

280.8

314.6
133.1
15.3
31.1

304.1
127.8
7.0
37.9

348.7
137.7
13.0
28.5

494.1
34.2

476.8
79.2

527.9
92.6

71.4
30.9
54.4

61.3
36.7
99.4

65.7
38.7
106.8

4.8

4.0

4.3

161.5

201.4

215.5

.

.2
81.5
.1

1.8
83.0
40.9
.5

.7
152.0
30.0
6.3

..

23.1

40.0
-24.5

110.0
-22.0

...

104.9

141.7

277.0

1,664.4

1,754.7

1,962.7

. . ._

Total, flood control works
Beach erosion control: Corps of Engineers—Civil.
Irrigation and water conservation works:
Bureau of Reclamation. .
.
.
Loan and grant program
Soil Conservation Service (mostly grants)
Bureau of Indian Affairs
. . .
Total, irrigation works
Navigation facilities:
Corps of Engineers—Civil
. . . .
Saint Lawrence Seaway Development Corporation
Tennessee Valley Authority .
Total, navigation facilities . .

Multiple-purpose dams and reservoirs with hydroelectric power
facilities:

Corps of Engineers—Civil

...

. .

._._

Bureau of Reclamation
..
. . .
.
International Boundary and Water Commission..
Tennessee Valley Authority

. . .

Total, multiple-purpose facilities
. .
Thermal-electric powerplants: Tennessee Valley Authority
Power transmission facilities:
Tennessee Valley Authority
Bureau of Reclamation
Bonneville Power Administration
Southwestern Power Administration

..

. . .
-

.

Total, power transmission facilities
Water supply and waste disposal facilities:
International Boundary and Water Commission
Federal Water Pollution Control Administration (grants)
Farmers Home Administration (grants)
Bureau of Reclamation
. .
Department of Housing and Urban Development:
Grants
. . . -- -Loans (net)...
—
Total, water supply and waste disposal
Total, water resources and related developments...




SPECIAL ANALYSES

79

tions shown in table F-7. The 1968 commitments will provide for
approximately 21,000 hospital beds and for 13,000 beds in long-term
care facilities. Assistance will be provided to increase the capacity
at professional health services training facilities by 2,300 students.
The Department of Housing and Urban Development will provide
$46 million in commitments m 1968 for neighborhood facilities for
health, welfare, and recreation activities serving low-income neighborhoods, and will assist State and local governments in providing
housing for students and faculty in public higher educational institutions through long-term loans.
The National Aeronautics and Space Administration's construction
programs will decline in 1968 from the 1967 level as major facilities
for the Apollo program are completed.
The Veterans Administration will continue its $1.2 billion program
to modernize obsolete facilities and to expand the veteran hospital
system. In addition to the hospital to be started in San Diego, work
will continue on hospitals in Chicago and Tampa.
In the general government function, the General Services Administration will spend $239 million in 1968, compared with $210 million
in 1967, for the construction of buildings and the modernization and
rehabilitation of existing Government buildings.
NATIONAL DEFENSE PUBLIC WORKS

Department of Defense—Military.—The 5-year force structure and
financial plan to strengthen and modernize the facilities of the Armed
Forces will be continued with the recommendation for $2.4 billion in
new obligational authority in 1968, of which $135 million will be spent
for facilities in support of research and development. The remainder
is for construction of facilities both at home and overseas to be used
for operations, training, logistics, administration and troop housing.
The plan was modified in 1967 to take account of the Vietnam requirements.
Atomic Energy Commission.—The 1968 construction program will
include work on facilities for weapons development, reactor development, and research in the physical sciences. Definitive design will
begin in 1968 on a 200 billion electron volt accelerator to be located
near Chicago, 111., which is expected to cost about $240 million.
AID TO COOPERATIVES AND NONPROFIT GROUPS

Some private nonprofit groups carry on activities of a public service
character,, such as the provision of educational and health services
and the conduct of research, which are related to similar programs
conducted by State and local governments. Federal assistance
programs may provide support both to State and local governments
and to the private nonprofit institutions providing similar services.
Federal expenditures to aid construction undertaken by these nongovernment institutions are shown in table F-7, but are not included
in the total public works expenditures reported in this analysis.




80

THE BUDGET FOR FISCAL YEAR 1968

Table F-7. FEDERAL EXPENDITURES FOR CONSTRUCTION BY COOPERATIVES AND NONPROFIT GROUPS (not included in public works)
(In millions of dollars)
1966

Program
Federal construction:
Howard University
Gallaudet College
Grants:
Hospital construction
Health professions educational facilities.
Health research facilities
Higher education facilities
Loans:
Rural electrification and telephones
College housing
Higher education facilities
Repayments and participation sales

1968
stimate

1967

2
*

104

114
13
38
58

116
29
38
89
508
158

-14

440
180
26
-578

49
•1,127

690

293

-135

26
16
361
165
30

Total.
"Less than $500 thousand.

Table F-8. FEDERAL ACTIVITIES IN PUBLIC WORKS (in millions of dollars)
By major function and agency

Function, organization unit, and program

NEW OBLIGATIONAL
AUTHORITY

EXPENDITURES

1966
actual

1967
estimate

1968
estimate

1966
actual

9.5

3.4

4.1

6.3

1968
1967
estimate estimate

CIVIL PUBLIC WORKS
International Affairs and Finance
Department of State:
State Department and Foreign Service
buildings
Cultural and Technical Interchange
Center, Hawaii (grant)
United States Information Agency: Radio
facilities and special international exhibitions
- .---.
Total, international affairs and
finance .
.
..
.

10.7

.2

.2

7.1

.1

22.7

4.8

17.6

6.4

17.1

14.0

32.2

8.5

21.7

12.8

24.4

24.7

60.9

85.0

54.2

572.4

280.0

160.0

20.9
2.0

13.9
2.0

5.4
2.0

3.7
.6.

13.7
1.7

32.6
3.9

1.5

.5
1.9

1.5
2.5

.3

2.0
1.2

1.2
2.3

Space Research and Technology
National Aeronautics and Space Administration:
Research and space flight facilities
Agriculture and Agricultural Resources
Department of Agriculture:
Laboratories, research facilities, and
library
Grants for research facilities
.
Soil Conservation Service: Resource
conservation and development:
Loans
Grants
.-




.8

81

SPECIAL ANALYSES
Table F-8. FEDERAL ACTIVITIES IN PUBLIC WORKS
(in millions of dollars)—Continued
By major function and agency

Function, organization unit, and program

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967
estimate

EXPENDITURES

1968
estimate

1966
actual

.9

1968
1967
esti mate estimate

CIVIL PUBLIC WORKS—Continued
Agriculture and Agricultural
Resources—Continued
Department of Agriculture—Continued
Farmers Home Administration:
Rural renewal loans
Grants for rural housing
-Grants for rural water and sewer
systems
._
Commodity Credit Corporation: Storage
facilities
Total, agriculture and agricultural
resources.- . .

1.0

.9

1.5

3.0

3.0

4.0

20.0

26.0

30.0

48.2

46.9

1.4
4.0

.1

40.9

30.0

-8.3
49.2

1.6
6.0

-7.6

-3.0

-2.8

59.5

72.5

Natural Resources
Department of Agriculture:
Soil Conservation Service: Flood prevention and watershed protection:
Direct work
. _ ..
...
3.0
3.0
Grants
69.7
68.1
5.2
5.7
Loans
Forest Service: Roads and research, rec87.0
184.7
reational and protective facilities
Department of Defense—Civil:
Corps of Engineers—Civil:
Flood control, navigation, and multiple-purpose projects with power... 1.060.7 1,038.5
25.5
16.3
Trust funds .
-.
..
14.4
18.1
Grants
Department of the Interior:
Bureau of Land Management: Roads
16.6
12.8
and other facilities
..
. .
Bureau of Indian Affairs: Irrigation
75.1
works, roads and schools
53.1
Geological Survey: Laboratory
Bureau of Mines:
Laboratories, demonstration plants,
1.4
and helium facilities
1.0
Appalachian mining area restoration
and anthracite mine drainage,
7.0
grants
-.
Office of Coal Research: Demonstration
4.0
3.8
plants
.
Bureau of Commercial Fisheries:
1.2
1.9
Facilities
._
.. ..
.9
Grants
Bureau of Sport Fisheries and Wildlife:
9.5
18.3
Facilities
_ _
Appalachian restoration and other
2.9
grants
.
See footnotes at end of table.
255-300 0—67


3.0

3.0

3.0

3.0

68.6

69.1

68.2

71.4

5.2

4.3

6.2

4.7

196.4

100.8

125.4

141.8

996.0
24.6
33.7

974.3
22.9
18.1

963.9
25.0
14.4

999.0
26.0
33.7

15.7

19.4

17.9

13.7

63.4

72.5
.6

61.5
.3

68.0

1.2

*

.6

2.0

.8

.8

2.5

11.5

5.4

3.8

4.3

5.1

1.4
.5

6.6
*

2.8
.1

2.2
.3

2.6

8.5

9.0

4.0

1.2

1.4

1.9

82

T H E BUDGET FOR FISCAL YEAR

1968

Table F-8. FEDERAL ACTIVITIES IN PUBLIC WORKS
(in millions of dollars)—Continued
By major function and agency

Function, organization unit, and program

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967
1968
estimate estimate

EXPENDITURES
1966
actual

1968
1967
estimate stimate

CIVIL PUBLIC WORKS—Continued
Natural Resources—Continued
Department of the Interior—Continued
National Park Service: Parkways, roads,
buildings and utilities 1 . . . - .
Federal Water Pollution Control Administration:
Buildings and facilities
.
Grants
Bureau of Reclamation:
Irrigation and multiple-purpose projects with power J . . .
Loans, small irrigation projects
Grants, small irrigation projects
.
Power transmission facilities:
1
Bonneville Power Administration
Southwestern Power Administration..
Office of Saline Water:
Demonstration plants and research
facilities
_.•. . .
_...
Department of State:
International Boundary and Water
Commission: Water resources projects and Chamizal settlement
Restoration of salmon runs, Fraser
River system
Facilities for International Pacific
Halibut Commission (grant)
.
Tennessee Valley Authority: Power, water
resources and chemical facilities
Total, natural resources

61.4

56.3

58.9

63.7

64.2

64.5

122.2

5.3
155.0

1.1
218.0

82.5

3.1
85.0

8.1
161.0

243.9
11.9
.1

240.7
12.7
.1

217.5
14.9

277.9
17.8
.1

237.8
14.3
.1

223.8
15.4

97.5
2.2

107.9
4.0

119.3
5.1

54.4
4.8

99.4
4.0

106.8
4.3

4.5

8.8

.6

.2

4.2

5.2

17.5

11.9

14.8

29.9

32.8

19.9

.2

.4

204.0

210.7

.1

.5
42.4 1,044.2

41.6

156.3

. . 1,966.9 3,093.5 2,112.1 1,992.5 2,055.0 2,207.8

Commerce and Transportation
Funds appropriated to the President:
Public works acceleration:
Grants
Direct Federal work..
Department of Commerce:
Economic development assistance:
Appalachian highways: Grants. . . .
Development facilities grants
Development facilities loans
Repayments
Participation in U.S. Expositions: 1967
Alaska Centennial, building
Environmental Science Services Administration: Structures2
Bureau of Standards: Buildings.
Maritime Administration: Library and
other improvements . . _
See footnotes at end of table.




84.7
3.4

200.0
35.0

100.0
189.6
22.0

8.9
5.6
3.7

42.1
41.6
21.5

80.7
119.3
37.9
-16.5

3.5

100.0
202.6
25.5

35.7
2.3

.5

.8
7.7

1.2
8.1

.4

.3

4.0
1.2
.2

*
1.4

1.2
.9

1.0
18.4

83

SPECIAL ANALYSES
Table F-8. FEDERAL ACTIVITIES IN PUBLIC WORKS
(in millions of dollars)—Continued
By major function and agency

Function, organization unit, and program

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967

1968

EXPENDITURES
1966
actual

1967

1968

CIVIL PUBLIC WORKS—Continued

Commerce and Transportation—Con.
Department of Defense—Civil: Panama
Canal Company: Canal and harbor improvements and bridge
Post Office Department: Post offices, improvements and alterations
Department of Transportation:
Coast Guard: Shore facilities and navigation aids
Federal Aviation Administration:
Air traffic control, navigation, and research facilities
Dulles and National Airports
Federal-aid airport program: Grants..
Federal Highway Administration:
Federal-aid highways and other trust
funds: Grants
Forest and public land highways:
Grants
Chamizal memorial highway: Grant..
Highway beautification, control of
outdoor advertising, grant
Federal Railroad Administration:
Alaska Railroad
St. Lawrence Seaway Development
Corporation: Alterations
Federal Communications Commission:
Construction

4.2

9.7

7.9

14.8

12.4

48.2

50.6

22.2

53.9

19.6

28.9

37.4

26.4

47.0

42.4

48.9
1.2
75.0

27.9
71.0

31.8
.2
71.0

59.8
2.2
54.0

53.5
3.4
54.0

46.9
4.0
59.0

,930.3

,336.1

,872.2

38.4

45.2

,855.7 3,819.9 3.692.6
40.0
.9

.6

9.0

3.5

1.0

4.1

39.4

.2

4.0

Total, commerce and transporta4,372.7 4,851.0 5,382.5 4,229.6 4,209.2 4,142.3
tion

Housing; and Community
Development
Department of Housing and Urban Development:
Urban transportation grants
Public facility loans, gross
Repayments and participation sales..
Grants for water and sewer facilities
Grants for neighborhood facilities
Metropolitan development incentive
grants
Advance planning, non-Federal public
works: Loans, gross
Repayments
Liquidating programs: Repayments
Low-rent public housing: Loans, gross.
Repayments
See footnotes at end of table.




45.7

53.3

56.2
2.6

100.0
12.0

100.0
17.0

4.5
33.4
-4.5

165.0
42.0

23.3
54.1
-84.7
40.0
3.0

110.0
15.0
7.0

30.0
15.0

49.3
56.2
-83.7

16.1
-7.2
-.4
199.3
-201.1

20.5
-8.5
-.4

19.1
-9.1
-.4
246.2
218.5
-218.8 -246.5

84

THE BUDGET FOR FISCAL YEAR 1968
Table F-8. FEDERAL ACTIVITIES IN PUBLIC WORKS
(in millions of dollars) —Continued
By major function and agency

Function, organization unit, and program

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967
stimate

1968
stimate

EXPENDITURES
1966
actual

1967
stimate

1968
stimate

1.4

5.1

6.5

CIVIL PUBLIC WORKS—Continued
Housing and Community Development— Continued
Federal Home Loan Bank Board:
Headquarters
-_. .
National Capital Transportation Agency:
Land acquisition and construction
.
District of Columbia:
Loans for schools, highway, sewer, and
water systems and other structures. __
Total, housing and community development
_-

13.2
3.7

9.1

28.3

37.5

83.8

28.3

50.4

52.0

204.7

230.9

379.6

69.5

102.5

221.6

73.9

10.0

6.0

50.0

65.0

7.0

5.7

3.1

1.2

.8

2.6

5.6

9.0
14.2
140.3
.5

18.3
14.7
149.4

10.7
22.2
136.5

19.3
9.3
85.5
.1

36.2
14.2
93.5

34.6
17.0
101.6

50.0
63.0
2.0

50.0
112.0
2.3

25.0
51.0
148.0
1.2

.5
4.6
1.2

2.8
31.2
2.2

18.5
25.0
66.5
3.2

1.5

8.5

28.1

1.5

8.5

28.1

360.1

368.3

429.9

172.8

256.2

306.9

7.5
41.9

10.0
12.3

10.0
12.3

10.7
44.4

9.0
31.0

9.0
29.8

55.0

100.0

25.4

26.5

49.5

362.6
56.6
30.0

359.1
68.6
40.0

37.1
22.0
15.9

-50.0
135.8
44.0
22.0

-50.0
210.7
49.0
25.0
*

Health, Labor, and Welfare
Office of Economic Opportunity: Job Corps
centers and related facilities..
Department of Health, Education, and
Welfare:
Food and Drug Administration: Buildings
- -- Public Health Service:
Federal research facilities and National Library of Medicine
Indian health facilities l
Grants for public hospitals . .
Grants for health research facilities.
Community health service facilities,
grants

Grants for mental health centers
Grants for health educational facilities
Saint Elizabeths Hospital: Buildings...
Social Security Administration: Buildings and district offices (trust fund) Total, health, labor, and welfare _
Education
Department of Health, Education, anc
Welfare:
Office of Education:
Schools in federally affected areas:
At Federal installations
Grants . . . .
..
Higher education facilities:
Loans, gross ~
.
.
Repayments and participation
sales
- - - -Grants .
.
_ - .
Vocational schools (grants)
Libraries (grants) .
Model secondary school for the deaf..
See footnotes at end of table.




308.0
70.6
27.2

85

SPECIAL ANALYSES
Table F-8. FEDERAL ACTIVITIES IN PUBLIC WORKS
(in millions of dollars) —Continued
By major function and agency

Function, organization unit, and program

NEW OBLIGATIONAL
AUTHORITY
1966
actual

EXPENDITURES

1968

1966
actual

1967

1968

157.8

1967

179.0
-11.9

195.0

171.6
-726.9

CIVIL PUBLIC WORKS—Continued
Education—Continued
Department of Housing and Urban Development:
College housing loans, gross
Repayments and participation sales __
National Science Foundation: Research
facilities
Smithsonian Institution:
John F. Kennedy Center for Performing
Arts
Museums
Total, education _

157.8

-282.8

7.8

12.4

6.8

7.6

3.8

3.9

2.6

7.1

723.0

606.3

595.7

338.5

1.2

3.7

10.0

2.3

3.6

.3

2.6
*

90.5
.2

52.1
.4

52.0
.8

83.7
.2

65.5
.4

77.0

2.5
1.4

4.0

4.0

1.0
.5

4.2
.9

95.8

63.8

67.1

86.7

70.5

89.9

11.4

11.5
*

3.9

.4
5.2

4.4
7.9

4.0
7.3

7.3

8.0
6.7

8.0
4.0

152.5 -211.7

Veterans Benefits and Services

Department of Defense—Civil:
Army: Cemeteries
United States Soldiers' Home (trust
fund).—.—...
Veterans Administration:
Hospital and domiciliary facilities
Research facilities
Construction of State nursing homes,
grants
Corregidor-Bataan Memorial
Total, veterans benefits and services-

5.0
2.1

General Government

Legislative Branch:
Architect of the Capitol: Buildings and
James Madison Library
Government Printing Office: Annex
Department of Defense—Civil:
Army: Power and water systems
Ryukyu Islands: Loans
Canal Zone Government: Improvements.
Department of the Interior:
Office of Territories: Public facilities in
Samoa, Guam, and the Trust Territory of the Pacific Islands:
Grants
Loans
Department of Justice:
Immigration and Naturalization Service : Border facilities
Federal Prison System: Prison facilities.
Grants for correctional and enforcement facilities
See footnotes at end of table.




5.2

9.0

2.0

5.0

7.4
5.9

12.0
.3

16.7
4.4

3.1

5.4

13.5
5.4

13.6
5.0

.1
5.0

.2
5.0

10.6

.1
6.5

.2
4.3

5.0

1.0

86

T H E BUDGET FOR FISCAL YEAR

19 6 8

Table F-8. FEDERAL ACTIVITIES IN PUBLIC WORKS
(in millions of dollars)—Continued
By major function and agency

Function, organization unit, and program

NEW OBLIGATIONAL
AUTHORITY

EXPENDITURES

1966
actual

1967
estimate

1968
estimate

1966
actual

1968
1967
estimate estimate

0.2

0.2

0.2

0.5

0.1

0.3

2.4
5.8

3.1
13.0

14.8

230.3

210.2

239.3

.4

.7

270.2

281.4

CIVIL PUBLIC WORKS—Continued
General Government—Continued
Treasury Department:
Bureau of Customs: Border facilities..
Bureau of Engraving and Printing: Air
conditioning ._
Bureau of the Mint: Philadelphia Mint General Services Administration: Construction of public buildings, sites and
planning 1 .
Central Intelligence Agency: Headquarters
.Total, general government
Total, civil public works

22.3
210.3

264.8

133.4

194.5

169.8

209.0

8.130.4 9,564.5 9,259.4 7,742.3

295.8

7,49\A 7,309.9

NATIONAL DEFENSE PUBLIC
WORKS
Department of Defense—Military:
Interservice activities:
Construction, Defense agencies
Loran stations
Family housing
Civil Defense:
Grants for shelters
Emergency centers and shelters
Army:
Construction..
Construction, Army Reserve
Construction, Army National Guard
(grants)
.
Navy:
Construction
..
Construction, Naval Reserve
Air Force:
Construction..
Construction, Air Force Reserve
Construction, Air National Guard

219.8
5.0
177.0

8.0

240.0
3.6
267.0

16.4
6.7
172.3

20.0
3.3
70.0

30.0
3.6
48.0

3.5
7.8

5.0

5.0

3.7
.1

4.5
.5

5.0
.8

967.7

402.5

592.0

326.9
2.2

513.8
.5

638.8
2.0

3.0

.7

2.7

652.2
5.0

447.4
4.4

430.0
5.5

618.0
3.9
9.5

516.1
2.4
8.1

610.0
6.2
10.0

10.0
634.8
9.5

266.9
5.4

705.7
4.0
10.0

401.5
3.6
9.4

3

3

335.2
7.0
565.0
4.7
11.2

Total, Department of Defense—
. Military .
2,754.7 1,102.3 2,396.2 1,509.7 1,675.0 1.654.0
176.0
155.0
125.8
191.6
130.0
87.7
Atomic Energy Commission: Facilities..
Total, national defense public works. 2,842.5 1,228.1 2,587.8 1,685.7 1,805.0 1,809.0
Total, civil and defense public
works: Budget accounts and
10,972.9 10,792.6 11.847.1 9,428.0 9,296.3 9,118.9
trust funds
....
* Less than $50 thousand.
1
Includes small amounts from trust funds.
2
3 Includes Weather Bureau and Coast and Geodetic Survey in 1966.
Includes $1.2 million of new obligational authority and $0.2 million of expenditures from the
Special Foreign Currency program.




SPECIAL ANALYSIS G
FEDERAL EDUCATION, TRAINING, AND RELATED PROGRAMS

This analysis provides information on all programs of the Federal
Government which contribute to the support of education, training,
and related activities, regardless of the agency which administers
them or their primary purpose. It is the second comprehensive analysis of Federal education, training, and related programs based on
data in the annual U.S. budget.
The 1968 Federal budget provides outlays of $11.0 billion for aid to
all education, training, and allied programs broadly defined. This
total encompasses all programs classified in the budget functional
category 700, "education," for which expenditures in 1968, including
amounts offset by sale of loan participations, are estimated to be
$4.6 billion. In addition, it includes $6.4 billion for education and
training activities classified in other functional categories, including
formal training, conduct of research at universities, national libraries
and library aid programs, military professional and occupational training with transfer value to the civilian economy, and aid for international educational activities. Funds for facilities, aid for students,
and institutional support all are included.
The $11.0 billion in total outlays will be partly offset by $1.8 billion
in sales of participations in pools of college housing, academic facility,
and student loans. As a consequence of the proceeds from sales of
participations, net budget and trust fund expenditures for education,
training and related activities in 1968 will amount to $9.2 billion.
Most of these proceeds are in the budget functional category for
"education," for which net budget expenditures are estimated at
$2.8 billion.
Almost all of the $9.2 billion of net expenditures for education,
training, and related activities will be from administrative budgetfunds. They comprise 6.8% of all regular budget expenditures in 1968.
The trust funds show net receipts of $7 million. Together, budget
and trust expenditures for these programs account for 5.3% of Federal
cash payments to the public and 9.6% of all Federal nondefense cash
payments.
The $11.0 billion in estimated outlays in this analysis is an increase
of $1.0 billion over 1967, of $3.7 billion over 1966, and $5.8 billion
over 1965.
In addition, aid to college and vocational education students through
private loans which are insured and subsidized by the Federal Government will total an estimated one-half billion dollars in fiscal 1967 and
three-quarters of a billion dollars in 1968, compared to $79 million in
1966. This raises the total aid for education in fiscal 1968 to $11.7
billion, $1.2 billion above 1967.
New obligational authority in 1968 for all the education, training,
and related programs will total $12.3 billion, $1.2 billion more than
in 1967 and $2.7 billion over 1966. The aid through guaranteed
private loans will be in addition, as will some obligations to be financed
from participation sales.



87

THE BUDGET FOR FISCAL YEAR 1968

Education, Training, and Related Programs
Obligations 1956-1964 '

NOA 1965-1968

$ Billions
12-

10-

8-

6Technical Training

4-

2-

1956

1958

Fiscal Years

development oj Federal education, training and related programs.—

The high value placed on education by the American people is reflected
in the substantial and increasing proportion of public, as well as
private, resources which are devoted to the support of education. In
the last decade, particularly, total outlays for education from all
sources have increased 60% in relation to the gross national product
(GNP), and in absolute terms have risen more than two and one-half
times.
The trend in Federal funds for education—classified into three
categories—is indicated in the accompanying chart for the fiscal
years 1956-68 which is based on the following figures (dollars in
billions):




89

SPECIAL ANALYSES

New obligational
authority

Obligations
Category

1956 1957 1958 1959 I960 1961 1962 1963 1964 1965 1966 1967 1968
Regular "education" activities
(700 category)
0.4 0 6
Military technical and professional training
. . _.
.9 .9
All other .
1.3 1.3
Total, education, training, and related programs

n6

0 8 0 9 1 1 1 4 1 3 1 •)

.8 .8
1.3 1.3

.8
.9 1.0
1.4 1.3 1.4

2.4

4 3 4 6 5 3

1.0 1.2 1.4 1.4
1.9 2.0 3.4 3.9

1.8 1.6
4.7 5.4

2.6 2.8 2.7 2.9 3.J 3.3 3.8 4.2 4.7 7.2 9.6 11.1 12.3

Note.— Data for fiscal years 1956-64 are estimates based on unpublished Office of Education tabulations, supplemented by Bureau of the Budget, and are not precisely comparable with new
obligational authority for 1965-68.

This table shows that the sharpest rate of increase since 1963 has
been in the regular education programs, although significant increases
have occurred in other programs, too.
Historically the financing of education is preponderantly a State
and local concern, but Federal assistance for education dates back to
the allocation of public lands for support of schools in 1785. It has
been marked by such milestones as the Morrill Act of 1862 which
authorized grants of land or scrip for the establishment of land-grant
colleges, the Smith-Lever Act of 1914 relating to cooperative extension
work by colleges, and the Smith-Hughes Act of 1917 and the GeorgeBarden Act of 1946 which provided support for vocational and
technical education.
The rapid expansion of national defense and war-related programs
during and following World War II has resulted in enlarging the
Federal role in support of education and training:
• Millions of military personnel and civilians were trained for
technical specialties in crash programs during the war.
• The "GI bills"—the Servicemen's Readjustment Act of 1944
and the Veterans' Readjustment Assistance Act of 1952—while
primarily veteran's benefit programs, nevertheless resulted in about
$19 billion of Federal expenditures for college and below-college
education, and for on-job and on-farm training. A major recent
impetus was given to educational aid for veterans by the Veterans'
Readjustment Benefits Act of 1966 which authorized aid for college
and below college institutional training for up to 36 months for
military service since January 1, 1955.
• Federal construction and operating assistance for schools in districts affected by Federal activities, authorized in 1950 on a greatly
enlarged basis, remained for more than a decade the largest source
of Federal aid to elementary and secondary education.
Science activities and training, which received a considerable impetus during World War II, have also had increasing Federal attention
in recent years:
• Major expansion of the National Institutes of Health during the
1950's and the 1960's provided an effective focus for Federal support
of health and training and has resulted in increasing the flow of research funds to universities.
• Establishment in 1950 of the National Science Foundation added a
new source of funds to promote basic research and science education.



90

THE BUDGET FOR FISCAL YEAR 19 68

• Concern over the large shortages in manpower trained in mathematics, science, and modern foreign languages following the first
Sputnik in 1957 led to the enactment of the National Defense Education Act in 1958 which authorized a variety of support programs
for elementary, secondary, and college level education.
Shortages of highly trained professional personnel and technicians
have likewise led to the enactment of many training programs related
to specific fields or missions. A good example is the Health Professions Educational Assistance Act of 1963, more recently augmented
by amendments in 1965. The Vocational Education Act of 1963 was
designed to reorient earlier Federal-State vocational education programs to meet current day needs for technicians. Growing awareness
of the necessity for retraining unemployed persons and for updating
skills in a rapidly changing economy similarly led to the Manpower
Development and Training Act of 1962 which has been amended
several times subsequently, with particularly significant improvements
in 1966.
The Economic Opportunity Act of 1964 authorized 10 major action
programs, including the Job Corps, Neighborhood Youth Corps,
Adult Literacy, Work Experience, College Work-Study, and Community Action programs (including Head Start and Upward Bound).
These programs place a heavy reliance on education and training.
The strengthening of education through other programs is also a major
part of the anti-poverty effort.
The Government has made exceptional strides in recent years in
providing direct Federal support for education at all levels. The
Higher Education Facilities Act of 1963 authorized major Federal
assistance through grants and loans for construction of undergraduate
and graduate academic facilities to help meet needs arising from increasing college enrollments. Previously, Federal aid for facilities
was essentially restricted to college housing loans, first authorized by
the Housing Act of 1950, and special-purpose grants, largely in the
science area.
The largest advances of all in Federal aid for education were made by
the 89th Congress. The Elementary and Secondary Education Act
of 1965 authorized more than $1 billion of Federal funds for the first
year to strengthen elementary and secondary education for children
from low-income families. It also authorized funds for supplementary
educational centers and services; for school library resources, textbooks, and other instructional materials; for educational "laboratories" designed to bring new curricular and other innovations to
the classrooms; and for strengthening State department's of education.
The Elementary and Secondary Amendments of 1966 extended the
earlier act for 2 years and broadened and increased the authorizations.
The Higher Education Act of 1965 authorized a major broadening
of Federal support of higher education including assistance for
(1) university community service programs; (2) college library
resources, library training and research; (3) strengthening of developing colleges; (4) student assistance on a greatly enlarged scale through
educational opportunity grants up to $1,000, federally subsidized,
guaranteed student loans, and an expansion and liberalization of the
college work-study program enacted in 1964; and (5) instructional
equipment. It also authorized new programs for graduate training of
schoolteachers and for establishment of a National Teacher Corps



SPECIAL ANALYSES

91

which would serve some schools with large concentrations of the poor.
The Higher Education Amendments of 1966 provided a 3-year extension of the Higher Educational Facilities Act of 1963 and liberalized
its provisions. The National Foundation on the Arts and the Humanities Act, also enacted in 1965, initiated Federal support of the humanities and the arts. The International Education Act of 1966 provided
a broadened program to support advanced and undergraduate
international studies.
Federal funds for education, training, and related programs by agency.—

Ten Cabinet departments and more than 15 other agencies support or
conduct education, training, and related programs as an integral part
of their agency's mission. Table G-l summarizes the funds for each
agency.
Of the $11.0 billion in outlays for estimated aid to be provided
for education, training, and related programs in 1968, $4.9 billion or
45% will be made by the Department of Health, Education, and Welfare. Within this Department, in turn, the Office of Education will
spend $3.5 billion or 71% of the funds; the Public Health Service,
including the National Institutes of Health, about $1.1 billion or 22%.
Expenditures for HEW programs, especially in the Office of Education, are increasing sharply, 78% from 1966 to 1968. Most of the
HEW expenditures take the form of grants-in-aid or loans.
The Department of Defense ranks as the next largest agency, responsible for $2.2 billion or 20% of all the outlays in 1968, even though
specialized military training such as recruit and pilot training have
been excluded from this analysis. More than $1.6 billion of the
Defense expenditures are for military technical and professional training in skills and occupations which have value in civilian life. A
buildup occurred in 1967 in these programs because of the Vietnam
conflict. In addition, the service academies, which account for expenditures of $120 million in 1968, have been included as an integral part of higher education.
All of the remaining agencies of the Federal Government will
account for outlays of about $3.9 billion for education, training, and
related programs in 1967, or 35% of the total. These outlays for
agencies other than HEW and Defense, include $1.6 billion of aid
financed by sale of college housing loan participations, which result
in net budget expenditures of $2.3 billion.
These other agencies cover a wide range of activities:
• The Department of Housing and Urban Development plays a
large role in financing college housing facilities.
• The National Science Foundation's programs have the objective
of strengthening basic research and education in the sciences.
• The Department of Labor finances programs for occupational
training and manpower research. In 1968 it will provide training
to 280,000 workers under the Manpower Development and Training Act.
• The Veterans Administration supports the education of disabled
veterans, or those of recent service, children of totally disabled or
deceased veterans, and training in medicine and dentistry. In 1968
it will fund training for an estimated 478,000 individuals, 96%
of them veterans of the Vietnam conflict.



92

THE BUDGET FOR FISCAL YEAR 1968

• The Department of the Interior provides elementary, secondary,
and college level education and vocational training for Indians and
Alaskan natives. An estimated 73,000 individuals will be given
education or training in 1968.
• The Agency for International Development finances both formal
and informal education and training of individuals in the developing countries.
Table G-1. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED
PROGRAMS BY AGENCY (in millions of dollars)
Agency

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967

1968

EXPENDITURES
1966
actual

1967
estimate

1968
estimate

ADMINISTRATIVE BUDGET
Department of Health, Education, and
Welfare:
Office of Education
Public Health Service:
National Institutes of Health
Other Public Health Service
Vocational Rehabilitation Administration
Welfare Administration
Other Health, Education, and Welfare
Total, Department of Health,
Education, and Welfare
Department of Defense:
Military activities:
Army
Navy
Air Force
Other
Civil activities

3,342 4,018 4,155
(3,342) (3,918) (4,055)
897
773
852
200
433
341
(200) (341) (421)
90
47
28

124
60
26

151
64
104

4,475 5,421 5,803
(4,479) (5,321) (5,691)

1,972
(1,972)

558
84
(84)
82
43
22

2,762
(2,762)

3,556
3,047
(2,947) (3,356)
804
790
285
193
(270)
(193)
121
57
30

146
66
50

4,906
4,238
(4,138) (4,691)

743
513
645
54
20

1,013
586
711
52
21

857
560
695
50
25

715
511
625
52
16

1,008
573
707
48
25

856
558
701
50
27

Total, Department of Defense. _

,975

2,384

2,188

,918

2,361

2,191

Office of Economic Opportunity1
National Science Foundation
Veterans Administration
Department of Labor
Department of Housing and Urban
Development
.

742
480
80
408

892
480
415
405

1.291
526
472
415

588
368

841
395
415
284

1,115
455
472
304

300
(300)
205
137
188
108

9
(9)
237
160
192
119

143
67
22
57
67
26
27

117
62
30
50
56
32
32

Department of the Interior
Economic Assistancel
Department of Agriculture
Atomic Energy Commission
National Aeronautics and Space Administration
Department of State
District of Columbia
Peace Corps *
Military Assistance1
Library of Congress
Smithsonian Institution
1

Funds appropriated to the President.




345
(345)
240
225
205
120

79
283
312
(312)

205
82
170
103
119
69
20
47
67
25
30

340
347
(-253) (-1,260)
243
216
158
108
196
182
120
115
141
66
32
47
51
31
41

136
66
36
50
42
37
42

93

SPECIAL ANALYSES

Table G-1. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED
PROGRAMS BY AGENCY (in millions of dollars)—Continued

Agency

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967

1968

EXPENDITURES
1966
actual

1967

1968

ADMINISTRATIVE BUDGET—Con.

Department of Transportation
Department of Commerce
National Foundation on the Arts and the
Humanities
Department of Justice
United States Information Agency
General Services Administration
Tennessee Valley Authority
U.S. Government Printing Office
U.S. Arms Control and Disarmament
Agency.
..
.
Small Business Administration
Total budget funds for education,
training and related programs

33
23

32

32
14

16
13
11
5
2
1

32
20
15
12
11

5
2

9,587 11,175 12,346
7,313
9,993 11,009
(9,587) (11,075) (12,234) (7,313) (9,293) (9,194)

TRUST FUNDS
Department of Health, Education, and
Welfare: Social Security
Department of Housing and Urban Development
Department of Transportation
Library of Congress
Smithsonian Institution
National Foundation on the Arts and the
Humanities
Department of Labor
Department of State
General Services Administration

15

Total net budget and trust funds for
education, training and related
programs

15

15

-10
4
2
2

-37
6
2
2
2
1
1
*

Total trust funds for education,
training and related programs
Total funds provided for education,
training, and related programs. _
Participation sales

15

27
9,595

11,202
-100

12,375
-112

9,593

11,102

12,263

16

-7

7,320

10.010
-700

,002
,815

7,320

9,310

9.187

30

*Less than $500 thousand.
Note.—Figures in parentheses represent amounts after proceeds from loan participation sales.

The forward momentum of Federal education, training, and
related programs is indicated by the 28% increase of new obligational
authority from 1966 to 1968. Of the $12.3 billion total for 1968,
nearly $5.7 billion, 46%, is for the Department of Health, Education,
and Welfare—a growth of over 27% in 2 years for HEW. The Department of Defense's share in the new obligational authority for 1968 is



94

THE BUDGET FOR FISCAL YEAR 19 68

$2.2 billion, or 18%. All other agencies will receive $4.4 billion, or
36%, of total new obligational authority for 1968.
Federal junds jor education, training, and related programs by category
or type of aid.—Table G-2 shows the distribution of total new obligational authority and expenditures for the programs in this special
analysis by the level of education aided or the type of assistance
provided.
The promotion of higher education will amount to $4.5 billion in
1968, 37% of total new obligational authority requested for 1968.
Support of facilities, equipment, and institutional development,
largely by the Office of Education and the National Science Foundation, comprise nearly $1.2 billion. Support of undergraduate,
graduate, and professional training, in which many agencies participate, will account for nearly $1.9 billion. In addition, students will
receive three-quarters of a billion dollars of private loans guaranteed
by the Government not reflected in these figures. University-based
research, exclusive of educational research, which is financed largely
by agencies such as the National Institutes of Health, the National
Science Foundation, and the Department of Defense totals $1.5 billion.
Total outlays for higher education, including aid financed by participation sales of $0.7 billion in 1967 and $1.8 billion in 1968, will rise
from nearly $3.6 billion in 1967 to over $4.0 billion in 1968.
The second largest category, $3.2 billion of new obligational authority, or 26%, will be for aid to preschool, elementary, and secondary
education. In this category, more than $1.6 billion will be for programs authorized by the Elementary and Secondary Education Act of
1965, mostly for educationally deprived children from low-income
families. An estimated 8.5 million low-income children will be aided
in 1968 under title I of this act. In addition Head Start will help
737,000 children and thousands of children in the primary grades will
be aided through a new Head Start followup program.
The third largest category, $1.8 billion of new obligational authority
in 1968, is for vocational education, work training, and other adult or
continuing education programs. It encompasses the vocational educational programs of the Office of Education, the Manpower Development and Training program of the Department of Labor, and training
components of numerous programs financed by the Office of Economic
Opportunity. The OEO programs in 1968 will provide for an average
of 38,000 Job Corps enrollees, 355,000 full-year and summer Neighborhood Youth Corps job and training opportunities, and many
thousands of adult work-training or employability training places.
The fourth largest category, $1.7 billion in new obligational authority, is for training of Federal governmental personnel. About 96%
of these funds are for technical and professional training of military
personnel in skills which are usable in civilian occupations. An estimated 0.7 million military personnel will receive such education or
training for varying durations under Defense Department auspices in
1968, including 87,000 recruits or inductees who will be given special
help to bring them up to acceptable standards. The amounts for the
service academies and off-duty training are included as higher education.




95

SPECIAL ANALYSES

Table G-2. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED
PROGRAMS BY CATEGORY (in millions of dollars)
NEW OBLIGATIONAL
AUTHORITY
Category or type of aid

EXPENDITURES
1966
actual

1967
1968
estimate estimate

1966

1967

1968

actual

estimate

estimate

683

794

905
18

562

670

769
13

234

283

262

956
86

1,433
122

1,632
154

2,508

2,830

1. Preschool, elementary, and secondary:
(a) General support:
(1) Operations:
Existing programs
Proposed legislation
(2) Facilities:
Existing programs
Proposed legislation
(b) Education of special groups
(c) Teacher training

294

281

1,294
128

1,549
143

245
21
1,842
180

Subtotal, preschool, elementary, and secondary

2,399

2,767

3,212

,838

1,215
0,215)

1,159
(1,059)

1,252
(1,152)

521
(521)

495
(495)

802
(802)

408
(408)

73

139

861
(849)
2
(2)
191

308
255

369
299

392
340

217
162

.280
72

1,360
102

1.467
102

2. Higher education:
(a) Facilities, equipment, and institutional development of
physical facilities
(b) Support of undergraduate students:
(1) Support of individuals:
Existing programs
Proposed legislation
(2) Institutional support
(c) Support of graduate and professional training:
(1) Support of individuals
(2) Institutional support
(d) Research, except educational research
(e) Other
Subtotal, higher education
3. Vocational education, work-training and
other adult or continuing education:
Existing programs
Proposed legislation
4. Educational research, curriculum development, etc
5. Training of Federal governmental personnel:
(a) Military personnel
(b) Civilian personnel
6. International educational activities:
Existing programs
Proposed legislation
7. Other:
Existing programs
Proposed legislation
Subtotal, existing programs
Subtotal, proposed legislation
Total funds provided for education,
training, and related programs. .
Participation sales
Total net budget and trust funds for
education, training, and related
programs

4,232
4,610
3.698
(3,698) (4.132) (4.498)

1,277

1.456

765
948
(65) (-752)

761
(761)

829

76

(814)
100
(-100)
138

323
245

362
282

,307
1.366
,075
73
96
45
4,021
3,550
2,438
(2.438) (2,850) (2.206)

1,781
30

1,021

1.341

1.542
12

135

137

164

65

116

134

1.408
77

1,794
82

,572

1,397
74

1.767
81

1.580

297

306
4

347
6

242

251
4

295
6

303

424

543
23

244

392
*

481
15

9,595

11,197
5

12,275
100

7,320

10.005

11.056
-54

9,595

11,202
-100

12,375
-112

7,320

9,595

11,102

12,263

7,320

5

10.010 11.002
-700 -1,815

9,310

9,187

* Less than $500 thousand.
Note.—Figures in parentheses represent amounts after proceeds from loan participation sales.




96

THE BUDGET FOR FISCAL YEAR 1968

Federal funds for education, training, and related programs by budget

functional category.—Table G-4 lists the major Federal programs covered in this analysis under the functional categories in which they are
regularly classified in the Federal budget. In each category the programs are in turn listed by the agencies which administer them.
Programs classified in the "education" function of the budget will
have estimated total outlays of $4.6 billion, 42% of the total outlays
for education, training, and related programs from the Federal Government. Of the new obligational authority, however, they comprise
$5.2 billion or 43%. These are the programs which have as their end
purpose the promotion of education. They include all the activities
carried on by the Office of Education and by the National Science
Foundation, and these two agencies are the largest components. They
also include the college housing loan program of the Department of
Housing and Urban Development, and certain other smaller programs,
such as education of Indians by the Department of the Interior, and
activities of the Smithsonian Institution and the Library of Congress.
Expenditures of $6.4 billion in 1968 are included for programs which
have as their primary purpose objectives other than the promotion
of education and training, but which, nevertheless, contribute significantly to advancing the search for knowledge and education broadly
defined. They are administered by a wide variety of other agencies
and are classified in other functional categories. A review of this
second group of programs indicates the extent to which the Federal
Government supports mission-related education and training which
contributes to the overall development of our human resources. In
1968, such expenditures are estimated as follows:
• $2.3 billion in "national defense," including-$1.6 billion for training of military and civilian personnel, nearly $0.3 billion for research
support at universities by the Department of Defense, and $120
million by the Atomic Energy Commission, mostly for universitybased research.
• $2.7 billion in "health, labor, and welfare," encompassing the
economic opportunity programs of $1.1 billion, the health research
and training programs of $1.1 billion, and $0.5 billion for the
activities of the Welfare Administration, Vocational Rehabilitation
Administration, the manpower development programs, and various
other smaller programs.
• $0.5 billion in "veterans benefits and services" for vocational
rehabilitation of disabled ex-servicemen, educational benefits for
children of deceased servicemen, new Vietnam readjustment benefits, and training of VA medical personnel.
• $0.3 billion for the expanded education aid programs in the
"international affairs" category mostly through the Agency for
International Development and the Department of State, including
the training activities of the Peace Corps.
• $172 million in "agriculture and agricultural resources," primarily
for cooperative research and extension services.
• $136 million for "space research and technology" for both mission
related research grants and contracts and graduate education in
science and technology through the NASA sustaining university
program.




SPECIAL ANALYSES

97

• $0.2 billion in all other categories of the administrative budget,
including "natural resources," "commerce and transportation," and
"housing and community development."
Support of graduate and undergraduate students.—The Federal Government is playing an increasing role in the support of graduate and
professional training (1) directly, through fellowship and traineeship
programs included in this analysis, and (2) indirectly, through research contracts and grants at institutions of higher education which
support thousands of research assistants, principally graduate students.
Table G-3 presents preliminary estimates of the number of individuals
assisted, including rough estimates of the number of assistantships.
While the totals include some undergraduates, the great majority of
the individuals are engaged in postgraduate training or study.
In addition to support for the individuals reported in table G-3,
several programs also finance training for large numbers of teachers
through institutes, generally held in the summer. NDEA institutes
financed by the Office of Education are estimated to aid 26,500 teachers
in 1968, about 6,500 more than in 1967, and about 1,800 fewer than in
1966. Likewise, the science institutes and cooperative college-school
programs financed by the National Science Foundation are expected
t.o assist about 43,700 high school teachers in 1968, 5,600 more than
in 1967, and 300 fewer than in 1966. Altogether, through institutes,
fellowships, and traineeships, the Federal Government will aid in
training and updating the skills of about 123,000 teachers in fiscal
1968, including 102,000 for elementary and secondary schools.

255-300 O—67


CO

00

Table G-3. ESTIMATED NUMBERS OF INDIVIDUALS IN GRADUATE AND PROFESSIONAL TRAINING AIDED BY FEDERAL
FUNDS (in thousands)
Research assistantships

Fellowships

Traineeships

Total

Agency
1966

Department of Defense (Military)
Department of Health, Education, and Welfare:
Office of Education
Public Health Service:
National Institutes of Health
Other Public Health Service . .
Other
Atomic Energy Commission
__
-National Aeronautics and Space Administration
National Science Foundation
.__..
Other
Total

1967

1968

1966

1967

1968

15.4

17.2

1966

1967

1968

18.2

1966

1967

1968

15.4

17.2

18.2

16.2

22.8

25.5

1.2

.9

1.1

3.8

4.5

4.7

21.2

28.2

31.3

5.6
.4
.1
.4
.2
4.1
3.1

5.5
.4
.2
.4
.4
2.7
2.9

5.6
.4
.2
.4
.4
2.7
3.0

7.6
.4

8.3
.5

9.0
.5

4.2

4.4

4.5

6.0

6.5
*

7.3
*

22.0
8.8
6.6
.1
1.3
4.2
6.0

23.6
9.5
7.6
.1
.8
5.9
6.2

24.6
7.6
7.7
.1
.3
6.3
6.7

35.2
9.6
6.7
4.7
1.5
14.3
9.1

37.4
10.4
7.8
4.9
1.2
15.1
9.1

39.2
8.5
7.9
5.0
.7
16.3
9.7

30.1

35.3

38.2

34.8

37.8

40.6

52.8

58.2

58.0

117.7

131.3

136.8

to
CO

* Less than 50.




oo

99

SPECIAL ANALYSES

Aid to undergraduate college students which began in substantial
proportions under the NDEA loan program has been greatly expanded
under the Higher Education Act of 1965. The trend of undergraduate college student aid in the fiscal years 1965-68 is sharply upward:
Program

Aid provided (millions):
Federal: New obligational authority Private: Federally insured loans
Number of grants and loans to students (thousands) :
NDEA direct Federal loans
Insured private loans
Work-study grants
Educational opportunity grants
Veterans Administration grants *
Total grants and loans 2

1965
actual

$147

37
1

1
7
34
3

1966
actual

1967
estimate

1968
estimate

$371
79

$752
479

$903
638

400
105
190
134
17
86
4

435
480
191
221
455
1.782

437
750
226
285
478
2,176

1
Includes vocational rehabilitation of disabled, war orphans, and benefits for veterans of Vietnam
conflict.
2
The number of individuals aided is smaller because some students receive several types of aid.

In addition to the foregoing, a program of insured loans starting in
1967 will guarantee 150,000 loans in 1967 and 262,500 in 1968 for
students enrolled in vocational education courses, providing aid of
$60 million and $105 million, respectively.
Proposed legislation.—The budget contains several legislative proposals for aid to education for which specific amounts of funds are
provided, including the following:
• Vocational education project grants, new obligational authority
$30 million; expenditures $12 million.
• Grants to States and localities for educational evaluation and
planning, new obligational authority $15 million; expenditures $10
million.
• Extension and expansion of Federal support for educational
television, new obligational authority $20 million; expenditures $12'
million.
• Sales of participations in NDEA student loans, net new obligational authority $2 million; net expenditures —$100 million.
• Aid to Ryukyu Islands, new obligational authority, $6 million;
expenditures $6 million.
• District of Columbia revenue proposals, new obligational authority $24 million; expenditures, $2 million.
Other proposed legislative items covered in the general contingencies
of the budget or in the allowances for ongoing programs include (1)
extension and enlargement of the Teacher Corps, (2) more flexible
authority for teacher training, (3) aid for education of handicapped
children, (4) authority to adjust the present 3% statutory interest
rate in college facilities programs to a more reasonable level, and (5)
establishment of a new program to support training of personnel for
State-local government service.
Coverage of this special analysis.—Although the scope of this
analysis is broad it does not include a number of activities which
are closely allied and which are sometimes included in estimates of



100

THE BUDGET FOR FISCAL YEAR 1968

expenditures for education. Examples of activities excluded are as
follows: Basic recruit training of military personnel and other strictly
military training, such as flight training, are excluded because of
limited transfer value to the civilian economy. Scientific research
conducted outside of academic institutions, or carried on in universitymanaged research centers under Federal contracts, is also omitted,
because the portion of their efforts devoted to training is generally
limited. The school lunch and special milk programs are omitted
because they are largely of a welfare character and their effect on
transmission of knowledge is indirect. University service contracts,
for example, for operating mental health centers, are excluded. Technical assistance programs between Federal and State and local
governments or between levels of governments which do not involve
educational institutions are not included. Finally, many small
inservice training programs for Federal civilian employees are not
included because it was not practicable to obtain data.
The amounts reported in this analysis include training and other
programs also covered in other special analyses. For example, the
analysis of health programs includes the training and university
research programs of the health agencies. Thus, if the amounts
reported in two or more special analyses are to be added together,
provision should be made to eliminate the overlapping programs.
Relationship of Federal aid to total national outlays jor education.—
The significance of the Federal expenditures for education reported
in this analysis may in part be appraised in the context of total
national expenditures for education from all sources, public and
private. Preliminary estimates consistent with those published by
the Department of Health, Education, and Welfare in Health, Education, and Welfare Trends indicate that the total national expenditures
for education covering current expenditures, capital outlay, and
interest, but not debt retirement, for both public and nonpublic
schools and colleges reached $45 billion during the school year ending
1966, approximately 6.7% of the gross national product. Nearly
$30 billion was spent for elementary and secondary education and
slightly more than $15 billion for higher education.
The HEW series, however, includes only funds obligated by educational institutions. It thus omits major federally operated programs such as training of military personnel, the great bulk of on-thejob and similar training activities outside regular schools, as well as
the student assistance which is paid to individuals rather than to the
colleges. On the other hand, the HEW series includes several major
programs which are omitted from the present special analysis, including the school lunch and school milk programs and about $550
million in funds for research and development in university-managed
off-campus research centers for 1966.
If the figures for the funds in this special analysis for fiscal year
1966 are adjusted to correspond with those in the series prepared by
HEW, the Federal funds for elementary and secondary education total
approximately $2.1 billion, or about 7% of all public and private outlays in the corresponding category; and funds for higher education
would total about $3.3 billion or about 22% of the national outlay in
this category reported by HEW. Overall the Federal contribution
to the direct financing of the Nation's educational institutions would
be about 12%.



Table G-4. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS BY BUDGET FUNCTION
(in millions of dollars)
Functional category, agency, and program

ADMINISTRATIVE BUDGET FUNDS
National defense:
Department of Defense:
Support of oversea schools for dependents
Service academies, construction, equipment, and operation
Research grants and contracts with educational institutions
Professional, technical, and related training:
Military personnel
Civilian personnel
Civil defense research and training
Military assistance: Training of military and civilian personnel administered by Department of Defense from funds appropriated to the President
Atomic Energy Commission:
Research, including conduct and facilities
Graduate and professional training and related support for higher education
Other

Functional
code




1967
estimate

1966
actual

EXPENDITURES

1968
estimate

1968

1967

1966
actual

051
051
051

79
133
274

85
119
294

94
121
300

79
101
268

85
131
283

93
121
295

051
051
051

1,448
7
14

1,840
10
14

1,623
11
14

1,435
7
13

1,813
10
14

1.631
11
14

057

67

56

42

67

51

42

058
058
058

94
8
6

105
8
7

104

90
8
6

100
8
7

105
8
6

2.130

2,537

2,325

2,073

2,501

2,326

57

50

47

48

48

Total, national defense.
International affairs and finance:
Peace Corps: Training activities
United States Information Agency: Information center and library activities, Foreign
Service Institute, etc.
Department of State:
Salaries and expenses: Foreign Service Institute, grants to oversea schools, etc
Mutual educational and cultural activities: Largely American and foreign student,
teacher, professor, specialist, and leader exchange programs.
Educational and cultural affairs: Center for Cultural and Technical Interchange
Between East and West

NEW OBLIGATIONAL
AUTHORITY

152
153

10

10

11

151

9

9

9

153

53

47

55

51

50

153

6

6

6

6

6

Table G-4. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS BY BUDGET FUNCTION
(in millions of dollars) —Continued
Functional category, agency, and program

Functional
code

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967

EXPENDITURES
1966
actual

1968

1967

1968

ADMINISTRATIVE BUDGET FUNDS—Continued
International affairs and finance—Continued
Agency for International Development (funds appropriated to the President for
economic assistance): Educational and training phases of technical cooperation,
aid to educational institutions, and training of foreign nationals
U.S. Arms Control and Disarmament Agency: Research
.
Total, international affairs and finance

- -

Agriculture and agricultural resources:
Department of Agriculture:
Agricultural research service: Training and research, including foreign currency
program
_
Cooperative State research service: Payments to State agriculture experiment
stations for research
.
__
...
.
Federal extension service for cooperative extension work
Other, including National Agricultural Library . .
.. ..
... .

225
1

82
1

108
1

158
1

271

283

356

207

232

285

251

143

117

111

119

141

136

355

14

16

18

5

5

5

355
355
355

53
89
9

57
93
3

61
97
4

50
90
2

56
93
5

62
97
7

166

169

180

148

159

172

23
1

23
1

25
1

22
1

23
1

24
1

.

Natural resources:
Department of Agriculture: Forest Service: Largely payments of shared revenues to
States and counties for schools
_
Department of Defense—Civil: Corps of Engineers: Research and training




160
1

-

Space research and technology:
National Aeronautics and Space Administration: Research and training

Total, agriculture and agricultural resources

137
1

152
151

402
401

Department of the Interior:
Shared revenue payments to States and counties under miscellaneous permanent
appropriations, largely mineral leasing and grant lands (estimated portion for
school support)
Bureau of Indian Affairs: School construction, alteration, repair, and maintenance.
Water and saline water research, including assistance to States and research
Geological Survey research and training
Tennessee Valley Authority: Mainly in-lieu-of-tax payments and cooperative
research

400
401
401
409

114

Total, housing and community development"Less than $500 thousand.




28
50
13
*

29
54

30
55

1

31
45
22
2

17
1

21
2

135

129

116

126

135

59
19

502
506
506

6
3

7
3
10

13

13
19
1

14
16

16
17
1

13
19

15
16
1

15
17
1

45

502
501
506

Total, commerce and transportation.
Housing and community development:
Department of Housing and Urban Development: Grants for training in community
development, city planning, and transportation management
District of Columbia:
Prorated school portion of general Federal contribution
Proposed legislation

29

401

Total, natural resources.
Commerce and transportation:
Department of Commerce:
Maritime Administration: State schools and other maritime training
Scientific and technological research
Other research and State assistance
Department of Transportation:
U.S. Coast Guard, principally Coast Guard Academy, education of uniformed
personnel and oversea dependents
Federal Aviation Agency: Principally training of civilian Federal personnel
Small Business Administration: Training

28
42
17
1

47

57

44

47

53

553
555
555

1

22

30

38
24

20

32

33
2

22

31

69

20

32

39

Table G-4. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS BY BUDGET FUNCTION
(in millions of dollars) —Continued
Functional category, agency, and program

Functiona
code

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967

EXPENDITURES

1968

1966
actual

1967

1968

ADMINISTRATIVE BUDGET FUNDS—Continued
Health, labor, and welfare:
Office of Economic Opportunity (funds appropriated to the President):
Community Action program:
Head Start
Adult training, remedial education, research, etc
Job Corps—Urban and rural centers
Neighborhood Youth Corps:
In-school and summer
Out-of-school
Work-study
Work experience—Adult training, including remedial education
Adult basic education
Education of migrant children
VISTA—Training of volunteers
Special unemployment impact work and training programs
Department of Health, Education, and Welfare:
Public Health Service:
Construction of medical schools and other health education facilities
Health professions training
Research grants, manpower
Air pollution programs
Indian health, and hospitals and medical care_
Other, including chronic and communicable disease, radiological health, and
urban industrial health activities
National Institutes of Health:
Training
Research grants
Research facilities




655
655
655

180
139
165

352
132
86

472
165
178

76
100
145

250
108
176

360
153
178

655
655
655
655
655
655
655
655

173
5

154
10

168
9

141

168
10

33
21
22
3

30

2
1
17
4
258

170
4
33
23
22
12
4

39
14
25
5
75

3
5
22
4
185

651
651
651
651
651

90
63
(63)
8
7
3

160
118
(118)
10

203
161
(H9)
10
13
5

5
40
(40)
6
6
3

45
101
(101)
9
6
4

95
122
(107)
10

651

23

27

28

20

23

23

651
651
651

204
357
46

222
405
46

234
442
29

124
298
21

206
434
21

225
432
13

National Institute of Mental Health:
Training
Research grants
Research facilities
National Library of Medicine
Welfare Administration:
Maternal and child welfare grants
Public assistance grants to States and assistance to Cuban refugees
Juvenile delinquency and youth offenses training activities
Vocational Rehabilitation Administration:
Research and training
Rehabilitation services and training
Other health, education, and welfare:
Freedmen's Hospital and St. Elizabeths: Medical training
Department of the Interior: Bureau of Mines: Health and safety training
Department of Labor:
Manpower Development and Training Act: Institutional and on-the-job trainingApprenticeship, area redevelopment, and research activities
Total, health, labor, and welfare.
Education:

Legislative branch: Library of Congress
Department of Health, Education, and WelfareOffice of Education:
Elementary and Secondary Education Act of 1965:
Education of the disadvantaged (grants to school districts with low-income
families)
Supplementary centers
Schoolbooks and strengthening State educational agencies
Proposed legislation for educational planning and evaluation
Aid to federally impacted school districts:
Operation
Construction
National Defense Education Act for elementary and secondary: School equipment, guidance, testing, and teacher institutes
National Teacher Corps
._

74
0

701
701
701
701
701
701
701
701

"Less than $500 thousand.
Note.—Figures in parentheses represent amounts after proceeds from loan participation sales.




Table G-4. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS BY BUDGET FUNCTION
(in millions of dollars)—Continued

Functional category, agency, and program

Functional
code

NEW OBLIGATIONAL
AUTHORITY
1966
actual

1967
estimate

EXPENDITURES

1968
estimate

1966
actual

1967
estimate

1968
estimate

ADMINISTRATIVE BUDGET FUNDS—Continued
Education—Continued
Department of Health, Education, and Welfare—Continued
Office of Education—Continued
Civil rights, and other..
Assistance to the handicapped
Aid for undergraduate and graduate college students:
Scholarships
Work-study
National Defense Education Act loans
Proposed legislation for NDEA loans

701
701
702
702
702
702

Higher Education Act: Insured loan program
Teacher training:
Fellowships, elementary and secondary teachers
Fellowships, college teachers.
Higher education academic facilities:
Grants for college, junior college, and graduate facilities.
Loans

702

International education
Other aids to higher education institutions, including aid to developing
colleges
Expansion and improvement of vocational education
Proposed legislation for vocational education project grants
Grants for libraries and community services:
Public libraries
Higher education libraries
Other libraries
Education research and development
Other aids to education, including salaries and expenses of Office of Education .

702




702
702
702
702
702
704
704
704
704
704
704
740

9
28
60
99
182

9
38
115
134
193

10
20
56

46
30
81

522
110
(110)
13

523
301
(201)
16

35
243

62
275

31
53

6
15

9
25

22
40

160
140
193
2
(2)
40

10
31
177

59
108
189

113
113
189

35
97
450
104
(4)
37
62
267
30
68
37
61
105
40

38
20
57

(-100)
52
30
82

32
56
51
(51)
13

202
53
(-47)
14

309
101
(1)
18

15
128

42
222

57
219
12
63
37
44
83
38

Special institutions and miscellaneous including American Printing House for the
Blind, Gallaudet College, Howard University, and educational TV
Educational TV—Proposed legislation
_
Department of Housing and Urban Development: College housing loans
Department of the Interior: Bureau of Indian Affairs: Indian education
National Foundation on the Arts and the Humanities
National Science Foundation:
Basic research and specialized research facilities
Grants for institutional science programs
Science education
Other science activities
Smithsonian Institution

26

24

704
704

300
(300)
107
6

703
703
703
703
704

237
90
124
28
27

702-704
704
702

232
98
122
29
32

251
110
131
34
37

182
46
123
18
30

188
59
125
23
41

213
86
128
28
42

5,345
(5,245)

2,834
(2,834)

4,004
(3,304)

4,616
(2,816)

800

12

16

15

12

1
6

15

803
804

36
32

365
34

421
35

36
30

365
34

421
35

80

415

472

79

415

472

910

1

910

14

910
910

5
6

910

9

908

12

*Less than $500 thousand.
Note.—Figures in parentheses represent amounts after proceeds from loan participation sales.




312
(312)
104
1

31
12
347
338
(-253) (-1,262)
106
125
8
15

4,723
(4,623)

Total, veterans benefits and services General government:
Legislative branch: Government Printing Office: Distribution to depository libraries..
Department of Defense—Civil:
Canal Zone Government, contribution to schools, including capital outlay
Ryukyu Islands administration:
Schools
Proposed legislation
Department of the Interior: Administration of territories, including Samoa and
Trust Territory of the Pacific, prorated portion for schools
Department of Justice: Vocational training in Federal prison industries and training
in law enforcement

7
(7)
119
II

28

4,315
(4,315)

Total, education.
Veterans benefits and services:
Veterans Administration:
Compensation and pensions: Subsistence allowances for veterans in vocational
rehabilitation
Readjustment benefits: Aid under War Orphans' Educational Assistance Act,
Veterans' Readjustment Benefits Act, and vocational rehabilitation for disabled
veterans
Training of medical personnel engaged in VA medical activities

20

43
20
338
(338)
129
16

Table G-4. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS BY BUDGET FUNCTION
(in millions of dollars)—Continued
Functional
code

Functional category, agency, and program

NEW OBLIGATIONAL
AUTHORITY
1967

1966
actual

EXPENDITURES

1968

1967
estimate

1966

1968
estimate

ADMINISTRATIVE BUDGET FUNDS—Continued

General government—Continued
General Services Administration: National Archives services, Presidential library
activities, and national historical publications grants
.
Total, general government

. . _.

.

4

4

5

4

4

5

42

42

52

33

46

53

9,587
(9.587)

11.176
(11,076)

12,346
(12,234;

7.313
(7,313)

9.993
(9.293)

11.009
(9.194)

150

*

1

1

*

1

1

654

1

14

15

I

14

15

652

1

1

1

1

1

1

704
702
704
/04

3

2

2

2

2
-37

*
*

2

2

*

2

2

*

2
-10
2
2

3
*

3
3

2

3
*

3

905

. . -.

Total administrative budget funds for education, training, and related
activities
TRUST FUNDS
International affairs and finance:
Department of State: Educational Exchange Trust Fund .
..
Health, Education, and Welfare:
Department of Health, Education, and Welfare: Education and training by Social
Security Administration for vocational rehabilitation
Department of Labor: Grants to States for school counseling and testing by employment service..
Education:
Legislative branch: Library of Congress, gift and trust fund income accounts
.
Department of Housing and Urban Development: participation sales trust fund .
Smithsonian Institution
National Foundation on the Arts and the Humanities; fund for private contributions..
Transportation:
Bureau of Public Roads: Research and development
National Highway Safety Bureau: Proposed legislation.
...




503
503

2
2

3

General government:
General Services Administration: National Archives gift fund..

905

__

T o t a l , trust f u n d s for e d u c a t i o n , training, a n d r e l a t e d programs

. . . . . .

Total funds provided for education, training, and related programs
Participation sales
.
Total net budget and trust funds for education, training, and related programs
"Less than $500 thousand.
Note.—Figures in parentheses represent amounts after proceeds from loan participation sales.




*

*

*

*

*

7

27

30

7

16

-7

9,595

11,202
-100

12,375
-112

7,320

10,010
-700

11.002
-1,815

9,595

11,102

12,263

7,320

9,310

9,187

*

SPECIAL ANALYSIS H
FEDERAL HEALTH PROGRAMS

This analysis summarizes the medical and health-related expenditures of the Federal Government. It includes activities classified in
the "Health, Labor and Welfare" function, as well as health programs
which are undertaken and classified as part of another function such
as "National Defense" or "Education."
Under this broader categorization, Federal cash payments to the
public will rise $1.6 billion over 1967, to a total of $12.4 billion in
1968. This spending will finance a wide variety of activities—
hospital care and medical treatment in Federal and non-Federal
facilities, medical research, training health manpower, construction
of health facilities, and preventive and community health programs.
Of total Federal payments to the public in 1968 for all purposes,
7.2% will be paid out for health and related programs. This compares with 6.7% in 1967 and 4.3% in 1966. In the 2-year period,
1966-68, it is estimated that these cash payments for health will
more than double, with about 60% of the increase due to the enactment of Medicare.
Federal health expenditures constitute a significant proportion of
the Nation's total outlay for health. Based on estimates developed
by the Social Security Administration for fiscal year 1966, the Federal
portion of health expenditures represented 14% of the Nation's total
expenditure of about $43 billion. With the expansion in health care
programs financed out of Federal funds after 1966, particularly for
the aged and the indigent, Federal expenditures in 1968 will represent
an even larger percentage of the total national expenditure for health.
Similarly, these recent Federal expansions in health care have resulted
in a major redistribution in the purposes for which the Federal health
dollar is spent. In 1963, 40% of the total Federal health expenditures
of $4.7 billion were for direct care provided in Federal facilities—
primarily by the Department of Defense and the Veterans Administration. In 1968, on the other hand, while direct patient care will
continue to increase, it will account for only 21% of the Federal
health dollar.
Recent trends in Federal health expenditures.—The declining proportion of expenditures for direct health care reflects the changing role
of the Federal Government in the provision of health services. The
new and expanded Federal initiatives are illustrated under the following six headings:
a. Programs to remove the financial barriers to health care.

• Medicare, enacted in 1965, provides social insurance to cover
hospital costs incurred by the aged. Practically all of our 19
million aged are protected. Medicare also established a voluntary
system to insure against the costs of doctor bills—financed by
110



SPECIAL ANALYSES

111

monthly premium payments by the aged and by a matching
Federal contribution. Over 90% of our aged have enrolled in this
voluntary program.
• Medicaid, also enacted in 1965, provides Federal grants to State
programs paying for medical care for needy citizens. Some 28
States are now operating under this program, and by the end of 1968
it is expected that 48 States will have adopted this program and will
help meet the medical costs of about 8 million people.
• The Head Start and Neighborhood Health Centers programs
funded by the Office of Economic Opportunity, special infant and
child health and maternity care programs supported by the Children's Bureau, and health centers financed under the Appalachian
programs were all initiated in recent years to make quality medical
care available to medically indigent persons.
b. Programs to meet the manpower, facility, and other resource requirements of the health care system.
• As a result of the Health Professions Educational Assistance Act
of 1963, and subsequent amendments, the first-year enrollment of
our medical schools will increase from 9,213 in 1963 to 10,020 in
1968. With this added enrollment, more than 700 additional
doctors a year will be entering practice by 1972. Similarly, with
help provided by the Nurse Training Act of 1964, the number of
graduating nurses will increase by 17% from 32,800 in 1965 to
38,700 in 1968. The Allied Health Professions Personnel Training
Act of 1966 is similarly designed to increase auxiliary health workers.
• The Community Mental Health Centers Construction Act,
enacted in 1963, and subsequent amendments will have provided by
1968 construction aid to approximately 331 community mental
health centers.
• Largely as a result of the report of the President's Panel on Mental
Retardation and enactment of implementing legislation, obligations
by the Department of Health, Education, and Welfare to construct
university and community mental retardation service centers will
reach $25 million by 1968.
• As a result of the Heart, Stroke, and Cancer Amendments of
1965, a grid of about 53 Regional Medical Programs will span the
country by 1968 to disseminate advanced diagnosis and treatment
methods from university medical centers to physicians practicing
at the community level.
• The Hill-Burton program was extended in 1964 for 5 years. The
extension authorizes a total of $1.34 billion in additional grants
and loans to provide for construction or modernization of approximately 33,000 beds per year.
• Hospitals and other medical care facilities will have funds available for acquiring additional or replacing existing medical care
resources as a result of Medicare payments covering depreciation of
that portion of facilities and equipment devoted to health care for
the aged.
c. Programs to improve the delivery of health care.
• Many of the programs listed above also are exploring ways to
make our health care system more effective. In addition, there is a
small but increasing amount of funds available, estimated at $35



112

THE BUDGET FOR FISCAL YEAR 1968

million in 1968, to develop new or more efficient methods of delivering health and medical care. This effort, principally by the Department of Health, Education, and Welfare, will increase from about
$15 million in 1966. Since there is relatively little comparable research privately supported, these expenditures cover most of this
type of research in the health industry.
d. Programs to protect the consumer and to improve the quality of our
physical environment.
• Under the authority of the Clean Air Act of 1963, and subsequent
amendments, more than 150 State and local air pollution control
agencies have received Federal assistance for establishing, developing, and improving programs of pollution control. Under the
authority of the act, eleven Federal enforcement actions to abate
interstate pollution have been undertaken and emission control
standards have been promulgated and will be applied to all new
automobiles beginning with the 1968 models.
• All of the drugs approved by Food and Drug Administration
on the basis of safety alone since 1938 will, as a result of the Kefauver-Harris Amendments of 1962, be reevaluated on the basis
of efficacy as well as safety. Under the Drug Abuse Control Amendments of 1965, a nationwide program has been inaugurated to stop
the illegal production and traffic in dangerous drugs affecting the
central nervous system.
e. Programs designed to improve the effectiveness of joint FederalState-local government health efforts.
• As a result of Public Law 89-749, the Partnership-for-Health Act,
State and local governments will be given financial assistance to
establish comprehensive health planning; units. In addition, six
existing State formula grant programs will be consolidated to reduce
the fragmentation of governmental effort. Special project grants
will support efforts to meet specialized national or regional health
problems and to encourage new approaches in furnishing health
services.
• Assistance, mostly in the form of vaccines, was given to State and
local governments under the Vaccination Assistance Act of 1962, as
amended, to provide 250 million immunizations for preschool children against polio, diphtheria, whooping cough, tetanus, and
measles.
• As a result of the Vocational Rehabilitation Amendments of
1965, States will on the average receive 75% of rehabilitation costs
compared with an average of about 60% previously.
/. Programs to advance research in the cause, treatment, and prevention
of diseases.
• Between 1960 and 1968, Federal expenditures for biomedical
research will more than triple. New insights have bsei achieved
in the prevention of rubella, leukemia, and other disabling diseases.
Major development programs have been launched on programs to
develop artificial organs, vaccines, and chemotherapeutic agents.
Distribution of Federal health programs by agency.—While over 20

agencies conduct or support health programs, 90% of total health
expenditures is concentrated in 3 agencies. Table H-l shows the expenditures for each agency.



113

SPECIAL ANALYSES

Table H-l. FEDERAL EXPENDITURES FOR MEDICAL AND HEALTHRELATED PROGRAMS BY AGENCY (in millions of dollars)
Agency

1966
actual

1967
estimate

1968
estimate

ADMINISTRATIVE BUDGET
Department of Health, Education, and Welfare:
Public Health Service:
National Institutes of Health
National Institute of Mental Health
Other
Welfare Administration..
Social Security Administration
Other....
Proposed legislation (net)
Total, Department of Health, Education, and Welfare
Department of Defense:
Army
Navy
Air Force
Other
Total, Department of DefenseVeterans Administration
Agency for International Development
Atomic Energy Commission
Department of Agriculture
National Aeronautics and Space Administration
Department of Housing and Urban Development
National Science Foundation
Civil Service Commission
Office of Economic Opportunity
Department of Commerce
Department of State
Department of Labor
Other agencies
Contributions by Federal agencies to Federal employees' health
benefits funds not included above
Interfund transactions
Total net budget expenditures for health.

141.1

929.9
194.9
866.2
1,196.7
971.8
198.6

989.2
217.6
1,095.2
1,407.9
917.6
238.6
42.0

2,541.5

4,358.1

4,908.1

436.8
367.9
398.7
9.0

666.2
428.1
440.7
7.8

716.5
461.3
445.7
7.3

1,212.4

1,542.8

1,630.8

1,306.7

1,381.7

1,471.5

120.0
93.9
126.7
73.0
27.5
24.2
29.2
48.2
.5
21.0
30.4
60.4

198.7
98.6
141.1
81.8
28.6
25.0
36.6
120.2
3.8

223.9
102.8
154.0
85.7
103.0
25.0
40.7
140.5
25.2
26.7

74.9

66.3

139.8

185.1
•1,021.8

189.1
-991.6

5,864.3

7,329.4

,237.1

64.5

3,525.8

1.5
7.2

-3.0
8.4

3,971.6
200.0
-14.3
10.1

73.2

3,531.2

4,167.4

5,927.5

10,860.6

12,440.5

738.8
164.3
633.5
863.8

71.4

TRUST FUNDS
Department of Health, Education, and Welfare:
Social Security Administration
Proposed legislation
Civil Service Commission, net
United States Soldiers' Home
Total trust fund expenditures for health
Total budget and trust fund expenditures for health.

Spending by the Department of Defense will increase by $88 million
to a total of $1.6 billion primarily due to the military situation in
Vietnam and the resultant increase in personnel strength of the armed
services, and will account for 13% of the total. The Veterans Ad255-300 0—67


114

THE BUDGET FOR FISCAL YEAR 1968

ministration expenditures for health will approximate $1.5 billion, an
increase of $90 million over 1967. The increase will provide new
medical services such as intensive care units, open heart surgery, pulmonary emphysema units, clinical radioisotope facilities in many of
the VA hospitals. VA expenditures will account for 12% of the total
Federal payments for health.
In 1968, $8.1 billion or 65% of all Federal expenditures for health
will be spent by the Department of Health, Education, and Welfare.
This compares with 42% in 1963. This sharp increase reflects the
fact that nearly all of the major new programs identified in the previous section are managed by this Department. Unlike the Department of Defense and the Veterans Administration, the Department
of Health, Education, and Welfare spends only a small portion of
its health funds (2%) for direct care and treatment provided in its
own hospitals and clinics. The major share of the Department's
expenditures include $4.2 billion from trust funds for health care
services under Medicare, and $1.2 billion from the administrative
budget to support the Federal-State medical assistance program for
the needy. Aside from these payments for health care, the Department's major spending efforts will support: medical research, training health personnel, construction of medical facilities throughout
the country, and efforts to control the purity of food, drugs, and air.
The remaining $1.3 billion of the estimated expenditures in 1968
will be made by some 20 departments and agencies. Among these,
the largest amounts will be spent by the Agency for International
Development for health activities in other countries and the Office
of Economic Opportunity for care and treatment provided the poor,
the Department of Agriculture for research and animal inspections,
and the the Department of Housing and Urban Development primarily
for construction of community health related facilities.
Federal

E x p e n d i t u r e s , Medical and Health-Related Activities by Category - 1963 and 1968

Fiscal Yean

S Billions

f

•••••••••••••••^^•••••••••••••^^•I^^^HBBI > ?
.9
Grants and Payments for Medical Care of Individuals
1.9
Direct Patient Care

••••••^••i1
.
5
.9

Research-Including Facilities

.3
T r a i n i n g - Including (or Research

^————-n
H

Tofal Expenditures
.
o

•3
Preventive and Community Services

•••• 6
.4
Construction of Health Facilities




1968 •

•

12.4

115

SPECIAL ANALYSES

Distribution of Federal health expenditures by category.—Table H-2
shows total Federal health related expenditures for the 3 fiscal years
1966-68 by six functional categories. The preceding chart contrasts
the 1963 and 1968 Federal outlays in these categories.
Table H-2. FEDERAL EXPENDITURES FOR MEDICAL AND HEALTHRELATED ACTIVITIES BY CATEGORY (in millions of dollars)
Category

1966
actual

1967
estimate

1968
estimate

Hospital and medical care in Federal facilities
Federal grants and payments for hospital and health care in nonFederal facilities
Medical research, total
(a) Conduct of research
(b) Research facilities
Training, including training for research
Preventive and community services
Construction of hospitals and health facilities

2,199.0

2,504.6

2,614.7

Total expenditures from administrative budget and trust
accounts

5,273.4 6,237.5
321.8
1,385.0 1,450.8
167.3
102.5) (1,293.2) (1,359.6)
(64.8)
(91.8)
(91.2)
410.4
623.0
762.5
451.0
820.1
632.3
378.0
554.9
442.3
5,927.5

10,860.6 12,440.5

Direct care expenditures are estimated at $2.6 billion, or 2 1 % of
the total. Most of this pays for service in hospitals of the Department of Defense, Veterans Administration, and the Department of
Health, Education, and Welfare which have about 11% of all the
hospital beds in the United States. (Table H-3 presents for the 3
years the number of hospitals, beds and average daily patient load in
Federal hospitals.) The people eligible for direct medical treatment
in Federal installations are servicemen and retired military personnel
and their dependents; veterans with service-connected disabilities;
veterans with non-service-connected illness to the extent that beds
are available, and the veteran certifies his inability to pay for care in
private facilities. Aside from these, other eligible persons—though in
much smaller numbers—include Federal employees injured on the job,
American Indians and natives of Alaska, American seamen, inmates
of Federal prisons, and narcotic addicts.
Expenditures for care in non-Federal facilities are estimated at $6.2
billion in 1968 or 50% of the total expended by Federal health programs. About $280 million of this total are expenditures by the
Department of Defense and the Veterans Administration for their
beneficiaries in those cases where Federal facilities are not available.
But the largest share of these expenditures represent payments under




116

THE BUDGET FOR FISCAL YEAR 1968

Medicare and the Medicaid program. The following tabulation
summarizes the operations of these programs. (Allfiguresin millions.):
1966
Number
of individual's
receiving
benefits
Medicare:
For hospital bills.
For doctor bills
Medicaid
1

._

1967

Federal
expendi-

1.6

Federal
expendi'

Number
of individuals
benehts

benefits

1

.. .

Number
of individuals

1968

$65

4.3
5.2

$2,480
996

202

6.4

884

4.7
5.5
8.0

Federal
expenditures

$2,876
1.296
1.162

Tooling up costs.

Health benefits are provided to more than 2.3 million Federal civilian employees and their 4.8 million dependents under insurance programs managed by the Civil Service Commission. A similar program
provides benefits for 215 thousand retired employees and their dependents. These payments are made from trust revolving funds combining
the premium deposits of the agencies and their employees. Since
these are revolving funds, with receipts offsetting expenditures, only
the net effect of trust fund transactions is included in the total for this
category. The Governments' contribution however, amounting to
$170 million in 1966, $223 million in 1967, and $230 million in 1968 are
included in this category.
Medical research expenditures are estimated at $1,450 million or
12% of the Federal health expenditures. This category reflects the
activities of many agencies, although the National Institutes of Health
and the National Institute of Mental Health will spend $895 million
or about 60% of the total Federal medical research effort.
A comparison of current expenditures with 1960 graphically demonstrates the sharp increase which has taken place in the national
medical research effort. Between 1960 and 1966 total national
expenditures, both public and private, in support of medical research
increased 150%, from $830 to $2,050 million. Projections indicate
that a national level of effort approximating $2.5 billion will be
achieved in 1968. Since 1960, Federal expenditures have risen from
$444 million to $1,450 million in 1968.
Health manpower training programs continue to expand, reaching
$762 million in 1968. The Public Health Service will spend 65% of
this total for the construction of nurse training facilities, schools for
the education of doctors, dentists, and other professional and allied
health personnel and for student loans, scholarships, traineeships, and
institutional support. The 1968 programs will support, via loans and
scholarships, 16,400 medical, 5,900 dental, 28,000 nursing and about
1,200 students in other health service professions. Other agencies
having major health training programs are the Department of Defense
($75 million), the Department of Labor ($55 million), and the Vetx
erans Administration ($39 million).
Preventive and community services account for $820 million of
total expenditures and are $369 million above 1966. An important




117

SPECIAL ANALYSES

change in the relation of Federal to State and community health programs will take place with the implementation of the Partnership for
Health Act in 1968. This program will help the States develop integrated plans and programs combining services, facilities, and manpower in a concerted effort to solve high-priority health problems.
In addition, it will substitute a new system of general support and
project grants for a variety of categorical grants which have in the
past fragmented the local system of health services. Aid to States
and localities to control environmental hazards will also be expanded.
Efforts to control air pollution, for example, will double in 1968 to a
level of $50 million.
Construction of hospitals and other health facilities will result in
1968 expenditures of $555 million, an increase of $113 million. Of
this total, $235 million will be for the construction of community
facilities supported through Hill-Burton program construction grants.
Defense construction accounts for $55 million and VA construction
for $77 million of the total.
Table H-3. FEDERAL HOSPITALS, OPERATING BEDS, AND PATIENT LOADS
1966
actual

Number of hospitals:
Defense
Health, Education, and Welfare
Veterans Administration..
Other
Total
Number of operating beds:
Defense
Health, Education, and Welfare
Veterans Administration
Nursing home beds included in total
Other
Total
Average daily patient load:
Defense
Health, Education, and Welfare
Veterans Administration
_ _ .
Nursing home beds included in total
Other

Total

1967
estimate

1968
estimate

234
63
165

237
63
167

235
65
167

35

35

32

497

502

499

45,127
14,714
118,486
(1,475)
2,623

57,577
60,899
14,660
14,676
118,852 119,929
(3,000) (4,000)
2,623
2,584

180,950

193,712

31,792
12,336
108,634
(1,245)
1,628

43,866
39,980
11,898
12,056
109,082 110,036
(2,790) (3,720)
1,698
1,709

154,390

162,827

198,088

167,498

Payments for health care services by population grouping.—Table H-4
distributes the estimated Federal expenditures for health care provided directly in Federal installations or via payments or grants for
health care delivered by non-Federal facilities and medical practitioners—the sum of the first two lines of table H-2. As this tabulation represents the initial attempt at a population classification in
this analysis, the figures should be viewed as trend indicators and as
reasonable estimates.




118

THE BUDGET FOR FISCAL YEAR

1968

Table H-4. ESTIMATED FEDERAL HEALTH CARE EXPENDITURES BY
POPULATION GROUPS (in millions of dollars)
Aged (65 and over)

1966

Department of Health, Education, and Welfare:
Medicare 1
_ ...
Medical assistance (includes
Medicaid)
Child and maternal health
Other HEW health programs..
Office of Economic Opportunity.
Veterans Administration
.
Department of Defense
Other Federal health programs..
Total

Children and youth
(0-21)
1966

1967

1968

1967

1968

Other adults
(22-64)
1966

1967

65 3,479 3,972
689

728

785

15
2
400
22
28

18
9
420
28
34

1968

150

21
12
450
30
36

21
65
27
36

123
104
28
84

221
133
29
100
453
67

1,221 4,716 5,306

60
16
120
7
752
686
130

328
51

417
67

188
33
150
22
816
874
157

177
50
182
27
855
950
154

528

823 1,003 1,771 2,240

2,545

1
Under proposed legislation for the disabled there may be a small but not significant number
of children covered in 1968.

The aged.—Because of prior studies made by the Department of
Health, Education, and Welfare, firmer estimates can be made of the
total—public and private—expenditures for health care for the aged
than for other age groupings. In 1968, total public and private health
care expenditures by or for the aged are estimated at about $10 billion.
Of this estimate, $5.3 billion will be derived from Federal programs—
primarily Medicare which is estimated to spend $4.0 billion in 1968.
This is a marked shift, as well as a significant dollar increase from
1966 health care expenditures on behalf of the aged which totaled
about $7.5 billion, of which only about 16% were expenditures from
Federal programs. In addition to Medicare, the other major programs which provide or pay for health care for the aged are payments
to vendors under the Federal-State medical assistance program, and
the VA programs for eligible veterans. In 1968 almost 60% of the
total Federal payments for health care will be spent on behalf of the
aged.
Children and youth.—The rise in Federal expenditures for health
care for this group, from $823 million in 1967 to $1 billion in 1968,
stems primarily from expansion of the recently enacted Medicaid
program which provides Federal grants to support State programs
paying for the cost of care provided to needy individuals and their
families. These expenditures are estimated at $221 million in 1968
compared to $123 million in 1967 and $21 million in 1966. The
Neighborhood Health Centers and the Head Start program financed
by OEO as well as special programs financed by the Children's Bureau
also pay for health care services to children. The OEO programs rise
$16 million over 1967 to $100 million; the Children's Bureau expenditures are estimated at $133 million in 1968, an increase of $29 million




SPECIAL ANALYSES

119

over 1967. Payments by the Department of Defense for servicemen
and dependents under 21 rise from $417 million in 1967 to $453 million
in 1968.
Other adults.—The 1968 expenditures of $2.5 billion tallied in
table H-4 for this group reflects the predominant emphasis of Federal
programs serving beneficiaries legally entitled to care in Federal
installations or under Federal auspices. The programs pay for health
care given to servicemen, veterans, Federal employees and thenspouses, and represent over three-fourths of the total spent for nonaged
adults. Federal grants to support the State medical assistance program for needy adults are less than 8% of the total. Other Federal
programs that will spend more than $10 million in 1968 for health
care for adults are OEO's Neighborhood Health Centers, the Vocational Rehabilitation program, and the maternal health programs of
the Children's Bureau. The proposed extension of Medicare to cover
the disabled will increase future Federal health care expenditures for
adults in the 22-64 age group.
Proposed legislation.—-The President's 1968 budget proposes legislation to improve the health status of our Nation.
It recommends extending the Medicare program to cover some 1.5
million disabled individuals. These people, like the aged, now
receive monthly cash benefits from the Social Security and Railroad
Retirement systems to replace lost earnings. Coverage under Medicare will extend to these people similar protection to meet the cost
of health care. This legislation will also assure that payments made
to hospitals for depreciation under Medicare will be used to replace
facilities and equipment in accordance with State and community
plans. In addition, the legislation will enable the Medicare system to
reimburse Federal hospitals for services provided to its beneficiaries
just as the system now reimburses State and local hospitals for similar
services. The 1968 budget includes an increase of $200 million in
payments from the Medicare trust funds to cover the costs of health
care to the disabled and the reimbursement payments to Federal
hospitals.
The budget also includes expenditures of $33 million for proposed
legislation designed to improve the availability and quality of health
care to needy children, including dental care. Particular stress will be
given to requiring periodic diagnostic screening and followup treatment in the Federal-State Medicaid program, and to develop methods
which utilize more effectively professional manpower and medical
assistants in bringing health care to children.
Legislation also will be proposed to expand and strengthen the new
Partnership for Health program. The 1968 budget includes expenditures of $20 million for this purpose. Finally, as part of a proposed
revision of the Federal-State public assistance program, legislative
changes will be proposed to modify the Medicaid program so that its
beneficiaries relate more closely to the beneficiaries receiving support
under the cash assistance program.




120

THE BUDGET FOR FISCAL YEAR 1968

Table H-5. FEDERAL EXPENDITURES FOR MEDICAL AND HEALTHRELATED PROGRAMS (in millions of dollars)
Agency and program

1967
estimate

1968
estimate

unconal
ode

1966
actual

051

1,037.6

1,320.4

,434.3

051
051
051

64.4
69.1
41.3

68.0
75.3
79.1

66.3
74.9
55.3

059

15.1

9.0

10.0

058

93.9

98.6

102.8

1,321.4

1,650.4

1.743.6

152

11.0

11.0

11.2

153

.3

.3

.3

152

120.0

198.7

223.9

151

19.5

23.7

25.0

152
153

.5
1.0

.7
.9

.8
1.0

506

15.0

20.0

167.3

255.3

262.2

251

73.0

81.8

85.7

355

126.7

141.1

154.0

8.9

6.6

7.8

8.9

13.7

ADMINISTRATIVE BUDGET FUNDS

National defense:
Department of Defense:
Hospital and medical care of military personnel and
their dependents, retired personnel and their
families on a space available basis, and civilian
employees and their dependents overseas
Research in preventive medicine, improved methods
of caring for and rehabilitating the sick and injured,
and studies relating to medical problems of military
Professional and technical training of personnel
Construction of hospitals and medical facilities
Department of Health, Education, and Welfare: Stockpiling of medical supplies
Atomic Energy Commission: Research on the effects and
use of radiation
Total, national defense.
International affairs and finance:

Peace Corps: Assistance to underdeveloped countries
particularly for nursing and malaria eradication
projects
United States Information Agency: Medical care of
Foreign Service officers who became ill abroad.
Agency for International Development: Grants, loans,
and other assistance to underdeveloped countries for
their most pressing health problems and for family
planning
Department of State:
Contributions to international organizations, conferences, and medical and hospital care of Foreign
Service personnel and their dependents
Assistance to refugees from Communist countries, except Cuba
Mutual educational and cultural exchange activities..
Military assistance program: Medical personnel and
construction
Total, international affairs and finance.
Space, research and technology:

National Aeronautics and Space Administration: Research on health factors and human capabilities in
advanced aerospace systems
Agriculture and agricultural resources:

Department of Agriculture:
Plant and animal research; meat and poultry inspections, consumer protection
Natural resources:

Department of the Interior: Grants to territories and
American Samoa; expanded research and training...
Commerce and transportation:

Small Business Administration: Loans for construction
and operation of nursing homes and other healthrelated facilities



506

121

SPECIAL ANALYSES

Table H-5. FEDERAL EXPENDITURES FOR MEDICAL AND HEALTHRELATED PROGRAMS (in millions of dollars)—Continued
Agency and program

unc:ional
code

1966
actual

1967
estimate

1968
estimate

ADMINISTRATIVE BUDGET FUNDS—Continued
Housing and Urban Affairs:
Department of Housing and Urban Development: Advances and loans to local communities for construction
of health-related facilities, and grants for urban services
and community facilities
Health, labor, and welfare:
Department of Health, Education, and Welfare:
Freedmen's Hospital: Operation of a community
teaching hospital serving Howard University
Medical School
Saint Elizabeths Hospital: Hospital care for the
mentally ill in the District of Columbia
Public Health Service:
Health services for Indians
Construction of Indian health facilities
Medical care of merchant seamen and other Public
Health Service beneficiaries.
Support of comprehansive health planning and servCommunicable and chronic disease programs
Grants and loans for construction of hospital and
health facilities
Support of medical, dental, and nursing education
and training
Health services and supporting activities
Scientific activities overseas
Construction of health facilities
Environmental health programs
Mental health research, training and service
National Institutes of Health:
Research
Training _ - ^
Regional medical programs
Welfare Administration:
Grants for maternal and child welfare
Assistance to refugees and repatriated U.S. nationals
Public assistance grants for hospital and health care.
Research and training
Vocational Rehabilitation Administration: Rehabilitation grants and research and training in problems
of handicapped individuals
Social Security Administration: General fund payments to trust funds
Food and Drug Administration: Enforcement of the
pure food and drug laws
Department of Labor: Bureau of Labor Standards
.
Department of Commerce:
Economic Development Administration
National Bureau of Standards
Office of Economic Opportunity
Proposed legislation: To improve child health, to expand
the Partnership for Health program, and to cover the
disabled under Medicare
Total, health, labor, and welfare.




553

27.5

28.6

103.0

651

4.4

6.2

7.0

651

11.2

651
651

65.6
9.1

72.0
14.2

73.5
17.2

65!

57.3

60.9

58.5

651
651

122.4

4.5
158.2

88.0
107.2

651

202.3

228.4

275.0

651
651
651
651
651
651

50.3
37.6
4.7

130.0

190.0

85.8

123.7
12.0
32.0

17.2
57.1
164.3

12.0

6.5
31.4
74.3

97.5

195.6

218.9

651
651
651

625.8
112.6
.3

755.8
166.6
7.5

783.6
168.8
36.8

651

91.8

153.9

184.1

653
651
651

2.1

769.5
.3

4.2
,038.2
.4

5.8
,217.8
.4

659

43.4

71.8

103.4

971.8

917.6

654
651
652

45.2
1.9

57.0
1.9

62.0
2.7

507
506
655

.2
.3
48.2

3.4
.4
120.2

24.8
.4
140.5
42.0

651
2,545.1

4,431.8

5,022.2

122

THE BUDGET FOR FISCAL YEAR 1968

Table H-5. FEDERAL EXPENDITURES FOR MEDICAL AND HEALTHRELATED PROGRAMS (in millions of dollars)—Continued
Agency and program

*"unctional
code

1966
actual

1967
estimate

1968
estimate

ADMINISTRATIVE BUDGET FUNDS—Continued
Education:
Department of Labor: Training of health personnel
Department of Health, Education, and Welfare:
Practical nurse training Other educational activities - . . - . .
._ . .
National Science Foundation: Support of basic research
in health-related fields
- .
. ..

652

18.2

35.4

56.6

704
701

7.5
14.4

18.3
24.5

18.5
25.7

703

24.2

25.0

25.0

64.3

103.2

125.8

1,306.7

1,381.7

1,471.5

906

10.3

11.7

12.1

501
908

5.4
7.5

6.1
7.8

6.3
12.1

906

29.2

36.6

40.7

905

.7

910
910

11.9
.3

14.2

14.9

65.3

76.4

86.1

Contributions by Federal agencies to employees' health
benefits fund not included above
Interfund transactions
_-

139.8

185.1
-1,021.8

189.1
-991.6

Total net administrative budget expenditures for
health

5,864.3

7,329.4

8,273.1

549.5
-548.0

609.3
-612.3

693.4
-707.7

1.5

-3.0

-14.3

64.5

3,525.8

3.971.6

Total, education
Veterans benefits and services:
Veterans Administration: Hospital, domiciliary, and
outpatient care of veterans including medical research
and construction and modernization of facilities
- 804
General government:

Department of Labor: Hospital and medical care for
Federal employees injured in line of duty
Department of Transportation: Federal Aviation Administration: Research and services... . . . . . . —
Department of Justice: Medical care of prisoners
Civil Service Commission: Government contribution to
Federal employees' health benefit funds for retired
employees and annuitants
General Services Administration: Matching grant for a
hospital in southeast Washington, D.C
Panama Canal: Medical and hospital care for civilian
and military personnel, sanitation and quarantine
Transitional grants to Alaska
.. ...
Total, general government

TRUST FUNDS
Civil Service Commission (revolving funds):
Expenditures for employee health benefits
654
Receipts from employee and Government contributions.
Net expenditures from trust revolving funds
Department of Health, Education, and Welfare: Social
Security Administration: Expenditures for hospital and
654
supplementary medical insurance
Proposed legislation: To provide Medicare benefits to the
disabled and to reimburse Federal hospitals for Medicare
services
- 654
United States Soldiers' Home: Hospital and domiciliary
care of retired and disabled enlisted personnel of the
Regular Army and Air Force
805
Total net trust fund expenditures for health.
Total budget and trust fund expenditures for health..




200.0

7.2

8.4

10.1

73.2

3.531.2

4,167.4

5,927.5

10,860.6

12,440.5

SPECIAL ANALYSIS I
FEDERAL RESEARCH, DEVELOPMENT, AND RELATED PROGRAMS

The continued advancement of science and technology for both
national security and domestic progress is an important responsibility
of the Federal Government. Federal obligations for research and
development are estimated at $17.3 billion in 1968, as compared with
the 1967 estimate of $17.5 billion. Expenditures are estimated to
increase from $16.5 billion in 1967 to $17.1 billion in 1968. However,
within these relatively level totals, there will be important shifts in
the mix of research and development activities conducted by Federal
agencies.
New investment in development will decline in 1968, while funds for
basic and applied research will increase significantly. Increases are
proposed for selected major fields including marine sciences and
technology, medical research, urban development, atmospheric sciences
and meteorology (including weather modification and support of the
World Weather Watch), and the improvement of systems for providing scientific and technical information. Funds are also provided to
initiate design of a 200 billion electron volt accelerator.
Expenditures for research and development comprise a substantial
part of the Federal budget. In 1968, 13 percent of administrative
budget expenditures will be for research and development. About
two-thirds of the Nation's research and development effort is financed
from Federal funds, and about 75 percent of the research conducted
in universities comes from Federal funds.
Research and development in the Federal Government are supported chiefly to advance major governmental functions which require
a high level of technical support, such as national defense, space
exploration, the utilization of atomic energy and the improvement of
public health. To a growing extent, research also is being pursued
in the context of social problems such as education, transportation,
and urban life.
With some 11 major Federal agencies engaged in the conduct or
support of research and development, various processes are used
to foster coordination and minimize duplication. The Office of Science
and Technology, in the Executive Office of the President, is the chief
instrument of the President in providing oversight and evaluation
of research and development. The President's Science Advisory
Committee, composed of leading scientists and engineers from academic and business life, is available to furnish advice on the Nation's
scientific and technological needs and progress. The Federal Council
for Science and Technology, chaired by the President's Science Adviser,
assists in providing interagency coordination of Federal programs.
A number of coordinating committees of the Council exist to provide
a synthesis of purposes and efforts in selected cross-cutting fields
such as materials research and atmospheric sciences. Special bodies,
such as the National Council on Marine Resources and Engineering
Development, headed by the Vice President, are charged with the
establishment and coordination of goals and priorities in assigned



123

124

THE BUDGET FOR FISCAL YEAR 1968

areas. Coordination also is provided by the Bureau of the Budget
through its review of agency financial requirements and program plans.
This special analysis presents separate summaries of Federal funds
estimated for development, for research, and for the construction of
research and development facilities.1 In addition, it provides information about selected areas of science which are of broad national
interest and which engage a number of Federal agencies.
Development is financed by the Federal Government to design,
fabricate, test, and evaluate prototypes of materials, devices, systems,
or processes to accomplish specific agency missions. These include
prototypes of complex devices such as military weapons, space vehicles, and nuclear reactors, and of "systems" for such purposes as air
defense and aircraft traffic control.
Research is supported not only to further specific agency missions—
often as a forerunner to development—but also to increase the broad
body of scientific knowledge which underlies the future advancement
of the Nation's welfare, economic growth, and security. Of particular
long run importance to the latter objective is Federal support of basic
research, especially that conducted in academic institutions.
Development.—Total Federal obligations for development are estimated to decrease from $10.9 billion in 1967 to $10.2 billion in 1968;
a small reduction in expenditures is also projected, from $10.4 billion
in 1967 to $10.3 billion in 1968. These trends mainly reflect changes
in development activities of the Department of Defense and the
National Aeronautics and Space Administration, which together account for more than 80% of Federal funds for development.
Department of Defense obligations for development are estimated
to be about $0.5 billion lower in 1968 than in 1967, reflecting decreases
after accelerated development in 1967 of many smaller limited war
systems for application in Southeast Asia and systems nearing completion of development. Development obligations and expenditures
of the National Aeronautics and Space Administration will decline
from 1967 to 1968 because of reduced requirements for the manned
lunar landing program. An increase is projected in the programs of
the Atomic Energy Commission, chiefly for continuing development
of reactors and nuclear weapons.
Among other agencies, there will be increases in the Department of
Health, Education, and Welfare, mainly for Public Health Service
programs for improved health care, prevention and diagnosis; in the
Department of Commerce, for improved weather prediction and telecommunications; and in the Post Office for advanced mail-handling
systems. These increases will be more than offset by a major decline
in obligations for development activities of the Department of Transportation, because the design competition for the civil supersonic
transport has been completed with funds provided in 1967 and prior
years and a decision on further funding for this project awaits the outcome of studies now in progress. The decrease in total obligations
is also partly reflected in the drop in expenditures.
Note.—Totals in text tables may not add due to rounding.
Generally excluded from this analysis are funds for routine testing, experimental production,
information activities, and training programs. This analysis also omits funds for research performed
independently by contractors within overhead arrangements on some procurement contracts funded
in Department of Defense procurement accounts and for the collection of general-purpose statistics
by the Census Bureau and other agencies.
1




125

SPECIAL ANALYSES

Obligations for Development

Dept of
Defense

1959

I960

1961

1962

1963

1964

1965 1966

Fiscal Yean

1967

1968

Estimate

Table 1-1. OBLIGATIONS AND EXPENDITURES FOR THE CONDUCT OF
DEVELOPMENT > (in millions of dollars)
Expenditures

Obligations

Agency
1966
Department of Defense—Military
National Aeronautics and Space
Administration
Atomic Energy Commission
Other
Total

1967

1968

1966

1967

5.171.2

6.026.3

5.554.6

4.863.6

5.329.1

5.485.2

3.762.1
838.8
301.2

3.578.3
875.0
454.6

3,505.9
946.7
187.9

4.034.5
838.8
222.4

3,910.0
875.0
310.8

3.600.0
946.7
265.3

9.959.3 10.424.9

10.297.2

10.073.2

10.934.2 10.195.1

1968

1
In this table and tables 1-2 through 1-4 for agencies other than the Department of Defense and
NASA "obligations" are generally "new obligational authority" which approximates "obligations"
for analysis purposes. In this table and tables 1 2 and 1—3, "obligations" and "expenditures" for
—
the AEC are accrued costs, which approximate obligations and expenditures for analysis purposes.

Research.—Federal research activities are estimated to increase
significantly, with obligations rising from $5.7 billion in 1967 to $6.4
billion in 1968, and expenditures from $5.3 to $6 billion.
Research related to defense, space, and health objectives continues
to comprise the major part of Federal research activities. Increased
support is planned for appbed research projects in the Department of
Defense; for manned space flight and unmanned investigations of
Mars by the National Aeronautics and Space Administration; for




126

THE BUDGET FOR FISCAL YEAR 1968

Obligations (or Research

1959

I960

1961

Fiscal Yeats

Table 1-2. OBLIGATIONS AND EXPENDITURES FOR THE CONDUCT OF
RESEARCH > (in millions of dollars)
Obligations

Agency

Expenditures

1966

Department of Defense—Military .
.
National Aeronautics and Space
Administration
Atomic Energy Commission
Department of Health, Education, and Welfare
National Science Foundation
Department of Agriculture
Department of the Interior
Department of Transportation
Department of Commerce
Veterans Administration
Other
Total
1

1967

1968

1966

1967

1,847.2

1.815.9

2,193.2

1.811.3

1.775.0

2,111.0

1,311.0
373.9

1.416.7
399.7

1.546.9
422.8

1.315.9
373.9

1.400.0
399.7

1.526.0
422.8

1,040.5
249.7
232.1
119.5
44.9
40.4
40.1
71.7

1.187.7
245.4
246.5
136.5
62.3
42.2
42.9
71.5

1.305.7
274.7
272.2
164.6
67.7
52.2
44.7
100.7

811.7
176.3
236.1
109.1
38.3
38.5
37.6
63.4

991.9
196.5
253.6
118.6
56.5
36.1
42.2
67.6

1,061.4
226.4
264.1
144.1
66.8
46.2
43.9
82.5

5.371.0

5.667.3

6,445.5

5,012.1

5,337.7

5,995.0

1968

Includes funds for basic and applied research.

medical research programs of the National Institutes of Health in the
Department of Health, Education, and Welfare; for nuclear research
programs of the Atomic Energy Commission; and for basic research
programs of the National Science Foundation.



127

SPECIAL ANALYSES

Smaller but significant research increases are also estimated in other
areas of national concern including education, conservation of natural
resources and prevention or reduction of environmental pollution,
transportation and highway safety, weather modification and improved weather prediction, and housing and urban problems.
Basic research.—The 1968 budget provides for continuing growth
in the support of basic research—the systematic search for fundamental knowledge which provides the basis for advances in applied
science and technology. Included in the totals for research are basic
research obligations estimated to increase from $2.1 billion in 1967
to $2.4 billion in 1968, with expenditures rising from $2 to $2.3 billion.
About three-fifths of the overall increase is related to the basic research
flight programs of the National Aeronautics and Space Administration.
Increased basic research support is also estimated for the National
Science Foundation; the Department of Health, Education, and
Welfare—chiefly for the National Institutes of Health; the Atomic
Energy Commission; and the Department of Agriculture. This increased support will be largely for grants and contracts in colleges and
universities to support a wide variety of research in the sciences.
Academic research.—The Federal Government provides about threequarters of all research funds used by institutions of higher education. Thus these institutions are directly affected by the volume and
distribution of Federal research grants and contracts. In 1968, Federal agencies will obligate a total of about $1.7 billion for research
and development conducted in academic institutions proper, a net
increase of approximately $100 million above 1967. More than half
of this amount will be for basic research; the remainder will be mainly
for applied research, particularly medical research supported by the
National Institutes of Health.
The Federal agencies support research in academic institutions with
the primary aim of obtaining scientific results relevant to their missions. In September 1965, the President directed that the agencies
also administer research funds with a view to strengthening academic
institutions and increasing the number capable of performing research
of high quality.
Table 1-3. OBLIGATIONS AND EXPENDITURES FOR THE CONDUCT OF
BASIC RESEARCH ' (in millions of dollars)
Expenditures

Obligations
Agency

1968

1966

Department of Defense—Military
. - .
National Aeronautics and Space
Administration
Atomic Energy Commission
Department of Health, Education, and Welfare
National Science Foundation
Department of Agriculture
Other
Total
1

1967

1968

1966

1967

262.1

285.8

287.2

251.5

265.0

270.0

598.0
280.9

689.1
303.2

858.7
321.4

568.1
280.9

685.0
303.2

875.0
321.4

354.2
249.7
89.9
94.0

411.7
245.4
98.4
105.2

446.8
274.7
109.4
123.7

286.0
176.3
91.8
86.9

352.7
196.5
102.2
95.4

374.8
226.4
105.9
112.9

1.928.8

2,138.8

2,421.9

1,741.5

2,000.0

2,286.4

Amounts are included in conduct of research, table 1-2.




128

THE BUDGET FOR FISCAL YEAR

1968

Federal agencies have responded with measures to improve the
administration of project support, through more extensive institutional support, and through special developmental funds. To
strengthen existing institutions, three programs, totaling $97 million
in 1968, are significant—the NIH general research support grant,
primarily to medical institutions ($62 million), the NASA sustaining
university program ($20 million), and the NSF institutional grants for
science ($15 million). Three other programs, totaling $89 million
in 1968, are also noteworthy. NSF and PHS support specialized
programs directed toward increasing the capabilities of academic
institutions for research or eduction in the sciences. Finally, in 1967,
the Department of Defense initiated a program to assist the development of new academic centers of excellence in areas of science and
technology in which the Department of Defense and the university
have a strong mutual interest.
Research and development jacilities.—Total obligations for research
and development facilities are estimated to decrease from $869 million
in 1967 to $694 million in 1968. Expenditures will increase slightly,
from $759 million in 1967 to $764 million in 1968. The decrease in
obligations of the Atomic Energy Commission in 1968 reflects the fact
that obligations for construction for certain large facilities, principally
for physical research, are expected to occur in 1967. Obligations and
expenditures of the National Aeronautics and Space Administration
will be lower, primarily reflecting completion of test and launch facilities required for the manned lunar landing program. The additional
amounts shown for the Department of the Interior are primarily for
facilities for water pollution control research.
Table 1-4. OBLIGATIONS AND EXPENDITURES FOR RESEARCH AND
DEVELOPMENT FACILITIES (in millions of dollars)
(Dbligations

Agency
1966

Department of Defense—Military.
. _.
National Aeronautics and Space Administration
- - . - -Atomic Energy Commission
Department of Health, Education, and
Welfare
National Science Foundation
Agriculture
Interior
Other
Total




1967

Expenditures
1968

1966

1967

1968

75.4

100.8

96.2

54.5

56.5

76.5

277.4
239.0

148.0
358.0

95.0
256.3

582.6
249.5

290.0
211.2

174.0
229.9

122.4
86.0
25.6
13.3
9.1

125.1
86.2
19.2
25.7
5.7

83.3
89.8
9.6
44.2
19.4

51.9
58.2
5.7
12.7
29.8

85.2
57.0
19.2
19.3
20.4

99.9
77.3
38.3
38.1
29.6

848.2

868.7

693.9 1,044.8

758.8

763.7

SPECIAL ANALYSES

129

PROGRAMS OF AGENCIES WITH MAJOR RESEARCH AND DEVELOPMENT
ACTIVITIES
DEPARTMENT OF DEFENSE

MILITARY

The programs of the Department of Defense include basic and
applied research in subjects of potential military significance; exploratory, advanced, and engineering development of new systems and
systems components; and development of weapons systems approved
for introduction into the operational forces. The principal amounts
for these purposes and for the operation of research and testing
facilities of the Department are carried in the budget under appropriations entitled "Research, development, test, and evaluation." Certain supporting amounts are provided in the military personnel, procurement, operations and maintenance, and military construction
appropriations, as indicated in table 1-5. Research and development
related to civil defense is financed under that heading. Amounts requested in the special foreign currency program for research and
related construction are included in this year's analysis for the first
time.
The total research and development effort in 1967 and 1968 is
estimated to increase over 1966. Of the totals shown in table 1-5
for 1968, 4% is for basic scientific research. Approximately 25% is
for applied research, which includes experiments with extensive equipment requirements, designed to solve defense problems. The remaining 71% is for development, test, and evaluation of new military
weapons systems and supporting equipment and for support of
laboratory and test facilities for defense research and development.
The total amount of basic research in 1968 will remain roughly level
with 1967, as shown in table 1-3. Applied research will increase
substantially in 1968. In 1967 and 1968 the major share of development efforts will continue to be for conventional and limited war
systems. Work on strategic weapons will also increase in this period.
The composition of the programs of the Department by major
fields of concentration is shown in table 1-5. Aircraft under development include several versions of the F - l l l aircraft for use by both
the Navy and Air Force, the C-5A cargo transport, several Army
helicopters and major components to provide combat support and
mobility for the ground forces, and Navy early warning and tactical
air control aircraft. Missile developments include continuing efforts
applied to the Navy's Polaris and Poseidon submarine-launched
strategic missiles, the Air Force's Minuteman III ballistic missile and
the Army's Nike-X antiballistic missile system, as well as a number
of smaller missiles for tactical support of ground forces, interdiction
of hostile supply systems, and anti-air warfare.
Major programs supported in the military astronautics activity are
the manned orbiting laboratory (MOL), military communications
satellites, nuclear detection satellites, and the Titan III family of
space boosters, with complementary efforts in reentry, recovery, power
source, and basic engine technology. Totals for the military space
program are given in table 1-12.
Examples of other fields of concentration receiving substantial
attention include antisubmarine warfare, communications, surface
mobility, conventional ordnance, and surveillance systems. Provi255-300 0—67



9

130

THE BUDGET FOR FISCAL YEAR 19 68

sion is also made for support of Government-owned laboratories such
as the Eastern and Western Test Ranges, the Naval Research Laboratory, and the Army Limited War Laboratory.
Table 1-5. OBLIGATIONS AND EXPENDITURES OF THE DEPARTMENT OF
DEFENSE—MILITARY—RESEARCH AND DEVELOPMENT (in millions of
dollars)
Purpose and budget title

1966
actual

1967
estimate

602.0
1,096.7
1,964.8
975.5
293.1
400.7
838.9
402.9

614.9
1,291.2
2,432.4
1,022.0
287.0
388.0
966.7
395.8
18.2

611.0
1,098.0
2,446.0
1,061.1
290.9
311.0
977.3
411.7
125.0

6,574.6
288.3
107.9
37.6
10.0

7,416.2
292.3
81.9
41.0
10.0
.7

7,332.0
277.5
64.8
55.9
10.0
7.6

7,018.4

7,842.1

7,747.8

75.4

100.8

95.0
1.2

Total, direct obligations for research and development

7,093.8

7,942.9

7,844.0

Total expenditures for research and development

6,729.4

7,160.6

7,672.7

Obligations for the conduct of research and development:
Research, development, test, and evaluation:
Military sciences
Aircraft and related equipment
Missile and related equipment
Military astronautics and related equipment
Ships, small craft, and related equipment
Ordnance, combat vehicles, and related equipment...
Other equipment
Programwide management and support
Emergency fund
Total, direct obligations, research, development, test,
and evaluation
Military personnel
Procurement
Operations and maintenance
Civil defenseSpecial foreign currency program
Total, direct obligations, for the conduct of research and
development
Obligations for research and development facilities:
Military construction
Special foreign currency program

1968
estimate

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

All the activities of the National Aeronautics and Space Administration are considered to be research and development. This agency
develops, tests, and operates space vehicles for manned and unmanned
exploration of space and other nonmilitary purposes, and conducts
broad programs of research and development in support of these
objectives. In addition, NASA is responsible for conducting research
to advance aircraft technology in support of both military and civilian
interests. The nature and composition of the research and development programs of NASA are shown on table 1-6.
Total expenditures for NASA in 1968 are estimated at $5.3 billion,
a decrease of $300 million from the estimate for 1967 because of
declining requirements in the manned lunar landing program. New
obligational authority will increase from $4,968 million in 1967 to
$5,050 million in 1968. This increase—principally for the new
Apollo applications program of extended manned flight—is offset in
part by a decline in the Apollo lunar landing program.




131

SPECIAL ANALYSES

Expenditures for research programs will increase from 1967 to 1968
while expenditures for development will decline. This reflects the
shift in emphasis within the space program from the development of
a basic space flight capability toward use of that capability for research purposes. Expenditures for facilities reached a peak in 1965
and continue to decline as work on major projects for the manned
lunar landing is completed.
NASA activities classified as basic research include space flight
programs in physics, astronomy, and the biological sciences, and the
planetary and interplanetary programs. Also included are the programs of supporting research and technology which result in preliminary investigations for, or instrumentation to be used in, the above
described flight programs. The development and preparation of the
scientific experiments carried on manned flight missions is also classified as basic research.
The "other research" category includes those activities intended
to improve the technology required for the development of new space
vehicles and aircraft. It also includes the Surveyor and Orbiter projects which, while generating a wealth of data useful for basic research,
are directed primarily toward providing data needed for the design
Table 1-6. EXPENDITURES OF THE NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION FOR RESEARCH AND DEVELOPMENT (in
millions of dollars)
Program and type of activity

1966
actual

Conduct of research:
Basic scientific research in space:
Spacecraft, instrumentation, conduct of experiments,
and supporting costs
Procurement of launch vehicles for basic research
purposes
- _
.
_ „
Other basic research in space science and technology._

1967
estimate

1968
estimate

414.6

505.0

695.0

49.1
104.4

70.0
110.0

80.0
100.0

568.1
661.8

685.0
675.0

875.0
601.0

86.0

40.0

50.0

_._

1,315.9

1,400.0

1,526.0

Conduct of development:
Manned space flight and supporting development
Development of launch vehicles for research purposes...
Other development

3,849.4
85.8
99.3

3,740.0
60.0
110.0

3.460.0
30.0
110.0

4,034.5

3,910.0

3,600.0

Research and development facilities:
Facility grants to colleges and universities
___
Manned space flight and supporting facilities.__ _ __ _
Other research and development facilities
__

10.1
484.5
88.0

10.0
200.0
80.0

14.0
110.0
50.0

Total, research and development facilities.. _ _ __

582.6

290.0

174.0

5,933.0

5,600.0

5,300.0

Subtotal, basic research.
__ . .
Other research
Procurement of launch vehicles for other research
purposes _
_._.__
Total, conduct of research

Total, conduct of development

______

______

Total, National Aeronautics and Space Administion




132

THE BUDGET FOR FISCAL YEAR 19 68

and operation of manned lunar landing systems. This category also
includes satellites and study projects whose mission is to determine
the extent and proper method of utilizing our space capabilities to
provide basic services, primarily in the fields of meteorology and
communications.
The development category includes the development and operation
of manned space flight systems, except for the scientific experiments
discussed above. Development of launch vehicles for all purposes
including research is also in this category.
ATOMIC ENERGY COMMISSION

Expenditures of the Atomic Energy Commission for the conduct of
research and development are estimated to increase from $1.3 billion
in 1967 to $1.4 billion in 1968, principally for the development of
improved nuclear reactors, for weapons research and development,
and for increased research in the physical and biomedical sciences.
The Atomic Energy Commission's basic and applied research programs will increase from an estimated $400 million in 1967 to about
$423 million in 1968. About three-fourths of these amounts are for
basic research in the physical and biomedical sciences. The remainder
is for applied research, largely related to nuclear weapons and controlled thermonuclear reactions.
A 7% increase is planned in 1968 in the physical sciences research
program, which consists of research in high, medium, and low energy
physics and in those aspects of chemistry, metallurgy, and mathematics of particular importance to nuclear science and technology.
The 1968 estimate for physical sciences research includes a 16%
increase in research on thermonuclear plasmas, the major purpose of
which is to determine whether the energy released in thermonuclear
reactions can be controlled for production of electric power.
The development funds of the Commission are primarily for programs to design and test improved nuclear weapons, to develop
improved nuclear reactors, and to develop the peaceful uses of radioisotopes and nuclear explosives. The reactor development program
includes efforts to develop improved types of central station nuclear
power reactors, nuclear rocket technology (Project Rover), nuclear
electric power sources for space and other remote applications and
reactors for naval propulsion, and to broaden the base of reactor
technology. Continued emphasis wil) be placed in 1968 on the development of breeder reactors, which would produce more fissionable
fuel than they consume.
Expenditures for research and development facilities will increase by
about $19 million, mainly for facilities for reactor development and for
physical research. Of special importance in 1968 are the Atomic
Energy Commission's plans to initiate definitive design of the 200-Bev
proton accelerator facility near Chicago, 111., and the Omnitron accelerator at Berkeley, Calif. The 200-Bev accelerator, which would
have a total design and construction cost of about $240 million excluding supporting equipment, would provide the world's highest energy
proton beam for research in elementary particle physics. The
Omnitron is intended to accelerate ions of all the chemical elements,
for use both in nuclear chemistry and in biomedical research.




133

SPECIAL ANALYSES

The 1968 budget includes funds to construct a large Fast Flux Test
Facility, a reactor facility capable of producing a large quantity of
high energy neutrons in a controlled environment for testing fuel and
other reactor materials and. components for the fast breeder reactor
program. The total estimated capital cost of this facility is $87.5
million.
Table 1-7. EXPENDITURES OF THE ATOMIC ENERGY COMMISSION FOR
RESEARCH AND DEVELOPMENT (in millions of dollars)

Program

Conduct of research and
development

Research and development facilities

1966
actual

Production technology for fissionable materials
Development of weapons
Reactor development
.
Physical research..
-.
Biology and medicine
Other research and development,
. -.
Total . .

1967
estimate

1968
estimate

1966
actual

23.6
421.5
428.6
234.5
82.4
22.1

22.4
419.2
467.7
255.3
86.0
24.1

22.4
463.7
492.3
272.0
90.5
28.6

2.7

2.6

3.4

63.9
79.2
93.7
8.2
1.9

58.9
71.5
67.1
8.9
2.1

57.6
83.1
75.1
8.7
2.1

1,212.6 1,274.7 1,369.5

249.5

211.2

229.9

1967
1968
estimate estimate

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

Expenditures by the Department of Health, Education, and Welfare for research and development will increase by $88 million to a
level of $1,184 million in 1968. This increase occurs primarily in
health and health-related research—particularly in programs of the
Public Health Service.
Expenditures for Public Health Service programs—mostly through
the National Institutes of Health—will emphasize research into the
nature of life, the functioning of biological systems, the basic character
of disease, degenerative processes, and the conditions of health which
provide the basis for the further advance of medical science and
practice. The primary mechanism of support will continue to be
the project grant, which is reviewed by non-Federal scientific peers
for its scientific merit and program relevance. However, increasing
emphasis will be given to general research support and to organized
research efforts to develop such diagnostic and therapeutic items as
artificial organs, vaccines, diagnostic instruments, organ transplantation techniques, and drugs. A small but growing amount of research
will be devoted to improving the delivery of health services.
Expenditures for Office of Education research and development
programs will increase particularly for support of educational laboratories at which institutions of higher education, States, private
enterprise, and schools work on improved curricula and methods of
instruction for use in the Nation's classrooms. Increases will also
be provided for (1) research centers which focus on current education
problems such as education of the disadvantaged, individualized
instruction, early childhood learning, and teacher education; (2)
research and field tests to improve education for the physically




134

THE BUDGET FOR FISCAL YEAR 1968

and mentally handicapped, especially for higher education opportunities for the deaf and development of computerized education
systems and (3) better vocational training to meet changing job
skill requirements.
Outlays for research and development facilities are rising rapidly
as payments are made against earlier awards under the 1963 Higher
Education Facilities Act. Expenditures for research facilities at
colleges and universities under this program will total $23 million in
1968, a doubling of the 1967 level. In addition, expenditures of $6
million are estimated in 1968 for educational laboratory and handicapped research facilities.
NATIONAL SCIENCE FOUNDATION

The National Science Foundation supports basic research in all
fields of science, primarily through grants to colleges and universities.
Total expenditures of the Foundation for research and research
facilities are estimated at $304 million in 1968 compared with $254
million in 1967 and $235 million in 1966.
In 1968 approximately 3,870 research project grants—an increase
of nearly 8 percent over 1967-—will be awarded to an estimated 440
academic institutions. Through these grants and the national
research programs and centers supported by the Foundation, particular
stress will be placed on increased basic research in oceanography,
atmospheric sciences, chemistry, and the social sciences—fields of
growing national interest. More basic research in these fields will
help form a sound basis for growth in Federal and non-Federal programs of applied research and development in such areas of prime
concern as pollution abatement, weather modification, and urban
redevelopment.
Smaller increases are projected in specialized research facilities; in
the United States Antarctic program, in the weather modification,
and the ocean sediment coring programs; and in the national research
centers for astronomy and the atmospheric sciences. Funds for the
Cerro Tololo Inter-American Observatory will provide for a portion
of the costs of the mounting for a 150-inch telescope to be installed
at the Cerro Tololo site in Chile. Also included are increased funds
for oceanographic programs authorized by the National Sea Grant
College and Program Act of 1966.
DEPARTMENT OF AGRICULTURE

Expenditures of the Department of Agriculture for research and
development are estimated to be $311 million in 1968 compared with
$281 million in 1967. The increase provides for staffing and equipping
improved, and newly completed, farm and utilization research laboratories and watershed research centers. In addition, research will be
accelerated on problems relating to the effects of environmental
pollution, improving food sources of protein, attacking costly animal
diseases, and means to increase the effective supply of timber in the
United States. The economic research program of the Department
will be increased to improve research on supply, demand, and trade
in farm products, study of economic and social forces in the rural
community, and conduct of trade and commodity analyses.



SPECIAL ANALYSES

135

There will be an increase in grants to State experiment stations
under the Hatch Act, and in grants for cooperative forestry research.
Expenditures for research facilities will increase substantially in
1968, due mainly to planned construction which was authorized in
prior years.
DEPARTMENT OF THE INTERIOR

Expenditures of the Department of the Interior for research and
development will increase from $164 million in 1967 to $206 million
in 1968. Programs to improve conservation and sound use of the
Nation's natural resources are conducted by the Fish and Wildlife
Service, the Geological Survey, the Bureau of Mines, and the Offices
of Saline Water, Water Resources Research, and Coal Research.
Research also contributes to the improvement of resources management in such operating bureaus of the Department as the Bureau of
Reclamation and the Bonneville Power Administration.
Accelerated research is projected for 1968 in the area of industrial
waste treatment, where practical engineering answers are being
sought through pilot plants being tested under field conditions.
Research is also being expanded to develop information on the effects
of pollution on various uses of water and on the propagation of wildlife.
In the area of tunneling technology, a new program will be initiated
in 1968 to develop tunneling techniques for transportation, urban
utilities, mineral extraction, and the distribution of water, power,
and gas.
DEPARTMENT OF COMMERCE

Expenditures of the Department of Commerce for research and
development will total $79 million in 1968, an increase of $16 million
over 1967. This does not include expenditures for research activities
being transferred to the Department of Transportation.
The Environmental Science Services Administration will increase
its research in weather modification, detection, and prediction of
severe storms, air-sea interaction, and telecommunications. Increased research on satellite sensors and systems will support the
World Weather program. The National Bureau of Standards plans
to accelerate efforts to develop standard reference data, reference
materials, and technological standards. It will also increase research
and development in the area of data processing. The Maritime
Administration will continue research aimed at reduction of shipbuilding and operating costs.
DEPARTMENT OF TRANSPORTATION

Expenditures of the Department of Transportation for research and
development are estimated to be $273 million in 1967 and $219 million in 1968. The Department's research and development programs
are focused on four major areas of Federal interest:
The Federal Aviation Administration undertakes research and development on aircraft safety, aviation medicine, air traffic control and
navigation, and civil supersonic aircraft. Expenditures for these
activities will decline to $132 million in 1968 from $214 million
in 1967, reflecting completion of the design competition for the




136

THE BUDGET FOR FISCAL YEAR 1968

supersonic transport aircraft. The decision is pending on construction of a prototype and 1968 funding. Obligations in 1968 will total
$38 million compared to $319 in 1967.
The Coast Guard conducts research in oceanography and on aids to
navigation, and on aids to search and rescue. Expenditures of $21
million in 1968 compared to $11 million in 1967 reflect the planned
construction of a new oceanographic ship in 1968 and an increased
oceanographic survey program.
The Federal Highway Administration supports research and development on traffic and highway safety, motor vehicle safety standards,
State and community safety programs, safety techniques, traffic operations, and highway materials and maintenance. The expenditures
for these activities will increase from $38 million in 1967 to $52 million
in 1968, largely reflecting full-year costs of the highway and traffic
safety programs initiated in 1967. Obligations will be $40 million in
1967 and $59 million in 1968.
The Department also undertakes research, development, and demonstration programs on high-speed ground transportation and conducts research on general transportation problems. Expenditures
will increase from $11 million in 1967 to $22 million in 1968 as the
demonstration program in the Northeast Corridor goes into operation.
SELECTED GOVERNMENT-WIDE SCIENTIFIC ACTIVITIES OF THE
FEDERAL GOVERNMENT

The following section presents a number of scientific activities of
the Federal Government on a Government-wide basis. In these
fields, and in many other fields, the Office of Science and Technology,
with the advice of the President's Science Advisory Committee and
the Federal Council for Science and Technology, is active in improving the planning, coordination, and review of Federal research and
development programs. Funds for these scientific and technical
activities are included in the agency figures shown elsewhere in this
analysis.
ATMOSPHERIC SCIENCES

The atmospheric sciences are concerned with the physical and
chemical properties, composition, behavior and processes of the
planetary atmospheres of the solar system. The atmospheric sciences
encompass: meteorology—the physics and chemistry of the earth's
atmosphere, including studies of such phenomena as general circulation, precipitation processes, turbulence, diffusion, and atmospheresurface interactions; aeronomy—the physics and chemistry of the
earth's upper atmosphere, including studies of such phenomena as
airglow, aurora, magnetic fields and radiation belts; and planetary
atmospheres—studies of extraterrestrial atmospheres.
A major part of the funding for atmospheric sciences research continues to be for the large space flight programs of NASA, principally
the Nimbus program (with scheduled launching in late 1969) and the
Mariner unmanned planetary spacecraft. Exclusive of space flight
programs, funding for atmospheric sciences is planned to increase
about 11% in 1968 after a period of level funding in 1966 and 1967.
Alajor increases are estimated for weather modification research.
The Environmental Science Services Administration (ESSA) will



SPECIAL

137

ANALYSES

substantially increase its research in weather control and modification
(including studies of inadvertent modification of the atmosphere)
supported by expanded development of general circulation models and
studies of cloud physics. The Department of the Interior will continue to expand its research efforts in precipitation augmentation and
redistribution. The National Science Foundation will increase its
weather modification research support only slightly, but will make
significant increases, closely coordinated with the efforts of ESSA,
in supporting research in general circulation, cloud physics, and
atmospheric turbulence.
The distribution of Federal support in the areas of meteorology, the
upper atmosphere (aeronomy), and the planetary atmospheres is as
follows:
Table 1-8. OBLIGATIONS OF FEDERAL AGENCIES FOR ATMOSPHERIC
SCIENCES BY FUNCTIONAL AREA (in millions of dollars)
Functional area

1966

Meteorology:
Departments of:
Agriculture
Commerce
_
Defense
-_
-Health, Education, and Welfare
-_.
Interior
. _.
- -Atomic Energy Commission
. _ _.
National Aeronautics and Space Administration
National Science Foundation __
. . _ _
. . .
Other agencies.
.. .
.
Total meteorology__

1.2
11.2
28.0

1.3
11.7
26.5

1.3
16.6
27.2

2.7
3.4

3.3
4.4

3.3
5.8

5.2
48.5
11.3

5.1
45.5
13.0

5.1
62.0
16.4

1.6

2.1

1.8

112.9

139.4

Planetary atmospheres:
Departments of:
Commerce
Defense
.__
National Aeronautics and Space Administration
National Science Foundation _ . _
-_
-.

--

_-__

44.1
1.1
6.2
9.9

68.0

65.0

.1

.1
18.2
2.6

.

3.7

48.1
1.4
5.8
9.6

.1

. _ __

3.1

50.5
1.6
8.1
11.1

74.2

.

Total aeronomy . .

Total atmospheric sciences

1968

113.3

.-

Aeronomy:
Departments of:
Commerce
_ . __ - . _ _ -Defense
.,
__.
.
Atomic Energy Commission
.
National Aeronautics and Space Administration
National Science Foundation

Total planetary atmospheres

1967

.1
37.3
2.5

71.3

21.0

40.0

73.9

208.5

220.9

278.2

3.1

.1

2.5

MEDICAL RESEARCH

Federal expenditures for medical and health-related research activities are estimated to be $1,451 million in 1968. This is an expansion
of about 5% over the 1967 level of $1,385 million.




138

THE BUDGET FOR FISCAL YEAR 1968

Of the increase of $66 million in overall medical research expenditures in 1968, $49 million, or 74%, is in expenditures of the Department
of Health, Education, and Welfare, predominately in the National
Institutes of Health. Significant increases will occur in both the
extramural and the intramural programs of NIH. It is estimated
that by 1968, NIH and the National Institute of Mental Health will
support approximately 35% of the total national medical research
effort of more than $2.5 billion in public and private funds.
Table 1-9. EXPENDITURES OF FEDERAL AGENCIES FOR MEDICAL AND
HEALTH-RELATED RESEARCH (in millions of dollars)
Agency
Department of Health, Education, and Welfare:
Public Health Service
(National Institutes of Health)
(National Institute of Mental Health)
(Other Public Health Service)
Other
Total, Department of Health, Education, and Welfare
Department of Defense
Atomic Energy Commission
Department of Agriculture
National Aeronautics and Space Administration
National Science Foundation
Veterans Administration.
Other
Total, medical and health-related research
Total, conduct of research
Total, research facilities

1966
actual

805.6
(625.8)
(94.3)
(85.5)
18.2
823.8
64.4
93.3
39.5
73.0
24.2
42.4
6.7

1967
estimate

1968
estimate

983.1

(755.8)
(113.6)
(113.7)
27.1

1,026.9
(783.6)
(1H.8)
(131.5)
31.9

1,010.1
68.0
97.8
43.3
81.8
25.0
47.5
11.5

1,058.8
66.3
102.1
51.7
85.7
25.0
50.2
11.0

1.385.0 1,450.8
1,167.3
(1,102.5) (1,293.2) (1,359.6)
(91.8)
._
(64.8)
(91.2)

Further discussion of medical and health related research may be
found in Special Analysis H, Federal Health Programs.
MARINE SCIENCE AND TECHNOLOGY

The Marine Resources and Engineering Development Act of 1966
provides new direction for Federal marine science and technology.
The National Council on Marine Resources and Engineering Development, created by this act, is charged with the responsibility to develop
a comprehensive program of marine science activities. The 1968
budget for these programs takes into account the Council's views and
recommendations for priorities.
Federal activities in marine sciences and technology include the
coordinated effort of 11 agencies to utilize the oceans in the pursuit of such goals as preservation of national security, international
cooperation, development and exploitation of new food, mineral and
energy resources, protection of health and property, improved weather
forecasting, and enhancement of commerce and transportation. To
achieve these goals, programs are directed to research in biology and
physical sciences, studies of the air/sea environment, exploration
of the continental shelf and deep ocean, development of ocean engineering systems and techniques, and support of education in marine



139

SPECIAL ANALYSES

sciences and technologies. Important new initiatives amounting to
approximately $40 million in 1968 will be taken in such areas as development of ocean food resources, deep ocean technology, and
marine research and education.
Marine science and technology includes activities previously
reported under oceanography, plus expanded coverage of areas such
as development of fisheries, assessment of marine mineral and energy
resources, and military technology. Table 1-10 represents a functional breakdown of funds. Increases in 1968 are primarily for
research and development with special emphasis on civilian needs.
The increases for research reflect growth in marine research and
education, including Sea Grant programs. Development of systems
and techniques to utilize and exploit the resources, advantages, and
opportunities of the marine environment also receives additional
support in 1968, particularly with the expansion of Navy deep ocean
technology programs. A new Coast Guard ship equipped for polar
research is included in 1968. The increase in surveys reflects additional costs of operation as new survey ships, financed in prior years,
are delivered and put in service.
The National Council on Marine Resources and Engineering
Development provides continuing advice and assistance to the President on marine science policy planning, coordination and development of a comprehensive Federal marine program including international cooperation. The Council will provide for long-range studies
of the potential benefits from exploitation and improved utilization
of the oceans for the Nation's commerce, security, health, and welfare.
A public advisory Commission on Marine Science, Engineering, and
Resources is responsible for reviewing Federal, State, and private
Table 1-10. PROGRAM PLAN FOR MARINE SCIENCES AND TECHNOLOGY
BY FUNCTIONAL AREA * (in millions of dollars)
1966

Research and development:
Research
.Development, _ _

1968

122.3
72.4

Investment:
Ships
.
Shore facilities
Major equipment
Other .

.
...

Subtotal
Operations:
Surveys
Services
Other

_

-

_

_

.. .

. _

Subtotal

-

.
__

.

.

262.7

35.7
9.5
16.3
5.3

28.8
6.2
30.7
6.3

66.8

72.0

68.9
20.1
2.9

-

224.6

46.8

-

138.1
124.6

29.4
4.8
9.1
3.5

-

121.5
103.1

194.7

__
-

Subtotal

Grand total

1967

89.2
25.1
3.4

100.6
23.1
3.9

91.9

117.7

127.6

333.4

409.1

462.3

1
The figures in this table and in table I—11 reflect expanded coverage of marine technology and
are not comparable to amounts shown for "oceanography" in prior years.




140

THE BUDGET FOR FISCAL YEAR

1968

needs for marine science, surveys, and natural resources. It is to
recommend to the President and the Congress, through the Council,
an adequate marine science program meeting national needs. The
Interagency Committee on Oceanography of the Federal Council
on Science and Technology, which now is a mechanism for coordination
and exchange of information among agencies concerning oceanographic
programs, projects, and operating problems, assists the National
Council on Marine Resources and Engineering Development.
Table 1-11. PROGRAM PLAN OF FEDERAL AGENCIES FOR MARINE
SCIENCES AND TECHNOLOGY (in millions of dollars)
1966
actual

Agency

Departments of:
Commerce
Defense
Health, Education, and Welfare
Interior
State
Transportation
Agency for International Development
Atomic Energy Commission
National Aeronautics and Space Administration
National Science Foundation
Smithsonian Institution

1967
estimate

1968
estimate

32.5
235.8
7.0
71.2
5.1
10.8
2.0
13.7
.4
29.0
1.6

36.0
258.7
4.8
72.3
5.4
24.6
2.0
15.8
.8
40.1
1.8

333.4

Total

25.0
174.9
5.4
56.5
5.0
8.1
.1
8.3
.9
47.7
1.5

409.1

462.3

SPACE PROGRAMS

As shown on table 1-12, new obligational authority for the total
Federal space program is estimated at $7.1 billion in 1968, an increase
of $371 million over 1967. Expenditures decrease $174 million in
1968. The major increase in new obligational authority is in the
Department of Defense, largely for development of the Manned
Orbiting Laboratory (MOL). The principal expenditure decrease is in
the National Aeronautics and Space Administration, reflecting the
completion of the Gemini program and declining requirements for
the manned lunar landing, offset in part by initiation of the Apollo
Applications program.
Except for the operational satellite programs of the Department of
Commerce, amounts for all space programs are classified as research
and development for purposes of this special analysis.
All activities of the National Aeronautics and Space Administration
are included in the amounts shown, with the exception of amounts
specifically identified with aircraft technology. About 60% of 1968
expenditures will be devoted to the achievement of a manned lunar
landing within this decade. The Apollo Applications program of
extended manned flight will account for $375 million in 1968 expenditures. The balance of the NASA funds provide for continuing unmanned space exploration with satellites and probes, development of
space applications, and a continuing program of studies and supporting
research.




141

SPECIAL ANALYSES

Table 1-12. NEW OBLIGATIONAL AUTHORITY AND EXPENDITURES FOR
FEDERAL SPACE PROGRAMS (in millions of dollars)

Agency

NEW OBLIGATIONAL
AUTHORITY
1966

1967

1968
1

National Aeronautics and Space
Administration 1
Department of Defense
Atomic Energy Commission.
Department of Commerce: Environmental Science Services
Administration
Department of the Interior U.S.
Geological Survey
Department of Agriculture: Agriculture Research Service
National Science Foundation
Total
1

EXPENDITURES
1966

1967

1968

m

5.094.5
1.692.8
186.8

4.864.2
1.670.5
181.3

4 930. 4
1 998 1
151. 6

5,857.9
1.637.4
188.3

5.505.0
1.680.0
182.6

5,190.0
1,840.0
152.2

26.5

29.6

34 8

28.1

29.5

40.1

4.1

4.3

4. 8

4.0

4.1

4.6

3.2

2.4

4
2. 8

2.8

2.0

.4
2.4

7.007.9

6.752.3

7 123. 1 7.718.5

7,403.2

7,229.7

Excludes aircraft technology.

The estimates for the Department of Defense include the projects
in the Department's astronautics budget activity and certain amounts
in other budget activities which contribute to the space effort, such
as missile development, range operations, and various supporting
research, development, and operating costs. The amounts shown
include funds for the MOL, the communications, navigation, and
nuclear detection satellite programs, the Titan III space booster, and
for supporting research and development.
For the Atomic Energy Commission, the table includes amounts for
nuclear rocket propulsion technology and nuclear power sources for
space applications, including production of isotopic fuels, and amounts
for aerospace safety. The amounts shown for Commerce are primarily those related to the establishment and operation of a satellite
system to observe meteorological conditions, and, therefore, are not
included in the total for research and development in this special
analysis. The Interior and Agriculture funds support research on
remote sensing of earth resources. The amounts for the National
Science Foundation are for research in astronomy using rockets and
satellite-borne observation instruments.
WATER RESEARCH

In planning their 1968 programs, agencies were guided by the TenYear Program Report developed by the Committee on Water Resources Research of the Federal Council for Science and Technology.
The latter report, released during 1966, provides for a balanced research program to meet the challenge of adequate water management.
The research effort in 1968 will increase by $31 million as shown in
table 1-13. This increase is spread throughout the program with the
most significant additions being assigned to water quality, water




142

THE BUDGET FOR FISCAL YEAR 1968

supply aspects of weather modification, and further implementation
of the Water Resources Research Act.
Coordinated planning and implementation of this program remains
a continuing concern of the FCST committee. Through its efforts,
plans have been made to establish a Water Resources Science Information Center in the Department of the Interior. The latter will be
initiated in 1967, through a supplemental appropriation request, and
its services will be available to all of the agencies.
Table 1-13. OBLIGATIONS OF FEDERAL AGENCIES FOR WATER
RESEARCH (in millions of dollars)
Agency

1966
actual

Departments of:
Agriculture
Commerce
Defense
Health, Education, and Welfare
Interior
Atomic Energy Commission
National Science Foundation
Tennessee Valley Authority

1967
estimate

1968

17.0
1.1
3.8
.3
63.0
2.6
1.9
.7

6.5
.5
109.9
2.5
2.1
1.0

90.4

Total

18.9
1.2
5.6
.3
80.8
2.4
2.0
1.0
112.2

143.0

19.2
1.3

SCIENCE INFORMATION

Both the existing science information activities of the Federal
agencies designed to put data on research into the hands of users
more effectively, and investigations designed to make the entire
National effort in this field more efficient, will be strengthened in
1968. Approximately $60 million will be provided for the support of
research and development on scientific and technical information
systems, techniques, and devices. In this area, one of the most
significant efforts will be devoted to the complex problem of building
national systems, incorporating data from governmental and private
sources, for specific fields of science, such as chemistry. During 1968,
further work will be done, particularly by the National Science
Foundation, not only on designing new systems for discrete fields of
science but also on linking these systems together. Another significant development is the extension of existing Federal research project
reporting systems so that the total investment of Federal funds in
specific areas of science can be determined and disseminated efficiently.
The central mechanism for planning and coordinating Federal activities in these fields is the Office of Science and Technology, assisted
by the Committee on Scientific and Technical Information of the
Federal Council for Science and Technology.




143

SPECIAL ANALYSES
SUMMARY DATA

Table 1-14 below gives historical data on total research and development expenditures by major agency. Table 1-15, following, provides
information on expenditures for the conduct of research and development and for research and development facilities by agency and
major subdivisions for the fiscal years 1966, 1967, and 1968.
Table 1-14. BUDGET EXPENDITURES FOR RESEARCH AND
DEVELOPMENT,! 1954-66 (in millions of dollars)
Fiscal year

1954
1955
1956
1957
1958.
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1
2
3

.

.

Department of
Defense 2
2.487
2.630
2,639
3,371
3.664
4,183
5,654
6.618
6.812
6,849
7,516
6.728
6.735
7.169
7.682

NASA 3

AEC

D/HEW

90

383

63

4

121

74
71

385
474

70
86

9
15

140
161

76
89
145
401
744

657
804
877
986

144
180
253
324
374
512
632
791
707
877

31
33
51
58
77
105
142
197
195
235
254
304

183
220
293
315
356
403
478
496
587
774
916
987

1.257
2.552
4,171
5,093
5.933
5.600
5.300

1.111
1.284
1.335
1,505
1.520
1,462
1,486
1.599

1,096
1,184

Including research and development facilities.
Includes civil functions.
National Advisory Committee for Aeronautics prior to 1958.




Other

NSF

Total

3,148
3.308
3.446
4.462
4,990
5.803
7,738
9,278
10,373
11,988
14,676
14,830
16,016
16,521
17,056

144

THE BUDGET FOR FISCAL YEAR 1 9 6 8
Table 1-15. EXPENDITURES FOR FEDERAL RESEARCH AND
DEVELOPMENT PROGRAMS (in millions of dollars)

Description

Conduct of research and
development

Research and development facilities

1966
actual

Department of Agriculture:
Agricultural Research Service
Cooperative State Research Service
Forest Service
..
Other
Total, Department of Agriculture..
Department of Commerce:
National Bureau of Standards
Environmental Science Services Administration
.. .
Other .
..
Total, Department of Commerce
Department of Defense:
Military
Civil
Total, Department of Defense
Department of Health, Education, and
Welfare:
Food and Drug Administration
...
Office of Education
Public Health Service
Vocational Rehabilitation Administration
Welfare Administration and other .
Total, Department of Health, Education, and Welfare

1967
estimate

1968
estimate

1966
actual

132.1
51.8
37.6
21.8

148.1
55.6
35.8
22.4

153.6
60.5
37.3
21.1

3.5
.6
1.5
.1

8.3
1.7
4.3
5.0

22.1
3.9
2.5
9.8

243.3

261.9

272.5

5.7

19.3

38.3

31.9

24.6

30.8

20.7

9.4

9.4

12.6
11.2

16.0
13.1

23.6
15.3

55.7

53.7

69.7

20.7

9.4

9.4

6,674.9 7,104.1 7,596.2
9.2
5.1
8.7

54.5

56.5

76.5
.2

6,680.0 7,112.8 7,605.4

54.5

56.5

76.7

.8
5.2
45.8

1.1
12.8

71.3

4.9
29.0
66.0

825.2 1,010.6 1,083.6

51.9

85.2

99.9

.6

.3
.6
2.0
4.2

9.4
37.5

12.5
64.8

14.0
80.3

739.0

887.8

938.9

26.3
13.0

29.6
15.9

1967
1968
estimate estimate

31.9
18.5

Department of the Interior:
Geological Survey
._
Bureau of Mines
Bureau of Commercial Fisheries . . . .
Office of Saline Water
Water Pollution Control Administration.
Office of Water Resources Research . . .
Other..

27.2
27.3
21.9
12.7
8.1
5.8
29.0

32.2
22.6
24.8
10.8
16.9
6.9
30.9

36.1
32.4
28.2
22.6
24.4
10.7
32.1

5.3
.2
1.2

Total, Department of the Interior..

132.0

145.1

186.5

6.4

2.0
1.8
5.2
23.0

5.4

5.8

6.2

12.7

19.3

38.1

4.6
249.5

6.1
211.2

14.6
229.9

582.6
58.2
3.7
.8

290.0
57.0

3.9
1.0

174.0
77.3
4.5
.9

Total, research and development... 14,971.4 15,762.5 16,292.2 1,044.9

758.8

763.7

23.1
29.9
Department of Labor
26.5
204.4
178.7
Department of Transportation
267.2
1,212.6 1,274.7 1,369.5
Atomic Energy Commission.
National Aeronautics and Space Admin5,350.4 5,310.0 5,126.0
istration
226.4
176.3
National Science Foundation
196.5
45.0
38.5
Veterans Administration _
43.2
73.4
Other
55.5
60.3




SPECIAL ANALYSIS J
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS

In recent years, there has been a significant growth in the scope of
cooperative governmental efforts to solve national problems. By
sharing the resources derived from a growing economy, Federal aid
enables vital national goals to be pursued in such areas as education,
health, welfare, and urban development. At the same time, these
jointly administered programs:
• Make it possible to pursue broad national objectives in a way
which recognizes the diversity of local conditions and needs;
• Spread creative innovation in public services from one jurisdiction
to another; and
• Preserve a fair and equitable total tax system—by relieving
some of the pressure on those States and local tax sources which
are less closely related to ability to pay than income taxes.
Federal Aid to State and Local Governments
Budget and Trust Fund Expenditures

$ Billions
16—

1957

1958

1959

I960

Fiscal Year*

1961

1962

1963

1964

1965

1966

1967

1968

Estimate

145
255-300 0—67-




-10

146

THE BUDGET FOR FISCAL YEAR 1968
HIGHLIGHTS FOR FISCAL Y E A R 1968

The emphasis of Federal aid programs has shifted from time to
time, in response to the diversity of problems confronted.
The following represent the highlights of the aid program for fiscal
year 1968:
(1) Total Federal aids to State and local governments are estimated
to increase by $2.1 billion over 1967, to $17.4 billion.1 This represents more than a threefold increase in the short span of only a
decade, and is nearly 45% greater than the rise in total Federal
nondefense expenditures over the same period.
(2) Public assistance and highways continue to be the largest
programs. Together, they constitute about half of total Federal
aid payments.
(3) The jastest-growing grants are those to advance the war on
poverty and to upgrade the elementary and secondary educational
opportunities available to children of low-income families. Between
fiscal years 1965 and 1968, grants administered by the Office of
Economic Opportunity will increase by $1.3 billion and those
for the new elementary and secondary education program will rise
by $1.4 billion.
(4) Total aids to metropolitan or urban areas have risen from about
$3.9 billion in 1961 to an estimated $10.3 billion in fiscal year 1968.
Thus, Federal aids benefiting urban areas have grown almost $6%
billion, or nearly 165% in less than a decade. (Included in these
amounts are grants to States which subsequently benefit urban
areas. This topic is discussed in greater detail on pages 155-56.)
GROWTH AND DEVELOPMENT OF FEDERAL AIDS

The distinguishing features of our present system of Federal grantsin-aid can be traced back more than a century to the enactment of
the Morrill Act in 1862. This act established land-grant colleges
(so called because assistance for education was provided initially in
the form of Federal land), and instituted certain minimum requirements. In rudimentary form, the pattern was established for providing needed resources in exchange for acceptance of certain national
standards. (This type of aid has come to be known as "categorical"
grants.)
Federal aid was extended to agricultural programs around the
turn of the century. The second decade of the 20th century saw the
inauguration of Federal assistance programs for highways, and for
vocational education and rehabilitation.
In the depression years of the 1930's, the financial exigencies of the
time led the Federal Government to launch a wide range of new
welfare and economic security programs. These were designed not
only to help individuals but also to alleviate the intense pressures on
State and local resources. Other measures were enacted to provide
low-rent public housing and improved health services.
The years following World War I I were marked by a series of new
categorical grants for health care, for education in selectedfieldsand
1
Included in this amount are grants-in-aid and shared revenues from both administrative budget
and trust funds. Loans and repayable advances are discussed separately.




147

SPECIAL ANALYSES

areas, and for renewing the physical environment of the Nation's
cities.
More recently, significant steps have been taken to broaden elementary, secondary, and higher educational opportunities; to develop
economically depressed areas of the country; to help finance health
services and medical care for the indigent; and to launch a concerted
attack on.poverty. And, in 1966, a comprehensive new program was
enacted to transform areas of cities now encumbered by slums and
blight into model neighborhoods.
Factors underlying growth in Federal aids.—Increasing population and rapid urbanization have led to greater demands for the
services traditionally provided by State and local governments. Programs in education, health, housing, urban renewal, highways, and
public transportation have all increased in size and scope. Rapid
economic change and rising affluence have stimulated programs for
safeguarding the economic security of individuals. While the major
burden for providing such public services rests directly upon the more
than 90,000 State and local governmental jurisdictions, the Federal
Government also plays a vital role: first, by providing financial
assistance to State and local governments; and second, through direct
operation of various programs. Furthermore, by encouraging a sound
and growing economy the Federal Government helps States and localities indirectly by promoting a growing tax base.
Federal-aid program by function.—The factors creating pressures to increase Federal aids, coupled with the changing nature of
State and local program needs, have altered substantially the focus of
Federal aids at several junctures in the past two decades. These
changes can be traced in the accompanying table.
In 1950 and 1955, prior to the advent of the expanded Federal-aid
highway program, nearly three-fifths of total grant payments were for
health, labor, and welfare programs. Public assistance payments
alone accounted for nearly half of the total. Commerce and transportation activities comprised another one-fifth.
The Federal-Aid Highway Act of 1956 significantly modified the
pattern of aid to State and local governments. By 1960, with the
infusion of more than $2% billion in additional funds for highway
grants, commerce and transportation programs moved once again to
a dominant position in Federal assistance activities.
Table J-l. PERCENTAGE DISTRIBUTION OF FEDERAL AIDS TO STATE
AND LOCAL GOVERNMENTS BY FUNCTION »
Function

Agriculture and agricultural resources
SJatural resources
Commerce and transportation .
Housing and community development
Health, labor, and welfare
.
. __
Education..
Other .
..
Total
1

Excludes loans and repayable advances.




1950
actual

1955
actual

I960
actual

1965
actual

1968
estimate

5
2
21
1
69
2
1

7
3
19
4
57
8
2

3
3
43
4
41
5
1

5
3
40
5
40
6
1

3
3
25
7
46
14
1

100

100

100

100

100

148

THE

BUDGET FOR FISCAL YEAR

19 68

In more recent years, both the nature and number of aid programs
have changed appreciably. In the last 4 years, the Congress enacted
several programs which are aimed primarily at broadening the scope
of individual opportunity and development. The cumulative effect
of these programs has been to place the principal emphasis of Federal
aid once again on health, labor, and welfare activities—-as well as to
give added impetus to education and housing and community development efforts. In 1968, these programs will account for two-thirds
of total estimated aid payments.

Federal aid in relation to Federal and State-local out-

lays.—The rapid increase in Federal aid to State and local governments has become an increasingly important factor in the finances of
all levels of government. Federal aid as a proportion of total Federal
outlays has nearly doubled in the past decade—rising from 5% of
total Federal outlays in 1957 to an estimated 10% in 1967. In terms
of domestic programs, about one-fifth of Federal payments will take
the form of grants to State and local governments in 1968. Because
of strenuous efforts on their own behalf, the relative increase in the
amount of Federal aid has not been quite as marked for the recipient
State and local governments as it has for the Federal Government.
Federal aid constituted approximately 11% of all general revenue
available to State and local governments in 1957; the corresponding
amount for 1967 will rise to an estimated 16-17%.
Table J-2. FEDERAL-AID EXPENDITURES IN RELATION TO TOTAL
FEDERAL EXPENDITURES AND TO STATE-LOCAL REVENUE i
Total expenditures for aid to State and local
governments, budget and trust accounts

Amount
(millions)

1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967 estimate
1968 estimate

3,257
3,724
4,039
4,935
6,669
7,040
7,112
7,893
8,634
10,141
10,904
12,960
15,366
17,439

As a percent As a percent As a3 per2
cent of
of total cash of domestic
State-local
payments to cash payments to the revenue
the public
public
4.6
5.1
5.0
5.9
7.0
7.5
7.1
7.3
7.6
8.4
8.9
9.4
9.6
10.1

11.9
12.7
12.5
14.2
15.0
15.6
15.0
15.6
16.1
17.5
17.7
18.8
19.5
20.4

10.4
10.6
10.5
12.0
14.6
13.8
13.2
13.5
13.7
14.8
14.7
15.6
16-17

1
2
3

Excludes loans and repayable advances.
Excluding payments for national defense, space, and international affairs and finance.
Based on compilations published by Governments Division, Bureau of the Census. Excludes
State-local revenue from publicly operated utilities, liquor stores, and insurance trust systems.
4
Not available.

Division of responsibility among governments.—From the

turn of the century until the early 1950's, local government expenditures declined relative to those of the States. However, for the past



149

SPECIAL ANALYSES

decade or more, the three levels of government have shown a remarkable stability in the proportionate costs they bear for directly providing
civilian services. About two-thirds of total civilian outlays are made
by States and localities, with the localities alone providing more
than 40%.
Table J-3. DIRECT SPENDING FOR GENERAL
DOMESTIC! PROGRAMS-PERCENTAGE DISTRIBUTION
Fiscal year

1965
1960
1955
1950
1944
1936
1902

Federal

34
36
38
46
60
49
2
8

State

23
22
21
19
12
15
9

Local

43
42
41
35
28
36
6
2

Total

100
100
100
100
100
100
10
0

1
Direct general expenditures, excluding those for
defense, space, and international programs. Excludes
trust funds and Government-operated enterprises.
Source: Tabulations of the Governments Division,
Bureau of the Census.

ADMINISTRATION

OF F E D E R A L - A I D

PROGRAMS

The effective administration of Federal-aid programs, while always
important, has become a matter of increasing concern. The manner
in which funds are distributed and the need to coordinate the growing
number of aid programs have attracted particular attention.
Types of grant-in-aid formulas.—With the growth in the number and variety of grants, the methods of allocating the funds have
undergone considerable change. A major feature of this change since
World War II has been the increased use of fiscal "equalization"
provisions, enabling States with relatively meager resources to obtain
a proportionately larger share of Federal aid.
Before the 1930's, Federal grants were apportioned among the
States either as a flat sum per State or on the basis of State population.
More recently, many of the grant programs have taken some account
of variations among States in relative fiscal capacity. In fact, several
of the new grant programs enacted during the past 4 years use a
"fiscal capacity" index.
Most present Federal grant programs have two distinct but coordinate provisions to determine State shares of grant funds. The first
is an apportionment formula which specifies the proportion of total
Federal grant funds for which each State is eligible. The second
provision, a matching formula, specifies to what extent a participating
State must share in the costs of the program.
Apportionment formulas vary considerably, but most often incorporate one or more of the criteria embraced by the so-called "PFN"
formula: Population, Financial ability, and Need for the program.
• Program need is usually measured by the total population or the
relevant population group.
• Financial ability is typically measured by relative per capita
income. This is the case, for example, in grants for school lunches.



150

THE BUDGET FOR FISCAL YEAR 19 68

Matching requirements—requiring States to share in program costs—
are common elements of most grants. The matching or cost-sharing
requirements are of two kinds: variable matching, which takes account of the differing abilities of the States to support their aided
functions; and fixed ratio matching under which each State is required
to share in the same proportion of program cost.

Growth in number of aid programs.—The number as well as

the magnitude of Federal-aid programs has grown in response to the
increasing array of problems faced by State and local governments
which are also of immediate national concern.
While not strictly comparable to the concept of aid used in this
analysis, the Legislative Reference Service of the Library of Congress
has tabulated the number of aid programs in effect during the past 3
years. In early 1964, the number of major assistance programs
exceeded 115. Two years later, the number of programs had grown
to 162. In many cases, a given program has several different grant
authorizations. The total number of such authorizations rose from
239 in 1964 to 399 in 1966.
TABLE J-4. NUMBER OF AID AUTHORIZATIONS IN EFFECT AT
SPECIFIED DATES
Functional category

Apr. 1.
1964

Jan. 4,
1965

Jan. 10,
1966

National defense
Agriculture and agricultural resources...
Natural resources
Commerce and transportation
Housing and community development-.
Health, labor, and welfare
Education
Veterans benefits and services
General government

1
1
1
2
3
3
23
1
7
94
37
1
1
1

1
1
1
2
4
1
2
5
23
14
1
42
3
1
2

153
82
3
12

Total number of authorizations..
Total number of major programs

29
3
(116)

23
8
(135)

399
(162)

11
15

54
37
32

Source: Labovitz, I. M., "Number o{ Authorizations for Federal Assistance to State and Local
Governments Under Laws in Force at Selected Dates During 1964—66" (Library of Congress), July
5, 1966.

On an agency basis, the largest number of programs—more than
45% of total authorizations—is administered by the Department
of Health, Education, and Welfare.
The Departments of Agriculture, Interior, and Housing and Urban
Development, combined, account for an additional 25%.

Measures to coordinate Federal-aid programs.—While easing

State and local financial problems, the rapid increase in new aid programs has focused attention on the need for coordination and improvement in their administration.
A number of steps are being taken to improve the administration of
grant programs and intergovernmental relations:
• High-level liaison with State and local governments is being




SPECIAL ANALYSES

151

provided through the Vice President of the United States and the
Executive Office of the President.
• Funds will be sought to enable the Bureau of the Budget to
intensify its review of intergovernmental relations problems and to
strengthen the coordination of Federal programs, particularly in
the field.
• Systematic examinations of problems of intergovernmental coordination are being made in selected States.
• Coordination of Federal efforts is being strengthened by the
specific assignment of such roles to the Department of Housing and
Urban Development for urban areas and the Department of
Agriculture in rural areas.
• Simplification of the grant-in-aid system has been undertaken
in the area of public health. A number of grants have already been
brought together under the new Partnership in Health program.
Other areas of Federal aid will be studied to determine whether
additional grants can be combined to make them more effective tools
of intergovernmental action.
• Improved consultation with elected officials of State and local
governments is being sought in the development and execution of
Federal programs.
• New aids to multijurisdictional coordination have been provided
in such programs as those for metropolitan development, pollution
control in river basins, and regional economic development.
• Steps are being taken to coordinate Federal and State actions
in establishing development planning districts.
As a further step toward more effective cooperative governmental services, legislation will be proposed to improve the training
and mobility of State and local personnel. In addition, the Congress
will be asked again to take favorable action on general legislation to
improve and strengthen intergovernmental cooperation.
Efforts to refine the grant as an instrument of cooperative intergovernmental action are clearly worthwhile. Grants have served us
well in the past and offer equal promise for the future. These joint
Government programs have proven effective—by combining available
resources, by specifying certain minimum standards of performance,
and by decentralizing their actual administration. They are also
efficient, since Federal funds are focused on those national goals and
governmental units which need them most.
SPECIAL ASPECTS OF THE 1968 AID PROGRAM

This section focuses only on the 1968 aid program, and some of its
significant features. Major changes from the preceding year, and
Federal aid by agency and type are the principal topics treated.
Major program changes for 1968.—In 1968, total expenditures under existing and proposed programs for financial assistance to other
levels of government will increase substantially. The total is estimated
to be $2.1 billion more than for 1967 and $4.5 billion more than the
actual total for 1966.




152

THE BUDGET FOR FISCAL YEAR 19 68

The major increases in grants for 1968 over the 1967 estimates are
as follows:
• Health, labor, and welfare grants will rise an estimated $1.0 billion, as antipoverty efforts gain further momentum and cooperative health programs increase in scope.
• Grants for housing and community development are up by an
estimated $446 million (54%) over 1967, as programs to assist in
solving urban slum, growth, and transit problems are intensified.
• Educational assistance programs are estimated to rise by $269
million to a total of $2.5 billion, largely reflecting legislation enacted
in the past 4jyears for elementary, secondary, vocational, and higher
education.
Decreases in expenditures in 1967 are expected to occur in: (1) accelerated public works (almost $36 million), as most projects are now
completed; and (2) Federal-aid highways (nearly $125 million).
Federal-aid programs by agency.—In 1968, the Department of
Health, Education, and Welfare will spend approximately $8 billion
through its grants-in-aid programs—about 46% of total Federal aid.
Another 23%, or $4.1 billion, will be accounted for by the Department
of Transportation. The Office of Economic Opportunity, and the
Departments of Agriculture and Housing and Urban Development
will finance an additional 22% of Federal-aid programs. The detailed
table at the end of this analysis lists the various programs of Federal
aid to State and local governments by function, type of aid, agency,
and major program group.
Table J-5. FEDERAL AIDS BY AGENCY (in millions of dollars)»
Agency

Executive Office of the President
Funds appropriated to the President:
Economic opportunity programs
Other (primarily public works acceleration and disaster relief)
Department of Agriculture
Department of Commerce
Department of Defense—Military
Department of Defense—Civil
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Treasury Department
General Services Administration
Veterans Administration
Other independent agencies
District of Columbia 2
Total, budget and trust fund expenditure for Federal aid
1
2

Excludes loans and repayable advances.
Represents Federal payments to the District of Columbia.




1966
actual

1967
estimate

1968
estimate

.9

.7

.2

639.3
221.8
849.3
17.7
24.3
20.0

1,103.4
120.1
1,101.5
96.6
26.2
16.8
7,051.6
765.0
288.6

10.4
547.5
6.4
4,063.1
80.1

1,410.0
34.5
1,221.4
220.0
32.7
35.7
963
,203
413
31
591
6.4
,093.2
76.7

12.4
44.2

11.4
16.8
60.0

15.0
18.9
70.6

12,960.1

15,366.1

17,439.0

5,676.8
582.0
237.1

.6
491.3
6.3
4,055.4
71.4
.7

8.6

153

SPECIAL ANALYSES

Types of Federal aid.—Federal financial assistance to State and
local governments primarily takes the form of grants-in-aid and shared
revenue. In 1968, it is estimated that $17.2 billion or 98.7% of total
expenditures for aid will take the form of grants-in-aid. Shared revenue will account for $223 million, or 1.3%. Apart from these types
of Federal aid, many other Federal expenditures which are not included in this analysis affect the finances of State and local governments, such as contractual payments or grants to public institutions
for research and training in specialized fields.
Table J-6. TYPES OF FEDERAL AID BY FUNCTION, 1968 (in millions of dollars)
Function

National defense
International affairs and finance
Agriculture and agricultural resources.
Natural resources
Commerce and transportation
Housing and community development
Health, labor, and welfare
Education
Veterans benefits and services
General government
Total
1

Grantsin-aid

32.9
6.0
559.0
405.3
313.8
,274.3
042.0
,497.9
15.0
70.1
17,216.3

Shared
revenues

Total
aids

86.7

32.9
6.0
559.0
541.3
4,313.8
1,274.3
8,042.0
2.497.9
15.0
156.8

222.7

17.439.0

136.0

Excludes loans and repayable advances.

Formerly, certain transactions of a strictly financial nature were
also classified as aids to State and local government. Loans and repayable advances were included in the aid totals on a net basis (disbursements less repayments or sales). Since the amounts were small (an
average of less than 3% of the total), and essentially different in kind
from the outright grants and shared revenues, they are shown separately this year. Moreover, to measure the total activity generated by these loans and advances, they are shown on a gross, as well
as net, disbursements basis. Net loans and repayable advances have
been removed from the historical series on Federal aids to make the
data consistent over time.




154

T H E BUDGET FOR FISCAL YEAR

19 6 8

Table J-7. LOANS AND REPAYABLE ADVANCES (budget and trust accounts in
millions of dollars)
Net expenditures

Gross disbursements
Agency and program

1966
actual

1967
estimate

1968
estimate

1966
actual

1967
estimate

1968
estimate

0.9

Agriculture and agricultural resources

1.0

0.8

0.9

1.6

1.4

Natural resources:

Department of Agriculture: Watershed
protection and flood prevention _ .
Department of the Interior: Irrigation
projects, . __ _

4.8

6.8

6.2

4.3

6.2

4.8

18.0

14.4

15.5

17.8

14.2

15.4

Total, natural resources . . . _

22.8

21.2

21.7

22.1

20.4

20.2

3.7

21.5

38.6

3.7

21.5

21.4

2.6
199.3
33.4
16.1
284.9

218.8
54.1
20.5
625.0

246.5
56.2
19.1
371.3

-.4
-2.1
28.9
8.8
30.3
2.9

-.4
-.2
-30.6
12.0
36.7
-.2

90.2

52.7

24.1

55.1

52.7

608.0 1,008.6

748.4

92.5

72.4

59.5

25.4

17.5
127.7

99.5

25.4

17.5
-27.7

-.5

179.0

195.0

171.6

167.2

-87.8 -555.3

...

204.4

340.2

271.1

192.6

- 9 8 . 0 -555.8

Department of Defense—Civil: Corps
of Engineers: Construction of power
systems, Ryukyu Islands . .
Department of the Interior: Administration of territories.
_

.4

4.4

4.0

.4

4.4

4.0

5.4

5.4

5.0

5.4

5.4

4.4

5.8

9.8

9.0

5.8

9.8

8.4

845.6 1,402.3 1,089.6

317.6

Commerce and transportation: Economic

development

.

- ...

Housing and community development:

Department of Housing and Urban Development:
Liquidating programs: Community
facilities loans
Low-rent public housing program
Public facilities
_
.. Public works planning . ._
_
Urban renewal fund
Urban transit fund
District of Columbia: Capital outlays
and operations. .
Total, housing and community development. . - _- _
Education:
Department of Health, Education, and
Welfare:
Student loan f u n d . . . _ _
... _
Higher education facilities .
Department of Housing and Urban Development:
College housing . . . .
___..
.._
Total, education

3.1
71.2

2.2
-.2
-27.5

no.o
22.5
-.2

General government:

Total, general government,.
Total, loans and repayable advances

. _

27.7 -444.9

AIDS TO URBAN AREAS AND REGIONS

Increasing attention has been focused recently on two cross-cutting
issues concerning Federal aids:
(1) The amount of these aids which assist metropolitan or urban
areas in meeting their pressing needs; and



155

SPECIAL ANALYSES

(2) The geographical distribution of Federal aids.
Counties are the smallest geographical unit for which information
on Federal aids is generally available. Therefore, Standard Metropolitan Statistical Areas (SMSA's) were chosen as the definition of
"urban" for purposes of the figures in the following analysis—since
SMSA's are generally combinations of entire counties. These areas
cover the bulk of the urban population and display the urban phenomena which place heavy pressure on public service requirements:
high population density and rapid population growth. Nevertheless,
the amounts shown still only represent approximations, based on the
best information readily available.
Aids to urban areas.—Approximately $10.3 billion of the $17.4
billion of total Federal aids will be spent in SMSA's to help fill the
growing gap between their needs and resources. This represents an
increase of almost $6% billion or 165% over the amount of aid provided to such urban areas in 1961. The amount will have increased
almost $3 billion in the short span of only 2 years.
The table below shows the major sources of urban aid, by function
and program, for selected years.
Table J-8. FEDERAL-AID PAYMENTS IN URBAN AREAS (budget and trust accounts in millions of dollars) *
Function and program

National defense (civil defense and National Guard centers) -.
Agriculture and agricultural resources
Natural resources
Commerce and transportation:

Highways
Economic development
Airports
Other

1961
actual

1966
actual

10
155
54

20
149
105

26
235
200

1,398

2,138
2

36
1

30
52

2,176
36
33
6

105

169

T06

"""235

Housing and community development:

Public housing
Water and sewer facilities
Urban renewal
Model cities
Urban transportation
District of Columbia
Other

14
44
23

Health, labor, and welfare:

Office of Economic Opportunity
School lunch, special milk, food stamp
Hospital construction
Community health
Public assistance (including medical care)
Vocational rehabilitation
Employment security and manpower training
Other

131
48
33
,170
37
303
21

449
196
75
127
1,905

108
417
47

Education:

Elementary and secondary
Higher education
Vocational education
Other

"Less than $0.05 million.
1
Excludes loans and repayable advances.




208
61
336
132
98
71
100
1,010
290
95
450
2,243
211
501
101

222
5
28
3

895
37
90
27
*

1,292
172
160
80
6

3,893

7,354

10,329

Other functions
Total aids to urban areas.

1968
estimate

156

THE BUDGET FOR FISCAL YEAR 1968

The major increases in Federal grants for urban areas occur in
housing and community development, education, and programs to
improve the welfare of our disadvantaged citizens.
In addition to the grants and shared revenue which will be provided
to State and local governments in 1968, approximately $498 million in
loans and repayable advances will also be made available. This represents approximately 70% of total disbursements for such financial
assistance, and an increase of $322 million from the amount so provided in 1961.
Federal housing loans and loan insurance encourage additional
public and private funds to be provided to meet urban housing needs.
Mortgage funds totaling $10.6 billion in 1968 will be covered by these
programs, up $3.3 billion from 1961.
The emphasis in this analysis has been on those programs which
provide financial assistance to urban communities to help them meet
their public service needs. It includes grants made to States which
are subsequently spent to benefit metropolitan areas. No attempt
has been made to add up all the various forms of funds to reach an
overall total. However, the Department of Housing and Urban Development (HUD) estimates that the total Federal financial commitment for urban social and community development aids could exceed
$33 billion in 1968—nearly double the level in 1961.
While the tabulations are not fully comparable, the estimates of
the Department of Housing and Urban Development do serve to put
in perspective the more direct urban aid expenditures covered by this
analysis. The Department's figures indicate the magnitude of financial involvement in communities of 2,500 population or over, as
measured by obligations or commitments. (Obligations or commitments indicate the current level of program activity rather than the
current disbursement of funds.) The HUD data also include the cost
of some construction undertaken and services provided directly by the
Federal Government in urban areas.
Regional distribution

of Federal aids.—The regional distribu-

tion and relative importance of Federal aids to State and local governments can be seen in the following table.
Table J-9. REGIONAL DISTRIBUTION OF FEDERAL AID, FISCAL YEAR 1965 *
Region

Total
(in millions)

Mew England
. . _.
Mideast
- Great Lakes..
Plains
._
_
Southeast- - - Southwest
Rocky Mountain
- - - - Far West
United States
1

Per capita

Percent of
State and
local government general
revenue

$619.7
1.796.2
1,614.0
973.6
2,637.7
998.2
481.6
1.658.7
2

$55.67
43.60
42.31
61.31
62.52
63.69
102.53
66.61

14.5
10.6
11.7
16.0
20.4

10,903.9

56.26

14.7

18.2
22.9
13.3

Excludes loans and repayable advances.
Includes $124.1 million for Puerto Rico, the Virgin Islands and other.
Sources: "Annual Report of the Secretary of the Treasury" and "Governmental Finances in
1964-65." Bureau of the Census.
2




157

SPECIAL ANALYSES

The distribution of Federal aids on a regional basis ranges from
a high of more than $2.6 billion in the Southeast to a low of $482
million in the Rocky Mountain area. However, when account is
taken of population differences, the Rocky Mountain area ranks highest with grant payments per capita reaching $102.53, while the Great
Lakes and Mideast regions are lowest with $42.31 and $43.60 per capita
respectively. Population density and per capita income are the
two major factors which account for this wide variation.
Population density is inversely related to the level of per capita
aids. The population density of the Rocky Mountain area is the lowest of the regions, while per capita aids are highest. At the other end
of the scale, per capita aids are lowest in the Great Lakes and Mideast
where population density is the greatest. This inverse relationship
stems primarily from aids for highway construction. The cost of
building a highway which crosses a State is little affected by the
number of people living in the State.
Per capita aid is also inversely related to per capita income. There
are two reasons for this relationship. First, some grant programs,
such as hospital construction and water pollution control, require
lower matching by the relatively poorer States. Second, certain
grant programs, such as those for public assistance and elementary
and secondary education, are designed as aids to the disadvantaged
and, hence, tend to flow to States with lower incomes.
The forthcoming Annual Report of the Secretary of the Treasury
for 1966 (table 84) provides more detailed information concerning
the State distribution of grants-in-aid and shared revenues for fiscal
year 1966.
Table J-10. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
(in millions of dollars)
Agency and program

Functional
code

1966
actual

1967
estimate

1968
estimate

BUDGET AND TRUST ACCOUNTS'
Grants-in-aid and shared revenue 2

National defense:
Executive Office of the President: Office of Emergency
Planning—Federal contributions to State and local
planning . . .
.
_
_.....
059
Department of Defense—Military:
Civil defense shelters and financial assistance
051
Construction of Army National Guard centers . _ . . 051

International affairs and finance:
Department of State: East-West Cultural and Technical
Interchange Center.
_
. . .
See footnotes at end of table.




153

0.7

0.2

21.2
3.0

25.5
.7

30.0
2.7

25.2

Total, national defense

0.9

26.9

32.9

6.3

6.2

6.0

158

THE BUDGET FOR FISCAL YEAR 1968

Table J-10. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
(in millions of dollars) —Continued
Agency and program

Funcnal
de

1966
actual

1967
estimate

1968
estimate

BUDGET AND TRUST ACCOUNTS »—Continued
GrantB-in-aid and shared revenue 2—Continued

Agriculture and agricultural resources:
Department of Agriculture:
Commodity Credit Corporation and Consumer and
Marketing Service: Removal of surplus agricultural
commodities and value of commodities donated
Rural water and waste disposal facilities
Rural housing for domestic farm labor
Resource conservation and development
Agricultural Research Service: Grants for basic
scientific research
Agricultural experiment stations
Cooperative agricultural extension service
Payments to States, territories, and possessions, Consumer and Marketing Service
Commodity Credit Corporation: Grants for research..

351
352
352
354

226.9

324.5
40.9
6.0

.3

1.2

361.2
30.0
4.0
2.3

355
355
355

1.0
50.9
86.7

1.0
57.0
89.5

1.0
64.1
93.6

355
355

1.1

3.3

1.8
1.2

368.7

525.1

559.0

401

69.1

68.2

71.4

402

18.7

19.2

19.8

402

35.9

42.9

43.6

401

18.1

14.4

33.7

401

2.0

2.4

1.9

401

88.5

92.0

171.0

1.0
.9

1.1
.9

Total, agriculture and agricultural resources
Natural resources:
Department of Agriculture:
Watershed protection andfloodprevention
Grants for forest protection, utilization, and basic
scientific research
National forest and grassland funds; payments to
States and counties (shared revenue)
Department of Defense—Civil: Corps of Engineers:
Payment to California, flood control
Payments to States, Flood Control Act of 1954 (shared
revenue)
Department of the Interior:
Water pollution control
Payments to States and counties from grazing receipts,
grasslands, and sales of public lands (shared
revenue)
Bureau of Indian Affairs: Resources management
Bureau of Reclamation:
Grants
Payments to Klamath area, Arizona and Nevada
(shared revenue)
Office of Water Resources Research
Office of Saline Water
Payments from grant lands: Oregon, California, and
Coos and Douglas Counties (shared revenue)
Mineral Leasing Act payments (shared revenue)
Bureau of Mines:
Mine drainage and solid waste disposal
Appalachian mining area restoration
Aid for commercial fisheries
Payment to Alaska from Pribilof Island fund (shared
revenue)
Fish and wildlife restoration and management
Wildlife refuge fund and grasslands payments (shared
revenue)
Land and water conservation grants
Preservation of historic properties
See footnotes at end of table




401
401
401
401
401
401

.6
5.4

.7
5.6

.7
8.0
3.5

402
403

20.2
46.9

21.4
48.2

24.3
49.2

403
403
404

.3
.4
.4

.5
2.3
3.2

1.1
11.0
4.4

404
404

21.8

.3
24.7

.4
25.1

.4
3.1

1.6
28.8

1.5
51.0

404
405
405

159

SPECIAL ANALYSES

Table J-10. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
(in millions of dollars) — C o n t i n u e d
Agency and program

Functional
code

1966
actual

1967
estimate

1968
estimate

.2

.4

BUDGET AND TRUST ACCOUNTS'—Continued
Grants-in-aid and shared revenue ~—Continued
Natural resources—Continued
Department of State: Pacific Halibut Commission
Federal Power Commission: Payments to States
(shared revenue)
Tennessee Valley Authority: Payments in lieu of taxes
(shared revenue)
Water Resources Council

404

.1

401
10.4

11.9
1.4

13.1
2.1

344.5

391.7

541.3

(226.9)
(117.5)

(261.3)
(130.4)

(405.3)
(136.0)

507

84.7

35.7

502
506
506
507
507

.4
.1

.4

.4

1.3
7.0
8.9

3.5
50.6
42.1

7.1
131.8
80.7

401
401

Total, natural resources
Grants-in-aid
Shared revenue
Commerce and transportation:

Funds appropriated to the President: Public works
acceleration
Department of Commerce:
State marine schools
Improvement of weights, measures, and technology
Office of State Technical Services
Economic development assistance
Appalachian development highways
Department of Transportation:
Chamizal Memorial Highway
Forest and public lands highways
Highway safety and beautification
Highway Beauty-Safety (trust fund)
Federal-aid highways (trust fund)
Federal Aviation Administration: Federal-aid airport
program
Appalachian Regional Commission

503
503
503
503
503

40.0
2.5

39.4
42.8

3,958.9

3,926.8

3,802.7

501
507

54.0
.9

54.0
.9

59.0
.6

4,158.7

4,196.3

4,313.8

Total, commerce and transportation.
Grants-in-aid, administrative budget.
Grants-in-aid, trust fund
Housing and community development:
Funds appropriated to the President: Alaska mortgage
indemnity grants
Department of Housing and Urban Development:
Alaska housing
Low-rent public housing program
Urban planning grants
Open space land and urban beautification
Grants for basic water and sewer facilities
Grants for neighborhood facilities
Model city grants
Urban renewal
Urban transportation assistance
Metropolitan development incentive grants
Other aids for urban renewal and community facilities.
District of Columbia: Federal payment
Total, housing and community development_
See footnotes at end of table.



4.0

(199.8)
(3,958.9)

(269.4) (283.6)
(3,926.8) (4,030.2)
33
.

551
551
552
553
553
553
553
553
553
553
553
553
555

()
227.5

225.5
20.1
7.9

249.1
22.0
28.5
40.0
3.0
5.2

277.7
30.0
57.8

312.8
15.8

361.3

447.5

55.9

108.7
7.0
3.0

44.3

60.0

70.6

626.2

828.2

1,274.3

110.0
15.0
147.0

160

THE BUDGET FOR FISCAL YEAR 1968

Table J-10. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
(in millions of dollars) — C o n t i n u e d
Agency and program

unconal
ode

1966
actual

1967
estimate

1968
estimate

BUDGET AND TRUST ACCOUNTS'—Continued
Grants-in-aid and shared revenue s—Continued
Health, labor, and welfare:

Funds appropriated to the President:
Disaster relief
Office of Economic Opportunity:
Community action programs:
Head start
Other
Neighborhood Youth Corps
Work experience
Adult basic education
Adult work training and special impact
Other
_
Department of Agriculture:
Special milk and school lunch
Food stamp
Department of Health, Education, and Welfare:
Hospital construction
(Portion to private, nonprofit institutions)
Health manpower
Comprehensive health planning and services
Medical services: Hospitals and medical care, Hawaii;
and Indian health facilities
National Institutes of Health
Mental health
Health services
Disease prevention and environmental health
Maternal and child welfare
Medical assistance
Public assistance (exclusive of medical assistance)..
Vocational rehabilitation
Administration on Aging
Department of Labor:
Manpower development and training activities
Grants to States for administration of employment
security programs (trust fund)
Equal Opportunity Commission

69
5

131.7

81.1

34.5

655
655
655
655
655
655
655

75.7
215.0
239.3
74.4
21.1

360.0
436.0
300.8
97.0

13.8

250.0
318.0
291.0
124.8
13.9
75.0
30.7

659
659

291.5
65.4

315.7
131.4

343.6
184.0

651
651
651
651

196.1
(104.5)
6.7

219.9
(114.4)
47.5
4.0

230.5
(116.3)
138.3
105.7

651
651
651
651
651
651
651
653
659
659

185.0
31.2

652
652

Total, health, labor, and welfare.

1.5

112.4
33.2
72.8
154.6
,038.2
,887.6
256.8
4.6

216.1
55.7
49.6
207.3
,182.8
,970.2
309.7
10.3

30.0

40.0

469.3

517.5
.7

551.6
.7

5,781.3

652

1.2

7,012.4

8,042.0

92.4
20.4
43.6
114.4
769.5
,758.0
158.8
1.3
22.0

(5,312.0
(469.3

Grants-in-aid, administrative budget.
Grants-in-aid, trust fund

(6,494.9 (7,490.4)
(551.6)
(517.5

Education:

Department of Health, Education, and Welfare:
Assistance to schools in federally affected areas
Elementary and secondary educational activities
Higher education activities (including land-grant
colleges)
Vocational education
Arts and humanities educational activities
Grants for library services and construction
Training teachers of the handicapped
Community services and National Teacher Corps
Civil rights educational activities
Teaching of the blind and deaf
Educational television facilities




701
701

378.2
900.0

391.0
1,324.2

390.0
1,456.1

702
704
704
704
704
704
704
704
704

53.2
128.5
.1
44.8
2.6

170.3
220.7
.5
89.9
6.0
3.0
3.5
1.1
7.8

245.3
228.0
.5
107.3
13.0
8.5
15.9
1.6
19.7

2.0
.9
4.4

161

SPECIAL ANALYSES

Table J-JO. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
(in millions of dollars) —Continued
Func-

1966
actual

1966
estimate

1968
estimate

10.0

9.5
1.0

10.0
2.2

1,524.7

2,228.5

2,497.9

.8.6
.....

9.0
1.0
1.5

9.3

8.9

Agency and program

11.4

15.0

code
BUDGET AND TRUST ACCOUNTS i— Continued
Grant8-in-aid and shared revenue 2—Continued

Education—Continued
Department of the Interior: Bureau of Indian Affairs:
Education and welfare services
National Foundation on the Arts and Humanities

704
704

Total, education.
Veterans benefits and services:
Veterans Administration:
Aid to State homes
..
Grants for construction of State nursing homes.
Administrative expenses

804
804
805

Total, veterans benefits and servicesGeneral government:
Funds appropriated to the President: Transitional
grants to Alaska
Department of the Interior:
Grants to territories
Internal revenue collections, Virgin Islands (shared
revenue)
Department of Justice:
Law enforcement assistance:
Education and training
Other
.
Crime prevention and control
Treasury Department:
Tax collections for Puerto Rico (shared revenue)
Bureau of Customs: Refunds, transfers and expenses
of operation, Puerto Rico and the Virgin Islands
(trust fund shared revenue)
General Services Administration: Hospital facilities in
the District of Columbia
President's Crime Commissions
Total general government.
Grants-in-aid, administrative budget...
Shared revenue, administrative budget.
Shared revenue, trust fund
Total grants-in-aid and shared revenue.
Total grants-in-aid, administrative budget...
Total grants-in-aid, trust funds
Total shared revenue, administrative budget.
Total shared revenue, trust funds

4.2
1.5

910

5.4

910

26.5

36.8

38.2

910

10.4

11.1

10.0

908
908
908

.6

4.2
6.3

6.2
6.3
19.5

910

51.8

52.0

52.0

904

19.6

28.

24.7

905
908

.7
.6

.9

115.6

139.3

156.8

(33.8)
(62.2)

(48.1)
(63.1)
(28.1)

(70.1)
(62.0)
(24.7)

(19.6)
12,960.1

15,366.1 17,439.0

(8,332.6) (10,700.1) (12,634.6)
(4,428.1) (4,444.4) (4.581.8)
(179.7)
(193.5) (198.0)
(24.7)
(19.6)
(28.1)

"Less than $0.05 million.
1
Budget accounts unless otherwise specified. Many expenditures listed here are parts of larger
appropriation accounts or trust accounts.
2
Grants-in-aid unless otherwise specified.
3
Reflects proposed transfer of forest and public lands highways to the highway trust fund.
* Reflects proposed establishment of a new Beauty-Safety trust fund.

255-300 0—67


-11

SPECIAL ANALYSIS K
PRINCIPAL FEDERAL STATISTICAL PROGRAMS

Principal statistical programs of the Federal Government in the
1968 budget are summarized in this analysis. The general year-toyear level of statistical activities of the various agencies is reflected
in the amounts shown for current statistical programs. Recommendations in 1968 for current statistics total $122.4 million. Periodic
statistics, as distinguished from current, are characteristically derived
from census-type surveys taken once or twice a decade, and amounts
fluctuate widely from year to year depending upon the nature and
periodicity of the activities. Recommendations for the periodic
programs for 1968 aggregate $40.5 million.
Objectives of these programs are to provide accurate, comprehensive, and timely information on the functioning of the economy
and welfare of the people, both for Government decisions and for
private and general public use. The functions of collecting, processing,
and analyzing current general-purpose statistical information are
often closely related to other agency objectives. To indicate the
interrelationships of the statistical programs carried out by different
agencies and to aid in evaluating the Government's overall statistical
system, the significant components of current Federal statistical
activity are brought together and classified by broad subject areas
in this special analysis. These areas and the amounts involved for
the current program are summarized in table K-l. Information by
agencies for both the current and periodic programs is shown in table
Current statistical programs presented here represent the entire
programs of some agencies but only that portion of the programs of
other agencies constituting general-purpose statistical activity. A
significant change in this year's presentation is the inclusion of the
statistical activities of the new Department of Transportation.
Amounts for the Department of Housing and Urban Development
in this analysis relate only to statistical activities; funds for urban
research are not included although they were in former years.
An adjustment is also made this year in the amounts carried for the
Economic Research Service of the Department of Agriculture.
Nearly three-fourths of the activities of this agency are excluded in
this analysis because they are primarily of a research nature rather
than statistical.
A brief description of the major program changes is shown below
by broad subject areas. The agencies which contribute to each
subject area are shown in table K - l . Adjustments made for savings
resulting from increased productivity and for additional amounts
required for increased pay costs are not itemized in descriptive statements but are reflected in the totals.
162




163

SPECIAL ANALYSES

Table K-1. OBLIGATIONS FOR PRINCIPAL CURRENT STATISTICAL
PROGRAMS, BY BROAD SUBJECT AREAS (in millions of dollars)
1966
actual

Program

Labor statistics (Departments of Agriculture, Interior, and
Labor; National Science Foundation) .-.
.. .. ..
Demographic and social statistics (Departments of Agriculture,
Commerce, and Health, Education, and Welfare; National
Science Foundation; Office of Economic Opportunity) . . . . .
Prices and price indexes (Departments of Agriculture, Commerce,
and Labor)
Production and distribution statistics (Departments of Agriculture, Commerce, Defense, Interior, and Transportation; Civil
Aeronautics Board; Interstate Commerce Commission). . . .
Construction and housing statistics (Departments of Commerce
and Housing and Urban Development; Federal Home Loan
Bank Board)
- .
National income and business financial accounts (Departments
of Agriculture, Commerce, and Treasury; Federal Trade
Commission; Securities and Exchange Commission). . _ _ _
Total, principal current programs-

-

-

'

1967

1968

26.0

26.9

29.2

24.2

31.9

37.2

5.6

6.2

7.4

28.6

32.0

33.1

3.2

3.4

3.7

8.7

10.8

11.8

96.3

111.2

122.4

LABOR STATISTICS

Manpower and employment data.—Funds are requested for intensive
surveys in 10 to 15 metropolitan areas of unemployment, labor force
participation, alienation from the labor force, and the factors associated with the under-utilization of manpower in hard-core slum areas.
It is expected that concentrating on problem areas will extend and
illuminate information collected nationally by means of the Current
Population Survey. This budget provides $1 million for the Bureau
of Labor Statistics, much of this amount to be transferred to the
Bureau of the Census for costs of field enumeration. At the same
time, more extensive analyses will be made of the national Current
Population Survey sample results made possible by the expansion of
the sample in January 1967, and the addition of questions tested in
earlier years.
An amount of $100,000 is proposed for the Economic Research
Service to improve its estimates of the supply of and the requirements
for farm labor in major production areas.
Manpower training.—A review of manpower training will be made
as a basis for assessing the role which the Federal Government should
play in training and retraining manpower. A large part of specific
vocational training is now provided by employers, but there is little
information on the amount and kind of such training. The $500,000
requested for the Office of Manpower Policy, Evaluation, and Research
would provide for surveys and research badly needed as a basis for
developing sound policy.
Wages and industrial relations.—The Bureau of Labor Statistics
now collects information on general wage changes in manufacturing
industries but has only very limited coverage of nonmanufacturing
industries. Funds are recommended, $200,000, to inaugurate a semiannual survey of general changes in wage rates and benefits in the
nonmanufacturing sector. This information will round out the data



164

THE BUDGET FOR FISCAL YEAR 1968

needed to relate the magnitude of wage changes to changes in productivity and prices and to study the problems of labor demand and supply
among industries. An additional $150,000 is included to strengthen
the program of information on employee benefits, particularly pension
plans. Based on available data and special surveys, research will be
undertaken on provisions and financial aspects of pension plans,
characteristics of employees covered, actual benefits paid as distinct
from plan provisions and similar questions related to evaluating the
protection afforded by private plans and the relationship between
public and private systems.
Produdiviiy and growth.—Work on measurement of productivity for
the total economy and by industry will continue to expand principally
by providing detail for more industries, and by increasing the frequency and promptness in the reporting of productivity changes.
The Economic Growth Project has completed the first major stage of
its research program with the preparation and publication of projections to 1970 of final demand, output, and employment integrated
within an input-output framework. This work was done in the Labor
Department in cooperation with other agencies, notably the Department of Commerce, Council of Economic Advisers, Bureau of the
Budget, Agriculture, and Interior. Future work will be based in
part on updating, by the Office of Business Economics, of the 1958
Input-Output tp He involving more industry detail and on exploring
various facets of the sources of economic growth, studied only in part
in the first phase of the growth project. The level of expenditures remains substantially the same for fiscal 1968.
DEMOGRAPHIC AND SOCIAL STATISTICS

Population statistics.—No additional funds are requested for the
Census Bureau's current program of population statistics. Work
will continue on exploring the use of administrative records to provide
estimates of population and family incomes for small areas such as
counties and standard metropolitan statistical areas for intercensal
years. Principal emphasis on population statistics during 1968 will
center on preparations for the 19th Decennial Census and a special
large-scale sample survey; these are covered under Periodic Programs.
An increase of $200,000 is proposed for the Economic Research
Service in the Department of Agriculture to improve statistical information on the economic and social status of people in rural areas.
Health and Vital Statistics.—A program increase of $600,000 is
recommended for the 1968 budget of the National Center for Health
Statistics.
The National Center would utilize this increase primarily in the
area of vital statistics. The budget includes $200,000 for preparations
necessary to revise the present disease classification system in accordance with the World Health Organization's new International Classification of Disease, and for implementation of plans to provide more
meaningful and useful data relating to mortality through coding
multiple causes of death rather than only the primary cause.
The National Fertility Study would be initiated in 1968 to examine
family planning and the economic problems of population growth and
change. This study is planned as part of a continuing survey to be
conducted on a 2-year cycle and will cost $400,000.



165

SPECIAL ANALYSES

Table K-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)
Agency

1966
actual

1967
estimate

1968
estimate

CURRENT PROGRAMS
Department of Agriculture:
Economic Research Service: Statistical activities
Statistical Reporting Service
Department of Commerce:
Bureau of the Census
Office of Business Economics
Department of Defense: Corps of Engineers: Domestic shipping
statistics
Department of Health, Education, and Welfare:
National Center for Educational Statistics
National Center for Health Statistics
Social Security Administration: Statistical and research
activities
Welfare Administration: Statistical and research activities
Department of Housing and Urban Development: Statistical
activities
_
Department of the Interior: Bureau of Mines: Mineral statistics.
Department of Labor:
Bureau of Employment Security: Statistical activities
Bureau of Labor Statistics
Office of Manpower Policy, Evaluation, and Research: Statistical activities
..
Department of Transportation: National transportation statistics.
Treasury Department: Internal Revenue Service: Statistical
reporting
Civil Aeronautics Board: Statistical and research activities
Federal Home Loan Bank Board: Statistical activities
Federal Trade Commission: Financial statistics
Interstate Commerce Commission: Reports and statistics
National Science Foundation: Statistics and special analyses
Office of Economic Opportunity: Statistical and research activities
-.—
Securities and Exchange Commission: Operational and business
statistics
Total, current programs

3.4
12.3

3.7
13.3

4.1
13.9

15.7
2.5

16.4
2.8

17.1
3.2

1.1

1.1

2.7
6.9

3.9
8.2

5.4
9.8

6.0
1.7

8.7
1.9

9.9
2.4

.5
2.7

.4
2.9

.5
2.8

3.0
20.0

3.1
20.6

3.2
23.1

4.0
.1

4.0
2.3

4.5
2.5

4.5
.6
.7
.4

6.1
.7
.8
.4
1.2
4.4

6.8
.7
.9
.4

4.0

4.0

.4

.4

96.3

111.2

122.4

5.1
.8
.2

1.8
3.3
1.3
1.0
2.8

7.7
1.1
20.0
7.7

1.9

4.0

1.1
3.7
2.4

.3

1.2
4.6

PERIODIC PROGRAMS
Department of Commerce: Bureau of the Census:
1964 Census of Agriculture
1967 economic censuses
1967 Census of Governments
1968 Sample Household Survey
Preparation for 19th Decennial Census
Registration and voting statistics
Modernization of computing equipment
Department of Agriculture: Statistical Reporting Service: Computer purchase and related costs
Department of Health, Education, and Welfare: National Center for Health Statistics: Computer purchase and related
costs
-Total, periodic programs
Total, principal statistical programs.




2.2
1.2
1.7

.5
1.1

11.2

13.7

40.5

107.5

124.9

162.9

166

THE BUDGET FOR FISCAL YEAR 1968

The National Center would also begin studying the possibility of the
development of an index of health suitable for measuring the state of
the Nation's health. Other projects include an analytical study of
general mortality trends in Scandinavian countries; a study of infant
mortality in the United States based on medical infant death and birth
records; and an evaluation of the quality of information reported on
death certificates.
Educational statistics.—Increases in the amount of $1 million for
data processing and $400,000 for special statistical programs are
recommended for the National Center for Educational Statistics.
The increase for data processing is the direct result of further centralization and automation of management activities and of additional
information requirements related to Federal Aid to Education programs, civil rights compliance, and evaluation studies of program
effectiveness. Funds for special statistical programs are intended to
cover: analyses of special Census data concerning education to be
collected in April 1967; a broad statistical investigation of adult and
vocational education programs; continued development of operations
analyses to assist decisionmakers on educational problems; and the
preparation of a number of new statistical publications.
Social security statistics.—In 1968, an increase of $310,000 is recommended for support of the Social Security Administration's research
and statistics program. This increase will be used primarily in the
health insurance area for studies of the utilization of hospital and
medical services and patterns of care of the aged before and after
Medicare; and for a supplement to the 1966 Survey of Disabled
Adults which will obtain needed information on the adequacy of
old-age, survivors', and disability insurance benefits and the level of
economic security for beneficiaries and nonbeneficiaries in nursing
homes and other long-stay institutions.
In addition, planning is proceeding for a Retirement History Survey
to examine over a period of time the changes in earnings, other income,
assets, health, medical care, and living patterns of persons of retirement age and the factors related to these changes. The first phase
of the field survey will take place in fiscal year 1968 and continue for
a period of at least 10 years.
Welfare statistics.—Major studies by the Welfare Administration
in 1968 will concern a benchmark medical care services study, as part
of the program to evaluate the impact of the Medical Assistance
program, and various cost-benefit and other analyses. Among the
other areas to be covered are: work incentives, alternative means of
caring for both children and adults now provided services under group
care arrangements, and a review of the fiscal ability of States as
related to the recommendations of the Advisory Council on Public
Welfare.
The nationwide study of the Aid-to-Families-of-Dependent Children
(AFDC) program and family living conditions will be completed and
evaluated. Work will continue on the AFDC characteristics study.
The feasibility of a study of the social and economic characteristics
of General Assistance recipients will be explored. Particular attention
will continue to be given to implementation of the new statistical
reporting system developed by the Bureau of Family Services, reexamination of the social service reporting system, and review of the



SPECIAL ANALYSES

167

Children's Bureau reporting system in light of the information necessary for Program Planning and Budgeting activities.
The Quality Control System instituted by the Bureau of Family
Services will be extended into new areas, and the Children's Bureau
will review and evaluate its research grant programs. Efforts will
continue to coordinate research in the field of social welfare manpower
and to-explore new ways to recruit, organize, and utilize social welfare
personnel. The total recommended increase for the Welfare Administration is $331,000.
Economic opportunity.—Basic research directed toward defining and
analyzing the nature, causes, and cures for poverty will be maintained
in 1968 at about the same level as in 1967. Major items for the Office
of Economic Opportunity include funds for: a longitudinal study of
persons located in previous surveys to determine the various factors
that place these persons in poverty or lift them out of it; a study of
hiring practices as they affect the poor; an examination of the relationship between the migratory patterns of the poor and ghetto formation
and industry location; and development of methods for assessing the
impact of antipoverty programs on youth through the use of control
groups.
Rural poverty characteristics studies will be continued in conjunction with the Economic Research Service of the Department of Agriculture. Also, work will continue on the development of an eventtype simulation model of a community action program.
PRICES AND PRICE INDEXES

Expanded programs in this area reflect the need for more adequate
measures of price changes which have become increasingly significant
during the past year. An increase of $404,000 is requested for the
Bureau of Labor Statistics to extend to 75 additional industries the
work initiated in recent years for a series of wholesale price indexes
on an industry sector basis, and to collect data representing transaction prices rather than list or quoted prices for some 40 major commodities. An increase of $120,000 is included for developmental
work and collection of data on prices of the more important commodities entering into foreign trade.
Additional funds ($100,000) are requested to carry on work necessary to improve the accuracy of the Consumer Price Index (CPI),
principally through the identification of changes in quality of commodities being priced and measuring their effect on prices.
This budget requests funds for planning and testing consumer expenditures surveys to be conducted at the end of the decade to provide
the necessary weights for revision of the CPI by the Bureau of Labor
Statistics and the indexes of prices paid by farmers by the Statistical
Reporting Service.
An increase of about $60,000 is requested for the Statistical Reporting Service, Department of Agriculture, for research on the effect on
prices received by farmers brought about by shifts in the relationship
between agricultural commodity producing and processing operations.
Funds are requested ($160,000) for the Bureau of the Census to
prepare and publish a construction price index for single-family
houses. This is part of a general program to provide price indexes for
various types of construction.



168

THE BUDGET FOR FISCAL YEAR 1968
PRODUCTION AND DISTRIBUTION

The statistics program of the Department of Transportation, included in this analysis for the first time this year and calling for an
increase of some $250,000 over last year, has three main objectives
in 1968: to take initial steps to improve data on commodity shipments, to start work toward getting more adequate information on
passenger movements, and to explore ways of making more effective
use of the capabilities of other agencies in the development of a
variety of statistics relating to transportation.
An increase of $193,000 is 'requested for the Bureau of the Census
to provide monthly national indexes of the dollar and physical volume
of total retail inventories of large consumer durables. An additional
$104,000 is requested to enable the Bureau to expand its data collection
program in the limited number of standard metropolitan statistical
areas for which retail sales data are published so that monthly estimates will be available of total retail sales, sales of nondurables, and
sales by general merchandise, apparel, furniture, and appliance stores.
A transfer in the amount of $51,000 is proposed from the Agricultural Stabilization and Conservation Service to the Statistical
Reporting Service to finance the collection of grain inventory data.
Of the $147,000 proposed increase for the Economic Research
Service, $100,000 is to provide data on the location and productive
potential of agricultural land. The remaining $47,000 is to be used
for statistics on the flow of agricultural commodities from our principal foreign competitors to those countries which are our major markets.
CONSTRUCTION AND HOUSING STATISTICS

An increase of $248,000 is recommended for this area in 1968.
Provision is made for an increase of $140,000 to permit the Department of Housing and Urban Development to finance, through the
Bureau of the Census, a survey of the first occupants of new sales
and rental housing. This is an extension of present surveys in order
to determine the incomes and other characteristics of families who are
occupying newly constructed housing.
Funds for the Bureau of the Census, in the amount of $108,000,
are recommended to enlarge the sample of building permit jurisdictions
reporting monthly so that monthly construction figures can be published for 100 standard metropolitan statistical areas. This is a
relatively small incremental cost to provide local data for so many
areas since the primary collection cost is already borne by the regular
sample needed for national data.
NATIONAL INCOME AND BUSINESS FINANCIAL ACCOUNTS

Economic accounts.—An increase of $430,000 (of which $372,000 is
for new programs) is requested to finance the work of the Office of
Business Economics. The new work provides for (1) beginning the
preparation of estimates of real GNP by industry on a quarterly
basis; (2) personal income by States on a quarterly basis; (3) strengthening the analysis of determinants of business investments; and (4)
expanding work on estimating the total tangible capital stock of the
United States.



SPECIAL ANALYSES

169

PERIODIC PROGRAMS

Economic Censuses and Census of Governments.—Funds are recommended for conducting the regular periodic Economic Censuses
during 1968. These censuses include the Censuses of Business,
Transportation, Manufactures and Mineral Industries. The 1967
Census of Business will, for the first time, obtain data on construction,
a major segment of the economy not previously included in census
coverage. Provision is also made for taking the 1967 Census of
Governments.
1968 Sample Household Survey.—The 1968 budget recommends
funds ($20 million) for the Bureau of the Census for a large-scale
sample survey to be conducted in 1968 covering about 3 million households. This survey is to provide current information in depth in order
to determine conditions and needs, allocate resources for greatest impact, take the most effective types of actions, and permit the measurement of progress toward goals. Information will be provided for all 228
standard metropolitan statistical areas, with the central cities separately; for concentrated poverty areas within the 108 larger metropolitan
areas of 250,000 or more population; urban, rural nonfarm and farm
areas outside of metropolitan areas in each State; totals for all States
and for the Nation as a whole.
The survey is designed for general use but will concentrate on
problems of welfare and poverty. It will be keyed to the 1970 Census
so that movement of groups out of poverty can be measured, as well
as their personal circumstances and the governmental programs
associated with such movements.
Preparation for 19th Decennial Census.—An increase is proposed in
funds necessary to prepare for the 19th Decennial Census. During
1968 the Bureau of the Census will continue to establish the basis for
collecting population and housing data, primarily by mail. A part
of the work involves the development and testing of operating procedures, taking a "dress rehearsal" census, establishing a master list
of addresses, and preparing a computer-based geographic coding system. Work will also continue on exploration and solution of problems expected to be encountered in hard-to-enumerate areas and on
questionnaire design under conditions of self-enumeration. Field
testing of new questions is required and further work is necessary on
the development of statistical measures relating to housing condition.
Computers.—Amounts recommended for the purchase of computers
and related costs for statistical activities included in this analysis are
shown under periodic programs. These amounts represent capital
expenditures and for analytical purposes should not be charged to the
current statistical program although the equipment is of course used
to process current as well as periodic statistics. Rental and operating
costs of computers are allocated to the particular program involved.




SPECIAL ANALYSIS L
FOREIGN CURRENCY AVAILABILITIES AND USES

Many agencies of the Government are engaged in activities throughout the world which involve payments in foreign currencies. From
some governmental activities, particularly the sale on concessional
terms of surplus agricultural commodities, the Government acquires
foreign currencies without spending dollars. This analysis presents
summary data on foreign currency availabilities and uses.
Most currencies accrue to the credit of the United States because
of past or current international agreements primarily dealing with
(1) sales of commodities (usually surplus agricultural commodities)
to foreign purchasers for local currencies, or (2) loans of dollars or
foreign currencies which may be repaid in the currency of the borrower.
Sales of commodities for foreign currency will be phased out over the
next few years. Currencies also become available in much smaller
amounts under other kinds of international agreements and from the
normal operations of the U.S. Government abroad.
A large part of the foreign currencies owned by the United States
is committed by the terms of the international agreements under which
they are received. They must be used on a loan or grant basis for
mutually beneficial purposes in the country and are therefore called
"country-use" currencies. Currencies available for the purposes of
U.S. agencies are called "U.S. use" currencies.
The Federal Government has established a number of procedures to
insure the maximum use of the foreign currencies which are available
for U.S. purposes. Efficient use of these currencies is important not
only as a matter of sound financial management but because of the
need to improve the balance-of-payments position of the United States.
It is useful for both administrative and analytical purposes to divide
U.S. use foreign currencies into two categories:
Excess currencies are the currencies of countries for which the
Treasury Department determines (after reviewing the availabilities
and prospective uses) that the supply is great enough to more than
cover our requirements for the next 2 or 3 years. For 1967, the excess
currency countries are: Burma, Ceylon, Congo (Kinshasa), Guinea,
India, Israel, Pakistan, Poland, Tunisia, United Arab Republic
(Egypt), and Yugoslavia. They are expected to remain excesscurrency countries in 1968.
Separate appropriations for "special foreign currency programs"
have been provided for several years. These appropriations finance
programs which can make good use of excess currencies, and may
include projects of lower priority than those financed through regular
appropriations. The use of these appropriations results in an expenditure being reported for the using agency and a receipt for the Commodity Credit Corporation or other appropriate fund. In addition,
regular appropriations may also be used for payments in excess foreign
currencies, and agencies are encouraged to substitute the use of such
currencies for dollars.
170



171

SPECIAL ANALYSES

Nonexcess currencies are those of all countries not designated as
"excess." In many of these countries, our supply of currencies is
far below our needs, and it is necessary to purchase currencies commercially to meet our requirements. In some of these countries, however, the supply of currencies available for U.S. programs is above our
immediate needs, but not by a great enough amount for the country to
be declared an excess currency country. Special efforts are made to
use these "near-excess" currencies, rather than U.S. dollars, wherever
possible. It is not appropriate, however, to seek additional uses for
such currencies, and they are not available for use under the special
appropriations. The "near-excess" countries currently are: Bolivia,
Brazil, Indonesia, Morocco, Paraguay, Sudan, Syria, and Turkey.
No designation of anticipated "near-excess" countries for 1968 has
been made, and the list is likely to change.
Total availabilities of foreign currencies owned by or in the custody
of the United States are as follows:
Table L-1. CASH AVAILABILITY OF FOREIGN CURRENCIES
(In millions of dollar equivalents)
1966
actual

Currencies owned by the United States:
For U.S. uses:
Excess currencies
Nonexcess currencies.- Subtotal, for U.S. uses
For country uses
Amounts unfunded in Treasury accounts
Total
Currencies held in trust

1967
estimate

1968
estimate

1.624
-

.

1,567

1,835

392

439

440

2.017
2,202
-9

2,006
1.881
-54

2,275
2,049
-67

4.210

3,835

4.257

84

97

97

Need for foreign currencies.—As indicated in table L-2, the need
for foreign currencies in U.S. operations often does not correspond to
their availability on a country-by-country basis. Although the
United States will have over $2 billion available for U.S. programs,
less than $500 million will be in nonexcess currencies. We must,
therefore, purchase over $1.7 billion of currencies to meet our total
requirements. (These figures are based on projections of future
collections and requirements; foreign currency transactions are subject
to more fluctuation and are, generally, less predictable than U.S. dollar
transactions.) In nonexcess currency countries a strong effort is made
in the negotiation of commodity sales agreements to obtain the
maximum amount possible for U.S. uses. Despite this, in the normal
course of its worldwide operations, the Government must purchase
large amounts of many currencies while at the same time it is accumulating large inconvertible balances of others.




172

THE BUDGET FOR FISCAL YEAR

1968

Table L-2. FOREIGN CURRENCIES AVAILABLE TO MEET U.S.
REQUIREMENTS, 1968 (in millions of dollar equivalents)
Requirements
(expenditures)
Country

Supply

Excess currencies:
Burma
Ceylon
Congo (Kinshasa).
Guinea
India
. . . .
Israel
Pakistan . .
Poland.
..
Tunisia
United Arab Republic (Egypt)
Yugoslavia..

15
5
4
10
841
44
178
475
14
160
89

1
3
8
7
2
1
2
8

1
1
1
*
29
12
6
7
1
6
8

13
4
3
9
810
24
165
466
11
153
73

33

71

1,731

7
39
7
7
19
23
8
37

2
7
2
1
5
33
4
18
165

Nonexcess currencies:
BoliviaJ
Brazil 1 .
Canada
France..
Germany, Federal Republic of
Indonesia 1
Italy.
Japan
.
Korea
1
Morocco
Paraguay i .
Philippines
Spain
Sudan 1 . . . . .
.
....
Syria 1
Thailand "
Turkey 1 . .
_
United Kingdom
Vietnam
Other countries

Total . .

Special
programs

1,835

Total, excess currencies

Total, nonexcess currencies

Other
than
special
programs

Amounts Requireavailable ments for
commerfor use
cial
after
purchase
1968
in 1968

9
44
62
142
411
*
72
232
44
6
3
95
43
1
1
85
50
81
402
291

440
2,275

11

23
23

.

1
1

2
5
55
135
392

*
*
*
*
*
*
*
*
*

23
23

65
218
33

17
20
93
36
*
*

i

12

80
17
78
384
140

2,074

3

96

1,733

2,107

74

1.826

1,733

1

*Less than $500 thousand.
1
Currently designated as "near-excess" currency countries, but this designation may not be effective in 1968.

U.S. uses of foreign currencies.—Table L-3 summarizes transactions
of U.S. use foreign currencies. Disbursing officers are required to use
currencies owned by the Government, if they are available, before
purchasing currencies commercially.




173

SPECIAL ANALYSES

Table L-3. SUMMARY OF FOREIGN CURRENCY TRANSACTIONS, U.S. USES
(In millions of dollar equivalents)
1966
actual

Cash balances brought forward:
Excess currencies
Noiiexcess currencies

1967

1968

1.345
91

1,221
61

1,464
66

1,436

1,282

1,530

158
116
26
55

199
144
25
79

184
143
25
81

110

134

163

Subtotal, collections..
Net transfer to country use.

142
608
-27

152
733
-10

160
757
-11

Total availabilities-.

2,017

2,006

2,275

13

14

113
136
133
15
-3

140
141
140
41

140
142
117
42

Subtotal, expenditures 1
Adjustments due to changes in exchange rates.

409
-325

46
7

40
5

Cash balances carried forward

1,282

1,530

,826

Subtotal, cash balances brought forward.
Collections:
Public Law 480 sales
Foreign assistance programs (including special letters of credit).
Interest on public deposits
Other nonloan collections
Loan repayments (principal and interest):
Public Law 480 loans
Foreign assistance loans (including Development Loan
Fund)

Expenditures (deduct):
Foreign currency expenditure authorizations
With dollar credits t o Foreign assistance programs (special letters of credit).
Miscellaneous receipts of the general fund
Commodity Credit Corporation, Agriculture
OtherDeposits for replacement currencies

1
Excludes sales of country-use currencies, subject to later replacement, as follows: 1966, $4 2
million; 1967, $15 million; and 1968, $5 million.

Recommendations for special foreign currency program appropriations
1968.—Most U.S. uses of foreign currencies are covered by unrestricted dollar appropriations. Table L-4 shows the separate appropriations for special foreign currency programs, which are limited to
the use of excess foreign currencies.




174

THE BUDGET FOR FISCAL YEAR 1968

Table L-4. SPECIAL FOREIGN CURRENCY PROGRAM APPROPRIATIONSNEW OBLIGATIONAL AUTHORITY (in thousands of dollar equivalents)
1966
enacted

Library of Congress: Collection and distribution of library
materials
Department of Agriculture: Agricultural Research Service: Salaries and expenses
Department of Commerce:
International activities: Salaries and expenses
Environmental Science Services Administration: Research and development
National Bureau of Standards: Research and technical
services

Department of Defense: Special foreign currency program
_
Department of Health, Education, and Welfare:
Office of Education: Educational research and training..
Office of Vocational Rehabilitation: Research and
training
Public Health Service: Scientific activities overseas
Welfare Administration: Research and training
Department of the Interior: Bureau of Commercial Fisheries: Management and investigations of resources
Department of Labor: Bureau of International Labor
Affairs: Special foreign currency program
Department of State: Acquisition, operation, and maintenance of buildings abroad
Smithsonian Institution: Museum programs and related
research
United States Information Agency:
Salaries and expenses
Special international exhibitions
Total..

1967

estimate

1968
estimate

1,694

2,088

2,584

3,000

4,500

15,400

200

200

200

500

500

750

500

500

500

7,348

16,000

1,000

1,000

4,600

2,000
5,000
1,200

3,000
10,000

5,000
18,685

1,500

1,500

500

100

75

75

6,250

5,025

11,112
154

2,316
10,941
350

34,460

51,068

6,100
10,158
387
87,064

300

6,500
1,300

Foreign currency expenditure authorizations.—The 1967 Foreign
Assistance and Related Agencies Appropriation Act authorized the
expenditure of $1 million in excess currencies for assistance to American schools and hospitals abroad. In addition, excess currencies are
made available under permanent authorizations for purchase of goods
and services in Nepal and for emergency relief assistance in Pakistan.
Some unexpended balances of prior foreign currency expenditure
authorizations remain for Defense family housing. Table L-5 summarizes all transactions under foreign currency authorizations for U.S.
uses which do not require charges to dollar appropriations.




175

SPECIAL ANALYSES

Table L-5. SUMMARY OF FOREIGN CURRENCY AUTHORIZATIONS FOR
U.S. USES (in thousands of dollar equivalents)
1966
actual

New authorizations to spend foreign currency receipts:
Funds appropriated to the President:
Emergency relief.
. . .
Assistance to third countries
. .
American schools and hospitals abroad
Department of State
...

1968
estimate

1967
estimate

21,750

10,609

6,800

625
8,809
3.125
635

1,356
12,080
316

936
7,248
316

13.194

. _.

6.800

13,752

8,500

858

Total authorizations.
Expenditures:
Funds appropriated to the President:
Emergency relief
.
Assistance to third countries
Department of Defense
Department of State. .

3.009
6,600
1.000

1.991
18.901

_
. .. ..

Total expenditures

Country uses.—A far larger amount of foreign currency is used
outside of the appropriations process, as summarized in table L-6,
for loans and grants in the host country for common defense and
economic development.
Table L-6. SUMMARY OF FOREIGN CURRENCY TRANSACTIONSCOUNTRY USES (in millions of dollar equivalents)
1966
actual

Balances brought forward,.

.

Total availabilities

Subtotal, expenditures
Adjustments due to changes in exchange rates..
Balances carried forward




-.
..
..

1,197

789
2

857
6

833
8

791
27

864
8

841
11

1.881

2.049

736
37
12

.

1.008

2,202

_

Subtotal, collections ._ ._
Net transfer from U.S. uses
...

Expenditures (deduct):
Public Law 480 country loans and grants
Public Law 480 loans to private enterprise
Other foreign assistance programs

1968
estimate

1,384

. ._ .

Collections:
Public Law 480 sales
Foreign assistance program. . . _

1967
estimate

641
36
8

568
36
10

786
-409

684

614

1.008

1.197

1,436

176

THE BUDGET FOR FISCAL YEAR 1968

Trust junds.—As a result of international agreements the United
States receives and spends foreign currencies for the benefit of the other
country. These currencies are held in trust funds by the Treasury.
Table L-7 summarizes foreign currency trust fund activity.
Table L-7. SUMMARY OF FOREIGN CURRENCY T R U S T F U N D S
(in millions of dollar equivalents)
1966
actual

1967
estimate

1968
estimate

33

29

64

68

84

97

97

49
-2

68

71

33

29

27

Balances brought forward
New authorizations to spend foreign currency—permanent:
Advances from foreign governments
Total availabilities
Expenditures (deduct):
Advances from foreign governments
Adjustments due to changes in exchange rates
Balances carried forward

Loans.—As a result of various loan programs, the United States has
outstanding loans of over $5 billion equivalent repayable in foreign
currency. Over $3 billion of this is in excess currencies. The loan
repayments and interest are available for U.S. uses. The outstanding
balances are distributed as follows (in millions of dollar equivalents):
Excess currency countries:
Burma
Ceylon
Congo (Kinshasa)
India
Israel
Pakistan
Tunisia
United Arab Republic (Egypt)
Yugoslavia

35
15
10
1,392
261
506
51
368
393

Nonexcess currency countries:
Brazil
China (Taiwan)
Greece
Japan
Morocco
Spain...
Turkey.
Other...
Total.

Total.
Grand total




103
188
123
102
195
229
379
747
2,066

3,031
5,097

SPECIAL ANALYSIS M
INTERNATIONAL TRANSACTIONS OF THE FEDERAL GOVERNMENT

As part of a wide range of efforts to reduce the continuing deficits
in the U.S. balance of international payments, the Federal Government carries on a special program to minimize any adverse effects of
its activities on the balance of payments. Under this program,
agencies with substantial receipts or payments abroad keep their
international transactions under close scrutiny. Twice each year
they prepare statistical estimates of their transactions. The Bureau
of the Budget reviews these estimates to determine whether all
possible actions are being taken to reduce payments and increase
receipts.
Since this system is used primarily as a management tool, forward
estimates are not confined to projections of current trends or programs, but rather reflect all possible efforts, consistent with the
national interest, to minimize payments and to maximize receipts
from activities in other countries.
This special analysis presents a summary of the international
transactions of the Federal Government for fiscal years 1966-68
based on estimates made in September 1966, revised where necessary
for comparability with the 1968 budget.
MAJOR TRENDS

On the basis of current estimates, net Federal payments abroad,
excluding special transactions, will increase by $500 million between
1966 and 1967 and then decrease by $335 million in 1968 (see table
M-l).
Gross Federal payments abroad are expected to increase from $5.1
billion in 1966 to $5.9 billion in 1967 and to remain at that level in
1968. The increase in expenditures is entirely for (1) defense purposes, (2) interest on the public debt held abroad, and (3) payments
to international institutions to carry out prior commitments.
Gross receipts, excluding special transactions (such as prepayments
on loans, sales of loans, negotiated sales of special securities, and
advances received on military sales) are expected to rise from the
1966 level of about $2.3 billion to $3.0 billion in 1968.
Table M-1. SUMMARY OF INTERNATIONAL TRANSACTIONS OF THE
FEDERAL GOVERNMENT (in millions of dollars)
1968
estimate

1966
estimate

5,052
2,276

Excess of payments
1

5,922
2,646

5.947
3,006

2,776

Payments
Receipts *

1967
estimate

3,276

2,941

Excluding special transactions.
255-300 0 — 6 7




12

177

178

THE BUDGET FOR FISCAL YEAR 1968

Trends by agency.—Table M-2 provides a breakdown of total
current receipts and payments figures. Agencies which account for
the bulk of the Federal Government's international transactions are
separately identified.
Table M-2. INTERNATIONAL TRANSACTIONS OF THE FEDERAL
GOVERNMENT—BY MAJOR AGENCY (in millions of dollars)
Description

Payments:
Department of Defense
Treasury Department
Agency for International Development
Department of State
Department of Health, Education, and Welfare
Veterans Administration
Atomic Energy Commission
Other
Subtotal
Deduct: Unfunding of previously reserved foreign currency
accounts
Total

1

Receipts:
Department of Defense
Export-Import Bank
Department of Agriculture
Agency for International Development
Treasury Department
Panama Canal
Other
Subtotal
,
Deduct: Transactions reported by more than one agency
Total 1
Receipts from special transactions (not included in receipts
above):
Advances received on military exports, net
Sales of medium-term, nonmarketable securities, net
Prepayments and sales of loans
Total, special transactions 1
1

1966
estimate

1967
estimate

1968
estimate

3,189
626
503
247
160
69
56
244

3.974
746
378
256

,019
775
319
262

166
78
28

174

311

85
9
309

5,094

5,937

5,952

42

15

5

5,052

5,922

5,947

1,095
493
262
183
181
73
113

,256
630
294
203
292
78

1,335
1,028
327
212
224
81

2,400
124

2,841
195

3,298
292

2,276

2,646

3.006

57
-106
205

301
-13
425

-126

156

713

-129

91

-50
47

Excludes payments and receipts in excess and near-excess foreign currencies.

Payments.—Estimated increases of $830 million by the Department of Defense and $149 million by the Treasury Department dominate the prospective trend in payments during 1966-68.
The Defense increase is largely the result of increased activities in
Southeast Asia. The Department will continue its efforts to limit its
expenditures abroad while maintaining all necessary combat capabilities in 1967 and 1968.
The Treasury Department makes substantial payments not readily
subject to administrative controls. These include especially (1)
interest on the public debt held abroad, and (2) U.S. contributions
to international financial institutions. (The balance-of-payments



SPECIAL ANALYSES

179

impact of these contributions occurs when the disbursement requirements of these institutions make it necessary to convert their U.S.
Government notes and letters of credit into cash.) Increased payments to the International Development Association in 1967 and to
the Inter-American Development Bank and to foreign holders of U.S.
debt in 1967 and 1968 account for the increases during the 2-year
period.
Payments abroad by the Agency for International Development will
continue to decline, largely because of special efforts to assure that,
wherever possible, loans and grants abroad are tied directly to procurement in the United States. Except for limited procurement in
some developing countries, the general policy of AID is to prohibit
the use of foreign economic assistance funds to purchase any goods
abroad. In 1968, AID will purchase more than 97% of its commodity
requirements in the United States.
Overseas payments by the Department of State will be somewhat
higher in both 1967 and 1968 primarily because of increased U.S.
contributions to international organizations.
Overseas payments by the Department of Health, Education, and
Welfare and the Veterans Administration will also increase between
1966 and 1968. Annuities, pensions, and other transfer payments not
readily subject to administrative controls account for about 84% of
the HEW payments. The VA payments abroad are mostly for compensation and pensions; the expanded veterans programs in the Philippines provided by recently enacted legislation are responsible for most
of the rise.
Payments by the Atomic Energy Commission will continue to decline sharply because of scheduled decreases in the procurement of
uranium concentrates from foreign countries. The United States
expects to terminate its procurement of foreign uranium in 1967.
Receipts.—The increase of $730 million estimated in receipts over the
1966-68 period arises largely from larger loan and interest payments
to the Export-Import Bank and higher Department of Defense sales
of military equipment to friendly governments.
Special transactions—which are not included in the totals just
discussed—will provide large additional receipts in 1966-67, especially
in 1967. Such transactions involve advances or loans which are
generally negotiated with foreign governments or official monetary
authorities. They include (1) advance payments by foreign governments for military exports, (2) sales of nonmarketable, medium-term
securities by the Treasury Department to foreign central banks, (3)
sales of loans, and (4) repayment of loans before they are due.
The large bulge in these receipts in 1967 is due to loan prepayments
by France and Germany and to timing of German payments under the
current offset agreement. Military exports that had been paid for in
prior years and net redemptions of medium-term, nonmarketable securities account for the excess of payments over receipts in 1968 from
such transactions.
Geographical distribution.—Table M-3 shows a distribution of
receipts and payments by major geographic area.
Receipts from Western Europe (excluding special transactions,
most of which are with Western Europe) are estimated to increase
by $285 million from 1966 to 1968 in contrast to a $121 million increase



180

THE BUDGET FOR FISCAL YEAR 1968

in payments. All other receipts from overseas are expected to rise by
$445 million during the same period, while payments will rise even
more—by $773 million.
Table M-3. DISTRIBUTION OF INTERNATIONAL TRANSACTIONS OF THE
FEDERAL GOVERNMENT, BY GEOGRAPHIC AREA (in millions of dollars)
1966

Payments:
Western Europe (including international organizations located
there)
Other countries . -

1968

_.

Total
Receipts:1
Western Europe (including international organizations located
there)
Other countries
._ ._
Other international and undistributed
Total

2,040
2,648
364

2,232
3,196
494

2,161
3,265
520

5,052

5,922

5,947

1,117
1,150
9

1,451
1,187
8

1,402
1,596
8

2,276

..

Other international and undistributed

1

1967

2,646

3,006

Excluding special transactions.

Payments by type of transaction.—Between 1966 and 1968, increases
in Federal payments abroad will occur primarily in purchases of goods
and services for use abroad, in U.S. payroll spent abroad, and in investments in international organizations. Increased Department of Defense expenditures for Vietnam largely account for the first two.
Table M-4. DISTRIBUTION OF FEDERAL PAYMENTS ABROAD BY TYPE
OF TRANSACTION (in millions of dollars)
Description

1966
estimate

1967
estimate

1968
estimate

U.S. payroll—amount estimated to be spent abroad. __
Goods and services purchased abroad for use abroad !_ _
Other purchases of goods and services
Grants (amounts for use abroad) 2
Pensions and similar transfer payments.. . . . .
Loans and investments (amounts for use abroad) 2
Other

1,151
2,392
161
592
293
147
528

1,326
3,009
175
496
322
289
491

1,385
3,006
139
469
334
231
572

Subtotal
Deduct:
Payments in excess and near-excess foreign currencies 3 .
Unfunding of previously reserved foreign currency accounts.--

5,264

6,108

6,136

170
42

171
15

184
5

Total, payments affecting the balance of payments

5,052

5,922

5,947

1
2

..

Includes Defense procurement, including military assistance.
Excludes funds tied to procurement in the United States, or which are otherwise not currently
available for use abroad.
3 See Special Analysis L for definitions of excess and near excess currencies. Since use of these
currencies does not increase the flow of dollars abroad, they are deducted in calculating the effect of
the Federal Government on the balance of payments. These figures are estimated on a slightly
different basis in Special Analysis L, which reflects certain payments not covered in agency estimates
of international transactions.




SPECIAL ANALYSES

181

RELATION TO THE BUDGET

Reports on international transactions do not, in all cases, flow
directly from the accounting system used for the administrative
budget or trust funds. In some instances they are estimated separately to show all Government receipts or payments which enter
the balance of payments. The major differences between data on
international transactions and administrative budget and trust fund
totals are:
1. Coverage.—Data on international transactions exclude all budget
and trust fund transactions that are within the United States. For example, the administrative budget includes all expenditures for foreign
assistance and Department of Defense procurement, while such payments are included as international transactions only to the extent
that the procurement is estimated to take.place abroad. On the other
hand, budget and trust figures exclude all transactions in U.S. Government debt whether domestic or international. But sales of special
Treasury securities overseas and other international debt operations
are included in reports on international transactions.
2. Estimated basis of international transactions.—No separate detailed accounting system has been established for international transactions comparable to that which supports administrative budget
and trust fund totals. In many cases, it is necessary to estimate the
overseas components of transactions, since these components are not
shown directly by accounting data. For example, budget accounts
provide precise data on the gross amount of salaries paid in a given
overseas area, but do not identify the amount actually spent overseas
by employees—which is the relevant statistic for balance-of-payments
purposes. Thus, international transactions are a combination of
actual accounting reports and estimates.
3. Timing.—International transactions are recorded at the time
when they are known or estimated to affect the balance of payments.
The time at which a given international transaction is counted may,
therefore, vary considerably from the time at which it is shown in
the budget and trust fund accounts. For example, in some cases
the U.S. Government has made contributions to international organizations in the form of non-interest-bearing notes. These notes were
shown as administrative budget expenditures when issued, but as
international payments only when they are cashed.
RELATIONSHIP TO BALANCE-OF-PAYMENTS STATISTICS

Data on Federal receipts and payments abroad are also reflected
in the balance-of-payments statistics published by the Department
of Commerce. However, as with the administrative budget, the
balance-of-payments statistics are designed for purposes which are
different from those for which the Government agency reports on
international transactions have been established. Balance-of-payments data meet the needs for economic analysis and for the measurement of international flows of real resources and money, while agency
reports on international transactions serve both as a means of esti


182

THE BUDGET FOR FISCAL YEAR 1968

mating and as a management tool for decreasing the balance-ofpayments impact of Federal Government programs.
Because the two compilations are intended to serve different purposes, the published presentations are very different from one another.
The basic difference arises from the fact that the balance-of-payments
statistics are comprehensive records of the United States private and
Government international transactions, real and financial, while the
data in this analysis are a record of the financial payments and receipts
attributed to the Government. The figures in this special analysis of
Federal overseas transactions, therefore, cannot be directly derived
from the published balance-of-payments statistics. The major differences between the two sets of data are:
1. Classification.—This analysis uses classifications by agency and
by types of expenditures which are quite different from the broad
functional classifications used for the balance-of-payments statistics.
For example, certain contributions to international organizations are
treated as grants in this analysis, but are treated as purchases of services in the balance-of-payments statistics.
2. Attribution.—Foreign transactions conducted by private businesses, in which the Federal Government is involved, 1 are generally
treated as private in the balance-of-payments statistics. In order to
emphasize management decisions, however, this analysis attributes
some such transactions to the Federal Government. For example,
sales of military goods to foreign governments made directly by private
companies are encouraged and sponsored by the Department of
Defense. In the balance-of-payments, such sales are reported as
private receipts from exports. However, for the purpose of measuring
the Department of Defense impact on international transactions,
some of them are included as Government receipts in this analysis.
3. Other.—Some Government transactions, such as merchandise
exports and imports, are separately identified in this analysis but are
combined with similar private transactions in the balance-of-payments
statistics. Further differences between the two sets of data are in the
timing of certain transactions, the reporting of foreign currencies, and
the coverage of transactions which are considered "foreign."
The balance-of-payments statistics do not include separate identifiable categories for all types of Federal receipts and payments. Table
M-5 shows the principal differences between the 1966 estimates in
this analysis and the total Government transactions (including some
transactions not separately identified) in the balance-of-payments
data. A more detailed reconciliation is available upon request.
1
Foreign expenditures of U.S. private firms operating under contract with the Department of
Defense are included as Government transactions in the balance-of-payments statistics.




183

SPECIAL ANALYSES

Table M-5. GOVERNMENT PAYMENTS AND RECEIPTS—RECONCILIATION BETWEEN THE BALANCE-OF-PAYMENTS STATISTICS * AND
ESTIMATES OF INTERNATIONAL TRANSACTIONS IN THIS ANALYSIS
(in millions of dollars)
Description

1966

Payments, in table M-2
Add:
Foreign currency payments involving no direct dollar outflow.
Subtotal, in table M-4
Add:
Grants and loans involving no direct dollar outflow.
Other (net)
Total: Payments in balance-of-payments statistics.
Receipts, in table M-2:
Regular transactions.
Special transactions..
Total.
Add:
Transactions under grant and loan programs involving no direct dollar inflow (imputed
receipts)
Excess and near-excess foreign currency receipts involving no direct dollar inflow
Other (net)
Deduct:
Commercial exports arranged by the Departments of Defense and Agriculture.
Total: Receipts in balance-of-payments statistics
1

U.S. Department of Commerce, "Survey of Current Business," December 1966, pp. 16—33.




5.052
212
5.264
3.752
152
9.168
2,276
156
2.432
246
379
26
479
2,604




INDEX
Administrative budget:
Expenditures:
Applicable receipts, text and table B-7,
21-22
By function, summary, table A-2, 7
Investment, operating and other, table D 2, 39r52
Explanation of, 5-7
Receipts, by source, summary, table A-2, 7
Receipts, exclusions, text and table B-8,
22-23
Relation of, to consolidated cash statement
and national income accounts, 1966-68,
text and table A-1, 6, 8-10
Agriculture, Department of, research and development expenditures analysis, 134-135
Aid to State and local governments:
Analysis, 145-161
Expenditures:
By agency, text and table J-5,152
In relation to total Federal expenditures
and to State-local revenue, table J-2, 148
Summary, text and table J—10. 156-161
Loans and repayable advances, by program
and by agency, text and table J-7, 153-154
Number of authorizations in effect, by functional category, at specified dates, text and
table H , 150
Payments in urban areas, by program, text
and table J-«, 154^56
Percentage distribution, by function, 1950—
68, text and table J-l, 147
Percentage distribution of Federal, State, and
local direct spending for domestic programs, text and table J-3, 148-149
Regional distribution, fiscal year 1965, text
and table J-5, 156-157
Types of Federal aid, by function, text and
table J-6. 153
Annexed budgets, expenditures and applicable
receipts, text and table B-7, 21-22
Atmospheric sciences research and development, obligations of agencies by functional
area, text and table 1-8, 136-137
Atomic Energy Commission, research and development expenditures, text and table 1-7,
132-133
B
Balance of payments, analysis, 177
Balance of payments statistics and agency estimates of international transactions, reconciliation, text and table M-5, 181-183
Balances, public enterprise funds, table B-3, 18




Balances, trust fund, June 30, table B-6, 20
Borrowing by Government enterprise funds,
text and table B-10, 24-25
Budget, U.S., types of accounts, explanation
of. 5-13
C
Census, 19th Decennial, 169
Commerce, Department of, research and development expenditures, 135
Compensation, Federal personnel, text and
table C-3, 31-32
Consolidated cash statement:
Derivation of totals, table A-3, 8
Explanation of, 7-10
Intragovernmental transactions excluded
from, table A-4, 9
Relation of, to administrative budget and
national income accounts, 1966-68, table
A-1 and text, 6,8-11
Construction by cooperative and nonprofit
groups, Federal expenditures for, text and
table F-7. 79-80
Credit programs, Federal:
Analysis, 57-70
Disbursements and repayments, by agency or
program, text and table E-3, 62—64
Interest rates and maturities, by agency or
program, December 1966, text and table
E-5, 65-67
Loans outstanding, by agency or program,
text and table E-2, 60-62
Loans outstanding, major quasi-public programs, by agency and program; text and
table E-6, 67-68
New commitments, by agency or program,
text and table E-1, 59-60
New legislative authorization, 68-70
Private participation in, text and table E-4,
64-65
Sales of loans, direct and participation, by
agency or program, text and table E-4,
64-65

D
Debt issuances, by Government enterprises,
text and table B-10, 24-25
Debt issuances in lieu of checks, 9
Defense, Department of—Military, research
and development, obligations and expenditures for. 1966-68, text and table 1-5,129-130
Defense, national, public works, NOA and
expenditures, by major function and agency,
table F-8. 86
Demographic statistics programs, 164-167
185

186

T H E BUDGET FOR FISCAL YEAR

Disbursements, major credit programs, by
agency or program, text and table E-3, 62-64

Economic opportunity statistics, 167
Education statistics, 166
Education and training programs:
Aid to students, graduate and professional,
by agency and type of aid, text and table
G-3, 97-98
Analysis, 87-109
Expenditures and NOA:
By agency, text and table G-1, 91-94
By category or type of aid, text and table
G-2, 94-95
By functional category and by agency,
text and table G-4, 96-97, 101-109
Related programs, discussion, 100
Employment, Federal civilian:
Analysis, 17-34
By geographical location, as of June 1966,
text and table C-2, 30
Comparison of current estimates for 1967
with estimates in 1967 budget, text and
table, 27T29
Compensation and benefits, text and table
C-3, 31-32
In relation to population and other Government employment, 1942-68, table C-4,
33-34
Summary, full-time permanent, as of June
1966-68, table C-l, 28
Trends in workload and numbers, 32-33
Expenditures:
Annexed budgets, text and table B-7, 21-22
Construction by cooperative and nonprofit
groups, text and table F-7, 79-80
Gross:
Analysis, 23-26
Government-administered funds, text and
table B-9. 23-24
Public enterprise funds, by agency, table
B-l, 14-15
Trust revolving funds, table B-5, 20
Investment, operating, and other, analysis,
35-56
Investment, operating, and other, summary,
table D-l, 36
National income accounts, by category,
table A-5. 11
Relation of, in administrative budget, consolidated cash statement, and Federal sector of national income accounts, 1966-68,
tableA-1.6
Summary, by functions, table A-2, 7

Federal aid programs, see under Aid
Federal financial transactions, three measures
of. 5-13
Foreign currencies:
Availabilities and uses, analysis, 170-176
Available to meet U.S. requirements, text and
table L-2. 171-172
Cash availability of, 1966-68, table L-l, 171




1968

Foreign currencies—Continued
Special program appropriations—NOA, text
and table L-4, 173-174
Summary of authorizations, U.S. uses, text
and table L-5, 174-175
Summary of transactions, country uses, text
and table L-6, 175
Summary of transactions, U.S. uses, 1966-68,
text and table L-3, 172
Trust funds, summary, text and table L-7,
176
G
Government-administered funds, gross expenditures of, text and table B-9, 23-24
Government-administered funds, purchases of
U.S. securities, text and table B-l 1, 25-26
Government civilian employment, Federal,
State and local, in relation to population,
1942-68, text and table C-4, 33-34
Government enterprises, borrowing by, text
and table B-10, 24-25
Grants and loans, public works, expenditures
and NOA, by agency, text and table F-3, 73

H
Health, Education, and Welfare, Department
of, research and development analysis,
133-134
Health and related programs:
Analysis, 110-122
Expenditures:
By agency, text and table H-1, 113-114
By category, text and table H-2, 115-117
By functional program and by agency,
table H-5, 120-122
Health care, by agency and by population
age group, text and table H-4, 117-119
Research, by agency, text and table 1-9
137-138

Statistics, 164, 166
Hospitals, Federal, operating beds and patient
loads, by agency, table H-3, 117
Housing statistics, 168

I
Interest payments, table D-2, 52
Interest rates and maturities, major credit
programs, by agency or program, December
1966, text and table E-5, 65-67
International transactions:
Analysis, 177-183
By major agency, table M-2, 178
Distributed by geographic areas, text and
table M-3. 179-180
Federal payments abroad, by type of transaction, table M-4, 180
Reconciliation of estimates of, with balance
of payments statistics, text and table
M-5, 181-183
Relation to the Budget, 181
Summary, text and table M-1, 177
Interior, Department of the, research and
development expenditures, analysis, 135

INDEX
Intragovernmental funds, reimbursement from
non-Federal sources, text and table B-8,
22-23
Intragovernmental transactions excluded from
consolidated cash statement, table A-4, 9
Investment, operating, and other expenditures:
Analysis, 35—56
By kind, agency, and program, table D-2,
39-56
Summary, table D-1, 36
Investment in U.S. securities, Government
administered funds, text and table B-l 1, 2526
L
Labor statistics programs, 163-164
Legislation proposed, 119
Loans, see also Credit programs
Loans and repayable advances to State and
local governments, by program and by
agency, text and table J-7, 153-154

M
Marine science and technology, program plan,
by agency, text and table 1-11, 140
Marine science and technology, research and
development expenditures, text and table
1-10, 138-140
Mixed-ownership credit programs, loans outstanding, text and table E-6, 67-68

N
National Aeronautics and Space Administration, research and development expenditures, text and table 1-6, 130-132
National defense, public works, 79
National economic accounts, 168
National income accounts, Federal sector:
Explanation of, 10-13
Receipts and expenditures, table A-5, 11
Relation of, to administrative budget and
consolidated cash statement, 1966-68,
table A-l and text, 6, 10-11
National Science Foundation, basic research
expenditures, analysis, 134
New obligational authority:
Public enterprise funds, by agency, table
B-2. 17
Public works, by major function and agency,
table F-8, 80-86
Space programs, by agency, table 1-12, 140-

141
Special foreign currency programs, table
L-4.174
P
Participation sales fund, table D-2, 52
Participation sales of loans, major Federal
credit programs, text and table E-4, 64-65




187

Payments, Federal:
Abroad, by type of transaction, table M-4,
180
International transactions, by agency, text
and table M-2, 178-179
International transactions, by geographic
area, table M-3, 180
Payments to the public, consolidated cash
totals, table A-3, 8
Personnel, Federal, compensation and benefits,
text and table C-3, 31-32
Personnel, Federal, total, text and table, 29
Population statistics, 164
Poverty program statistics, 167
Price indexes, 167
Public enterprise funds:
Analysis of, 14-26
Balances, table B-3, 18
Gross expenditures and applicable receipts,
by agency, text and table B-l, 14-15
NOA and writeoffs, by agency, table B-2, 17
Public works:
Analysis, 71-86
Civil, direct, estimated cost, 1968, for continuing and new work, text and table F-4,
74-75
Civil, expenditures and NOA, by major function and agency, table F-8, 80-86
Construction by cooperative and nonprofit
groups, expenditures for, text and table
F-7, 79-80
Defense, NOA and expenditure?, by major
function and agency, table F-8, 86
Direct expenditures and NOA, by agency,
text and table F-2, 72
Expenditures, 1959-68, text and table F-1, 71
Grants and loans, expenditures and NOA, by
agency, text and table F-3, 73
National defense, 79
Reserve of authorized projects and programs
for undertaking after 1968, by agency, text
and table F-5, 76
Water resources and related developments,
expenditures for, text and table F-6, 77-78
Purchases of U.S. securities by Government
administered funds, text and table B-11,
25-26
R
Receipts:
Annexed budgets, text and table B-7, 21-22
International transactions, by geographic
area, table M-3, 180
International transactions, by major agency,
table M-2, 178
National income accounts, Federal sector, by
source, table A-5, 11
Public enterprise funds, by agency, text and
table B-1, 14-15
Relation of, in administrative budget, consolidated cash statement, and Federal
sector, national income accounts, table
A-1.6
Summary, by source, table A-2, 7

188

T H E BUDGET FOR FISCAL YEAR

Receipts from the public, consolidated cash
totals, table A-3, 8
Reimbursements from non-Federal sources
credited to appropriations and intragovernmental funds, table B-8, 22-23
Repayments, by agency or program, text and
table E-3, 62-64
Research, basic, obligations and expenditures
for, by agency, text and table 1-3, 127
Research, medical and health-related, expenditures for, text and table 1-9, 137-138
Research and development:
Analysis, 123-144
Atmospheric sciences, obligations of agencies
by functional area, text and table 1-8,
136-137
Atomic Energy Commission, text and table
1-7,132-133
Defense, Department of—Military, text and
table 1-5, 129-130
Expenditures, by agency, 1954-68, table 1-14,
143
Expenditures, by agency, 1966-68, table
1-15, 144
Facilities for, obligations and expenditures, by
agency, text and table 1-4, 128
Marine sciences and technology, text and
tables 1-10, 1-11,138-140
Medical and health-related, text and table
1-9, 137-138
National Aeronautics and Space Administration, text and table 1-6, 130-132
Obligations and expenditures, by agency,
text and tables 1-1. 1-2, 125-127
Space programs, NOA and expenditures, by
agency, text and table, 1-12, 140-141
Water research and survey, obligations for,
by agency, text and table 1-13, 141-142

19 6 8

Statistical programs:
Analysis, 162-169
Obligations for, by broad subject areas,
text and table K-1, 162-163
Obligations for, current and periodic, by
agency, table K-2, 165
Student aid programs, 1956-67, table, 99

Teacher training, aid for, 1956-67, table, 99
Training, see Education and training
Transportation, Department of, research and
development, 135-136
Trust funds:
Analysis, 19-21
Balances, June 30, table B-6, 20
Expenditures:
Aid to State and local governments, by
type, function, agency and program,
table J-10, 156-161
By function, summary, table A-2, 7
By fund, table B-4, 19
Investment, operating, and other, table
D-2, 53-56
Foreign currency, summary, text and table
L-7, 176
Receipts, by fund, table B-4, 19
Receipts, by source, summary, table A-2, 7
Revolving, expenditures and applicable receipts, table B-5, 20

U
Urban areas, Federal aid payments in, by program, text and table J-8, 154-156

Vocational education, 1956-67, table, 99
Sample Household Survey, 1968, 169
Science information activities, 142
Securities, U.S., purchases, of by Governmentadministered funds, table B-11, 25-26
Social statistics programs, 164-167
Space programs, NOA and expenditures, by
agency, table 1-12, 140-141
State and local governments, aid to, see under
Aid




W
Wage statistics, 163-164
Water research, obligations, by agencies, text
and table 1-13, 141-142
Water resources development, expenditures for,
text and table F-6, 77-78
Welfare statistics, 166-167

O





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