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FISCAL YEAR 1 9 7 6

ERRATUM
Insert missing chart Q-l on page 2(38 of Special Analysis Q.

Environmental Outlays, by Category, 1971-1976
$Billions

S Billions

6
Protection and Enhancement

-5

Understanding, Describing and Predicting

5—

Pollution Control and Abatement
A

3—

O —

I—

(971

1972

1973

1974

1975

FISCAL YEAR 1 9 7 6

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THE BUDGET DOCUMENTS
Data and analyses relating to the budget for 1976 (and for the
3-month transition period, as applicable) are published in four
documents:
The Budget of the United States Government, 1976 contains the information that most users of the budget would normally need, including
the Budget Message of the President. The Budget presents an overview
of the President's budget proposals which includes explanations of
spending programs and estimated receipts. This document also contains a description of the budget system and various summary tables
on the budget as a whole.
The Budget of the United States Government, 1976—Appendix contains detailed information on the various appropriations and funds
which comprise the budget.
The Appendix contains more detailed information than any of the
other budget documents. It includes for each agency: the proposed
text of appropriation language, budget schedules for each account,
explanations of the work to be performed and the funds needed, proposed general provisions applicable to the appropriations of entire
agencies or groups of agencies, and schedules of permanent positions.
Supplemental proposals for the current year and new legislative
proposals are identified separately. Information is also provided on
certain activities, whose outlays are not part of the budget totals.
Special Analyses, Budget of the United States Government, 1976
contains 17 special analyses that are designed to highlight specified
program areas or provide other significant presentations of Federal
budget data.
This document includes analytical information about: Government
finances and operations as a whole and how they affect the economy;
Government-wide program and financial information for Federal
education, manpower, health, income security, civil rights, and crime
reduction programs; trends and developments in the areas of Federal
aid to State and local governments, research and development, and
environmental protection.
The United States Budget in Brief, 1976 provides a more concise, less
technical overview of the 1976 Budget than the above volumes.
Summary and historical tables on the Federal budget and debt are
also provided, together with graphic displays.
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.

TABLE OF CONTENTS
PART 1. ECONOMIC AND FINANCIAL ANALYSES
A. Federal transactions in the national income accounts
B. Funds in the budget
.
C. Borrowing, debt, and investment
D. Investment, operating, and other budget outlays
E. Federal credit programs. _ _
__
F. Tax expenditures
G. Principal Federal statistical programs.
__
H. Civilian employment in the executive branch

PART 2. FEDERAL SOCIAL PROGRAMS

_
._
. _

I. Federal education programs
__ _ _
J. Federal manpower programs. _
K. Federal health programs
.
_ _ __ _ __
L. Federal income security programs
.
_
M. Federal civil rights activities._ _ _ _ _ _
N. Federal programs for the reduction of crime
PART 3. SPECIALIZED ASPECTS A N D VIEWS OF F E D E R A L PROGRAMS
0 . Federal aid to State and local governments
_
P. Federal research and development programs
_ ___ _
Q. Federal environmental programs.
._ _
_____

Page
5
_
7
28
39
58
82
101
118
130

137
_ _ _

139
156
169
197
209
222
233
235
252
268

PART 1

ECONOMIC AND FINANCIAL
ANALYSES

INTRODUCTION
Part 1 provides analyses and tabulations which cover Government
finances and operations as a whole, and reflect the ways in which Government finances affect the economy. These special analyses encompass those designated A through G.
Special Analysis A presents the Federal budget estimates in terms
of the national income accounts. It is designed to explain the relationships of the unified budget of the Federal Government to the national
income accounts, which constitute the most widely used measure of
aggregate economic activity in the United States.
Special Analysis B classifies budget information by the groups of
funds (Federal and trust) which comprise the budget.
Special Analysis C summarizes current developments and trends in
Federal borrowing, debt, and interest, and the investment of Federal
and trust funds in Federal securities. It includes a summary of both
Federal and federally assisted borrowing from the public to display
some measure of the Government's impact on the credit markets.
Special Analysis D classifies budget outlays in terms of the duration
and nature of the benefits derived, distinguishing those of an investment or development type from those which primarily yield current
benefits. Apart from this analysis the U.S. budget, unlike those of
some other governments, includes outlays which are for "capital" or
investment-type activities in the same accounts in which "current"
activities and costs are shown.
Special Analysis E covers Federal credit programs—direct loans,
guarantees of private loans, and loans of federally sponsored credit
agencies. It includes an analysis of loan subsidy costs, and provides
an aggregate measure of total credit supplied to the public under
Federal auspices.
Special Analysis F provides an enumeration of lost revenues due to
provisions of the Federal income tax laws that allow a special
exclusion, exemption, or deduction from gross income or that provide
a special credit, preferential rate of tax, or deferral of tax liability.
Special Analysis G reflects the year-to-year level of activity under
the principal programs of the Federal Government for collecting
current statistics, and current spending for periodic statistics obtained
in census-type surveys usually conducted every 5 or 10 years.
Special Analysis H deals with the levels of civilian employment in
the executive branch. It also contains figures on total Federal personnel costs (including military personnel).

SPECIAL ANALYSIS A
FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS

The budget is designed to serve several purposes:
• It is an economic document that reflects the taxing and spending
policies of the Government for promoting economic growth, high
employment, relative price stability, and a strong balance-ofpayments position.
• It proposes an allocation of resources between the private and
public sectors, within the public sector, and—through its impact
on consumption and investment decisions and the distribution
of income—within the private sector.
• It sets forth the President's request to Congress for appropriation action on existing or new programs and for changes in tax legislation.
• It is a report to the Congress and the people on how the Government
has spent the funds entrusted to it in past years.
No single budget concept can satisfy all these purposes fully. The
budget document and related Treasury reports provide complete,
detailed information on the finances of the Federal Government. For
study of aggregate economic activity, however, the national income
accounts (NIA) of the United States provide the most important
measures.
This special analysis shows the Federal budget as measured in the
national income accounts. The analysis is divided into three major
sections. The first shows the size, composition, and trends in Federal
sector receipts and expenditures. It contains only a limited discussion
of program detail, since this is available—on a unified budget basis—
in the budget document and other special analyses. Additional detail
on an NIA basis will be published in the February 1975 issue of the
Survey of Current Business. The second section, which is being added
in this special analysis, shows quarterly estimates of Federal sector
receipts and expenditures seasonally adjusted at annual rates (see
table A-7), and the third section of the anatysis explains the major
differences between the budget and NIA concepts. For a discussion of
fiscal policy, see Part 1 of the budget (the Budget Message) and the
Economic Report of the President.
FEDERAL SECTOR RECEIPTS AND EXPENDITURES

Table A-l shows Federal sector NIA receipts, expenditures, and
deficits for 1974-76. The Federal sector deficits in 1975 and 1976 are
expected to increase significantly due primarily to (a) the f alloff of receipts associated with the slowdown in economic activity; (b) proposed
tax changes that will reduce receipts in order to stimulate the economy;
(c) automatic increases in spending in response to the higher unemployment rates; and (d) recently enacted increases in spending
designed to alleviate the impact of unemployment and to provide
additional jobs. Table A-3 shows the impact of the President's tax
proposals and associated spending.
7

THE BUDGET FOR FISCAL YEAR 1976

Trends in Federal sector receipts.—Table A-l shows receipts
divided into four major categories.
Table A-1. FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL
INCOME ACCOUNTS (in billions of dollars)
1974
actual

Description

1975
estimate

1976
estimate

Change,
1974 to
1976

123.1
45.6
21.6
83.3

122.1
41.0
33.1
91.4

111.1
39.9
54. 7
99.4

-12.0
—5.7
33.1
16.1

273.6

287.6

305.1

31.5

110.3
(75.4)
(34.9)
104.2
(101.3)
(2.9)
41.5
17.4

121.1
(80.3)
(40.8)
131.7
(128.2)
(3.5)
47.0
19.8

136.1
(90.9)
(45.2)
147.0
(143.0)
(4.0)
50.8
23.0

25.8
(15.5)
(10.3)
42.8
(41.7)
(1.1)
9.3
5.6

RECEIPTS

Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance
Total receipts

EXPENDITURES
Purchases of goods and services
Defense
_
Nondefense
_
Transfer payments
_-_
Domestic ("to persons")
_._
Foreign
_
Grants-in-aid to State and local governments
__
Net interest paid
Subsidies less current surplus of Government enterprises.
_
__.
Wage disbursements less accruals

4.7
.2

3.7
.4 .

4.1

-.6
-.2

Total expenditures _

278.3

323.7

361.0

82.7

Surplus or deficit ( - )

-4.7

-36.1

-55.9

-51.2

The largest receipt category—personal tax and nontax receipts—is
composed primarily of individual income taxes but also includes
estate and gift taxes and some miscellaneous receipts. Increases in
income—because of both real growth and inflation—automatically
increase these receipts. Since personal income taxes are progressive,
these receipts normally grow at a faster rate than personal income.
However, tax reductions enacted in the past two decades have offset
virtually all the increase in effective tax rates resulting from the
progressive tax structure. This is illustrated in the table below, which
shows Federal sector receipts at 10-year intervals as a percent of
gross national product (GNP). Despite significant income tax reductions over the years, personal taxes were equal to the same percentage
of GNP in 1973 as 10 and 20 years earlier.
Table A-2. FEDERAL SECTOR RECEIPTS AS A PERCENT OF GNP
Description

Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals.
Contributions for social insurance
Total receipts

1953

1963

1973

8.7
5.5
3.0
2.0

8. 7
4. 1
2. 6
3. 9

8.7
3.4
1.7
5.9

19.3

19.2

19.6

SPECIAL ANALYSES

The President's fiscal and energy proposals will significantly alter
the composition of Federal sector receipts. The proposals to stimulate
the economy will reduce personal and corporate taxes by $17.8 billion
in 1975 and 1976 combined. The proposals to reduce energ}^ consumtion will increase indirect business taxes by $31.2 billion in 1976, but
this will be offset by decreases in personal and corporate taxes and
by increases in Federal spending.
Table A-3. IMPACT OF THE PRESIDENT'S FISCAL AND ENERGY
PROPOSALS IN NIA TERMS
(in billions of dollars; seasonally adjusted at annual rates)
Description

JanuaryJune
1975
estimate

JulyDecember
1975
estimate

JanuaryJune
1976
estimate

Fiscal stimulus:
Personal tax and nontax receipts
Corporate profits tax accruals

—10.2
—3.2

—14.6
—3.3

—1.2
—3.1

Total fiscal stimulus

-13.4

-17.9

-4.3

Energy tax increases:
Indirect business tax and nontax accruals
Energy tax offsets:
Receipt reductions:
Personal tax and nontax receipts
Corporate profits tax accruals
Total receipt reductions
Expenditure increases:
Purchases of goods and services
Domestic transfer payments
Grants-in-aid to State and local governments
Total expenditure increases
Recapitulation—total change in:
Receipts..
Expenditures
Deficit

20. 9

31.9

30. 6

—5. 2
—5. 6

—33.0
—6. 4

— 18. 1
—7. 5

-10.8

-39.4

-25.6

1.0

3.0
2.0
2.0

1.0

7.0

-3.3
1.0
-4.3

-25.4
7.0
-32.4

0.7
7.0
-6.3

This package will result in major permanent increases in indirect
business taxes—a significant reversal of the long-term trend. These
increases will be largely offset by decreases in personal and corporate
profits taxes. An allowance is provided in the budget for additional
spending to compensate low-income individuals (who pay no income
taxes), Federal agencies, and State and local governments for the impact of higher energy prices on their budgets.
Corporate profits tax accruals—the next major category of receipts
to be discussed—are quite variable since corporate profits are among
the most variable components of national income. The NIA corporate
profits taxes generally differ from the corresponding budget category
primarily because: (1) The unified budget shows the deposit of earnings by the Federal Reserve System as miscellaneous receipts whereas
in the NIA they are treated as taxes on corporate profits; and (2)

THE BUDGET FOR FISCAL YEAR 19 76

Distribution of Federal Sector Receipts by Category
Percent

100

Indirect Business Tax
and Nontax Accruals

Personal Tax and
Nontax Receipts

the unified budget records corporate profits taxes when the cash
pajnnents are received, while in the NIA they are recorded when the
profits are earned (i.e., accrued). In addition, the proposed windfall
profits tax is classified as an indirect business tax in the NIA, whereas
the budget classifies this as a part of corporate income taxes.
Corporate profits and tax liabilities reflected in this budget are
affected by the recent switch of many corporations from a first-infirst-out basis for inventory accounting to a last-in-first-out basis.
The shift substantially reduces recorded inventory profits during
inflationary periods and thus reduces corporate profits tax liabilities.
The secular decline in corporate profits tax receipts relative to our
GNP and to total receipts shown in the chart above results mainly
from three factors: (1) A long-term decline in corporate profits relative
to the GNP; (2) changes in the definition of corporate profits for tax
purposes (largely increases in permissable depreciation allowances and
investment tax credits); and (3) the nearly constant nominal tax rate
on taxable corporate profits. The President's proposal will result in
a permanent decrease in the corporate profits tax rates. This decrease
is designed to stimulate business investment.

SPECIAL ANALYSES

Indirect business tax and nontax accruals are composed of excise
taxes, customs duties, rents and royalties, and a proposed windfall
profits tax which is to be levied in the form of a graduated tax on the
sale of domestic crude oil. Over time, this category has become a much
less important part of total Federal sector income. Partly this is because these taxes normally do not rise in propoition to the increase in
the economy and partly because of the reduction or repeal of some of
the applicable taxes, such as the automobile and telephone excise taxes.
However, the President's proposals will double indirect business
taxes as part of the effort to reduce oil imports and energy
consumption.
Contributions for social insurance constitute the second largest
category of Federal sector receipts. The rapid rise in these receipts
since World War II has been caused by the growth in the labor force
and in wage rates, the expanded coverage of existing social insurance
programs, the enactment of new ones, and the higher taxable wage
base and contribution rates needed to finance liberalization of benefits.
The President's tax program will not directly affect these taxes.
Trends in Federal sector expenditures.—Federal sector expenditures are also divided into several major groupings. The primary division is between purchases of goods and services (which are divided into
defense and nondefense purchases) and all other transactions. Purchases are that portion of the Nation's output that is bought directly
by the Federal Government and is included in the calculation of the
GNP. The other expenditure categories consist primarily of payments
to individuals and grants to other levels of government. These groups,
in turn, can use the income to finance their own purchases of goods and
services, savings and—in the case of State and local governments—
transfers to individuals.
A major shift in the composition of Federal sector expenditures has
been underway for years. As the chart on expenditures shows, defense
purchases of goods and services have been a declining share of Federal
spending ever since the Korean war. There has been a corresponding
rise in other components, especially grants-in-aid and domestic transfer
payments. While this shift has been underway for two decades, it has
accelerated in recent years. In 1973 defense purchases as a percentage
of Federal sector expenditures were the lowest they had been since
1940, and the percentage has continued to drop. By 1976 defense purchases will be around 25% of total expenditures; the lowest percentage
in the period between World War II and the Vietnam war was in 1950,
when they were 30% of the total. In contrast, outlays for domestic
transfer payments and grants are expected to be well over half of total
Fedeial sector expenditures this year. Just one decade earlier they
were less than one-third of the total.

THE BUDGET FOR FISCAL YEAR 1976

Distribution of Federal Sector Expenditures by Category
5-Year
A
:ar Averages
Interest and Other

Grants-in-Aid

Domestic
Transfer Payments

Non-Defense
Purchases

Defense Purchases

1947-51
Fiscal Yew

1952-56

Defense purchases of goods and services.—Over

9 5 % of defense

purchases are made by the Department of Defense. The remainder
includes programs of military assistance to other countries and
purchases by the Energy Kesearch and Development Administration
(formerly the Atomic Energy Commission). However, the increase in
ERDA spending for development of new domestic energy sources is
included in nondefense purchases. Purchases and sales of defense
stockpiles are included in defense purchases.
Defense spending for procurement, research and development,
pay, and other purposes has faced the same inflationary pressures
that have affected the remainder of the economy. However, despite
these cost increases, the large reductions in military personnel, other
defense-related employment, and other economies have resulted in
the current dollar spending on defense purchases being slightly lower
in 1974 than 6 years earlier and resulting in holding defense purchases
to around the lowest proportion of the GNP since 1950. While the
budget anticipates modernization of defense weapons, the bulk of the
increase in defense purchases in 1975 and 1976 reflects the impact of
inflation. The budget contains an allowance for possible additional
spending for both defense and nondefense purchases that will result
from the crude oil excise taxes and import fees. A tentative distribution
of this allowance between defense and nondefense purchases was made
for NIA purposes.

SPECIAL ANALYSES

Nondejense purchases of goods and services.—This category covers

the goods and services purchased by Federal civilian agencies. These
include such programs as operating national forest, park, and recreation areas; space exploration; promotion of commerce; acquisition and
disposal of agricultural commodities; construction of flood control
and navigation projects; operation of the Federal airway system; a
wide variety of medical and other scientific research; the capital outlay
of Government-sponsored enterprises; Federal law enforcement; and
operation of veterans hospitals.
Table A-4. NONDEFENSE PURCHASES OF GOODS AND SERVICES BY
AGENCY (in billions of dollars)
1973

actual

Department of Agriculture:
Commodity Credit Corporation
Other
Department of Commerce
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
Department of the Treasury:
Interest paid abroad
Other
.--.----:
General Services Administration
National Aeronautics and Space Administration. _
Postal Service l
Veterans Administration
All other 2
Total,

1974
actual

1975
estimate

1976
estimate

-1.3
1.8
.8
1.7
4.1
2.0
1.6
1.0
.8
.5
2.7

-0.4
2.0
1.0
1.7
4.5
1.9
1.7
1.1
.7
.6
2.7

0.6
2.3
1.1
2.0
5.7
2.1
2.1
1.3
.9
.8
3.1

0.6
1.9
1.2
2.1
5.7
2.4
2.2
1.5
.9
.9
3.2

3.2
1.2
.9
3.2
.4
3.1
3.4

4.1
2.0
1.0
3.2
.7
3.4
3.0

4.1
2.7
.2
3.2
.6
4.1
3.9

4.1
2.9
.1
3.4
.8
4.4
6.9

31.0

34.9

40.8

45.2

1
Not included in budget outlays.
2
Includes allowances for energy tax equalization payments, civilian agency pay raises, and
contingencies.

Table A-4 shows a distribution by agency of nondefense purchases
for 1973 through 1976. In 1976, the Department of Health, Education,
and Welfare will account for more nondefense purchases that affect
GNP than am^ other agency; these are largely for medical research
and for administering grant and transfer programs. Purchases by
NASA have dropped substantially in recent years: in 1966 they were
one-third of nondefense purchases, but by 1976 the}r arc expected to
be around 7}<>%. The large-scale fluctuations in nondefense purchases by
the Agriculture Department are caused primarily by the purchase and
sale of commodity inventories. Nondefense purchases b}r the Department of Defense—Civil and the Department of the Interior are predominantly for water, power, and reclamation programs while the
bulk of nondefense purchases by the Veterans Administration is for
hospitals and medical care.

THE BUDGET FOR FISCAL YEAR 1976

Domestic transfer payments.—This is now the largest category of
Federal sector expenditures. Spending for domestic transfers has expanded rapidly, mainly because of more beneficiaries and higher benefit payments under the social insurance programs. Approximately
two-thirds of the payments are for retirement and disability, with the
old-age and survivors insurance fund constituting around 75% of
retirement and disability payments and around half of all domestic
transfer payments.
Another large group of domestic transfer payments is for medical
care under the hospital and supplementary medical insurance programs
(Medicare). These transfers did not exist prior to 1967 but by 1976
they are expected to total $14.1 billion.
The food stamp program began in 1961 and was relatively small
but growing until 1969. By 1972 the program had reached a level of
$1.8 billion and in 1976 it will be $3.2 billion.
Veterans benefits and insurance have long been a major group of
transfer payments. These payments expanded rapidly beginning in
1967, due in part to the war in Vietnam, but also in part to the enactment of the GI bill for post-Korean War veterans. Payments are
expected to remain high in 1975 and 1976 because of legislated costof-living and other benefit increases, despite a decline in the number
of ex-servicemen studying under the GI bill. The budget proposes a
$0.2 billion reduction in readjustment benefits in 1975 and $0.6 billion
in 1976.
The large increase in unemployment benefits in 1975 is due to the
automatic response of benefits to higher levels of unemployment
supplemented by major liberalization under legislation enacted in
December 1974.
Table A-5. DOMESTIC TRANSFER PAYMENTS (in billions of dollars)

Fiscal year

1965
1966_
1967
1968
1969
1970
1971
1972
1973 _. .
1974
1975 estimate .
1976 estimate.

Total

28.3
31.8
37.3
42.7
48.5
54.8
67.4
75.7
86.7
101.3
128.2
143.0

Retirement
and
disability i

20.2
23.8
25.3
28.0
32.2
35.6
42.4
47.9
58.5
69.1
82.6
91.3

Hospital
and
supplementary
medical
insurance

Food
stamps

3.2
5.1
6.3
6.7
7.4
8.3
9.0
10.9
13.2
14.1

0.1
.1
.2
.2
.6
1.5
1.8
2.1
2.7
3.3
3.1

Veterans
benefits
and
insurance

Unemployment
benefits

4.7
4.7
5.3
5.6
6.1
6.9
8.0
8.8
9.7
10.4
11.9
11.6

2.5
2.1
2.1
2.2
2.2
3.0
5.6
6.5
4.8
5.4
13.7
17.2

Other

0.9
1.1
1.3
1.7
1.6
2.0
2.3
2.5
2.5
2.7
3.5
25.7

* Less than $50 million.
Includes black lung benefits, supplemental security income benefits, and military retired pay.
Includes allowances for energy tax equalization payments in 1976 and contingencies in 1975
and 1976.
1
3

Domestic transfer payments and grants-in-aid constitute the great
bulk of Federal spending for domestic civilian programs. As the chart
below demonstrates, they also account for the bulk of the increase
in Federal spending in recent years.

SPECIAL ANALYSES

Composition of Federal Sector Expenditures
SBillic

$ Billions

235

225

200-

200

175 —

—175
Grants-in-Aid and

150

Domestic Transfer Payments

125 -

—125

100-

-100

Defense Purchases

75-

50 —

— 50

25-

— 25

1964

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976

Fiscal Years

Estimate

Grants-in-aid.—These expenditures comprise programs designed to
help State and local governments provide general public services or
to finance programs for the needy.
Table A-6 shows the major types of grants for the years 1965-76,
and table A-ll provides additional detail. General purpose fiscal
assistance has been provided in relatively small amounts under several
programs for many years, but this became a major category with the
introduction of general revenue sharing in 1973. Such grants arc
generally available for operation of State and local governments, to
finance State or local government transfer payments to the public, to
retire debt, or to reduce taxes. Most grants included in the income
security and health functions are virtually indistinguishable from
domestic transfer payments: they finance cash benefits or services
for persons under such programs as medicaid. In contrast, most other
grants are directed toward State and local government public works—
such as highways, mass transit facilities, urban renewal, and pollution control facilities—or else support the operation of State and
local public services—such as education, manpower training, social
services, and law enforcement.

THE BUDGET FOR FISCAL YEAR 1976
Table A-6. FEDERAL GRANTS-IN-AID (in billions of dollars)

Fiscal year

1965.
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975 estimate
1976 estimate
1
3

Total

Revenue
sharing
and
general
purpose
fiscal assistance

10.9
12.7
14.8
17.8
19.2
22.6
26.8
32.6
40.2
41.5
47.0
50.8

0.2
.2
.2
.3
.2
.3
.3
.4
7.0

6.5

6.6
8.7

Income
security

Health

3.2
3.2
3.2
3.7
4.2
4.9
6.6
7.9
7.6
7.1
6.9
6.9

0.7
1.3
1.9
2.7
3.1
3.9
4.5
6.0
6.2
7.6
8.8
9.3

Education,
manpower,
and
social
services

1.4
2.4
3.7
4.5
4.5
5.2
6.1
8.2
8.4
8.1
10.3
9.8

Transportation l

Community
and
regional
development

4.1
4.0
4.1
4.3
4.4
4.6
4.9
5A
5.3
5.3
5.8
6.4

0.6
.7
.8
1.2
1.3
2.2
2.4
2.8
2.9
2.9
3.1
4.0

Othe

0.8
.9
.9
1.1
1.3
1.5
2.0
2.2
2.7
4.1
25.6
25.7

Includes a small amount of grants for "commerce."
Includes allowances for energy tax equalization payments and contingencies.

Special Analysis O (Federal Aid to State and Local Governments)
discusses grant-in-aid programs in more detail and explains the major
differences between grants as defined in the three principal Federal
statistical series on grants.
Other Federal sector expenditures.—Four other categories complete
the list of Federal sector expenditures. The largest category—net
interest paid—is affected by changes in Federal debt outstanding and
in interest rates. Net interest has varied between 6% and 8% of
Federal sector expenditures and l%% to 1%% for GNP for most years
since 1952.
There are three major types of foreign transfer payments: Expenditure of dollars to assist foreign economic development, grants
to foreign governments of foreign currencies that are earned from the
sale of surplus agricultural products, and payments under social
security and similar programs to individuals living abroad. Although
payments to individuals are gradually rising (roughly in proportion
with the rise in GNP), total foreign transfer payments have been stable
(and a declining proportion of GNP) for many years.
Subsidies less current surplus of Government enterprises consist of
two elements: (a) Subsidy payments to resident businesses (including
farms); and (b) the "current surplus" or "deficit" of Government
enterprises. A subsidy is a monetary grant to a unit engaged in commercial activities. Examples are payments to farmers for land retirement, payments to air carriers, and the operating differential subsidy
paid to operators of U.S. flag merchant ships.
Government enterprise is the term applied to certain business-type
operations of the Government (usually appearing in the budget as
public enterprise revolving funds). The operating costs of Government enterprises are, to a great extent, covered by the sale of goods
and services to the public, as distinguished from tax receipts. The
difference between the sales and the current operating expenses of a
Government enterprise constitutes its surplus or deficit. The largest

SPECIAL ANALYSES

of these enterprises are the Commodity Credit Corporation, the
Postal Service (which is no longer included in the budget), and the
Tennessee Valley Authority.
Wage disbursements less accruals is an adjustment item occasionally
made in the NIA to take account of the fact that wages and salaries
are not always received at the same time as they are earned. The
national income component of GNP is counted on an accrual basis;
that is, when the income is earned, rather than when it is received.
Personal income, however, including wage and salary disbursements,
is regularly estimated on the basis of when the cash is received.
Ordinarily, wage and salary payments disbursed in one period but
earned in the preceding period are approximately offset by payments
disbursed in the next period but earned in the current period, thus
making the adjustment between national income and personal income
small or zero. A retroactive pay increase for Federal employees caused
this category to be significant in fiscal years 1973, 1974, and 1975.
QUARTERLY ESTIMATES

In the past the Federal budget has provided estimates of receipts
and outlays only for fiscal years. Quarterly data have been developed
for internal use but have not been published because of the recognized
imprecision of the estimates. However, reforms under the Congressional Budget Act of 1974 suggest a congressional need for more
detailed budgetary data, and other users have expressed a similar need.
In response to the expressed congressional and public needs—and
despite the inherent limitations of the data—quarterly NIA receipts
and expenditures estimates for the period covered by the budget arc
being added this year.
The translation of the budget into national income accounts
categories is necessarily inexact. The budget itself is a mixture of a
forecast of what receipts and outlays are expected to be for some items
under current law and a Presidential request for congressional approval
of proposed amounts for others. For this special analysis each budget
receipt and outlay is analyzed and translated into NIA categories.
Imprecision and possible error are inevitable even when the translation
is made using annual data. When these annual estimates are converted into quarterly distributions seasonally adjusted at annual
rates, the imprecision is further increased. The data presented in table
A-7 are the best available estimates of the quarterly NIA receipts and
expenditures consistent with the 1976 budget, but should be used with
clear recognition of their limitations.

580-700 O - 75 - 2

Table A-7. FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME ACCOUNTS, QUARTERLY, 1974-76, AND
J U L Y - S E P T E M B E R 1976 l

(in billions of dollars; seasonally adjusted at annual rates)
Actual

Description

JulySept
1973

OctDec
1973

JanMar
1974

Estimated

AprJune
1974

JulySept
1974

OctDec
1974 2

JanMar
1975

AprJune
1975

JulySept
1975

OctDec
1975

JanMar
1976

AprJune
1976

JulySept
1976

RECEIPTS

Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance
Total receipts

116.7
43.8
21.0
80.2

121.6
43.5
21.3
81.8

124.1
45.9
21.5
86.7

129.4
49.2
21.9
88.1

134.8
55.4
22.5
90.0

136.6
46.0
22.2
90.0

130.8
31.9
31.1
92.8

101.1
30.5
56.4
94.2

74.0
35.2
55.3
95.8

107.9
40.2
54.8
98.9

127.3
41.3
54.5
102.4

133.0 140.2
42.7 43.1
54.3 54.2
104.9 107.3

261.8

268.3

278.1

288.6

302.8

294.7

286.6

282.2

260.3

301.8

325.5

334.9

344.8

108.4
(75.3)
(33.1)
98.8
(96.3)
(2.5)
41.0
17.6

111.5
(75.8)
(35.7)
106.5
(104.0)
(2.5)
42.9
17.9

114.3
(76.6)
(37.7)
113.6
(110.8)
(2.7)
43.2
18.7

117.2
(78.4)
(38.7)
120.8
(118.4)
(2.4)
43.4
19.1

122.8
(83.5)
(39.3)
127.1
(124.3)
(2.7)
45.5
19.7

122.9
(81.0)
(41.9)
137.0
(132.6)
(4.4)
47.7
20.1

121.8
(78.5)
(43.3)
142.3
(137.8)
(4.5)
51.4
20.4

127.3
(83.1)
(44.2)
147.5
(143.4)
(4.1)
49.5
21.5

132.9
(87.9)
(45.0)
147.8
(143.8)
(4.0)
50.7
22.5

138.9
(93.3)
(45.6)
146.8
(142.8)
(4.0)
51.0
23.5

145.2
(99.3)
(45.9)
146.6
(142.7)
(3.9)
52.0
24.5

151.7^
(105. V
(46.4)
154.1
(150.4)
(3.7)
53.2
25.5

EXPENDITURES

Purchases of goods and services
105.3
Defense
(73.3)
Nondefense
(32.0)
Transfer payments
96.5
Domestic ("to persons")
(93.9)
Foreign
(2.7)
Grants-in-aid to State and local governments
39.8
Net interest paid
16.8
Subsidies less current surplus of Government
enterprises
5.0
Wage disbursements less accruals
_
Total expenditures
Surplus or deficit ( - )

4.8

2.2

1.3
.6

2.7
1.5

2.3

3.9
__ . .

4.1

4.2

263.4

270.6

281.0

291.6

304.7

317.3

331.6

340.0

349.9

358.0

364.3

372.4

388.7

-1.7

-2.3

-2.8

-3.0

- 1 . 9 -22.6 -45.0 -57.8 -89.6 -56.2 -38.8 -37.5 -43.9

1
Part 7 of the 1976 budget provide* unified budget data for the period July
through September 1976. This is the transition period (1 quarter) between
fiscal
year 1976. which covers the fiscal period July 1975 through June 1976, and fiscal
year 1977, which—in accordance with the Congressional Budget Act of 1974—will
cover the period October 1976 through September 1977. The final column of this
table shows the NIA estimates for this fiscal period.

Preliminary.

KT
r i
i J
u
J•
n
J- •
N
o t e : r>
Because of the methods normally used in seasonally adjusting
t h, e
average
of
the
four
quarters
of
a
fiscal
year
seasonally
adjusted
data
ec ual t o t h e
*

unadjusted fiscal year total,

KIT A J
NIA data,
may not be

SPECIAL ANALYSES
RELATIONSHIP

THE BUDGET TO THE FEDERAL
NATIONAL INCOME ACCOUNTS

SECTOR

THE

Table A-8 shows the major differences between the budget and the
Federal sector of the NIA. These differences are explained below.
Table A-8. RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR,
NIA (in billions of dollars)
Description

1974
actual

1975
estimate

1976
estimate

278.8

297.5

4.3
1.9
3.1
-.6

5.0
2.1
2.6
-.8

5.4
2.2
1.1
-1.1

273.6

287.6

305.1

268.4

313.4

349.4

—2.9
4. 3
1.9
.4
6.0
.2

—1.2
5.0
2.1
—.3
4.2
.5

—4.2
5. 4
2.2
.3
6.9
1.0

278.3

323.7

361.0

RECEIPTS
Total budget receipts

264.9

Government contribution for employee retirement (grossing) __
Other netting and grossing
Adjustment to accruals
Other
Federal sector, NIA receipts
EXPENDITURES
Total budget outlays
Lending and financial transactions
Government contribution for employee retirement (grossing) ___
Other netting and grossing
Defense timing adjustment
Bonuses on Outer Continental Shelf land leases
Other
Federal sector, NIA expenditures

Lending and financial transactions.—Conceptually, the national income accounts measure the Nation's current income and production,
and therefore do not include transactions—such as loans—that are
an exchange of assets and liabilities rather than current income or
production. Loan transactions have a significant economic impact,
affecting income and output, but they are analyzed more appropriately within a different accounting framework. Special Analysis C
(Borrowing, Debt, and Investment) and Special Analysis E (Federal
Credit Programs) both contain information on the financial market
implications of the budget.
Most of the lending and financial transactions shown in table A-8
are shown in Special Analysis E. However, this total differs from the
total for direct loans shown in Special Analysis E because: (a) The
NIA records nonrecourse agricultural commodity loans as purchases
rather than loans; (b) capital contributions to international financial
institutions, while not technically loans, are excluded from the NIA
and treated as financial transactions; and (c) Special Analysis E also
shows credit transactions of Government-sponsored enterprises that
are not included in the budget or the NIA and therefore do not
require reconciliation.
Government contribution for employee retirement.—The

contributions

of Government agencies to the retirement trust funds of their employees are not included in the budget totals. While the outlays are

THE BUDGET FOR FISCAL YEAR 1976

recorded in each agency's budget, they are offset by an intragovernmental deduction. However, the NIA counts Government payments
for employee retirement as part of the compensation paid to Government employees and, therefore, as Government expenditures; this
treatment maintains comparability with the treatment of employee
retirement contributions in the rest of the economy. This category
includes contributions by the Postal Service even though the Postal
Service is not included in the unified budget. Since the NIA includes
the Postal Service as a Government-sponsored enterprise, its contributions affect the current deficit of the enterprise rather than constituting nondefense purchases. In the NIA, the receipt of these retirement
contributions is treated as contributions for social insurance. Since
receipts and expenditures are increased by equal amounts, this treatment has no effect on the surplus or deficit. Over 75% of these payments go to the civil service retirement fund, while most of the
remainder is for Federal employees insured under social security.
Other netting and grossing.—The budget normally counts as receipts
only income from taxation or similar sources that arises from the
exercise of governmental power to compel payment. Money received
in the course of business-type transactions, therefore, is normally
shown as offsets against expenditures. For instance, receipts from
two major insurance programs operated by the Veterans Administration (National Service Life Insurance and U.S. Government Life
Insurance) are netted against expenditures in the budget since these
programs are voluntary, commercial-type activities. However, in the
NIA these insurance premiums are treated as receipts in the same
way as receipts from compulsory Government insurance programs.
Adjustments of this type affect total receipts and expenditures equally
and thus do not alter the surplus or deficit of either the budget or the
Federal sector.
Timing adjustments.—The budget records receipts at the time the
cash is collected regardless of when the income is earned, while outlays
(except interest) are generally recorded at the time the checks are
issued. The NIA attempts to record most receipts from the business
sector in the time period in which the income is earned rather than
when taxes are actually paid, while personal income taxes and social
insurance contributions are recorded at the time of payment by the
individual taxpayer.
The principal timing adjustment to expenditures is for defense
purchases. Procurement items (such as missiles or airplanes) purchased under most fixed price contracts are recorded in the Federal
sector NIA as defense purchases at the time of delivery to the Federal Government rather than when they are fabricated or when they
are paid for; work in progress is counted as part of private business
inventories until the articles are completed and delivered to the
Government. In both the budget and the NIA accounts, public debt
interest is recorded when it accrues.
Bonuses on Outer Continental Shelf land leases.—In recent years
bonuses paid on the Outer Continental Shelf oil leases have become a
significant reconciliation item between the unified budget and the
NIA. The budget records these bonuses as proprietary receipts and,

SPECIAL ANALYSES

therefore, deducts them from budget outlays. The NIA excludes these
transactions as being a transfer of assets because the pa}^ments are
not included in calculating book profits under current corporate accounting practice.
Other.—This category includes some miscellaneous adjustments,
largely for certain specialized aspects of the national income accounts,
such as the purchase and sale of land and geographical exclusions
arising out of transactions with Puerto Rico, the Virgin Islands, and
other U.S. territories. Certain nondefense timing adjustments are
included here because of the difficulty in separating them from other
adjustment categories. This category includes adjustments for certain
foreign currency transactions that are not included in the budget and
transactions of Federal agencies or activities that are excluded from
the budget but included in the Federal sector NIA.

Table A-9. FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS, 1965-76 (in billions of dollars)
Actual

Description

1965

1966

1967

1968

1969

Estimate

1970

1971

1972

1973

1974

1975

1976

RECEIPTS
Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance

__
__

Total receipts

51.3
27.7
16.9
24.6

57.6
31.0
15.7
28.5

64.5
31.2
15.8
35.7

120.5

132.8

147.2

64.4
(48.9)
(15.5)
30.5
(28.3)
(2.2)
10.9
8.5

71.7
(54.4)
(17.3)
34.2
(31.8)
(2.3)
12.7
9.0

4.1

71.4
33.7
17.1
38.3

49.1

87.5
32.3
20.1
52.6

100.7
34.1
20.0
58.5

106.8
41.2
20.7
71.7

123.1
45.6
21.6
83.3

122.1
41.0
33.1
91.4

111.1
39.9
54.7
99.4

190.4

195.2

192.5

213.2

240.4

273.6

287.6

305.1

94.9
(75.9)
(18.9)
44.8
(42.7)
(2.1)
17.8
10.9

99.4
(78.0)
(21.4)
50.7
(48.5)
(2.2)
19.2
12.3

98.0
(77.0)
(21.0)
56.8
(54.8)
(2.0)
22.6
14.0

95.8
(73.1)
(22.7)
69.7
(67.4)
(2.3)
26.8
14.3

103.2
(73.6)
(29.5)
78.6
(75.7)
(2.8)
32.6
13.4

105.3 110.3
(74.2) (75.4)
(31.0) (34.9)
89.4 104.2
(86.7) (101.3)
(2.9)
(2.7)
40.2
41.5
17.4
14.5

121.1
(80.3)
(40.8)
131.7
(128.2)
(3.5)
47.0
19.8

136.1
(90.9)
(45.2)
147.0
(143.0)
(4.0)
50.8
23.0

5.1

4.1

4.7
-.1

5.7
.1

5.3

6.7
-.5

4.7
.2

3.7
.4

4.1

131.9

154.5

172.5

185.7

195.9

212.4

232.9

255.4

278.3

323.7

361.0

+.9

-7.3

-11.9

+4.7

-.7

-19.8

-19.7

-15.0

-4.7

-36.1

-55.9

90.0
37.4
18.6
44.4

160.6

85. 3
(67.7)
(17.6)
39.4
(37.2)
(2.2)
14.8
9.9

4.5

118.5
+2.0

93.6
33.3
19.2

EXPENDITURES
Purchases of goods and services.
Defense
Nondefense
Transfer payments
Domestic ("to persons")
._
Foreign
_
..._
Grants-in-aid to State and local governments_ _
Net interest paid.._
Subsidies less current surplus of Government
enterprises
Wage disbursements less accruals
Total expenditures
Surplus (+) or deficit ( - )

.._.

Table A-10. FUNCTIONAL COMPOSITION OF DOMESTIC T R A N S F E R PAYMENTS (in billions of dollars)
Actual
1965

1966

1967

1968

1969

Estimate

1970

1971

1972

1973

1974

1975

1976

HUMAN RESOURCES PROGRAMS
Income security:
Social security (OASDI)..
Railroad retirement..
Civil service retirement
Unemployment benefits
Benefits for coal miners
Supplemental security income. _
Food stamps
Other
_...

16.4
1.1
1.4
2.5

19.5
1.2
1.7
2.1

20.5
1.2
2.0
2.1

22.5
1.4
2.1
2.2

25.8
1.5
2.4
2.2
_.

28.7
1.6
2.7
3.0
*

34.0
1.9
3.2
5.6
.3

38.0
2.1
3.7
6.5
.4

46.6
2.4
4.5
4.8
.9

*
1

.1
.1

.1
*

.2
.1

.6
.1

1.5
.1

1.8
.2

Total

21.5

24.6

25.9

28.6

32.3

36.7

46.6

Health:
Medicare
Other

3.2
.3

5.1
.3

6.3
.3

6.7
.4

Total

3.5

5.4

6.6

1
1

.2
.2

.4
.1

.7
.1

4.7

4.8

26.7

30.0

Education, manpower, and social services:
Education
Manpower*
Total
Veterans benefits and services
Total human resources programs
See footnotes at end of table.

2.1
.2

53.2
2.6
5.6
5.5
1.0
1.9
2.7
.2

61.4
3.0
7.0
13.8
.9
4.2
3.4
.2

67.7
3.3
7.8
17.3
.9
4.9
3.2
.2

52.7

61.5

72.7

93.9

105.4

7.4
.4

8.3
.4

9.0
.5

10.9
.4

13.1
.5

14.1
.4

7.1

7.9

8.8

9.4

11.3

13.6

14.5

.7
.1

.9
.2

.9
.4

.9
.6

1.0
.5

1.0
.6

1.7
.8

1.9
.8

1.0

1.3

1.5

1.6

2.4

2.7

5.3

5.4

6.1

6.9

8.0

8.8

9.7

10.4

11.9

11.6

35.2

40.4

45.9

51.7

63.8

71.7

82.2

96.0

121.8

134.2

TABLE A-10. FUNCTIONAL COMPOSITION OF DOMESTIC TRANSFER PAYMENTS (in billions of dollars)—Continued
Actual
1965

1966

1967

1968

1969

Estimate

1970

1971

1972

1973

1974

1975

1976

ALL OTHER FUNCTIONS
O
National defense (military retired pay)
All other functions (includes allowance for
energy tax equalization payments and contingencies)
Total functions not included in human
resources grouping
Total domestic transfer payments..

1.2

1.4

1.8

2.1

2.5

3.0

3.5

4.0

4.7

5.7

6.3
^

2.5

1.6

1.8

2.0

2.3

2.6

3.1

3.6

4.0

4.5

5.3

6.4

8.8

28.3

31.8

37.2

42.7

48.5

54.8

67.4

75.7

86.7

101.3

128.2

143.0

•Less than $50 million.
Includes a relatively small amount classified as social services.

1.6

Table A-11. FUNCTIONAL COMPOSITION OF FEDERAL GRANTS-IN-AID (in billions of dollars)
Actual
escnp ion

^ ^

1970

1971

1972

1973

Estimate
1975
1976

1974

HUMAN RESOURCES PROGRAMS

Income security:
Public assistance cash benefits. _ _
Child nutrition and related programs
Administration of unemployment benefits. _.
Other
Total
Health:
Medicaid
Other (includes research, construction, services, and medical training)_.
Total
Education, manpower, and social services:
Education
Manpower
Social services
Total
Veterans benefi ts and services
Total human resources programs
See footnote at end of table.

2.8
.2
.2

2.7
.2
.2

3.2
.2
.2
.1

3.6
.3
.3
.1

4.1
.4
.3
.1

5.5
.6
.4
.1

6.6
.9
.4
.1

5.9
1.1
.5
.1

5.4
1.2
.4
.1

4.7
1.6
.5
.1

4.6
1.6
.4
.1

3.2

3.7

4.2

4.9

6.6

7.9

7.6

7.1

6.9

1.2

1.8

2.3

2.7

3.4

4.6

5.8

6.6

7.1

1.2

1.1

1.4

1.6

1.8

2.2

1.3

1.9

2.7

3.1

3.9

4.5

6.0

6.2

7.6

8.8

9.3

1.0
.2
.2

1.9
.3
.3

2.8
.3
.6

3.3
.5
.7

3.2
.5
.9

3.6
.5
1.1

3.9
.8
1.4

4.1
1.6
2.6

4.1
1.9
2.3

3.9
2.0
2.2

4.3
3.2
2.8

4.2
3.2
2.4

1.4

2.4

3.7

4.5

5.2

6.1

8.2

8.4

8.1

10.3

9.8

5.3

6.9

8.8

10.9

11.9

14.0

17.2

22.2

22.8

26.0

Table A-11. FUNCTIONAL COMPOSITION OF FEDERAL GRANTS-IN-AID (in billions of dollars) —Continued
Actual

Description

1968

1969

Estimate
1972

1973

1974

1976

1965

1966

.1
.1

.2
.1

.2
.2

.5
.2

.5
.3

.7
.3

1.6
.5

2.4
.6

2.5
.6

1.1

2.1

3.0

3.1

.3
*
.3
.1

.3
*
.1
.3

.4
.1
.1
.3

.5
.1
.2
.4

.5
.2
.3
.3

1.0
.3
.3
.5

1.0
.5
.4
.4

1.2
.7
.4
.4

1.0
.9
.5
.5

1.2
.8
.5
.4

1.2
.9
.6
.5

1.2
1.8
.6

1.2

1.3

2.2

2.4

2.8

2.9

3.1

4.0

4 0

4?
.1
.1

44
.1
.1

46
.2
.1

.3
.1

.4
.2

.5
.2

.9
.3

4.4

4.6

4.9

5.1

5.3

5.8

1967

1970

1971

1975

ALL OTHER FUNCTIONS

Natural resources, environment, and energy:
Environment
_ __
Other
Total
Community and regional development:
Urban renewal _
_
Other HUD grants
Area and regional development
Other
. Total

Commerce and transportation:
Urban mass transit
Other (mainly airport construction)
Total.

4?
*
.1

4.1

4.0

4.1

4.3

48
1.2
6.4

General science, space, and technology (mainly
research grants)
Law enforcement and justice..
Revenue sharing and general purpose fiscal
assistance:
General revenue sharing
Other (includes allowance for energy tax
equalization payments)

-5
T --

.5
*

.5
*
-

.6
*

.7
*

.6
.2

.6
.3

.6
.5

.7
.7

.7
.8

6.6

6.1

6.2

6.3

2.4

7.0

6.5

6.6

8.7

All other functions (includes allowance for contingencies)

1.1

Total, functions not included in human
resources grouping
._
_.

5.7

5.8

6.0

6.9

7.3

8.6

9.6

10.4

18.0

18.7

21.0

24.8

10.9

12.7

14.8

17.8

19.2

22.6

26.8

32.6

40.2

41.5

47.0

50.8

Total

Total grants-in-aid
* Less than $50 million.

SPECIAL ANALYSIS B
FUNDS IN THE BUDGET

This analysis classifies budget information by the groups of funds
that comprise the budget. It also presents information on the nature
of receipts for the largest trust funds.
DISTRIBUTION OF TOTALS, BY FUND GROUPS

Table B-l shows the distribution of total budget receipts and outlays
between the Federal funds and the trust funds. The two groups together, after deducting for transactions that flow between them, make
up the budget totals.
Table B-l. BUDGET RECEIPTS AND OUTLAYS, BY FUND GROUP
(in millions of dollars)
Description

1974

1975

1976

RECEIPTS

Federal funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Receipts, Federal funds
Trust funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Receipts, trust funds
Interfund transactions
Total budget receipts

192,855
-1,152
-10,278
-205

196,975
-1,318
-9,307
-383

213,039
-1,256
-12,019
—486

181,219

185,966

199,278

110,395
—952
-3,954
—642

125,499
-999
-4,708
—1,110

133,866
-1,052
- 5 . 525
—779

104,846

118,681

126,510

-21,133

-25,897

-28,268

264,932

278,750

297,520

OUTLAYS
Federal funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Outlays, Federal funds
Trust funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Outlays, trust funds
Interfund transactions....

210,328
—1,152
—10,278
—205

240,014 267,976
—1,318 —1,256
-9,307 —12,019
—383
—486

198,692

229,005

254,215

96.382
-952
-3,954
-642

117,155
-999
-4,708
-1,110

130,781
-1,052
-5,525
-779

90,833

110,338

123,425

-21,133 -25,897

-28,268

Total budget outlays

268,392

313,446

349,372

Budget deficit

-3,460

-34,696

-51,852

SPECIAL ANALYSES

FEDERAL FUNDS

The Federal funds are derived mainly from taxes and borrowing.
Most of these funds are not restricted by law to any specific governmental purpose. There are four subgroups of Federal funds—the
general fund, special funds, public enterprise funds, and intragovernmental revolving and management funds.
Table B-2. FEDERAL FUND RECEIPTS AND OUTLAYS (in millions of dollars)
Description

1974
actual

1975
estimate

1976
estimate

RECEIPTS BY SOURCE
Individual income taxes
Corporation income taxes
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Total receipts Federal funds

118,952
38,620
9,743
5,035
3,334
5,535

117,700
38,500
13,168
4,800
3,910
7,888

106,300
47,700
25,166
4,600
4,300
11,212

181,219

185,966

199,278

OUTLAYS BY AGENCY
Legislative branch
The Judiciary
Executive Office of the President
_
_
Funds appropriated to the President:
Foreign assistance
_
Other
_
Agriculture
Commerce
Defense—Military 1
Defense—Civil
._
Health, Education, and Welfare
Housing and Urban Development
Interior
Justice
Labor
State
_.
_
__.
Transportation.
_
Treasury
__.
Energy Research and Development Administration
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies
Undistributed offsetting receipts:
Rents and royalties on the Outer Continental Shelf
Allowances 2
_
Total outlays Federal funds
Excess of outlays ( - )

_._
____
_ __

623
204
66

741
307
109

879
341
76

3,367
456
9,772
1,462
77,643
1,670
30,476
4,786
1.736
1,797
2,857
732
2,985
36,096
2,308
2,030
—275
3,253
13,151
8,245

4,267
619
8,763
1,646
83,464
1,911
35,866
5,517
2,203
2,061
7,861
859
3,871
39,840
3,090
2,937
—1,008
3, 205
15,191
9,984

4,804
1,606
9,650
1,799
90,776
1,990
37,344
7,055
2,452
2,221
8,613
932
3,867
43,656
3,815
3,080
—475
3,496
15,329
10,859

-6,748

-5,000
700

-8,000
8,050

198,692

229,005

254,215

-17,473

-43,039

-54,937

Includes allowances for civilian and military pay raises for Department of Defense.
* Includes allowances for energy tax equalization payments, civilian agency pay raises, and
contingencies.

Receipts and outlays.—The receipts of the general and special funds
in 1976 are estimated at $199.3 billion. Outlays of all the Federal
funds are estimated at $254.2 billion. The distribution of receipts by
source, and outlays by agency, is shown in table B-2. The proprietary

THE BUDGET FOR FISCAL YEAR

1976

receipts of the general fund and special funds, the Federal intrafund
receipts and the receipts of the public enterprise and intragovernmental funds, have all been offset in arriving at the outlays for each
agency.
Obligations.—The obligations (net) for Federal funds are estimated
at $296.7 billion for 1976, as set forth in table B-3. These transactions
largely flow from the budget authority of $387.8 billion for the year,
although in part the obligations were authorized by prior years'
budget authority.
Table B-3. OBLIGATIONS INCURRED, NET, IN FEDERAL FUNDS
(in millions of dollars)
Department or other unit

Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President:
International security assistance
International development assistance
Other
Agriculture
Commerce
Defense-Military *
Defense-Civil
Health, Education, and Welfare
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
Energy Research and Development Administration
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Civil Service Commission
Federal Home Loan Bank Board
Postal Service
Railroad Retirement Board
Other independent agencies
Undistributed offsetting receipts:
Rents and royalties on the Outer Continental Shelf
Allowances2
Total

1974
actual

1975
estimate

1976
estimate

622
205
72

768
304
76

871
345
68

3,110
1,468
1,157
9,050
1,540
79,331
1,941
32,619
4,070
1,839
1,866
2,814
724
3, 191
36,158
2,618
3, 185
-319
3,073
13,467
2,628
-344
1,698
22
4,306

1,458
2,585
731
9,029
1,685
91,428
1,786
36,737
33,634
2,411
2,179
8,463
878
4,561
39,867
3,901
5, 008
-1,054
3,571
15,296
3,805
-302
1,831
4
4,200

1,674
1,367
8,503
9,454
1,766
101,118
2,058
36,727
30,935
2,570
2,133
7,673
962
4,738
43,722
4,219
5,965
-401
3,629
15,592
4,540
-302
1,490
305
4,640

-6,748

-5,000
750

—8.000
8,325

205,365

270,589

296,684

1
2

Includes allowances for civilian and military pay raises for Department of Defense.
Includes allowances for energy tax equalization payments, civilian agency pay raises, and
contingencies.

Balances of prior authority.—Table B-4 shows the balances of budget
authority carried forward in Federal funds at the end of each fiscal
year. To the extent that valid Government obligations have been
incurred and remain unpaid, amounts sufficient to pay them may be
carried over into the next year. Unobligated balances may be carried
forward in accordance with specific provisions of law, usually in order

SPECIAL ANALYSES

to permit completion of projects as contemplated at the time the
appropriations were first made, but also to provide funding for
activities of a continuing nature (such as business-type enterprises) or
for standby emergency purposes (such as backup for insurance of the
Federal Deposit Insurance Corporation).
Table B-4. FEDERAL FUND BALANCES OF BUDGET AUTHORITY
lin muucms oi a<)iiars)
Department or
other unit

Start 1974
Obligated

Unobligated

E n d 1974

Obligated

Unobligated

E n d 1975

Obligated

Legislative branch
71
186
68
203
95
The Judiciary
19
*
22
*
19
Executive Office of the
President
42
2
47
*
15
Funds appropriated to the
President:
International security assistance
1.991
11 3,395
5
2,932
International
development assistance
4,520
8,871
4,506 10,644
5,066
Other
1,442
80
1,871
244
1,448
Agriculture
5,185 3,106 4,467
6,974
4,723
Commerce
1,659
351
1,759
310
1,799
Defense-Military1
26,933 12,643 28,566 15,093 36,558
Defense—Civil. __
527
380
798
203
672
Health, Education, and
Welfare
12,227
1,698 13,893
1,702 14,752
Housing and Urban Development
85,222 32,449 84,508 36,791 112,628
Interior
1,173
648
1,278
639
1,486
Justice
1,150
103 1,216
154 1,334
Labor
1,696
485
1,585
756 2,178
State
126
40
114
74
126
Transportation
1,959
1,724 2,160 4,092
2,851
Treasury
209
41
271
55
298
Energy Research and Development
Administration
1,143
501
1,452
358 2,263
Environmental Protection
4,355
5,467
5,510 8,134 7,582
Agency
General Services Administration
423
378
380
10
334
National Aeronautics and
Space Administration. __
1,090
516
916
479
1,282
Veterans Administration...
1,101
1,898
1,429
1,940
1,534
Civil Service Commission. _
18
5
10
6
11
Federal Deposit Insurance
Corporation
3,000
3,000
Federal Home Loan Bank
Board
-27
7,854
*
8,196
4
Postal Service
1,940
9,498
Other independent agencies
3,177 4,651
3,214 3,410 2,763
Allowances 2
50

Total
1

E n d 1976

Unobligated
162
*

Obli- Unobligated gated
86
23

104

2,365
10,083
4,404
251
7,551
11,582
4,527
283
1,766
10,194 46,913
162
740
696

10,161
241
13,870
299
11,253
45

14,135

920

45,092 136,508
1,919
1,603
74
1,245
4,398
1,238
31
156
11,583
3,721
36
363

18,777
1,567
53
201
5
9,739
30

36
7,341

2,667
10,466

36
2,119

130

409

122

137
2,097
5

1,415
1,797
11

46
2,114
4

3,000

10,478

8,781

2,941

2,562
325

7,264

159,371 96,587 163,435 103,476 204,802 122,712 247,023 90,752

Includes balances of allowances for civilian and military pay raises for Department of Defense.
Includes balances of allowances for civilian agency pay raises and contingencies.
* Less than $500 thousand.

THE BUDGET FOR FISCAL YEAR 1976

PUBLIC ENTERPRISE FUNDS

The public enterprise funds are a subgroup of Federal funds. They
carry on a cycle of business-type operations, primarily with the public,
on behalf of the Government. Some are incorporated enterprises;
others are unincorporated. The general fund usually supplies them with
capital, although in a few cases they may borrow from the public.
Data on public enterprise funds are included on a net outlay basis in
tables B-2 through B-4. Gross amounts are shown in table B-5.
Table B-5. PUBLIC ENTERPRISE FUND TRANSACTIONS
(in millions of dollars)
Applicable receipts
Description

1974
actual

Funds appropriated to the President:
Foreign assistance
326
Other
195
AgricultureCommodity Credit Corporation *. _ _ _ 4,379
Farmers Home Administration
3,729
Federal Crop Insurance Corporation,
48
Commerce
60
Defense:
Military
65
Civil (Panama Canal Company)
216
Health, Education, and Welfare
80
Housing and Urban Development:
Government National Mortgage Association
2,303
Urban renewal fund
946
Low-rent public housing fund
609
Federal Housing Administration
1,203
Other
81
Interior
55
Transportation
30
Treasury
1
Environmental Protection Agency
1
General Services Administration
3
Veterans Administration
788
Other independent agencies:
Emergency Loan Guarantee Board.. _
5
Farm Credit Administration
6
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corporation
382
Revolving fund
32
National Credit Union Administration
25
Small Business Administration
447
Tennessee Valley Authority
937
Total

Receipts from the public
Receipts from other accounts

16,953

1975
estimate

777

Gross outlays

1976
estimate

607

3,193 4,019
7,629 5,661
55
56
70
76

1974
actual

572
40

1975
estimate

1976
estimate

5,570
5,257
34
20

723
2
4,524
5,916
75
33

556
2
4,317
5,992
61
33

6
262
149

6
281
162

46
216
202

54
264
321

8
281
409

5,648
871
682
1, 395
92
302
43
2
*
3
1,180

7,221
570
658
1,550
96
397
42
2
*
3
997

6
7

7
7

2,250
2,072
621
2,066
130
129
446
*
1
2
721
*
6

5,805
2,121
682
2,187
219
364
844
1
1
2
950
1
7

7,507
1,820
658
2,280
450
450
1.121
1
1
2
940
*
7

411
2,535

440
37

5
36

112
2,525

120
37

29
568
1,287

34
601
1,756

13
1,179
1,338

20
941
2,087

18
912
2,487

27,200

25,286

22,971

30,799

30,468

(15,123) (24,631) (21,970)
(1,829) (2,569) (3,316)

1
Receipts include advances from foreign assistance and special export programs of $554 million in
1974. $778 million in 1975, and $1,336 million in 1976.
'"Less than $500 thousand.

SPECIAL ANALYSES

Receipts and outlays.—Receipts of public enterprise funds are
estimated at $25.3 billion in 1976, and gross outlays are planned to
total $30.5 billion, resulting in net outlays of $5.2 billion.
TRUST FUNDS

The trust funds are collected and used for specific purposes; in
this sense, they are administered in a fiduciary capacity by the
Government. They include trust revolving funds, which, like the
public enterprise funds, carry on a businesslike cycle of operations
and are normally stated on a net basis (outlays less receipts).
Cash operations.—Trust fund receipts are estimated at $126.5 billion
in 1976, with outlays planned at $123.4 billion, as shown in table B-6.
The transactions of the Federal old-age and survivors and disability
insurance funds are far larger than any other trust fund.
Table B-6. OUTLAYS AND RECEIPTS OF TRUST FUNDS
(in millions of dollars)
Outlays
Description

Federal old-age and survivors and disability insurance trust funds
Health insurance trust funds
State and local government fiscal assistance trust fund
Unemployment trust fund
Railroad employees retirement funds..
Federal employees retirement funds. __
Airport and airway trust funds
Highway trust funds
Foreign military sales trust fund
Veterans life insurance funds
Other trust funds (nonrevolving)
Trust revolving funds
Subtotal
Intrafund transactions
Proprietary receipts from the public...
Receipts from off-budget
Federal
agencies
Total

1974
actual

55,867
11,348
6,106
6,149
2,675
5,709
521
4,599
2,675
701
531
-499

Receipts

1975
1976
estimate estimate

64,491
13,903

71,108
14,990

6,176 6,301
13,000
15,900
3,026
3,267
7,260
8,039
626
1,126
4,670
5,002
3,613 4,869
761
772
472
497
- 8 4 2 -1,091

96.382 117,155 130,781
-952
- 9 9 9 -1.052
-3.954 -4,708 -5,525
- 6 4 2 -1,110
90,833

110,338

-779
123,425

1974
actual

57,703
15,419

1975 1976
estimate estimate

66,093
16,777

70,188
18,573

6,205
9,782
2,810
11,143
1,034
6,416
3,892
870
478

6,355
9,760
3,232
11,908
1,134
6,664
4,669
912
470

6,055
7.483
2,619
9,032
868
6.675
3,167
847
526

110,395 125,499 133,866
-952
- 9 9 9 -1.052
-3,954 -4,708 -5,525
- 6 4 2 -1,110
104,846

118,681

-779
126,510

In fiscal years 1974-1976, this group of funds has excesses of receipts
of the following amounts (in millions of dollars):
Total receipts, trust funds
Total outlays, trust funds
Excess of receipts, trust funds

1974
actual
104,846
90,833

1975
estimate
118,681
110,338

1976
estimate
126,510
123,425

14.013

8,343

3,085

Receipts by funds.—Table B-7 presents information classifying the
trust fund receipts by major fund, and by source for each such fund.
580-700 O - 75 - 3

THE BUDGET FOR FISCAL YEAR 1976
Table B-7. TRUST FUND RECEIPTS (in millions of dollars)
[Amounts under proposed legislation are shown separately]
Description

1974
actual

Federal old-age, survivors, and disability insurance trust funds:
Social insurance taxes and contributions
Interest on Federal securities
.
Federal payment as employer for employee retirement
Other (mainly receipts of special Federal payments)
Proposed legislation

65,855
2,728
973
515
117

57.703

66.093

70.188

12,260
483
147
2,529
-

13,035
712
166
2,855
9

13,888
874
176
3,615
20

15,419

16,777

18,573

6,055

6,205

6,355

__
-

6,828
650
5

7,654
727
1
1,400

7,989
470
1
1,300

7.483

9,782

9,760

1,411
257
931
20

1,546
285
980
—1

1,642
301
1,045
244

2,619

2,810

3,232

2,346
1,842

2,512
2,134

2,686
2,388

4,188
642
15

4,985
1,110
22

6,145
793
7
—110

Subtotal Health insurance trust funds
State and local government fiscal assistance trust fund:
Deposits for General Revenue Sharing.
_
Unemployment trust fund:
Social insurance taxes and contributions.__
Interest on Federal securities
Other receipts
Supplemental now requested.

Subtotal Unemployment trust fund
Railroad employees retirement funds:
Social insurance taxes and contributions
Interest on Federal securities
Receipts from other trust funds
_
Other (mainly receipts of special Federal payments)

_.._

Subtotal Railroad employees retirement funds
Federal employees retirement funds:
Social insurance taxes and contributions
Interest on Federal securities
........
Federal payment as employer for employee retirement (including
payment on prior year liabilities):
Agencies included in budget
Agencies excluded from budget
Other receipts
Proposed legislation
_
Supplemental now requested
Subtotal Federal employees retirement funds
Airport and airway trust fund:
Excise taxes
Interest on Federal securities
Proposed legislation

381
9,032

11,143

11.908

840
28

940
94

990
126
17

868

1,034

1.134

Subtotal Airport and airway trust fund

1976
estimate

53,925
61,877
2,518
2,806
764
916
496
494
___ _
_.

Subtotal Federal old-age, survivors, and disability insurance
trust funds
Health insurance trust funds:
Social insurance taxes and contributions
Interest on Federal securities
_
Federal payment as employer for employee retirement
Other (mainly receipts of special Federal payments)
Proposed legislation

1975
estimate

SPECIAL ANALYSES

Table B-7. TRUST FUND RECEIPTS (in millions of dollars)—Continued
(Amounts under proposed legislation are shown separately]
Description

Highway trust funds:
Excise taxes
Interest on Federal securities
Other receipts
Subtotal Highway trust funds
Foreign military sales trust fund
Veterans life insurance trust funds:
Interest on Federal securities
Other receipts
Subtotal Veterans life insurance trust funds
Other trust funds (nonrevolving)
Subtotal
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies
Total receipts

1974
actual

1975
estimate

1976
estimate

6,260
415
*

5,839
577

5,972
692

6,675

6,416

6,664

3,167

3,892

4,669

369

399

419

478

471

493

847

870

912

526

478

470

110,395
-952
-3,954
-642
104,846

125,499
-999
-4,708
-1,110
118,681

133,866
-1,052
-5,525
-779
126,510

•Less than $500 thousand.

Outlays by funds.—Corresponding information on outlays, classifying the data for the larger funds, is found in table B-8.
Table B-8. T R U S T F U N D O U T L A Y S (in millions of dollars)
[Amounts under proposed legislation are shown separately]
Description

Federal old-age, survivors, and disability insuiance trust funds:
Benefit payments
Payments to other trust funds
Administrative expenses and other
Proposed legislation
Subtotal Fedeial old-age, survivors, and disability insurance
trustfunds
__
Health insurance trust funds:
Benefit payments
Administrative expenses and other...
Proposed legislation
Subtotal Health insurance trust funds
State and local government fiscal assistance trust fund:
Payments for General Revenue Sharing

1974
actual

1975
estimate

1976
estimate

54,007
931
929

62.354
980
1,217
-60

71,947
1,045
1,310
-3,194

55,867

64,491

71,108

10,680
668

13.452
706
-255

15,525
844
-1.379

11.348

13,903

14.990

6,106

6.176

6.301

THE BUDGET FOR FISCAL YEAR 1976
Table B-8. TRUST FUND OUTLAYS (in millions of doIIars)-Continued
[Amounts under proposed legislation are shown separately]—Continued
Description

Unemployment trust fund:
Withdrawals for benefit payments
Repayment of advances to the general fund
Administrative expenses and other
Supplemental now requested
Subtotal Unemployment trust fund
Railroad employees retirement funds:
Benefit payments and claims
Administrative expenses and other
Proposed legislation
Supplemental now requested
Subtotal Railroad employees retirement funds

1974
actual

1975
estimate

1976
estimate

5,189
50
909

10,362

13,440

1,238
1,400

1,160
1,300

6,149

13,000

15,900

2,649
27

2,999
25

3,354
29
—116

2
2,675

3,026

3,267

5,489
218
2

6,917
329
14

8,504
292
15
—773

5,709

7,260

8,039

521

626

695
431

Subtotal Airport and airway trust fund

521

626

1,126

Highway trust funds:
Current programs (mainly grants to States)
Proposed legislation

4,599

4,670
*

5,003
*

4,599

4,670

5,002

2,675
701
531
-499

3,613
761
472
-842

4,869
772
497
-1,091

96,382
-952
-3,954
-642

117,155
-999
-4,708
-1,110

130,781
-1,052
-5,525
-779

90,833

110,338

123,425

Federal employees retirement:
Benefit payments and claims
Refunds to former employees
Administrative expenses and other
Proposed legislation
Subtotal Federal employees retirement
Airport and airway trust fund:
Current programs
Proposed legislation

Subtotal Highway trust funds
Foreign military sales trust fund
Veterans life insurance trust funds
Other trust funds (nonrevolving)
Trust revolving funds
Subtotal
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal agencies.
Total outlays
*Less than $500 thousand.

SPECIAL ANALYSES

Balances oi the trust funds.—The balances of the trust funds continue
to increase, as shown in the following end-of-year figures (in millions
of dollars):
1973
actual

Open book balances
Investments in U.S. securities:

1974
actual

1975
esti-

1976
esii-

5.937

5.018

4.798

4,436

Public debt_._
Agency debt

113.865
1.340

128,795
1,340

137,353
1,340

140,800
1,340

Total

121,142

135,153

143.491

146,576

A summary of the balances by fund is presented in table B-9. The
amounts include both open-book balances with Treasury and investments in U.S. securities. Part of the balances is obligated, part unobligated. The balances on an authorization basis exceed the cash
balances because for a few accounts budget authority is not the same
as receipts; these differences are listed in the note appended to the
table.
Table B-9. T R U S T FUND BALANCES (in millions of dollars)
As of June 30

Description
1973
actual

Federal old-age, survivors, and disability insurance
trustfunds
Health insurance trust funds
State and local governmentfiscalassistance trust f und_
Unemployment trust fund
Railroad retirement accounts
Federal employees retirement funds
Airport and airway trust fund
Highway trust funds
Foreign military sales trust fund
Veterans life insurance funds
Other trust funds (nonrevolving)
_ _.
Trust revolving funds
Total

1974
actual

44,300
5,114
1, 658
11,099
4,631
31,157
1,187
5,591
710
7,448
678
7,567
121,142

46.136
9,186
1, 607
12,428
4,581
34,480
1,534
7,667
1,202
7,594
671
8,066
135,153

1975
estimate

1976
estimate

47,738
12,059
1,636
9,210
4,364
38,363
1,942
9,413
1,481
7,704

46,818
15,643
1,690
3,070
4,329
42,232
1,950
11,075
1,281
7,843

672

645

8,908

10.000

143,491

146,576

Note.—The balances shown here cover the amounts on deposit with Treasury, and the U.S. securities held. In addition, certain funds have authority to obligate in advance of receiving moneys,
and to borrow from the public. The reconciliation is as follows:

1973
Balance available on an authorization basis
Unfinanced contract authority:
Airport and airway trust fund
Highway trust funds
Foreign military sales trust fund
Other
Unappropriated receipts:
Available as needed, on an indefinite basis
Available for appropriation by Congress:
Soldiers' Home permanent fund
Airport and airway trust fund
Highway trust funds
Retained as permanent endowment
Balance available on a cash basis

1974

1975

132,717

155,782

166,245

165,047

1976

—1,208
-10,119
-6,204
-10

—1,008
-17,351
-10,768
-7

—509
-19,266
-13,576

—489
-14,640
-15,707
__

—42

98
574
5,283
6

93
932
7,515
6

92
1,400
9,085
6

89
1,402
10,843
16

121,142

135,153

143,491

146,575

THE BUDGET FOR FISCAL YEAR

1976

For 1976, as in many recent years, the largest net investments are
expected to be those of the trust funds established by the Social
Security Act as amended.
Trust revolving funds.—The activities of the trust revolving fund
subgroup are shown in table B-10. The largest of these funds are
those used by the Civil Service Commission to buy insurance for
Government employees.
Table B-10. TRUST REVOLVING FUND TRANSACTIONS (in millions of dollars)
Applicable receipts

Description

1974
actual

Civil Service Commission (employees' life insurance and
health benefits)
Federal Deposit Insurance Corporation
All other trust revolving funds..
Total 1trust
funds

revolving

Receipts from the public
Receipts from other accounts...
1

2,081

Gross outlays

1975
estimate

1976
estimate

1974
actual

1975
estimate

2,455

2,906

1,868

2,150

2,549

725
239

680
253

730
352

501
177

150
246

31
317

3,045

3,388

3,988

2,546

2,897

(1,905)
(1,141)

(1,934)
(1,454)

(2,230)
(1,758)

Excludes right-of-way revolving fund which is a part of the highway trust funds.

1976
estimate

SPECIAL ANALYSIS C
BORROWING, DEBT, AND INVESTMENT
The major fiscal responsibilities of the Federal Government include
not only taxation and expenditure but also:
• The borrowing of cash to meet current requirements not covered
by receipts and to refinance maturing debt;
• The investment of balances that trust funds and other Government accounts do not currently need for outlays; and
• The provision of assistance, including Government guarantees,
for certain non-Federal borrowing.
This analysis summarizes current developments in Federal borrowing. It also discusses the size and growth of the Federal debt and the
interest on the Federal debt, agency borrowing, agency investment in
U.S. Government securities, the statutory debt limit, and borrowing
by Government-sponsored enterprises. The analysis concludes with a
brief discussion of the trend in Federal and federally assisted borrowing
and the relationship of this trend to total funds raised by nonfmancial
sectors in the economy. Excluded from this analysis are other types of
Federal liabilities such as accounts payable, obligations for undelivered orders, long-term contracts, insurance commitments, and
the obligation for future payments of social security and military
retirement.
Special Analysis E examines the related subject of Federal credit
programs, which include direct loans, loans by Government-sponsored
enterprises, and Government-guaranteed loans. The factors discussed
in both Special Analyses C and E are significant in appraising the
impact on financial markets of the programs contained in the 1976
Federal budget.
BORROWING AND REPAYING DEBT

The Federal Government borrows for two principal reasons. First,
it sells debt to the public in order to finance Federal deficits. Second, it
sells debt to the Government agencies that accumulate surpluses in
separate funds, primarily trust funds, required by law to be invested
in Federal securities. Most Federal debt has been issued by the
Treasury and is called "public debt," but a small portion has been
issued by other Government agencies and is called "agency debt." 1
The gross Federal debt includes debt held by both the public and
the agencies. Since Treasury borrowing from the agencies is an
internal transaction between two funds both within the Government
1
The term "agency debt" is defined more narrowly in the budget than in the securities market,
where it may include not only the debt of the Government agencies listed in table C-5 but also
the debt of other issuers such as the Government-sponsored enterprises listed in table C—8.

THE BUDGET FOR FISCAL YEAR 1 9 7 6

itself, only borrowing from the public affects the volume of securities
sold in the financial markets, the size and composition of assets held
by the private sector, and the taxes required to pay interest on the
Federal debt.
Borrowing from the public—whether by the Treasury or by an
agency—has a significant impact on financial markets and thereby
on the economy, and is consequently an important concern of Federal
fiscal policy. For most purposes borrowing from the Federal Reserve
System should be distinguished from borrowing by the rest of the
public. Federal Eeserve purchases of debt are undertaken to carry
out monetary policy, not to earn income, and affect the economy by
means of expanding bank reserves and the money stock. They thus
have a markedly different motivation and effect on financial markets
than do purchases by other sectors of the public. The debt held outside the Federal Reserve System, in contrast, enters into investment
portfolios of businesses and individuals and by this means affects
interest rates, other financial conditions, and private wealth. Almost
all interest received by the Federal Reserve System is returned to the
Treasury as a receipt, called a deposit of earnings, so the net cost to
the Government of Federal Reserve holdings of debt is very small.
The debt held by the public exclusive of the Federal Reserve System
is not estimated in this analysis for future years, despite its significance,
because Federal Reserve open market operations depend on future
economic developments and on policy decisions not yet made.
Table C-l summarizes Federal borrowing from 1974 through 1976.
In 1974 the total Federal borrowing (net of the refunding of securities)—i.e., the rise in gross Federal debt—was $17.8 billion. The
borrowing from Government agencies was $14.8 billion, and the
Table C-l. CHANGES IN FEDERAL DEBT (in millions of dollars)
Increase or decrease (—)

Description

1974
actual

Gross Federal debt:
Treasury debt_._
Agency debt.—

Gross Federal debt
Less debt held by Government agencies:
Treasury debt.
Agency debt
._._
Debt held by Government agencies
Total debt held by the public
Composed of:
Debt held by the Federal Reserve System.
Debt held by others
NA = Not available.

_
_

Debt outstanding.
end 1976
estimate

1975
estimate

1976
estimate

16,918
903

52,796
-502

67,570
-186

594,600
11,325

17,821

52,294

67,384

605,925

14,821
-8

8,865
-71

3,902
-18

150,973
1,899

14,813

8,794

3,884

152,872

3,009

43,500

63,500

453,053

5,467
-2,458

NA
NA

SPECIAL ANALYSES

borrowing from the public was $3.0 billion. Since the Federal Reserve
System bought $5.5 billion of Federal debt, which was more than the
total Federal borrowing from the public, the Government paid back
$2.5 billion of debt held by other lenders—commercial banks, foreign
central banks, other financial institutions, other businesses, and
individuals. Borrowing from the public is expected to rise to $43.5
billion in 1975 and $63.5 billion in 1976. This increase is primarily
because the current recession is automatically reducing tax receipts
and raising unemployment benefits and because temporary tax cuts
are proposed to stimulate the economy. By the end of 1976 gross
Federal debt is expected to be $605.9 billion, with 75% held by the
public (including the Federal Reserve System) and the remainder
by the agencies. Ninety-eight percent of the gross Federal debt will
have been issued by the Treasury.
Until recent years the Federal debt was held almost entirely by
domestic individuals and institutions. After World War II the debt
held in foreign balances and international accounts tended
to grow
gradually and by the end of 1969 amounted to $10 billion.2 However,
due to international monetary developments, in 1970 the foreign and
international holdings began to grow much faster and by the end of
1974 they were $57 billion. Most of the Treasury debt held abroad is
owned by foreign central banks. The annual borrowing from abroad
is shown below for 1969-74 in comparison with the annual borrowing
from the domestic public, exclusive of the Federal Reserve System
(in billions of dollars):
1969

Foreign and international
-0.4
Domestic (excluding Federal Reserve
System)
-12.6
Total borrowing from the public
(excluding Federal Reserve
System)
-13.0

1970

1971

1972

1973

1974

3.7

17.9

17.3

10.2

-2.5

-1.9

-6.3

-3.8

5.3

1.8

11.6

13.5

15.5

-2.5

* Less than $50 million.

Until 1970, the total borrowing from the public and the domestic
borrowing from the public were about the same. In 1970, however,
total borrowing was modestly larger than domestic borrowing; and in
1971 and 1972, Government borrowing from abroad was between $17
billion and $18 billion, which was several times higher than ever before.
Consequently, despite the Government's very large borrowing from
the public in 1971 and 1972, the amount of Federal debt held by the
domestic public (exclusive of the Federal Reserve System) decreased
in both these years. The Government borrowing from abroad remained
large in 1973, but in 1974 a small amount of the Government debt
held abroad was repaid.

THE BUDGET FOR FISCAL YEAR 1976

BORROWING AND GOVERNMENT DEFICITS

Table C-2 shows how borrowing from the public is related to the
Federal deficit. In previous years the budget deficit constituted practically the entire deficit of the Federal Government, but during
1974-76 the deficit of the off-budget Federal agencies is also significant.
In 1974 the total Government deficit was $6.1 billion. About half of
this amount, $3.0 billion, was financed by borrowing from the public,
and the remaining $3.1 billion was financed by other means. Some of
these other means of financing the deficit can be either positive or
negative. In years when these other means add up to a negative total,
such as is estimated for 1976, then they must be financed by borrowing
from the public just like the deficit itself.
Table C-2. MEANS OF FINANCING THE FEDERAL DEFICIT
(In millions of dollars)
Description

1974
actual

Budget surplus or deficit ( - )
Surplus or deficit ( - ) of off-budget Federal agencies

Total surplus or deficit ( - )
Means of financing other than borrowing from the public:
Decrease or increase (—) in cash and monetary assets
Increase or decrease (—) in liabilities for:
Checks outstanding, etc.2
Deposit fund balances
Seigniorage on coins
Increment on gold
Total means of financing other than borrowing from the
public
Total requirements for borrowing from the public
Change in debt held by the public

1975
estimate

1976
estimate

-3,460

-34,696

-51,852

-2,675

-13,931

-10,642

-6,135

-48,627

-62,494

2,519

3,147

—367

-913
-19
321
1,219

1,500
-133
613

-1,500
189
672

3,127

5,127

-1,006

—3,009 —43,500
3,009

43,500

—63,500
63,500

ing Bank, Export-Import Bank, Postal Service, and United States Railway Association. Not all
these
agencies existed during the entire period.
2
Besides checks outstanding, includes military payment certificates, accrued interest (less unamortized discount) payable on Treasury debt, and, as an offsetting change in assets, certain collections
in transit.

SPECIAL ANALYSES

The means of financing a deficit other than borrowing from the
public are:
• A decrease in cash or monetary assets;
• An increase in monetary liabilities for checks outstanding, etc.;
• An increase in deposit fund balances, which are liabilities that
arise when the Federal Government temporarily holds money in a
deposit as an agent for someone else (such as State income taxes
withheld from Federal employees' salaries and not yet paid to the
States);
• Seigniorage, which is the face value of minted coins less the cost
of their production; and
• The increment on gold, which is the increase in the value of gold
assets of the United States in 1974 due to the change in the par
value of the dollar authorized by section 2 of the Par Value
Modification Act as amended by Public Law 93-110.
As the figures in table C-2 indicate, the extent to which the deficit
can be financed by means other than borrowing from the public
is limited. Consequently, the total Government deficit and the
borrowing from the public tend to be closely related.
Borrowing from the agencies largely depends on the surpluses of
the trust funds, which, as shown in table C-6, own 93% of the Federal
debt held by Government agencies. The relationship between borrowing from agencies and trust fund surpluses during 1974-76 can be
seen by comparing the purchase of Federal debt by the agencies,
given in table C-l, with the aggregate surplus of the trust funds.
The trust fund surplus was $14.0 billion in 1974 and is expected to be
$8.3 billion in 1975 and $3.1 billion in 1976.
SIZE AND GROWTH OF FEDERAL DEBT

Gross Federal debt has risen substantially over most of the past four
decades, from about $16 billion in 1929 to $486.2 billion at the end of
1974. Table C-3 presents the detail of this change since 1954 and
shows that a sizable part of the increase is held in Federal Government
accounts (primarily trust funds) rather than being owed to the public.
From the end of 1954 to the end of 1974, gross Federal debt rose by
80% while Federal debt held by the public rose by 54%. Federal
debt held by the public apart from the Federal Reserve System rose
still less, by 33%—an annual compound rate of growth of 1.4% over
the 20 years—because during this period the Federal Reserve System
bought a large quantity of Federal debt in the market, thereby
expanding the reserves of the banking system and providing for
growth in the Nation's money stock.

T H E BUDGET FOR FISCAL YEAR

1976

Table C-3. COMPARISON OF TRENDS IN FEDERAL DEBT AND GROSS
NATIONAL PRODUCT (in billions of dollars)

Held by
Gross
Federal
debt

Fiscal year

1954
1955
1956 . .
1957
1958
1959
1960
1961
1962.
1963 . . .
1964
1965
1966
1967
1968 .
1969!2

1970
1971
1972 3
1973
1974 _
1975 estimate
1976 estimate

270.8
274.4
272.8
272.4
279.7
287.8
290.9
292.9
303.3
310.8
316.8
323.2
329.5
341.3
369.8
367.1
382.6
409.5
437.3
468.4
486.2
538.5
605.9

Federal
Government
accounts

46.3
47.8
50.5
52.9
53.3
52.8
53.7
54.3
54.9
56.3
59.2
61.5
64.8
73.8
79.1
87.7
97.7
105.1
113.6
125.4
140.2
149.0
152.9

GNP

The public
Total

224.5
226.6
222.2
219.4
226.4
235.0
237.2
238.6
248.4
254.5
257.6
261.6
264.7
267.5
290.6
279.5
284.9
304.3
323.8
343.0
346.1
389.6
453.1

Federal
Reserve
System

25.0
23.6
23.8
23.0
25.4
26.0
26.5
27.3
29.7
32.0
34.8
39.1
42.2
46.7
52.2
54.1
57.7
65.5
71.4
75.2
80.6

NA
NA

Other

199.5
203.0
198.5
196.4
200.9
209.0
210.7
211.4
218.7
222.4
222.8
222.5
222.5
220.8
238.4
225.4
227.2
238.8
252.3
267.9
265.4

NA
NA

362.1
378.6
409.4
431.3
440.3
469.1
495.2
506.5
542.1
573.4
612.2
654.2
721.2
769.8
826.0
898.3
954.6
,012.1
,101.6
,224.1
,348.9
1,434.0
1,596.0

Debt
held
by
public
as
percent
of
GNP

62.0
59.9
54.3
50.9
51.4
50.1
47.9
47.1
45.8
44.4
42.1
40.0
36.7
34.8
35.2
31.1
29.8
30.1
29.4
28.0
25.7
27.2
28.4

NA = Not available.
During 1969, 3 Government-sponsored enterprises became completely privately owned, and
their debt was removed from the totals for the Federal Government. At the dates of their conversion, gross Federal debt was reduced $10.7 billion, debt held by Government accounts was reduced
$0.6
billion, and debt held by the public was reduced $10.1 billion.
3
Gross Federal debt and debt held by the public were increased $1.6 billion due to a reclassification
of certain certificates of interest as debt.
3
A procedural change in the recording of trust fund holdings of Treasury debt at the end of the
month increased gross Federal debt and debt held in Government accounts by about $4.5 billion.
1

During the depression of the 1930's and during World War II,
Federal debt held by the public increased greatly, not only in absolute
amount but also, as shown in the following chart, as a proportion of
total net indebtedness: Federal, State and local, and private. Whereas
Federal debt held by the public was only 9% of total net debt at the
end of calendar year 1929, it had risen to 62% by the end of calendar
year 1945. Federal borrowing was large during these years, particularly
to finance World War II, and borrowing by other sectors was restricted
by low incomes and poor credit-worthiness during the depression and
by controls and scarcities during the war.

SPECIAL ANALYSES
Percent Distribution of Net Indebtedness1
Percent

100

1930

(940

1950

i960

1970

End or" Calendar Year
'Federal net indebtedness it the Federal debt Held by the public (including the Federal Reserve System). Private n
debtedness includes the debt of the Government-sponsored enterprises, which ore federally chartered but privately o

Since 1945, however, private debt has increased as a proportion of
total debt in every year, and in every year the Federal debt held by
the public (including the Federal Reserve System) has decreased as a
proportion of the total. State and local government debt has risen in
amount every year and has risen in proportion to total debt for the
period as a whole. From the end of calendar year 195^ to the end of
1973, Federal debt held by the public rose' 54%, State and local
government debt rose 510%, and private debt rose 515%. By the end
of calendar year 1973, Federal debt held by the public was only 14%
of total debt. As a result of these trends, Federal debt and borrowing,
although still significant, have become relatively much smaller influences in the financial markets.
During the same period Federal debt has decreased relative to gross
national product. As shown in table C—3, debt held by the public
equaled 62% of gross national product at the end of 1954 but declined
steadily to 26%'by the end of 1974. Debt held by the public is, however, expected to rise as a proportion of gross national product in 1975
and 1976.

THE BUDGET FOR FISCAL YEAR 1976

The interest cost of the debt may be more significant than the
amount of the debt for some types of comparison designed to measure
the importance of Federal indebtedness. Interest on the debt held by
the public has risen much faster than the debt itself, due to a strong
upward trend since World War II in the interest rates that must be
paid on new borrowings and on refunded debt. Between 1954 and 1974
the Federal debt held by the public grew 54%, but, as shown in table
C-4, the interest paid to the public more than quadrupled. For this
period as a whole, interest payments to the public grew faster than
gross national product. In the first 5 years, 1954-58, interest was equal
to 1.39% of gross national product, whereas by the last 5 years, 197074, the proportion had risen moderately to 1.59%. On the other hand,
the proportion of budget outlays devoted to paying interest on the
debt held by the public did not show any trend over the period as a
whole and fluctuated around an average of 7.7%.
Table C-4. COMPARISON OF TRENDS IN INTEREST ON FEDERAL DEBT,
GROSS NATIONAL PRODUCT, AND BUDGET OUTLAYS (in billions of dollars)
Interest on the gross Federal debt

Interest on debt
held by the public
as a percent of

Paid to
Fiscal year
Total

1954
_
1955
1956
1957
1958
1959
1960
1961
1962
1963,
1964
1965
1966
1967
1968.. .
..
1969
1970
1971
1972
1973
1974
1975 estimate
1976 estimate

6.4
6.4
6.8
7.3
7.8
7.8
9.5
9.3
9.5
10.3
11.0
11.8
12.6
14.2
15.6
17.7
20.0
21.6
22.5
24.8
30.0
33.7
36.7

Federal
Government
accounts

1.3
1.2
1.3
1.4
1.4
1.4
1.5
1.5
1.6
1.6
1.8
2.0
2.1
2.6
3.0
3.5
4.4
5.3
5.8
6.3
7.7
8.9
9.5

The public
Total

5.2
5.2
5.6
5.9
6.3
6.4
8.1
7.8
7.9
8.7
9.2
9.8
10.4
11.6
12.6
14.1
15.6
16.3
16.6
18.5
22.4
24.7
27.2

Federal
Reserve
System *

0.5
.4
.5
.7
.7
.8
1 0
.0
0
.1
1 ?
14
7
2.0
2.4
2.9
3.5
3.7
3.7
4.3
5.3
NA
NA

GNP
Other

4.7
4.8
5.1
5.3
5.6
5.6
7.1
6.8
6.9
7.6
8.0
8.4
8.7
9.6
10.2
11.2
12.2
12.6
12.9
14.2
17.0
NA
NA

1.43
1.37
1 %
1.37
1.44
1 V
1 63
1.54
1 46
1.51
1 51
I.50
1.45
1 51
1,53
1.57
1.64
1.61
1.51
1.51
1.66
.73
70

Budget
outlays J

7.2^
7.56
7.90
7.73
7.68
6.96
8.73
7.96
7.40
7.7S
7.80
8.29
7.75
7.36
7.07
7.66
7.95
7.73
7.16
7.51
8.33
7.89
7.78

NA = Not available.
Estimated as the average or calendar year figures. The 1974 estimate is tentative.
Budget outlays for 1954-76 are given in the Budget. Part 9. table 20.

Since the end of World War II the composition of the Federal debt
has changed, with an increasingly large proportion of Federal securities having a relatively short maturity. One contributing factor was
the statutory ceiling of 4#% that has been maintained since 1918 on

SPECIAL ANALYSES

the interest rate that could be paid on Treasury bonds.3 Because
long-term market rates exceeded 4%%, the ceiling prevented the
Treasury from selling long-term obligations after 1965. The ceiling
thereby tended to increase the gross dollar volume of debt refunded
each year. Since 1965, the average maturity of Treasury marketable
debt has declined from about 5 years to about 3 years. This restriction
on Treasury borrowing was relaxed in March 1971 by a law that
allowed the Treasury to issue up to $10 billion of long-term bonds at
interest rates above 4%%. In July 1973 the restriction was relaxed
further by exempting from this limit those bonds held by Government
accounts and the Federal Reserve System. Treasury now has $12.7
billion of bonds outstanding that have been sold since the change of
law in 1971, including bonds held by Government accounts and the
Federal Reserve System. The effective interest rates have ranged
upwards from 6.1% with an average of 7.1%.
BORROWING BY FEDERAL AGENCIES

A few Government agencies are authorized to sell their own debt
instruments to the public and to other Government agencies and funds.
This agency borrowing is part of the gross Federal debt. For those
a'gencies included in the budget, the authorization to borrow is budget
authority and the disbursement of such borrowed money is a budget
outlay.
Agency debt includes the borrowings of off-budget Federal agencies,
which are Government owned and controlled but whose transactions
have been excluded from the budget totals under provisions of law.
Those off-budget agencies that will have borrowed by the end of 1976
are the Export-Import Bank, the Postal Service, the Federal Financing
Bank, and the United States Railway Association. Part of the debt
of the Export-Import Bank and the Postal Service was issued before
they were excluded from the budget. The debt of the Federal Financing
Bank is classified by Treasury as public debt rather than agency debt.
The Federal Financing Bank (FFB) was created in December 1973
under the Treasury Department in order to assist agency borrowing
and Government-guaranteed borrowing and to coordinate such
borrowing with Treasury debt management. It was given the authority to purchase agency debt and Government-guaranteed loans
directly from any Federal agency and, in turn, to finance its purchase
of these obligations by selling its own debt instruments to the public
or the Treasury. Since the FFB should be able to borrow from the
public or the Treasury at lower interest rates than other agencies
would have to pay in the market, this procedure is expected to reduce
the cost of agency borrowing activities. To the extent that this procedure is used, the FFB will serve as a conduit for agency borrowing,
and FFB or Treasury securities will replace the securities of other
agencies in the market. Agency borrowing from the FFB is not
included in gross Federal debt. It would be double counting to add
together both the agency borrowing from the FFB and also the FFB
borrowing from the public (or the FFB borrowing from Treasury and
the Treasury borrowing from the public) that was necessary to provide
the FFB with funds to lend to the agencies.
3
Until 1967, 5-year notes were the longest term security that could be issued without regard to
this limitation. In 1967 the maximum maturity of notes was raised to 7 years.

THE BUDGET FOR FISCAL YEAR 1976

Agency borrowing was shown in total in table C-1 and is shown by
agency in table C-5. In 1974 the new agency borrowing exceeded the
repayment of agency debt by $0.9 billion. In 1975 and 1976, on the
other hand, repayments are expected to exceed new borrowing by small
amounts. The agency debt outstanding on June 30, 1976, is estimated
to be $11.3 billion, which is 2% of gross Federal debt.
Table C-5. AGENCY BORROWING (in millions of dollars)

Description

—

Borrowing from the public:
Agriculture: Farmers Home Administration1
Defense
Health, Education, and Welfare J_
Housing and Urban Development:
College housing loans1
Public facility loans*
Federal Housing Administration._
Housing for the elderly *
Government National Mortgage Association1
Veterans Administration1
Export-Import Bank__
Postal Service. _
Small Business Administration1 _ _
Tennessee Valley Authority
All other_

Increase or decrease
in debt

(-)

1974

1976

1975
s im

-89

Debt
out• standing,
end 1976

-105

-92

317
1,005

130
304
94
405
64
668
625
2,583
250

-65
-45

663

-67
-43
-301

-39
-41

440
5

51
-10

2,695
2

911

-431

-168

9,426

-13

-10

-18

175
152

283

Total borrowing from the public
Borrowing from other funds:
Agriculture: Farmers Home Administration1
Defense.. _
_____
Health, Education, and Welfare1. _
Housing and Urban Development:
College housing loans1
Public facility loans*
Federal Housing Administration
Housing for the elderly *
Government National Mortgage Association1
Veterans Administration 1
Export-Import Bank
Small Business Administration1
Tennessee Valley Authority

68
163
49
52
33
500
546

-6

10
1

-10
161
-51 _

Total borrowing from other funds

-8

-71

-18

1,899

Total agency borrowing included in gross Federal
debt

903

-502

-186

11,325

500

780
1,607
500

750
1,421
1,550

1.530
3,027
2,550

100

444

544

500

2,987

4,165

7,651

MEMORANDUM
Borrowing from Federal Financing Bank:
Tennessee Valley Authority
Export-Import Bant
Postal Service
United States Railway Association

Total agency borrowing from Federal Financing
Bank
*Less than $500 thousand.
1
Certificates of participation in loans.

SPECIAL ANALYSES

As shown in the memorandum section of table C-5, the FFB is
having a profound effect on agency borrowing.4 Four agencies that
would otherwise borrow in the market borrowed $0.5 billion from the
FFB in late 1974 and are expected to borrow $3.0 billion in 1975 and
$4.2 billion in 1976. Consequently, almost no agency borrowing from
the market is scheduled to take place in 1975 and 1976, and the
amounts to be borrowed from the FFB are far larger than the net repayment of agency debt held by the public and other Government
funds. If not for the FFB, the agency component of gross Federal debt
would be $7.7 billion higher at the end of 1976.
The FFB began financial operations in May 1974 and borrowed
$1.5 billion in 8-month securities from the public in July 1974. Its
previous and subsequent borrowing, however, has all been from the
Treasury, which can borrow from the public at lower interest rates
than the FFB. No further FFB borrowing from the public is currently
scheduled. Therefore, no amounts are presented for the FFB in the
tables in this special analysis. The FFB has substantial authority to
borrow from either the public or the Treasury. With the approval of
the Secretary of the Treasury, the FFB is authorized to have outstanding at any one time up to $15 billion of publicly issued debt and to
borrow from the Treasury without a statutory limitation on the
amount.
By the end of 1976, $5.5 billion of agency debt, or almost half of
the total, will be obligations of the agencies listed in table C-5
that are currently expected to conduct future borrowing from the
FFB. A total of $4.2 billion, or over a third of all agency debt, will
consist of certificates of participation in pools of loans issued by the
Government National Mortgage Association as trustee on behalf of
several agencies, which are identified in table C-5. The issuance of
certificates of participation was discontinued after 1968. A further
$1.0 billion of agency debt will be family housing mortgages assumed
a number of years ago by the Department of Defense. The remaining
agency debt, which is mostly for programs that will continue to borrow
from the public, will constitute only 4% of the total—$457 million
of Federal Housing Administration debentures and $8 million of
other obligations.
4

FFB purchases of Government-guaranteed loans are shown in table C—9.

580-700 O - 75 - 4

THE BUDGET FOR FISCAL YEAR 1976

The Treasury provides capital to business-type Government enterprises both in the form of capital stock and in the form of "debt." The
provision of "debt" is shown as "borrowing from Treasury" on the
statements of financial condition for enterprises in the Budget Appendix. However, the equity and the "debt" instruments are the same in
substance; and it would be double counting to add together the agency
"borrowing" from the Treasury and the Treasury borrowing from the
public that was necessary to provide the agencies with this capital.
Therefore, agency "borrowing" from Treasury is excluded from
figures on agency "borrowing" and "debt" in all other parts of the
budget documents.
AGENCY INVESTMENT IN FEDERAL SECURITIES

Trust funds and some public enterprise funds accumulate cash in
excess of current requirements in order to meet future claims and
demands. Such cash surpluses are invested mostly in Treasury debt
and, to a very small extent, in agency debt. Purchases of these securities are not counted as budget outlays, and redemptions are not
counted as budget receipts.
As shown in table C-6, net investment by trust funds and other
Federal agencies in Government securities was $14.8 billion in 1974
and is expected to decline substantially to $8.8 billion in 1975 and $3.9
billion in 1976. The major cause of this decrease is the large rise in unemployment. Higher unemployment is substantially increasing the
benefits paid by the unemployment trust fund and reducing the employment tax receipts of the social security trust funds.
Total agency holdings of Federal securities will reach an estimated
$152.9 billion by June 30, 1976. This will constitute 25% of the gross
Federal debt. Two major groups of trust funds—the social security
funds and the Civil Service Commission funds—will account for 70%
of total agency holdings, and all the trust funds together will account
for 93%. Ninety-nine percent of the holdings will be Treasury debt,
and the holdings of agency debt will decline by small amounts each
year.

SPECIAL ANALYSES

Table C-6. AGENCY INVESTMENT IN FEDERAL SECURITIES
(In millions of dollars)
Increase or decrease ( —)
in holdings

Description

1974
actual

Investment in Treasury debt:
Health, Education, and Welfare:
Federal old-age and survivors ins. trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical ins. trust fund
Housing and Urban Development:
Federal Housing Administration
Government National Mortgage Association
Other
Labor: Unemployment trust fund
Transportation:
Highway trust fund
Airport-Airway trust fund
Treasury: Exchange stabilization fund

Veterans Administration:
National service life insurance fund.
Other trust funds
Other..
...
Civil Service Commission:
Civil Service retirement and disability fund
Other tiustfunds
Federal Deposit Insurance Corp.: Trust fund
Federal Home Loan Bank Board: FSLIC
Postal Service
Railroad Retirement Board: Trust funds. _
Other trust funds
Other Federal funds
Other off-budget funds

__.
__

._
___

Total investment in Treasury debt
Investment in agency debt:
Agriculture: CCC
Health, Education, and Welfare:
Federal old-age and survivors insurance trust f u n d .
Federal hospital insurance trust fund..
Housing and Urban Development:
Federal Housing Administration
Government National Mortgage Association
Veterans Administration: National service life insurance fund
Civil Service Commission: Civil Service retirement
and disability fund
Federal Home Loan Bank Board: FSLIC
Postal Service
Railroad Retirement Board: Trust funds
Total investment in agency debt

1975
estimate

1976
estimate

Holdings,
end
of
1976
estimate

2,217
391
3,642
531

1,682
-216
2,559
326

—19
-901
3,212
371

38,826
7,078
13,585
1,928

68
191
27
1,165

138
245
29
-3,297

72
218
21
-6,140

1,417
1,531
183
2,684

2,049
878
-570

1,786
1,034
(*)

1,657
31
0)

11,043
1,943
* 2,364

178
-1
31

156
1
33

178
-3
33

6,940
1,041
350

3,465
204
225

3,839
311
530

3,846
357
872

41,641
2,339
7,263

378
-310
-60
46
71
4

299
-515
-191
38
59
20

321
-260
-35
21
35
15

3,904

14,821

8,865

3,902

150,973

-6

555
50

*
— 12

191
191

_
—6
— 14

*
—42

4,272
218
377
46

310
375
142
18

-23
50

-8

-71

-18

1,899

Total agency investment in Federal securities..

14,813

8,794

3,884

152,872

741
14,930
-858

754
8,557
-518

682
3,447
—245

8,322
142,140
2,410

MEMORANDUM
Investment by Federal funds
Investment by trust funds
Investment by off-budget Federal agencies

•Lest than $500 thousand.
1
The change in holdings is not estimated due to the uncertainties in foreign exchange, and the
1976 yeartnd holdings are taken to be the actual holdings at the end of 1974.

THE BUDGET FOR FISCAL YEAR 1976
LIMITATIONS ON FEDERAL DEBT

Statutory limitations have customarily been placed on Federal
debt. After enactment of the Second Liberty Bond Act in 1917, the
limitation on the amount of debt developed in several steps from being
an authorization of an amount for each specific issue to being an overall ceiling on the total amount of most outstanding Federal debt.
The latter type of limitation has been in effect since 1941. The limit
currently applies to the total of:
• All public debt issued by the Treasury since September 1917,
whether held by the public or by the Government;
• Special non-interest-bearing notes issued to the International
Monetary Fund;
• Agency debt in the form of participation certificates issued during
1968 under the Participation Sales Act of 1966; and
• Other debt issued by Federal agencies (and the District of Columbia Armory Board) which, according to explicit statute, is
fully guaranteed as to principal and interest by the United
States.
The statutory limit was $465 billion for the period beginning November 1, 1972, and ending November 30, 1973. This limit consisted
of a permanent limit of $400 billion and a temporary increase to that
limit of $65 billion. On November 30, 1973, the temporary increase of
$65 billion expired, and the level of the statutory limit fell to the
permanent limit of $400 billion. On that date the outstanding debt
subject to limit was $65.0 billion more than the statutory limit. On
December 3, 1973, the statutory limit was temporarily raised to $475.7
billion, and on June 30, 1974, it was temporarily raised to $495 billion.
The temporary increase to $495 billion expires on March 31, 1975,
after which the permanent limit of $400 billion is scheduled to come
into effect.
The outstanding debt subject to limit is shown in table C-7 and
compared with the gross Federal debt and the Federal debt held by the
public. The debt subject to limit was $476.0 billion at the end of 1974
and is expected to rise to $528.9 billion and $596.4 billion at the end
of 1975 and 1976, respectively. These amounts are substantially
more than the permanent debt limit of $400 billion. The debt subject
to limit equals 98% of the gross Federal debt. As table C-7 shows,
almost all of the difference is accounted for by agency debt not
subject to the general limitation.

SPECIAL ANALYSES

Table C-7. DEBT SUBJECT TO STATUTORY LIMIT
Description

Federal debt held by the public
Add: Federal debt held by Government agencies

(in millions of dollars)
End of year

1974
actual

1975
estimate

1976
estimate

346,053
140,194

389,553
148,988

453,053
152,872

486,247

538,541

605,925

617

610

1,382
2,696
2,894
250
3,235
13

1,267
2,695
2,583
250
3, 125
2

1,157
2,695
2,583
250
3,045
2

Total Federal debt not subject to limit

11,086

10,532

10,343

Federal debt subject to statutory limit
District of Columbia Armory Board bonds
Special notes held by International Monetary Fund

475,161
20
825

528,009
20
825

595,582
20
825

Total debt subject to statutory limit

476,006

528,853

596,427

Gross Federal debt
Deduct:
Treasury debt not subject to limit
Agency debt not subject to general limitation:
Department of Defense
Tennessee Valley Authority
Export-Import Bank
Postal Service
Participation certificates!
Other

1
Certificates of participation issued by the Government National Mortgage Association as trustee
for five departments and agencies (excluding certificates issued during 1968).

The debt subject to statutory limit is expected to increase more than
the debt held by the public in both 1975 and 1976: $52.8 billion
compared to $43.5 billion in 1975, and $67.6 billion compared to
$63.5 billion in 1976. The slower growth in the debt held by the
public is due primarily to the surpluses of certain funds in the Federal
budget—principally trust funds. Since these surpluses are largely
invested in Federal debt, they reduce the debt held by the public.
However, since the Federal debt acquired by these funds is almost
entirely subject to the statutory debt limit, this investment does not
reduce the amount of debt subject to limit.
Agency debt subject to the statutory limit is comprised almost
exclusively of debentures issued by the Federal Housing Administration and participation certificates sold in 1968. These two categories
together make up only about one-seventh of total agency debt.
However, most other agency debt requires explicit statutory authorization, whether sold to the public, the Federal Financing Bank, or
other Government funds. For example, the Postal Service is limited
to $2 billion of annual borrowing and $10 billion of outstanding bonds.

THE BUDGET FOR FISCAL YEAR 1976
FEDERALLY ASSISTED BORROWING

The impact of the Government on borrowing includes not only its
own borrowing to finance Federal operations but also its assistance
to certain borrowing by the public. Federally assisted borrowing is
of two types: Borrowing by Government-sponsored enterprises, and
Government-guaranteed borrowing by non-Federal borrowers.
Seven Government-sponsored enterprises, which are federally
chartered but fully privately owned, borrow under Government
auspices. The transactions of these enterprises are not included
within the Federal budget, and their debt is not part of gross Federal
debt. These enterprises are essentially financial intermediaries,
borrowing in the securities market and lending their borrowed funds
for specifically authorized purposes either directly or by purchasing
loans originated within the private sector that they were established
to assist.
The borrowing programs of all seven enterprises are subject to
Federal supervision. In addition, they all consult the Treasury
Department, either by law or by custom, in planning their market
offerings. The Student Loan Marketing Association 5now plans to
borrow exclusively from the Federal Financing Bank. The Federal
National Mortgage Association and the Federal home loan banks
are required to obtain Treasury approval of the terms and timing of
specific offerings. Four of the enterprises are systems of regional
lending institutions that pool their borrowings. In addition to their
Federal sponsorship, all of the established enterprises have a history
of successful financial performance. Hence, despite the absence of
Federal guarantees (except for the Student Loan Marketing Association), the obligations of these enterprises are sold at interest rates
only moderately higher than the rates on Treasury issues.
As shown in table C-8, the borrowing by these seven Government-sponsored enterprises totaled $14.9 billion in 1974 and is expected to be $14.2 billion in 1975 and $8.1 billion in 1976. The borrowing in all three years primarily reflects support for the housing market
provided by the Federal home loan banks, the Federal National
Mortgage Association, and the Federal Home Loan Mortgage Corporation. The smaller borrowing estimated for 1976 is due to a reduction
in the mortgage purchases and advances to savings institutions provided by these enterprises. Special Analysis E discusses lending by the
Government-sponsored enterprises.
* The securities of the other Government-sponsored enterprises are not Government guaranteed
and therefore cannot be bought by the FFB.

SPECIAL ANALYSES

Table C-8. NET CHANGES IN DEBT OF GOVERNMENT-SPONSORED
ENTERPRISES (b millions of dollars)
Description

Health, Education, and Welfare: Student Loan
Marketing Association. _
Housing and Urban Development: Federal National
Mortgage Association
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
Federal Home Loan Bank Board:
Federal home loan banks
Federal Home Loan Mortgage Corporation 1
Total
Less increase in holdings of debt issued by Governmentsponsored enterprises
Total borrowing
enterprises

or decreas e ( - )
1974

1976

1975

Debt outstanding,
end 1976

250

335

625

4,866

4,705

3,200

33,137

138
1,344
2,043

182
1.249
2.120

249
1.408
1.985

2,986
10,737
15.270

6,464
1,040

1.116
4,443

-2.495
3,748

15.300
12,262

16,145

13,855

8,430

90,317

1,253

-316

337

1,659

14,892

14,171

by Government-sponsored
8,093

88,658

The other type of federally assisted borrowing, Governmentguar,anteed borrowing, is defined as borrowing by individuals, private
corporations, State and local governments, or foreign countries that
is guaranteed by the United States Government. Governmentguaranteed borrowing is the same as Government-guaranteed lending.
The major part of Government-guaranteed debt consists of mortgages
on residential property. As shown in table C-9, Government-guaranteed borrowing was $10.1 billion in 1974 and is expected to rise to
$15.4 billion in 1975 and $16.1 billion in 1976. Special Analysis E
analyzes the various guarantee programs in detail.
TOTAL FEDERAL AND FEDERALLY ASSISTED BORROWING

Table C-9 summarizes Federal and federally assisted borrowing
from the public. For the purpose of this table, Government-sponsored
enterprises are excluded from the public and defined in the same
sector as the Federal Government. Federal borrowing from the public
is presented in total. Borrowing by Government-sponsored enterprises and Government-guaranteed borrowing are presented both in
total and as net amounts, the latter having been adjusted in order to
remove double counting in the derivation of total Federal and federally
assisted borrowing from the public. Double counting would otherwise
occur when one type of Federal or federally assisted debt is bought or
sold by the Government or a Government-sponsored enterprise.

THE BUDGET FOR FISCAL YEAR

1976

Table C-9. NET BORROWING FROM THE PUBLIC BY GOVERNMENT,
GOVERNMENT-SPONSORED
ENTERPRISES, AND GOVERNMENTGUARANTEED BORROWERS (in billions of dollars)
Borrowing or repayment ( —) Debt outstanding,
1974
1975
1976
end 1976
actual estimate estimate estimate

Description

Federal borrowing from the public1

3.0

43.5

63.5

453.1

14.9
—*

14.2
.4

8.1
*

88.7
1.1

14.8

13.6

7.7

87.0

10.1

15.4

16.1

215, 5

.1
—.3

10.6
—.1
.1

5.8
—.4

16.5
3.0

.1
3.7
.2

.3
2.4
.3

.6
31.4
2.4

Net Government-guaranteed borrowing from
public...

6.2

7.7

161.7

Total Federal and federally assisted borrowing
from the public

24.1

57.9

78.9

701.7

Borrowing by Government-sponsored enterprises
Less increase in holdings of Federal debt._
___
Less increase in Government-sponsored debt held by
Federal agencies
Net Government-sponsored
public...

borrowing

from
_.

Government-guaranteed borrowing
Less increase in Government-guaranteed loans held by:
Federal agencies:
Federal Financing Bank
.
Government National Mortgage Association
Environmental Financing Authority
Government-sponsored enterprises:
Student Loan Marketing Association. _
Federal National Mortgage Association
Federal Home Loan Mortgage Corporation

*Lcs8 than $50 million.
table C-1.
table C-8.
The same as Government-guaranteed loans. See table E-7.

2iSee
3 See

Federal and federally assisted borrowing from the public in 1974 was
composed mostly of Government-sponsored and Government-guaranteed borrowing, but in 1975 and 1976 the totals are made up predominantly of Federal borrowing from the public caused by large
budget deficits. In addition, the Federal Financing Bank expects to
acquire large amounts of Government-guaranteed debt in 1975 and
1976. Since the FFB finances these acquisitions through Federal
borrowing, these transactions substitute Federal borrowing for
Government-guaranteed borrowing in the market.
The following chart depicts the trends in Federal and federally
assisted borrowing from the public between 1965 and 1976. Total
Federal and federally assisted borrowing fell to $24.1 billion in 1974
due mostly to a sharp drop in the Federal deficit. The levels expected
for 1975 and 1976 are much the highest for any recent years during this
period.

SPECIAL ANALYSES
Federal and Federally Assisted Borrowing
SMtoM

S&lhom

80-

-80
>

-70

70/

-60

60Federally
Assisted Borrowing

50-

/
/&&
-50
/ /•'.•'.•'.''.•';

40-

-40

30 —

— 30

fatally
20 —

Assisted
Repayments

i
/,

/\ \

-20

V It'

10 —

-10
XwX\

>X'X'X*X*: Borrowing v;XvX;$V /$•$•$••••••••:$••:

•x : x : x : x\
•••.-" 1

10
" 1965

..,.

'66

'67

^*<w:x:::x:x:x:::::::x:::x::'X::::::::^^

'68

'69

Federal Repayments

Fiscal Years

As the chart shows, Federal and federally assisted borrowing is now
substantially higher than a decade ago. Much of the increase parallels the growth in the economy and in the total funds raised by the
ncnfinancial sector through the sale of debt securities and other forms
of borrowing and through the sale of corporate equities. However,
to some extent the total Federal and federally assisted borrowing has
increased as a proportion of the total funds raised. This proportion
rose from 15% during 1960-67 to 22% during 1968-74. Thus, despite
the decreasing share of Federal debt in total debt, Government
programs since 1968 have influenced the allocation of funds raised in
financial markets more than they did in the preceding years. During
1968-74 this proportion did not tend to increase further, although it
may rise again during 1975 and 1976.

SPECIAL ANALYSIS D
INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS

This analysis divides outlays between those that are of an investment or "capital" nature and those directed to operating or "current"
purposes. Budget outlays are classified into three categories; investment, current, and unclassified. Each of the major classifications is
further subdivided so that civil and national defense outlays can be
separately analyzed. The national defense division uses the same definitions as the national defense function in the budget; the civil grouping includes all other functions.
Investment-type outlays.—These outlays yield benefits over several
years: purchases of Federal physical assets, loans (both domestic and
foreign); State, local, and private physical assets; and developmental
expenditures which add to the Nation's capacity for better education,
technical innovation, and health services.
Current outlays.—These outlays are considered to provide benefits
in the year that they are made. Included are aid and special services to
agriculture, business, labor, homeowners, tenants, and veterans;
payments to other nations; and Federal welfare obligations. Also
included are: Payments from retirement and social insurance trust
funds established to provide an assured income to contributors or
their families in the event of unemployment, retirement, disability,
or death; and, other services and current operating expenses. Finally,
this category includes transactions such as: Operation and administration of Federal departments and agencies; repair, maintenance,
and operation of physical assets; regulatory and control activities;
and interest.
Unclassified outlays.—These outlays cannot be precisely classified
in either of the above two categories and are placed in this residual
classification. Included are: Allowance for contingencies; and certain
financial adjustments that cannot be distributed, such as proprietary
receipts and the employer share of employee retirement.
These three categories of outlays are summarized in table D-l for
1974-76.
• Additions to Federal assets, which will increase by more than
20% from 1975 to 1976, account for about two-thirds of the total
change in investment-type outlays.
• Investment-type outlays are expected to amount to $81.9 billion
in 1976, about 12% above a }^ear earlier.
• Retirement and social insurance benefits account for a large share
of the increase in the 1976 budget rising by about $13.5 billion.
• Current outlays are expected to be $280.6 billion in 1976, 9%
higher than the $257.1 billion in 1975.
58

SPECIAL ANALYSES

Table EM. SUMMARY OF INVESTMENT, OPERATING, AND OTHER
BUDGET OUTLAYS (in billions of dollars)
1974
actual

Outlays
1975
estimate

1976
estimate

INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:

Civil:
Loans and other financial investments
Physical assets:
Public works
Major commodity inventories
Major equipment and other physical assets
National defense

2.3

1.4

4.0

3.4
—.4
.7
17.9

4.2
.1
1.1
17.8

4.5
.2
1.0
20.5

8.9
*

10.5
*

10.8
.1

_.__

24.3
9.4

28.8
9.5

30.2
10.6

39.3
27.3

46.0
27.4

50.8
31.1

73.5
=

81.9
=

Additions to State, local, and private assets:

Civil
National defense
Developmental outlays:

Civil
National defense

Subtotal, investment type outlays:
Civil
National defense
Total

66.6
=====
=

CURRENT OUTLAYS
Current expenses for aids and special services:

Civil
National defense
Retirement and social insurance benefits—civil._
Other services and current operating expenses:

Civil:
Net interests.
Other
.
National defense
Allowances, Department of Defense

47.2
3.8

55.3
5.5

54.9
7.1

78.2

97.5

111.0

21.4
16.3
52.1

23.6
17.5
57.8

26.1
19.5
60.6
1.3

163.2
55.9

193.8
63.3

211.5
69.0

219.1
257.1
= = = = = ========

280.6
=====

_
_
_

Subtotal, current outlays:
Civil
National defense

. .
_

Total
UNCLASSIFIED
A llowances for:
Energy tax equalization payments l
Civilian agency pay raises
Contingencies
Employer share employee retirement (—)
Proprietary receipts from the public (—):
Civil.........
National defense..
Subtotal unclassified outlays:
Civil
National defense

_
_

Total
Total budget, outlays:
Civil
National defense
Total
•Lest
than $50 million.
1
Shown as civil.

__
—3.3

.2
—4.1

7.0
.6
.5
—3.9

-9.3
-4.7

-8.3
-5.4

-11.1
-6.1

-12.6
-4.7

-11.7
-5.4

-7.0
-6.1

-17.4

-17.2

-13.1

189.9
78.5

228.2
85.3

255.4
94.0

268.4

313.4

349.4

THE BUDGET FOR FISCAL YEAR 1976

Table D-2 shows civil investments and current operating outlays as
a percentage of total budget outlays. Current outlays drop from 61.8%
in 1975 to 60.5% in 1976 as a share of total budget outlays. This
relative decline is centered in current expenses for aids and special
services, which declined from 17.7% in 1975 to 15.7% in 1976.
Table D-2. CIVIL INVESTMENTS AND CURRENT OPERATING OUTLAYS
(percent of total budget outlays)
1972
actual

1973
actual

1974
actual

1975
estimate

1976
estimate

INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:

Loans
Othei financial investments
Public works—sites and direct construction
Major commodity inventories
Major equipment
Other physical assets—acquisition and improvement
Subtotal, additions to Federal assets

1.3
.1
1.4

0.2
.1
1.3

.2
.2
1.3
*
.1

.9
.2
1.3
*
.1

.7
.2
1.3
-.1
.1

3.2

1.8

2.3

2.2

2.8

2.9
.4

3.0
.4

3.0
.3

2.8
.3

3.3

3.4

3.3

3.1

6.5
2.9
.1

6.3
2.9
.1

6.0
3.0
.1

6.3
2.8
.1

5.7
2.9
.1

9.5

9.2

9.0

9.2

8.7

15.9

14.4

14.6

14.7

14.5

1.8
1.1
.5
.3
4.8
.8
5.4
2.3

2.2
1.3
.6
.6
5.1
.6
5.3
2.4

1.2
1.5
.6
.6
5.0
.5
5.8
2.4

.7
1.4
1.2
.7
5.0
.5
6.1
2.2

.4
1.1
.6
.9
4.5
.7
5.5
2.1

17.1

18.1

17.6

17.7

15.7

21.2

23.9

25.1

24.7

2.6
1.6

1.8
1.8

1.9
2.1

3.7
2.3

4.8
2.3

25.4

27.5

29.1

31.1

31.8

_ 2

Additions to State, local, and private assets:

State and local assets
Private assets
Subtotal, additions to State, local, and
private assets
Developmental outlays:

Education, training and health
Research and development
Engineering and natural resources surveys
Subtotal, other development outlays
Total, investment-type outlays
CURRENT OUTLAYS
Current expenses for aids and special services:

Agriculture
Business
Labor
Homeowners and tenants
Veterans
International aids
Welfare aids
Other aids and special services
Subtotal, current
special services

expenses

for

aids

Retirement and social insurance benefits:

Insurance benefits
Unemployment benefits
Other retirement and social insurance benefits. _
Subtotal, retirement and social insurance
benefits

SPECIAL ANALYSES

Table D-2. CIVIL INVESTMENTS AND CURRENT OPERATING OUTLAYS
(percent of total budget outlays)—Continued
1972
actual

1973
actual

1974
actual

1975
estimate

1976
estimate

Other services and current operating expenses:
Repair, maintenance and operation of physical
assets (excluding special services)
Regulation and control
Other operation and administration
Net interest

.5
1.0
1.9
6.9

.6
.9
4.6
7.1

.6
1.1
4.4
8.0

.3
1.1
4.2
7.5

.3
1.0
4.3
7.5

Subtotal, other services and current operating expenses

10.3

13.2

14.1

13.1

13.0

Total, current outlays

52.8

58.8

60.8

61.8

60.5

68.8
-2.6

73.3
-4.1

75.4
-4.7

76.5
-3.7

75.1
-2.0

CURRENT OUTLAYS-Continued

Total, civil investments and current operating
outlays
Civil unclassified
Net civil outlays

66.2

69.2

70.8

72.8

73.1

OUTLAYS OF AN INVESTMENT NATURE

Outlays of an investment nature are divided into three categories:
(1) Additions to Federal assets; (2) additions to State, local, and
private assets; and (3) development outlays. Civil investment outlays
are $50.8 billion, approximately 14.5% of the budget, while defense
investment outlays are $31.1 billion, 8.9% of the 1976 budget.
Additions to Federal assets.—This category comprises additions
to both financial and physical assets of the Federal Government. Investment in Federal civil assets in 1976 is projected to be $9.7 billion,
increasing by $2.9 billion, or 42.6% over the 1975 increase. Investment
in defense assets in 1976 is planned to be $20.5 billion, an increase of
$2.7 billion and an increase of 15.2% over the 1975 investment.
The financial assets are primarily direct loans, for example, loans
to finance private housing construction and encourage homeownership, to help small businesses, and to promote ecomonic development
abroad. Federal financial assets include both loans and other financial
investments. Other financial investments include the capital provided
for certain international organizations such as the World Bank.
Civil loans and financial assets are estimated to increase $4.0
billion and represent 1.1% of the 1976 budget. Loans are expected
to increase by $2.6 billion. Special Analysis E discusses financial
investments in greater detail. Additions to physical assets include
outlays for public works, such as dam construction, flood control
projects, Federal power systems, changes in major commodity inventories, and outlays for major equipment (including military equipment) and for the acquisition and improvements of real property
and other physical assets.

THE BUDGET FOR FISCAL YEAR 19 76

Additions to civil physical assets are $5.7 billion in 1976, as compared to additions of $5.4 billion in 1975. Public works investments,
the largest part of this total are $4.5 billion in 1976 as compared to
$4.2 billion in 1975.
Additions to State, local, and private assets.—Federal outlays
in this category add to State, local, and private assets. Grants that
add to 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 plants, watershed protection projects, schools in federally affected areas, and public facilities
under economic development programs for depressed regions.
Outlays that increase the value of privately owned assets are
largely for the conservation and improvement of private farmland
and water resources, for grants for construction of private nonprofit
hospitals and other health facilities, and for construction subsidies
to the merchant fleet.
Civil additions to State, local, and private assets in 1976 will be
$10.8 billion, an increase of $0.3 billion more than in 1975. The major
area of increased spending is in the Federal highway trust fund.
Developmental outlays.—Federal outlays of this type are principally for research and development, education and health, and other
programs that improve the knowledge, technical skills, and physical
vigor of America. The Federal outlays shown in this category do not
fully reflect the Government's contribution to the productivity of the
economy. Certain other programs that further this end are classified in
accordance with their principal purpose; thus, veterans educational
benefits are listed as current expenses for veterans aid rather than as
developmental outlays. Similarly, the training of military personnel
and other Government emplo}^ees is treated as an operating expense
and not as part of the Government's education and training programs.
Civil research and developmental outlays are $30.2 billion, an increase of $1.5 billion from 1975. This includes increases for the supplemental security income (development), Energy Research and Development Administration (ERDA), Airport and airway trust fund, and
the National Aeronautics and Space Administration (NASA).
Civil developmental outlays for education, training, and health are
$19.8 billion in 1976, or 5.7% of total outlays.
Civil outlays for research and development are $10.1 billion in 1976
and reflect an increase of $1.3 billion from the 1975 level. The bulk
of this increase is: $0.4 billion for air transport safety; $0.3 billion for
NASA and $0.3 billion for ERDA.
OUTLAYS OF A CURRENT NATURE

Outlays of a current nature are divided into the following categories:
(1) Current expenses for aids and special services; (2) retirement and
social insurance benefits; and (3) other services and current operating
expenses.

SPECIAL ANALYSES

Current outlays for civil functions are $211.5 billion, an increase of
$17.7 billion from 1976. The rate of increase will drop from 19% in
1975 to 9% in 1976. Current outlays for military functions are $69.0
billion, an increase of $5.7 billion from 1975.
Current expenses for aids and special services.—Outlays 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 outlays for the farm programs of the Commodity
Credit Corporation, maritime operating subsidies, veterans pensions,
and grants to foreign nations for economic and military assistance,
this category includes: (1) Administrative and other operating expenses
attributable to investment-type programs that benefit specific groups;
and (2) 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 increases its holdings of
assets for 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 because they either are not reflected in outlays or cannot
be readily measured. Examples of such indirect benefits are loan
guarantees, a subject discussed in Special Analysis E, "Federal Credit
Programs.''
Although outlays in this category essentially provide a direct aid or
special service yielding immediate benefits, some of the items included
contribute indirectly to the Nation's future development. Among
these are grants for several community development purposes.
Aids to agriculture are expected to continue to decline, reaching $1.3
billion in 1976, a decrease of $1.7 billion from 1974. Farm Income
support has dropped dramatically as farm income had increased.
Aid to homeowners and tenants is expected to be $3.2 billion in
1976, an increase of 52% over the $2.1 billion of 1975.
Retirement
and social insurance benefits.—This category
applies only to trust funds. It covers benefit programs that are financed
from special taxes or contiibutions and provide insurance against the
loss of income due to unemployment, retirement, disability, or death.
It does not include outlays for Government employees' health and
life insurance programs, which are in the form of premium payments
to approved companies and are included with "other services and
current operating outlays."
The growth in retirement and social insurance benefits is the result
of both a growing number of recipients and recently legislated increases. Outlays for these benefits are expected to increase 13.9% in
1976, to $111.0 billion and will be 31.8% of total outlays in 1976. A
large part of this increase, $5.1 billion, will come from the increase in
unemployment benefits due to a higher average unemployment rate
in 1976 than in 1975.

THE BUDGET FOR FISCAL YEAR 19 76

Other services and current operating outlays.—The outlays
reported under this heading support a wide range of activities. They
consist mainty of: 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; interest on the public debt; and operation
and administration of other direct Federal programs not elsewhere
classified.
These outlays are expected to increase by $7.3 billion and will
reach $106.2 billion in 1976. Net interest accounts for $2.5 billion of
this increase and defense accounts for $2.8 billion. Defense costs have
risen primarily due to price increases while net interest outlays will
increase because of the large deficits in 1975 and 1976.
UNCLASSIFIED

Certain outlay estimates cannot be classified precisely into any of
the categories described above and allowances are provided for them.
This year, a special allowance of $7 billion is provided for energy tax
equalization payments to low-income nontaxpayers, State and local
governments, and Federal agencies to compensate them for higher
energy costs due to the energy tax.
Intragovernmental receipts arise as a result of transactions between
Government agencies or funds. These transactions occur entirely
within Government accounts and are deducted from outlays to avoid
double counting. In order to provide a measure of outlays by category,
most intragovernmental receipts are allocated to a particular category
whenever possible. For example, interest received by the social security and other trust funds is deducted from the interest on the public
debt category in order to derive a measure of net interest paid to the
public. In addition, Government agency contributions for employee
retirement, which help to finance retirement benefits, are deducted
as a lump-sum unclassified amount.
Proprietary receipts from the public, arising from business-type
activities of the Government, are unclassified and are offset against
total outlays to highlight the net impact of the budget.
RELATIONSHIP TO CAPITAL BUDGET

The U.S. Government does not produce a capital budget in the sense
of a long-range program for the acquisition of assets, with separate
financing of capital outlays. Some foreign governments and some
State and local governments fund a portion of their capital expenditures by separate borrowing. They exclude most or all such expenditures from the computation of budget totals, except for annual charges
to amortize these capital outlays over a number of years.
While this analysis does not provide a precise measure of the difference between capital and current items, it does indicate useful general
magnitudes. However, 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 for transactions only
where the data will serve program and management needs, as in the
case of the public enterprise funds. As a result, this analysis does not
estimate the net addition to the value of federally owned assets.

SPECIAL ANALYSES

Recoverability of outlays.—In general, Government outlays 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 activities are carried on through revolving funds, such as in the case of most loan programs, receipts are
credited directly against disbursements and only the difference is
included in the total of outlays in the budget and in this anatysis. All
other receipts from the public arising from market-oriented or businesstype activities of the Government are offset against total outlays.
Whether recovered by specific receipts or not, investment and
developmental outlays for 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 receipts. However, this analysis does not attempt to measure the degree of recoverability of developmental outlays, the potential gain in public receipts
that will be forthcoming, or the duration of future benefits and their
discounted present value.
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays

ADDITIONS TO FEDERAL ASSETS
Loans:

Civil:
To domestic and private borrowers:
Department of Agriculture:
Commodity Credit Corporation: Price support and related programs
Farmers Home Administration:
Rural housing insurance
Agricultural credit insurance
Rural development insurance
Other 1
Soil Conservation Service and other 1
Department of Health, Education, and Welfare:
Health Resources Administration
Office of Education:
Higher education
Student loan insurance
Other
Other
Department of Housing and Urban Development:
Housing Production and Mortgage Credit: Federal Housing Administration and Government National Mortgage Association:
Federal Housing Administration
Special assistance functions
Management and liquidating functions and other
Community planning and development and other

530-700 O - 75 - 5

-1,013

-108

-67

-215
-39
18
-6

-1,314
-487
-116
-6
*
54

279
84
-3
2

199
171
-2
9

240
188
8
1

327
—214
—83
8

298
-64
-71
90

313
-375
-63
-14

1,141
—40
127
-9
1

THE BUDGET FOR FISCAL YEAR

1976

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued
Civ il—Continued
To domestic and private borrowers—Continued
Veterans Administration:
Loan guaranty revolving fund
Direct loans
Education loans
National service life insurance
Other i
Federal Deposit Insurance Corporation
Small Business Administration:
Business loans and investment
Disaster loans
Other agencies
Total to domestic and private borrowers
To State and local governments:
Department of Housing and Urban Development: Community planning and development and other
District of Columbia
Other agencies l
Total to State and local governments
To foreign borrowers:
Funds appropriated to the President:
International Development Assistance
Special Financing Facility
Department of Agriculture: Public Law 480 credit sales
Other agencies
Total to foreign borrowers
National defense:
To domestic and private borrowers: Other agencies
To foreign borrowers:
Funds appropriated to the President: International Security
Assistance
Total loans

25
-78

—270
-73
80
75
8
100

—56
-83
72
56
9

126
68
23

86
62
83

127
19
65

886

—1,196

229

—76
154
38

31
246
59

26
288
68

115

336

381

581

676

289
2

838
—3

784
1,000
778
—3

873

1,511

2,559

—2

326

426

827

2,198

1,075

3,996

446

704

818

36
7

Other financial investments—civil:

Investments in quasi-public institutions, trust funds, and international institutions: Funds appropriated to the President:
International financial institutions

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Public works—sites and direct construction:
Civil:
Legislative branch:
Architect of the Capitol
__
United States Tax Court
Department of Agriculture:
Agricultural Research Service
Forest Service:
Forest roads and trails
Other i
Department of Defense—Civil:
Corps of Engineers:
Construction, general
Flood control, Mississippi River and tributaries
L
Trustfunds
Other i
Department of Health, Education, and Welfare:
Indian health and other health services
Other 1
Department of the Interior:
Bureau of Reclamation:
Construction and rehabilitation
Colorado River Basin project
Other 1
National Park Service: Planning and constiuction and
other i
Bonneville Power Administration: Construction, and operation and maintenance of facilities
Bureau of Indian Affairs: Construction of schools and
roads_...
Otheri
Department of Transportation:
Coast Guard: Acquisition, construction, and improvementsFederal Aviation Administration: Airway system investment and development (Airport and airway trust fund)
Other
Energy Research and Development Administration: Plant and
capital equipment and other l
General Services Administration: Public buildings
National Aeronautics and Space Administration: Construction
of facilities
Veterans Administration: Hospitals and other
Tennessee Valley Authoiity
Other agencies
National defense:
Department of Defense—Military:
Military construction
Family housing and other
Energy Research and Development Administration
Total public works—sites and direct construction
See footnotes at end of table.

20
9

73
64

100
66

58
72

987
82
19
9

1,048
185
22
17

1,109
134
22
11

38
35

62
69

72
73

233
62
17

260
50
45

290
46
76

102

113

103
21

129
30

140
27

190
18

237
23

258
20

256
210

320
1

421
—2

75
104
510
92

100
137
955
105

108
184
930
148

1,286
209
124

1,351
276
199

1,583
321
201

5,036

6,054

6,620

61
*

THE BUDGET FOR FISCAL YEAR 1976

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Major commodity inventories:
Civil:
Department of Agriculture; Commodity Credit Corporation:
Agricultural commodities
Other agencies
National defense:
Funds appropriated to the President: Expansion of defense
production
Othei agencies
Intragovernmental transactions (—)
Total major commodity inventories

—364
5

84
1

153
3

—155
16
—6

3
1
—40

—504

155

25
96
82
4

38
104
93
17

50
83
109
17

15,241
70

14, 785
101

16, 600
101

15,518

15,139

16,960

120

203

151

680
*

588
*

442
*

92
28
—440
7

100
40
— 134
40

126
39
—41
53

774

736

828

1,261

1,572

1,597

23,956

24,594

30,146

Major equipment:

Civil:
Department of Commerce
Department of Transportation: Coast Guard and other
Energy Research and Development Administration
Other agencies1
National defense:
Department of Defense—Military: Procurement
Energy Research and Development Administration
Total major equipment
Other physical assets—acquisition and improvement:

Civil:
Department of Agriculture: Reforestation and range improvements and other '.
Department of Housing and Urban Development:
Federal Housing Administration
Housing Management
Department of the Interior:
Land and water conservation
Other
Energy Research and Development Administration
Other agencies
--National defense: Energy Research and Development Administration
Total other physical assets—acquisition and improvement.
Total additions to Federal assets
See footnotes at end of table.

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays—Continued

ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS
State and local assets:
Civil:
Funds appropriated to the President:
Appalachian regional development programs
Other
Department of Agriculture:
Rural water and waste disposal grants and other rural
development
Watershed and flood prevention operations and other conservation
Department of Commerce: Economic development assistance
programs and other
Department of Health, Education, and Welfare:
Health resources
Education
Human development
Department of Housing and Urban Development:
Housing management
Open space land programs
Grants for neighborhood facilities
Grants for basic water and sewer facilities
New communities assistance
Department of the Interior:
Land and water conservation
Other
Department of Justice: Law enforcement assistance
Department of Transportation:
Grants-in-aid for airports (Airport and airway trust fund) _
Federal Highway Administration:
Federal-aid highways (trust fund)
Other i
National Highway Traffic Safety
Urban Mass Transportation
Environmental Protection Agency: Construction grants
Washington Metropolitan Area Transit Authority
Other agenciesJ
National defense: Department of Defense—Military
Total State and local assets
Private assets—Civil:
Department of Agriculture:
Agricultural Stabilization and Conservation Service:
Agricultural conservation program
Other
Soil Conservation Service:
Conservation operations
Watershed and flood prevention operations
Other
Other
Department of Commerce: Ship construction
See footnotes at end of table.

222

255
1

260
1

105

198

218

194

256
64
10

307
59
5

258
56
4

80
40
136
1

75
35
140
2

151
70
82

150
80
98

160
90
96

243

290

360

4,341
35
1
345
1,553
170
5
41

4,380
49

4,666
47

615
2,300
185
6
46

796
2,300
182
12
54

8,187

9,454

9,946

239

2
67

239
58

165
35
25
28
200

201
67
33
-17
256

40
59
200
62
32
*
315

THE BUDGET FOR FISCAL YEAR 1976

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
Private Assets—Civil—Continued
Department of Health, Education, and Welfare:
Health resources.
Other
National Science Foundation
Other agencies.1
Total private assets
Total additions to State, local, and private assets

114
67
36
21

129
62
40
23

129
28
75
15

760

1,091

955

8,947

10,545

10,901

50
199

55
223

52
231

567
58
96
162
464
413
1,667
536
205
111
526
844
140
227
111
5,910
12
14
50
4
60
20
569
14
189

685
77
95
184
679
502
1,890
605
207
116
589
1,572
159
145
175
6,688
12
135
67
7
70
28
428
24
237

598
89
103
166
603
437
2,193
349
122
128
550
1,770
107
38
165
6,815
8
54
90
9
74
32
443
65
227

82
35

63
43

87
46

OTHER DEVELOPMENTAL EXPENDITURES
Education, training, and health:
Civil:
Funds appropriated to the President: Appalachian regional development programs
Department of Agriculture: Extension Service and other
Department of Health, Education, and Welfare:
Health services
Indian health
Preventive health services
National Institutes of Health
Alcohol, drug abuse, and mental health
Health resources
Elementary and secondary education
School assistance in federally affected areas...-.
Emergency school aid
Education for the handicapped
Occupational, vocational, and adult education
Higher education
Library resources
Educational development
Salaries and expenses and other education *
Public assistance
Other social and rehabilitation services
Supplemental security income program
Federal disability insurance trust fund
Other social security *
Howard University
Other special institutions
Human development
Other 1
Department of the Interior: Operation of Indian programs.__
Department of Justice:
Law enforcement assistance
Other
See footnotes at end of table.

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAY
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays—Continued
OTHER DEVELOPMENTAL

EXPENDITURES—Con.

Education, training, and health—Continued

Civil—Co itinued
Department of Labor:
Comprehensive manpower assistance
Emergency employment assistance
Temporary employment assistance
Program administration
Community service employment for older Americans
Veterans Administration: Medical care and other
ACTION.
Community Services Administration
Corporation for Public Broadcasting
National Foundation on the Arts and the Humanities 1
National Science Foundation
Smithsonian Institution
Other agencies *
Intragovernmental transactions (—)
National defense: Department of Health, Education, and Welfare
Total education, training, and health

1,416
598

2,752
58
350
62
10
210
99
5
62
156
66
54
79
___
1

16,059

19, 720

19,820

207
85
62
23

228
99
78
27

249
110
83
29

102

124

139
80

1,413
64
97
70
143

1,641
135
55
82
71
184

1,626
128
110
84
66
194

200

282
59

356
45

113
59
168
1,111
212
3,111
96
532
176

543
51
199
1,444
284
3,393
97
570
171

58
156
86
78
48
96
66
44
75

2,645
650
64
223
105
70
183
63
67
104
—10

Research and development:

Civil:
Department of Agriculture:
Agricultural Research Service 1
Cooperative State Research Service x
Forest Service J
__
Other 1
Department of Commerce:
National Oceanic and Atmospheric Administration
Other
Department of Health, Education, and Welfare:
National Institutes of Health
Alcohol, drug abuse, and mental health
Occupational, vocational, adult, and other education
National Institute of Education
Human development
Other 1
...
Department of Housing and Urban Development: Policy
development and research and other
Department of the Interior: Mines and minerals, geological
surveys, and other J
Department of Justice: Law enforcement assistance and other.
Department of Transportation:
Federal Aviation Administration J
Urban Mass Transportation Administration
Other 1
.
Energy Research and Development Administration x
Environmental Protection Agency
National Aeronautics and Space Administration x
Veterans Administration
National Science Foundation J
Other agencies l
See footnotes at end of table.

44
109
51
162
817

147
3,183
80
539
148

THE BUDGET FOR FISCAL YEAR 1976

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Investment-type outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Con.
Research and development—Continued
National defense:
Department of Defense—Military:
Military personnel
Research, development, test, and evaluation
Other
......
Energy Research and Development Administration
Total research and development
Engineering and natural resources surveys—civil:
Department of Defense—Civil:
Corps of Engineers
The Panama Canal___
Department of the Interior:
Geological Survey
Other
Other agencies1
Intragovernmental transactions (—)

___
—

Total engineering and natural resources surveys—civil
Total other developmental expenditures
Total investment-type outlays

373
8,582
5
446

405
8,650
6
480

411
9,610
7
543

17,414

18,330

20,692

52
1

84
52
67
-26

98
63

77
-24

108
86
76
-29

230

269

296

33,702

38,320

40,807

66,605

73,458

81,855

237

246

162

2,232
77

1,194
26

187
23

121
149
133
22
78
117
6

136
111
84
12
76
165
9

147
377
134
57
80
158
10

Current outlays
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES
Agriculture—civil:

Department of Agriculture:
Agricultural Stabilization and Conservation Service: Expenses and other
Commodity Credit Corporation:
Price support and related programs__
Other
Farmers Home Administration:
Salaries and expenses and other *
Rural housing insurance
Agricultural credit insurance- _
Rural development insurance
Agricultural Marketing Service *
Other1...
Other agencies
Total agriculture
See footnotes at end of table.

3,173

2,061

1,335

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Current outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued

Business—civil:
Department of Commerce:
Social and economic statistics
Domestic and international business operations and administration 1
Minority business development
Patent Office
.
...
Maritime operating-differential subsidies and other J
1
Other
__
Department of Defense—Civil:
Corps of Engineers
The Panama Canal
Department of Transportation:
Office of the Secretary
Coast Guard: Navigation aids and other x
Federal Aviation Administration: Operations and other 1
Federal Railroad Administration: Grants to National Railroad Passenger Corporation and other
Civil Aeronautics Board: Payments to air carriers
Postal Service
Small Business Administration:
Business loans and investments and other
Disaster loan fund
Other agencies l
Intragovernmental transactions (—)
Total business
Labor—civil:
Department of Health, Education, and Welfare: Work incentives.
Department of the Interior: Mining enforcement and safety
Department of Labor:
Manpower Administration:
Federal unemployment benefits and allowances
Grants to States for unemployment insurance and employment services
1
Unemployment trust fund
Other
Employment standards
Occupational safety and health
Labor statistics 1
Departmental management
Equal Employment Opportunity Commission
Occupational Safety and Health Review Commission
Railroad Retirement Board
Intragovernmental transactions (—)
Total Labor
See footnotes at end of table.

51
45
73
263
55

56
61
77
247
64

56
49
83
316
69

285
-10

287
-17

330
-21

1
511
1, 194

*
608
,285

-1
629
990

154
73
778

442
67
911

406
66
570

171
398
26
—24

126
136
50
-23

100
105
40
-26

4,099

4,440

3,830

232
57

222
67

218
77

1,834

226

60
909
29

64
1,237
25
77
102
52
30

74
1,160
29
76
116
58
30
60
6
305
-250

57
69
47
21

42
5
22
1
1,571

54
6
4
-1
3,773

2,185

THE BUDGET FOR FISCAL YEAR

1976

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Current outlays—Continued

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Homeowners and tenants—civil:
Department of Housing and Urban Development:
Housing Production and Mortgage Credit:
Federal Housing Administration
Special assistance functions
Other
Housing management:
Housing payments
Payments for operation of low-income housing projects
Other
--:-—.
Federal Insurance Administration
Other
Federal Home Loan Bank Board
Other agencies
Total homeowners and tenants

—145
256
-8

—94
325
15

—25
760
20

1,776

2,117

2,380
210

Veterans—civil:
Department of Health, Education, and Welfare: Payments to
social security trust and other funds
Veterans Administration:
Compensation and pensions
Readjustment benefits
Medical care
General operating expenses
Loan guaranty revolving fund
National service life insurance trust fund
U.S. Government life insurance trust fund
Other 1
Other agencies l
Intragovernmental transactions (—)
Total veterans.

47
4
-352
1

~38
62
8
-309
2

1,591

2,088

3,173

239

240

295

6,633
3,249
2,634
337
23
587
80
-77
44
-264

7,443
3,965
3,071
447
69
608
79
-44
14
-246

7,488
3,530
3,359
451
45
638
80
-52
11
-297

13,486

15,648

15,548

382
246
409
25

319
508
522
27

398
762
481
32

264
48
81
8
-50

-60
93
83
17
-50

558
48
83
15
-50

121
13
-333
2

International aids:

Civil:
Funds appropriated to the President:
International security assistance: Security supporting assistance
Indochina postwar reconstruction assistance
International development assistance*
Contingencies
Department of Agriculture: Public Law 480 donations of
agricultural commodities
Department of State
ACTION^
Other agencies
Intragovernmental transactions (—)
See footnotes at end of table.

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974

1975

1976

actual

estimate

Current outlays—Continued

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
International aids—Continued

National defense:
Funds appropriated to the President: International security assistance1
__
Department of Defense—Military:
Military construction
Military assistance, South Vietnamese forces
Total international aids

3,752

4,920

6,081

73
515

80
975

5,253

6,967

9,463

250

275

250

234
784
2,845
751
50

160
488
3,672
1,323
120

3
43
3,643
1,649
18
6

6,804
108
63
95
965
1,875
718

6,591
94
67
73
938
4,252
988

6,585
97
72
45
960
4,900
1,015
1

15,541

19,041

19,287

111

101
124
40
56

112
161
—35
48
44

117
175
25
53
79

2, 782
286
712
152
256
406
34
58

3,127
408
861
255
277
411
26
118

3,770
504
905
277
316
508
13
101

Welfare aids—civil:

Funds appropriated to the President: Disaster relief
Department of Agriculture:
Commodity Credit Corporation: Price support and related
programs
Funds for strengthening markets, income, and supply
Food stamp program
Grants for child food assistance
Special milk program
Food donations program
Department of Health, Education, and Welfare:
Public assistance
Work incentives
Other social and rehabilitation services
Assistance to refugees in the United States
Special benefits for disabled coal miners
Supplemental security income program
Human development
Departmental management
Total welfare aids
Other aids and special services—civil:
Department of Commerce: Economic development and other
Department of Health, Education, and Welfare:
Health Services Administration:
Health services
Indian health
____
Health maintenance organization loan and loan guarantee,
Alcohol, Drug Abuse, and Mental Health Administration
Health Resources Administration
Social Security Administration:
Payments to social security trust and other funds
Supplemental security income program
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Other
Departmental management and other *
See footnotes at end of table.

THE BUDGET FOR FISCAL YEAR 1976

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
ctual

1975
estimate

1976
estimate

Current outlays—Continued

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Other aids and special services—civil—Continued

Department of Housing and Urban Development:
Comprehensive planning grants
Model cities programs
Urban renewal fund—capital grants
Other
Departmental management and other
Department of the Interior:
Bureau of Indian Affairs:
Operation of Indian programs
Miscellaneous appropriations
Miscellaneous trust funds
Other i
Department of Transportation:
Federal Highway Administration: Federal-aid highways and
other trust funds
National Highway Traffic Safety Administration K _. I
Other
Community Services Administration
Legal Services Corporation
PostalService
Other agencies
Intragovernmental transactions (—)
Total other aids and special services
Total current expenses and aids and special services

99
468
1,211
35
46

107
280
1,200
39
71

60
230
1,200
43
69

212
74
264
24

270
84
158
16

294
83
155
7

116
129
38
570
920
92
—3,059

147
120
152
492
39
920
119
—3,297

155
118
252
374
63
920
118
—3,875

6,329

6,832

7, 221

51,044

60,849

62,042

47,847
6,158
7,806
2,874
50
2,654

54,718
7,636
9,901
3, 551
—315
65
2,999

62,864
9,083
11,380
4,145
—4,573
69
3,238

67,389

78,555

86,206

5,139

11,697

2,100
14,671

5,139

11,697

16,771

RETIREMENT AND SOCIAL INSURANCE BENEFITS
Insurance benefits—civil:
Department of Health, Education, and Welfare:
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Other social security trust funds
Department of Labor: Unemployment trust fund
Railroad Retirement Board (trust fund)
Total insurance benefits
Unemployment benefits:
Civil:
Department of Labor: Manpower Administration:
Advances to the Federal unemployment benefits and
allowances
Unemployment trust fund
Total unemployment benefits
See footnotes at end of table.

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Currrent outlays—Continued

RETIREMENT AND SOCIAL INSURANCE
BENEFITS—Continued
Other retirement and social insurance benefits—civil:
Department of State: Foreign Service retirement and disability
trust fund
Civil Service Commission: Civil service retirement and disability
trust fund
Other agencies
Intragovemmental transactions (—)

5,669
1
—15

7,205
1
—22

7,974
1
—7

Total other retirement and social insurance benefits

5, 694

7,238

8,032

78,222

97,490

111,009

353

401

343

199
1

248
1

268
1

103
107
179
37
34
94
612
-177
86
*

144
128
229
-90
42
97
6
-262
122

126
152
241
-191
38
108
2
-331
117

22,429
614

25,603
742

71
-1

82
*

28,174
890
148
90

24,740

27,493

30,178

207

307

342

330

376

381

145

173

189

Total retirement and social insurance benefits
OTHER SERVICES AND CURRENT OPERATING
EXPENSES
Repair, maintenance, and operation of physical assets:
Civil:
Department of Agriculture: Forest Service l
Department of Defense—Civil:
Corps of Engineers
Miscellaneous accounts
Department of the Interior:
Bureau of Land Management J
Bureau of Reclamation *
National Park Service J
Bonneville Power Administration
Other
Energy Research and Development Administration
General Services Administration: Public buildings
Tennessee Valley Authority
Other agencies *
Intragovemmental transactions (—)
National defense:
Department of Defense—Military:
Operation and maintenance
Family housing
Naval Petroleum Reserve
Energy Research and Development Administration
General Services Administration
Total repair, maintenance, and operation of physical assets. _
Regulation and control—civil:

The Judiciary 1
Department of Agriculture: Animal and Plant Health Inspection
Service and other *
Department of Health, Education, and Welfare: Food and Drug
Administration and other
See footnotes at end of table.

THE BUDGET FOR FISCAL YEAR 1976

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Currrent outlays—Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Regulation and control—civil—Continued
Department of Justice:
General administration
Legal activities
Federal Bureau of Investigation
Immigration and Naturalization Service
Federal Prison System 1
Law Enforcement Assistance Administration
Drug Enforcement Administration
Department of Transportation:
Coast Guard
Federal Aviation Administration
Other
Department of the Treasuiy:
Bureau of Alcohol, Tobacco and Firearms
Customs Service 1
Internal Revenue Service
Secret Service
Other 1
Environmental Protection Agency 1
Federal Deposit Insurance Corporation
Interstate Commerce Commission
National Labor Relations Board
Nuclear Regulatory Commission
Other agencies *
Total regulation and control

17
179
368
149
133
566
91

22
215
421
174
155
619
130

82
83
13

103
90
19

117
92
25

79
50
52
67
-2
206
-224
38
80
208

96
70
48
83
9
281
-630
47
64
139
284

102
68
49
95
6
345
-699
50
70
198
304

2,972

3,296

3,636

335
226
52
51
214
29

362
274
54
50
240
14

418
295
71
66
265

907

994

1,131

113

133

151

21
235

445

208
176
670
148

Other operation and administration:

Civil:
International activities:
Department of State:
Administration of foreign affairs 1
International organizations and conferences 1
Educational exchange and other *
Board for International Broadcasting
United States Information Agency l
Other agencies
Total international activities
Federal financial activities:
Legislative branch: Gendal Accounting Office and other._.
Department of Health, Education, and Welfare:
Health Services Administration
Social Security Administration: Supplemental security
income program
Department of the Treasury:
Bureau of Government Financial Operations l
Customs Service
Bureau of the Public Debt
Internal Revenue Service
Other
See footnotes at end of table.

35
82

-82

89
185
76
1,222
39

113
244
100
1,537
62

123
256
96
1,577
74

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974
actual

1975
estimate

1976
estimate

Current outlays—Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration—Continued
Civil—Con tinued
Federal financial activities—Continued
Other agencies
Total Federal financial activities
Other direct Federal programs:
Legislative branch *
Executive Office of the President
Funds appropriated to the President: Economic stabilization
activities and other
Department of Commerce: National Oceanic and Atmospheric Administration and other 1
Department of Defense—Civil:
Corps of Engineers
The Panama Canal
Department of Health, Education, and Welfare: Departmental management and other
Department of the Interior
_
Department of the Treasury: Bureau of Government Financial Operations and other i
Environmental Protection Agency
General Services Administration 1
Civil Service Commission:
Payment to civil service retirement and disability fund_ _
Employees life insurance fund
Employees health benefits fund
Salaries and expenses
Other*
Federal Energy Administration
Other agencies 1
Total other direct Federal programs

1,812

2,144

2,280

457
58

535
101

628
73

257

272

285

34
59

40
64

43
60

66
80

81
117

96
135

112
104
196

195
121
181

210
133
171

—156
—62
73
6
33
36

363
—278
—38
93
13
127
76

—361
—6
96
12
208
90

1,427

2,068

1,874

Retirement, unemployment, and accident compensation for
Federal employees:
Department of Labor:
Federal unemployment benefits and allowances
Special benefits
.
Department of Transportation: Coast Guard: Retired pay_
Civil Service Commission:
Government payment for annuitants, employees health
benefits.... _.
Payment to civil service retirement and disability fund..
Intragovemmental transactions (—)
Other agencies

343
107
86

331
165
105

384
201
116

163
2,384
—2,421
38

252
3,081
—3,487
45

339
4, 089
—4,135
48

Total retirement, unemployment, and accident compensation for Federal employees

700

492

1,042

See footnotes at end of table.

THE BUDGET FOR FISCAL YEAR 1976

Table D-3.INVESTMENT,OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974

1975

1976

Current outlays—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 Housing and Urban Development: Commuunity development grants
Department of the Interior: Land management, territorial
affairs, and other
Department of the Treasury:
Customs Service
Internal Revenue Service
State and local government fiscal assistance trust fund
District of Columbia
Tennessee Valley Authority
Other agencies

121

119

225

1,300

179

247

293

95
101
6,106
187
31
31

213
116
6,176
221
37
33

218
118
6,301
254
50
34

6,844

7,398

8,687

11,690

13,095

15,013

23,355
5,128
49
63
65
269
-10
60
13
—7

24,631
6,281
66
72
74
142
36
47
16
—6

24,588
6,884
71
49
72
—491
5
48
39
—6

Total other operation and administration, national defense..

28,984

31,359

31,259

Total other operation and administration

40,674

44,454

46,272

29,319

32,900

36,000

Total shared revenues and grants-in-aid
Total other operation and administration, civil
National defense:
Department of Defense—Military:
Military personnel
Retired military personnel._
Operation and maintenance
Family housing
Civil defense
Revolving and management funds
Other 1
Selective Service System
f
Other agencies
Intragovernmental transactions (—)

Interest:
On public debt
Other interest:
On refunds: Department of the Treasury
On uninvested funds: Department of the Treasury
I ntragovernmental transactions: special fund (—)
Total other interest
Intragovernmental transactions (—):
I nterest on Government capital in enterprises (—)
Interest received by trust funds ( - ) _ _
Receipts from off-budget Federal agencies: Interest on Government capital in enterprises (—)
See footnotes at end of table.

115

220
6
*

239
8
*

390
8
*

226

247

398

—1,119
-6,583
—155

—1,254
-7,769

— 1,229
-8,305

—333

—436

SPECIAL ANALYSES

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description

1974

1975

1976

Current outlays—Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Interest—Continued
Proprietary receipts from the public (—)

Total net interest
Total other services and current operating expenses

—198

—231

—314

21,490

23,560

26,114

89,875

98,804

106,200

1,194
141

National defense allowances:
Department of Defense—Military: Allowances:
Civilian and military pay raises
Other legislation

Total national defense allowances
Total current outlays...

1,335
219,244

257,181

279,686

500
200

7,000
550
500

-2,677
-642
-14,035

-2,960
-1,110
-13,784

-3,109
-779
-17,230

268,392

313,446

349,372

UNCLASSIFIED
Allowances for:
Energy tax equalization payments
Civilian agency pay raises
Contingencies
Employer share, employee retirement:
Interfund transactions ( - )
Receipts from off-budget Federal agencies(-)
Proprietary receipts from the public ( - )
Total budget outlays
* Less than $500,000.
Includes both Federal funds and trust funds.

530-700 O - 75 - I

SPECIAL ANALYSIS E
FEDERAL CREDIT PROGRAMS

A significant part of the Federal Government's assistance to the
public occurs through credit programs. Credit assistance is provided
in a number of ways. Direct loans are made by Federal agencies
whose activities are shown in budget totals, by Federal agencies outside the budget and by Government-sponsored, privately owned credit
enterprises. Federal Government agencies also guarantee or insure
private loans. Both explicit and implicit interest rate subsidies are
provided. And, serving as intermediaries, government-sponsored credit
enterprises improve access to credit markets for certain borrowers.
Because of the complex institutional arrangements that have evolved,
several forms of credit assistance are frequently combined in a single
credit program, and sometimes a single transaction is aided by two or
more programs.
This analysis is intended to serve as a basic factual resource rather
than as an evaluation of programs and policies. Questions of great
analytical difficulty remain unanswered about what are the effects
of credit assistance and who benefits by what amounts. The discussion of interest subsidies later in this analysis is one approach to the
evaluation of some aspects of Federal credit programs.
Constraints on space require consolidation of information relating
to budget accounts and programs in this analysis. Greater detail is
available elsewhere. The Treasury Bulletin provides data on outstanding direct and guaranteed loans in the most recently completed1
fiscal year or quarter for both accounts and programs within accounts.
Part IV of the Budget Appendix contains tables displaying disbursements, repayments and net outlays for each budget account containing
direct loan transactions.
TRENDS AND DIRECTIONS

The total amount of credit provided under Federal auspices has
risen rapidly during the past decade, both from the expansion of
existing programs and the initiation of new ones. Table E - l
summarizes data on Federal participation in domestic credit markets
over the last decade.
In 1965, funds advanced in U.S. credit markets to nonfinancial
sectors totaled $69.3 billion. Of this, $8.9 billion, or 13% was advanced under the auspices of one or more Federal credit programs.
In 1970, total funds advanced had risen to $85.3 billion, and credit
advanced under Federal auspices had risen to $17.4 billion, or 20%
of the total. Since that time, the rate of Federal participation in credit
advanced has declined to the levels of the late 1960's, about 15%.
The reduction in Federal participation in recent years is more nearly a
i See table GA 11-2, Treasury Bulletin.

Table E-l. FEDERAL PARTICIPATION IN DOMESTIC CREDIT MARKETS (billions of dollars)
Actual

Total funds advanced in U.S. credit markets to nonfinancial
sectors 1 (excluding equities)
Advanced under Federal auspices
Federal participation rate (percent)
Total funds raised in U.S. credit markets by nonfinancial
sectors1
Raised under Federal auspices2
Federal participation rate (percent)
Funds raised through marketable securities
Market total (including CD's) 6
Raised under Federal auspices 4
Federal participation rate (percent)
Market total (excluding CD's) 6
Raised under Federal auspices 4
Federal participation rate (percent)
1
2
3
4
5
6

Source: Federal Reserve Board
Estimates from table E-10.
Includes open market paper and
Includes borrowing by sponsored
Not estimated.
CD's are negotiable commercial

1965

1966

1967

1968

1969

69.3
8.9
13

73.3
10.1
14

58.7
5.8
10

92.5
14.9
16

95.8
15.0
16

69.3
10.2
15

73.3
8.7
12

58.7
1.1
2

92.5
31.3
34

25.6
6.1
24

29.0
6.5
22

27.7
.6
2

21.9
6.1
28

26.0
6.5
25

26.9
.6
2

1970

Estimates
1971

1972

1973

1974

1975

85.3
17.4
20

111.8
16.5
15

143.6
22.0
15

185.1
26.1
14

177.2
26.6
15

(5)
31.3

95.8
11.3
12

85.3
16.4
19

111.8
32.3
29

143.6
39.7
28

185.1
46.9
25

177.2
24.1
14

52.2
27.2
52

36.5
6.3
17

52.2
18.1
35

72.7
25.1
35

79.4
30.8
39

86.9
41.0
47

95.7
25.1
26

52.1
27.2
52

40.5
6.3
16

53.3
18.1
34

58.3
25.1
43

72.1
30.8
43

63.1
41.0
65

74.9
25.1
34

Flow of Funds Statement (fiscal year data).
bonds sold by financial intermediaries (compiled from FRB Flow of Funds data).
enterprises and Federal Government plus all guaranteed loans in form of security market issues.
bank certificates of deposit of $100 thousand and over.

1976

(5)
28.7
(5)
78.9

S.4

(5)
80.0

(5)

(5)
80.0

62.4

THE BUDGET FOR FISCAL YEAR 1976

measure of the explosive growth in total credit advanced than a
slowing of Federal activity. Since 1970 total credit advanced has
grown at an average annual rate of more than 20% compared with
an average annual rate of growth of about 4% in the years 196570.2 By comparison, funds advanced under Federal auspices during
the same periods grew at average annual rates of 11% and 14%,
respectively.
Another way to evaluate the Federal Government's impact on
credit markets is to compare funds raised under Federal auspices, i.e.,
Federal and federally-assisted borrowing, to total funds raised in U.S.
credit markets by nonfinancial sectors. Funds raised under Federal
auspices, including those raised under Federal credit programs and
those borrowed to finance deficits in the U.S. budget, accounted for
approximately 14% of total funds raised in 1974, but are expected to
rise rapidly to finance the deficits now budgeted for 1975 and 1976.
The credit component of the budget has become a less useful
indicator of Federal credit activities. In part this has occurred as a
result of the substitution of loan guarantee programs for direct loan
programs. This greater dependence on loan guarantee programs, in
which private credit markets are relied upon to provide the necessary
capital while the Government assumes some or all of the risks normally
borne by lenders, reduces direct Federal outlays for a given level of
assisted loans. Federal credit assistance has also been moved off of the
budget through the creation of Federal agencies that are, by statute,
outside the budget, and of enterprises which are privately owned, but
Government-sponsored.
A significant development of 1974 was the establishment of the
Federal Financing Bank (FFB). This new debt management facility,
authorized by Public Law 93-244 enacted December 29, 1973, has
authority to purchase any obligation issued, sold, or guaranteed by
a Federal agency. The bank's objective is to provide more efficient
financing for these obligations, thereby reducing or eliminating
unnecessary costs to the Government.
The FFB is authorized to borrow up to $15 billion directly from the
market and to borrow from the Treasury without stipulated limit.
Through January 3, 1975, FFB had borrowed $3.0 billion from the
Treasury, and $1.5 billion through short-term notes placed directly
with the public.3
The FFB purchase of guaranteed loan issues, if continued, will
reverse the earlier trend of increased reliance upon private credit
facilities. It could also increase demands for credit under Federal
guarantee programs because FFB can lend at interest rates generally
lower than those available to guaranteed borrowers in private credit
markets.
Table E-2 details FFB purchases of obligations. During 1975, FFB
purchases are expected to total over $13 billion of which approximately
$3.6 billion will be used for the temporary financing of mortgage loans
acquired under the GNMA tandem plan.
2
Total credit advanced is reflected in the outlays of Government-sponsored enterprises as discussed
in Part 2 of the Budget.
3
Because it was created as an off-budget agency, the 1976 budget of the FFB is published along
with budgets of other off-budget agencies in Part IV of the Budget Appendix.

SPECIAL ANALYSES

Table E-2. FFB NET PURCHASES OF OBLIGATIONS
(in millions of dollars)
1974
actual

Agency loan asset sales!
Guaranteed loans

2
100

Total loan purchases
Agency debt: 2
On budget agencies
Off-budget agencies

102
.__

Total net purchases of obligations 3

_
500
602

1975
estimate

8,112
2,467
10,579
780
2,207
13,566

1976
estimate

2,482
3,292
5,774
750
3,415
9,939

1
Direct loans sold from agency portfolios are normally guaranteed at time of sale and reappear
in 2guaranteed loan tables.
These loans are intergovernmental debt transactions and are not loan outlays for the purposes
of 3 the credit analysis.
Net of repayments received by FFB.

Another significant credit development during 1974 and 1975 has
been a large increase in credit assistance to housing. Restrictive
monetary policies substantially reduced the supply of credit available
to traditional mortgage lenders, triggering a drastic decline in residential housing construction. The Federal Government attempted to
mitigate this impact through four special programs designed to
provide an assured source of financing for individual mortgage loans
and to reduce the cost of home buying. The Government National
Mortgage Association (GNMA) was authorized to purchase for
later resale to private investors $9.9 billion of federally backed
mortgages carrying below-market interest rates under the FHA-VA
tandem plan. The Federal Home Loan Mortgage Corporation made
commitments to purchase $3 billion of residential mortgages with
below-market interest rates, and was authorized to finance the purchase of these mortgages with Treasury borrowing, if necessary. The
Federal Home Loan Bank System is making available $4 billion at
subsidized interest rates to savings and loan associations in order to
facilitate additional mortgage lending. And GNMA has been authorized to purchase $6 billion in conventional (nonfederally insured)
mortgages carrying below-market interest rates, using authority
provided by the Emergency Home Purchase Assistance Act of 1974.
The gross effect of these special programs will be to support nearly
$23 billion in loans financing the construction or purchase of housing
over and above established housing credit programs. The net addition
to housing credit will undoubtedly be less than $23 billion.
DIRECT LOANS

Direct loans are made by Federal agencies whether or not they are
included in the budget totals. They are financed by receipts or borrowings of the Treasury or the agency itself. The major Federal programs
that provide direct loans are identified in tables E-3 and E-4.
Loan outlays of Federal agencies (which are defined net of repayments) are reflected in budget outlays, and are accounted for in the
budget surplus or deficit. However, in recent years a number of

THE BUDGET FOR FISCAL YEAR 1976

Table E-3. DIRECT LOAN COMMITMENTS AND GROSS DISBURSEMENTS
(in millions of dollars)
Commitments
Agency or program

Funds appropriated to the President:
International security assistance
International development assistance
Special financing facility
Agriculture:
Farmers Home Administration
Commodity Credit Corporation
Public Law 480 long-term export
credits
.
Commerce: Economic Development
Administration
Health, Education, and Welfare:
Health programs
Education programs
Housi g nd Urban Development:
Low-rent public housing
Federal Housing Administration
Government National
Mortgage
Association:
FHA/VA tandem plan
Conventional tandem plan
Other
Urban renewal fund
Other loans
Interior
Transportation
Treasury
Veterans Administration:
Housing loans
Insurance policy loans
District of Columbia
Federal Deposit Insurance Corp.1
Federal Home Loan Bank Board
Small Business Administration:
Business and investment loans
Disaster loans
Other agencies and programs
Total budget agencies
Off-budget direct loans:
Export-Import Bank
Rural Electrification Administration..
Rural Telephone Bank
____
H U D : Housing for the elderly
1
Federal Deposit Insurance Corp.
Federal Financing Bank 2
U.S. Railway Association
Environmental Financing Authority. _
Total off-budget agencies
Grand total

1974
actual

Gross disbursements

1975
1976
estimate estimate

1974
actual

1975
1976
estimate estimate

878
522

353
680

509
595
1,000

430
646

507
770

896
800
1.000

3,329
1,554

3,942
1,415

3,681
1,769

3,893
1,550

4,602
1,415

4,251
1,769

566

931

863

578

931

863

127
412

117
517

59
248

100
378

128
392

117
478

32
521

161
569

52
576

623
361

675
345

650
380

3,027

6,450
6,000

247

1,448

4,300
2,000

.......
600
56
41

85
843
78
16
47

4,430
600
28
901
153
35
29

416
237
288

322
147
154

367
265
246
100
2,508

385
237
288

409
265
246
100
2,508

235
369
56

199
200
65

216
160
39

292
201
31

354
212
51

400
183
15

13,351

26,178

11,470

12,254

20,087

19,791

4,905
758
163

5,570
900
160
34
1,723
11,500
100
60

5,375
758
180
175

2,538
802
99
_.

3,342
873
175
100

7,000
450

102

3,032
869
160
2
1,723
8,217
100
60

*
843
56
18
23

360
147
154

128

901
67
42
26

-1

600
43
51
41

5,888
450

5,954

20,047

13,938

3,541

14,163

10,828

19,205

46,225

25,408

15,795

34,250

30,619

'Less
than $0.5 million.
1
This represents loan assets acquired from the receivership of Franklin National Bank, paid for by
assumption of the bank's loan from the Federal Reserve System. It was excluded from the budget
outlays
by FDIC because it was a noncash receivership transaction.
2
Excludes FFB loans to Federal agencies (whether to on- or off-budget agencies) where these
are debt transactions. See table E-2 for FFB total activity.

SPECIAL ANALYSES

Table E-4. NET DIRECT LOAN OUTLAYS AND LOANS
OUTSTANDING
(in millions of dollars)
Net loan outlays
Agency or program

1974
actual

Outstanding

1975
1976
eatimate estimate

1974
actual

1975
1976
estimate estimate

Funds appropriated to the President:
International security assistance
258
329
674
1,469
1,798
2,472
International development assistance
562
610
591 10,994 11,604 12,195
Special financing facility
.
1,000
1,000
Agriculture:
Farmers Home Administration
1,219 - 1 , 9 2 3
-242
3,217
1,294 1,052
Commodity Credit Corporation
-1,013
-108
-67
1,708
1,600 1,533
Public Law 480 long-term export
credits
289
838
778
3,438
4,276
5,055
Commerce: Economic Development
Administration
14
21
15
476
497
510
Health, Education, and Welfare:
Health programs
69
72
39
422
495
534
Education programs
355
365
433 2,942
3,307
3,740
Housing and Urban Development:
Low-rent public housing
21
_
_
71
71
71
Federal Housing Administration..__
327
298
313
1,686
1,984
2,296
Government National Mortgage
Association:
FHA/VA tandem plan
-92
. 39
-269
283
322
53
Conventional tandem plan
Other
-187
-153
-144
3,199 3,045 2,901
Urban renewal fund
-83
50
50
90
140
190
Other loans
-25
51
-63
4,510 4,042
3,978
Interior...
12
31
43
247
279
321
Transportation
46
29
41
171
200
241
Treasury
-137
-179
-169
3,908
3,729
3,560
Veterans Administration:
Housingloans
-54
-343
-139
1,769
1,426 1,287
Insurance policy loans
42
163
137
1,090
1,253 1,389
District of Columbia
141
171
236
828
999 1,235
Federal Deposit Insurance Corporation
100
100
100
Federal Home Loan Bank Board
-20
-2
*
103
101
101
Small Business Administration:
Business and investment loans
126
86
127
1,531
1,618 1,745
Disaster loans
68
62
19
1,340
1,402 1,421
Other agencies and programs
-9
17
-19
552
568
550
Total budget agencies
Off-budget direct loans
Export-Import Bank
Rural Electrification Administration...
Rural Telephone Bank
HUD: Housing for the elderly !
Federal Deposit Insurance Corpora-

1,929

614

1,325
629
99

1,673
663
160
-3

102

tion*

Federal Financing Bank 3
U.S. Railway Association
Environmental Financing Authority. _

3,372

46,132

46,227

49,599

1,802
638
173
94

7,911
7,196
144

9,584
7,859
304
516
1,723

1,723

10,579
100
60

5,774
444

102

10,681
100
60

16,455
544
60

1,723

11,385
8,497
477
609

Total off-budget agencies

2,155

14,955

8,925

15,353

30,827

39,750

Grand total

4,084

15,569

12,297

61,485

77,054

89,349

*Less than $0.5 million.
12 Transferred off-budget effective August 31, 1974, with outstanding loan balance of $519 million.
See footnote 1, table E - 3 .
3 See footnote 2, table E - 3 .

THE BUDGET FOR FISCAL YEAR 1976

direct-lending agencies have been placed off-budget under provisions
of law, hence do not enter into the budget. In some instances, their
activities are not counted against the public debt ceiling. Since their
effects are identical to those of direct loan programs included in the
budget, they are also included in this analysis.
Repayments of outstanding loans are not classified as receipts in
the budget, but are offset against new loan disbursements for loan
revolving accounts and against general outlays in the case of nonrevolving accounts. For this reason, the outlays of loan programs
understate the level of new lending activity. Gross loan disbursements, which are shown in table 4 E-3, provide a more complete
measure of program activity levels.
Tables E-3 and E-4 provide data on direct loan activity by major
agency and program.5 Table E-3 reports loan commitments and disbursements for 1974-76. Commitments to make direct loans tend to
forecast future financial flows and the economic activities they facilitate because commitments are often made in advance of the time
when funds are actually disbursed. An apparent anomoly occurs in
the relationship between commitments and disbursements for lowrent public housing and urban renewal notes. Disbursements are
higher than commitments because they include short-term interim
construction financing notes which are "rolled over" several times,
while commitments are counted only once.
Direct loan disbursements by Federal budget agencies during 1975
and 1976 are expected to be almost double the level of 1974, principally
as a result of the special assistance given to credit programs in support
of housing, discussed earlier. The "special financing facility/' listed
under Funds appropriated to the President, shows estimated 1976
commitments and disbursements of $1 billion in support of the creation
of an international fund to help industrialized nations meet financial
demands of higher energy costs.
The bottom panels of tables E-3 and E-4 detail the direct lending
activity of off-budget Federal agencies. The major change in total
disbursements over the 3-year period is attributable almost exclusively
to the expanding activities of the Federal Financing Bank, also noted
earlier.
Table E-4 shows net changes in direct loan programs, and outstanding loan levels for 1974-76. Wide fluctuations in total net loan outlays
of budget agencies are primarily due to the initial disbursements of the
special financing facility, and to wide swings in net disbursements
of the Farmers Home Administration program. The large bulge in
net loan outlays of off-budget agencies reflects initial activity of
4
Some direct loan disbursements, in fact, support guaranteed loan programs. This occurs because
direct loan outlays are established when claims are paid under guaranteed programs and the Government
receives either the original loan or the collateral.
5
Because loan disbursements and repayments in foreign currencies are not included in the budget,
the tables in this analysis include only data on loans that are both disbursed and repayable in dollars.
Government agency direct loan transactions disbursed or repayable in foreign currencies (in millions of dollars) are:
1974
1975
1976

Outstanding, start of year
Disbursements (dollar equivalents)
Repayments—dollars
Repayments—local currencies
Net disbursements
Adjustments
Outstanding, end of year

5,244
8
—2
—2,240
-2,234
—216

2,795
6
—3
—144
-141

2,654
—3
—140
-143

2,795

2,654

2,511

SPECIAL ANALYSES

the Federal Financing Bank. The total of loans outstanding, both
on- and off-budget, will continue to grow by about $10 billion a year
in 1975 and 1976, in sharp contrast to the very stable total levels of
the years 1971-73.
Loan repayments and net loan disbursements reflect sales of direct
loan assets as well as actual loan repayments and prepayments. Table
E-5 identifies the major loan sales within the repayment totals. Prior
to 1974 most loan sales were to private investors or to FNMA. Many
sales are now being directed to the FFB.
Table E-5. DIRECT LOAN ASSET SALES AND REPAYMENTS
(in millions of dollars)
1974
actual

Loan sales:
Farmers Home Administration:
Certificates of beneficial ownership
Other loans
Housing and Urban Development, GNMA:
FHA/VA tandem plan
Conventional tandem plan
VA housing loans
Health, Education, and Welfare:
Medical facilities loans
Health maintenance loans
Small Business Administration
Subtotal, loan sales
Loan repayments and prepayments
Total repayment credits, budget agencies
Memos:
Sales to FFB (included above)
Farmers Home repurchases
Off-budget loan sales: Export-Import Bink

1975
estimate

1976
estimate

828
1,343

5,406
386

3,441

1,503
209

4,372
600
568

4,550
2,000
378

53
100

45
30
100

3,911

11,485

10,544

6,414

7,988

5,874

10,325

19,473

16,418

2
1,201
25

8,117
900
25

2,586
650
25

GUARANTEED LOANS

Guaranteed loans are leans made or held by private and State and
local government lenders for which the Federal Government assumes
part or all of customary credit risks. The major agencies and programs
making loan guarantees are shown in tables E-6 and E-7. These
loans include private loans under a few programs on which the Government pays a significant share of the interest costs, even though
principal repayments are not assured. Federal long-term direct leases,
and guarantees of private leases, are also classed as guarantees of the
underlying credit. In some cases the Government guarantees less than
100% of the principal amount of the loan, but tables E-6 and E-7
measure the full principal amount of the loan, not just the Government's contingent liability.

THE BUDGET FOR FISCAL YEAR

1976

Table E-6. LOAN GUARANTEE COMMITMENTS AND LOANS GUARANTEED
(in millions of dollars)
Commitments

Agency or program
1974
actual
Funds appropriated to the President:
International security assistance
International development assistance
Agriculture:
Rural Electrification Administration
Farmers Home Administration
Commerce: Maritime Administration. _
Health, Education, and Welfare:
Health programs
Guarantees of SLMA obligations K _
Other education programs
Housing and Urban Development:
Low-rent public housing 2
Federal Housing Administration..
Urban renewal loans 2
New communities fund
College housing
GNMA mortgage backed securities 1
Interior
Transportation
For: Washington Metropolitan Area
Transit Authority
General Services Administration
Veterans Administration:
Housing
loans
Emergency Loan Guarantee Board
Environmental Prot ection Agency
Export-Import Bank
Small Business Administration
Other agencies and programs
Total (gross)
Less secondary guarantees

Total, primary guarantees
Less guaranteed loans acquired for direct loan portfolios:
By budget agencies, GNMA
By off-budget Federal agencies:
Environmental Financing Author-

ity—_

1976
estimate

518

519

513

116

272

275

128

974
2,392
1,266

1,386
8,156
1,389

1,446
3,881
981

2,176
488

329
6,806
1,588

926
3,501
1,697

514
250
1,160

402
40
1,400

130
335
1,760

528
250
1,520

382
40
1,690

521
335
1,786

289
5,638
58
43

1,446
5,102
950
32

471
6,093

5,100
46
50

7,500
43
500

"""172

8,400
5,663
1,069
30
100
5,100
46
331

9,800
7,731
348
88

4,125

7,295
5,712
1,407
54
75
4,125

375
221

177
412

160
161

375
221

177
412

160
161

7,760

9,403

10,072

9,484

Total primary guaranteed
loans (adjusted)

1974
actual

1975
1976
estimate estimate

7,500
43
585

60
12,025
1,363
10

13,375
1,710
5

3,473
1,802
4

8,876
30
60
3,721
1,363
190

35,276
4,375

49,521
4,540

49,200
5,835

37,836
4,375

46,775
4,540

50,865
5,835

30,901

44,981

43,365

33,461

42,235

45,030

1,532

4,458

4,300

1,532

4,458

4,300

102

60
10,710

5,774

102

5,282

6,495

7,707

5,351

5,435

4,044

314

292

314

7A
70

7,879
1,803
4

Federal Financing Bank._
__
By federally sponsored enterprises:
Federal National Mortgage Association
Federal Home Loan Mortgage
Corporation
Student Loan Marketing Association

Loan

1975
estimate

292
144
23,549

292
146
22,820

4,081
1,710
5

60
10,710 "5,"774

335

144

146

335

24,935

26,040

21,134

30,263

SPECIAL ANALYSES
Table E-7. NET LOANS GUARANTEED AND LOANS OUTSTANDING
(In millions of dollars)
Agency or program

Outstanding

Net loans guaranteed
1974

1975

Funds appropriated to the President:
International security assistance.-.54
202
International development assistance
78
93
Agriculture:
Rural Electrification Administration329
Farmers Home Administration
._
323
5,228
Commerce: Maritime Administration-.
406
1,488
Health, Education, and Welfare:
Health programs
528
382
Guarantees of SLMA obligations K.
250
40
Other education programs
1,148
677
Housing and Urban Development:
Low-rent public housing
658
1,259
Federal Housing Administration-.. -1,565 -1,747
Urban renewal loans
188
-132
New communities fund....
54
30
College housing
75
100
1
GNMA mortgage backed securities
3,366
3,966
Interior
43
Transportation
165
328
For: Washington Metropolitan Area
Transit Authority
375
177
General Services Administration
220
410
VeteransAdministration:Housingloans.
5,727
4,179
Emergency Loan Guarantee Board-__
70
30
Environmental Protection Agency
60
Export-Import Bank
694
780
Small Business Administration
914
728
Other agencies and programs
-5
180

1976

1974

1975

1976
istimate

200

298

500

700

119

519

612

731

926
1,886
1,581

9,759
1,666

329
14,987
3,154

1,256
16,873
4,753

521
335
1,058

575
250
5,884

957
290
5,561

1,478
625
7,618

1,290
-253
-653
88

12,441
85,312
3,839
252
778
12,879

13,699
83,565
3,707
282
878
16,845
43
681

14,990
83,312
3,054
371
878
23,627
78
1,157

997
1,219
57,074
250
60
4,222
4,748
311

1,157
1,378
61,629
220
60
5,062
5,787
306
237,207
21,667

6,782
34
583

352

160
159
4,555
-30

820
809
52,895
220

840
1,040
-5

3,443
4,019
130

Total (gross)
Less secondary guarantees *

13,724
3,616

18,831
3,406

21,217 197,159 215,990
5,132 13,129 16,535

Total primary guarantees
Less guaranteed loans acquired for
direct loan portfolios:
By budget agencies: GNMA
By off-budget Federal agencies:
Environmental Financing Authority
Federal Financing Bank
By federally sponsored enterprises:
Federal National Mortgage Association
Federal Home Loan Mortgage
Corporation
Student Loan Marketing Association

10,108

15,425

16,085 184,030 199,455 215,540

-279

-114

-413

3,482

3,367

2,954

102

60
10,579

5,774

102

60
10,681

60
16,455

3,726

3,722

2,406

25,251

28,973

31,379

168

207

287

1,869

2,076

2,363

144

146

335

144

290

625

6,247

825

7,696

153,182 154,008

161,704

Total primary guaranteed loans
(adjusted)

1 HEW guarantees of SLMA obligations, and GNMA guarantees of private securities backed
by FHA and VA-guaranteed mortgages result in double counting since underlying portfolio loans are
also guaranteed. These are labeled in this table as secondary guarantees. GNMA also will guarantee
securities backed by conventional mortgages in 1975 and 1976, and these are not deducted.

THE BUDGET FOR FISCAL YEAR 1976

Table E-8. LOAN COMMITMENTS AND GROSS DISBURSEMENTS OF
FEDERALLY SPONSORED CREDIT INTERMEDIARIES (in millions of dollars)
Commitments
1974
actual

Student Loan Marketing Association..
Federal National Mortgage Association i___
Farm Credit System:
Banks for cooperatives
Federal intermediate credit banks___
Federal land banks
Federal Home Loan Bank System:
Federal home loan banks
Federal Home Loan Mortgage Corporation: *
Corporation accounts
Participation certificate pool 2 —Total
Less secondary funds advanced from
Federal sources:
SLMAfromFFB
FHLMCfromFHLBB.Total primary lending

Gross disbursements

1975
1976
estimate estimate

1974
actual

1975
1976
estimate estimate

144

146

335

144

146

335

5.883

7,910

10.140

6.368

6,290

5.413

6,821
9,166
3,643

7,396
10.443
3.953

7,823
12.001
4,079

6.821
9.166
3,643

7,396
10,443
3,953

7.823
12,001
4,079

11,016

11,348

7.518

11.016

11,348

7,518

3,781
38

5.000
_

3.900
600

1.272
38

4.694

3.690
600

40,491

46,196

46,396

38,468

44,270

41,459

100
3,000

190

335

100

190
2,500

335

37,391

46,006

46,061

38,368

41,580

41,124

Data on loan guarantees in tables E-6 and E-7 are comparable to
tables E-3 and E-4 for direct loans.6 As with direct loans, the data in
table E-6 on commitments permits some forecasting of future gurantee
activity. It also gives some insight into program-by-program variations
in the rates at which commitments are converted into guarantees.
Guaranteed loans, like off-budget direct loans, are not reflected in
the budget at the time credit is extended. Budget impacts from loan
guarantee programs, excepting additional subsidies and administrative
costs, occur only when defaults require the Federal Government to
pay lenders' claims. Defaults for older guaranteed loan programs have
been relatively low, since older programs involved principally guarantees with liens on property. Newer programs generate higher risks
because little or no collateral is pledged, and, as a result, they are
experiencing much higher default rates.
Table E-7 summarizes the net changes in guaranteed loans and the
total dollar value of guaranteed loans outstanding at the end of
1974-76 by agency and program. Total net guaranteed loans are
expected to grow at a rapid pace, up to almost $20 billion during 1976.
However, the growth is much less spectacular after adjustments have
been made for multiple guarantees of single loans, and for the conversion of guaranteed loans to direct loans of off-budget agencies. During
the 1974-76 period, the FFB will play a major role in this conversion.
Appropriate adjustments are made in tables E-6 and E-7.
6
Adjustments to eliminate double counting have been made in the data shown in tables E-6
and E-7 to make possible the aggregation of guaranteed loans with other forms of Federal credit
assistance. Adjustments are required where the same credit extension is guaranteed twice, and
where guaranteed loans are converted to direct loans. Additional adjustments are made for double
counting in tables E-8 and E— 9 for Government-sponsored credit enterprises.

SPECIAL ANALYSES

Table E-9. NET CREDIT ADVANCED AND NET CREDIT RAISED BY
FEDERALLY SPONSORED CREDIT INTERMEDIARIES (in millions of dollars)
Net change
1974
actual

Outstanding

1975
estimate

1976
estimate

146

335

1974
actual

1975
estimate

1976
estimate

LENDING (Funds advanced)
Student Loan Marketing Association.
Federal National Mortgage Association 1
Farm Credit System:
Banks for cooperatives
Federal intermediate credit banks..
Federal land banks
Federal Home Loan Bank System:
Federal home loan banks
Federal Home Loan Mortgage
Corporation:1
Corporation accounts
Participation certificate p o o l 2 . . .

144

290

625

4,756

4,646

3,491

25,828

30,474

33,965

8
1,529
2,282

312
1,351
2,219

275
1,495
2,165

2,733
8,481
12,400

3,045
9,832
14,619

3,320
11,327
16,784

6,524

2.106

-2,482

17,703

19,809

17,327

1.134
-18

4,402
-55

3,277
475

3,091
780

7,494
725

10,771
1,200

Total lending (unadjusted).__
Less secondary funds advanced from
Federal accounts:
SLMAfromFFB
FHLMC from FHLBB

16,359

15,127

9,031

71,160

86,288

95,319

190

335

100

290

625

Total primary lending
Memo: Federal Reserve banks

16,259
* \,777

14,937
(«)

8,696
(«)

71,060
3,513

85,998
(5)

94,694
(5)

250

335

250

290

625

4,866

4,705

3,200

25,232

29,937

33,137

138
1.344
2,043

182
1.249
2,120

249
1.408
1,985

2,555
8,081
11,164

2,737
9,329
13,284

2,986
10,737
15,270

6,464

1,116

-2,495

16,679

17,795

15,300

1,058
-18

4,498
-55

3,273
475

3,292
780

7,789
725

11,062
1,200

16,145

13,855

8,430

68,032

81,887

90,317

1,209
44

-316
-*

343
-6

1,509
129

1,193
129

1,536
122

100

190
(3)

335

100

290
(3)

625

-35
5

413
-10

644
10

1,055

1,078

14,822

13,579

7,736

65,641

79,219

86,955

100

(3)

BORROWING (Funds raised)
Student Loan Marketing Association.
Federal National Mortgage Association.-..
Farm Credit System:
Banks for cooperatives
Federal intermediate credit banks-.
Federal land banks
Federal Home Loan Bank System:
Federal home loan banks
Federal Home Loan Mortgage
Corporation:
Corporation accounts
Participation certificates 2
Total borrowing (unadjusted).
Less: Borrowing from other sponsored
agencies:
FHLB loans to FHLMC
Other
.
Less: Borrowing from
Federal
agencies:
FFB loans to SLMA
FHLB loans to FHL banks
Less: Loans to Federal agencies:
Investments in Federal securities. __
FHL bank loans to FHLBB
Total borrowing (adjusted)

"Less than $500 thousand.
See note (1), table E-8.
See note (2), table E-8.
A loan of $2,500 million made in August of 1974 is expected to be repaid prior to the end
of 4the fiscal year.
Federal Reserve bank's loans to member banks are excluded from totals since these are not
estimated for fiscal years not yet completed.
5 Not estimated.
1
2
3

THE BUDGET FOR FISCAL YEAR 1976

GOVERNMENT-SPONSORED CREDIT ENTERPRISES OUTSIDE THE BUDGET

Several major Government-sponsored credit enterprises, created to
facilitate the financing of selected programs, are privatoly owned and
managed. All, however, are subject to some form of Federal supervision
and consult the Treasury Department as required by law or by
custom in planning the marketing of their obligations. The principal
enterprises in this category are the Federal Home Loan Bank System,
the three major components of the Farm Credit System, the Federal
National Mortgage Association, and the Student Loan Marketing
Association.
These enterprises differ from other private institutions in that they
have been given special preferences, including rights to assess their
constituents, various tax exemptions and preferences, and preferential
eligibility rights for federally regulated institutions and others to
invest in their securities. These, plus the enterprises' implied Federal
backing, give their security obligations a preferred position in the debt
securities market and enable them to borrow at interest rates well
below the rates attained by the best grade corporate securities, and
only moderately above the Government's own rates.
All Government-sponsored credit enterprises are essentially financial
intermediaries, channeling funds from one sector of the capital market
to another. They borrow mainly in the "agency sector" of the bond
markets, and disburse these funds for specifically authorized purposes,
either directly to lending
establishments or by purchasing loans
originated by them.7 Some of the agencies also serve as reserve
facilities or provide secondary marketing functions, providing liquidity
for constituent lenders during tight money periods by making temporary advances or buying portfolio loans for resale.
Funds lent by Government-sponsored credit enterprises are obtained
mostly from borrowings in the capital markets. Sale of capital stock
and retained earnings also provide a small portion of resources used for
lending. Moreover, the timing of borrowing to lending varies from
year to year. Tables E-8, and E-9 show both the lending and borrowing sides of these credit institutions.
SUMMARY OF FEDERAL AND FEDERALLY ASSISTED CREDIT
TRANSACTIONS

Table E-10 summarizes the components of Federal financial activity. Components within the aggregates change substantially from
year to year, but this is often mainly a shift in the form of credit not
affecting the totals. For example, much of the large rise in off-budget
loans from $2.2 billion in 1974 to $14.9 billion in 1975 is due to large
purchases of guaranteed loans by the new Federal Financing Bank.
However, guaranteed loans decline to reflect this purchase. Similar
effects occur on the borrowing side.
7
The program of the Government National Mortgage Association (a budget agency in HUD)
to guarantee mortgage-backed securities achieves a very similar "intermediation" result. GNMA
guarantees securities issued against privately held pools of federally guaranteed or insured mortgages. The FRB flow-of-funds data, for example, include this GNMA program within the definition of Government-sponsored credit enterprises. GNMA data appear in memorandum entries of
tables E-6 and E-7.

SPECIAL ANALYSES

Table E-10. SUMMARY OF CREDIT ADVANCED AND CREDIT RAISED
UNDER FEDERAL AUSPICES (in billions of dollars)
Net change
1974
actual

Outstanding

1975
1976
estimate estimate

1974
actual

1975
estimate

1976
estimate

LENDING (Credit advanced)
Direct loans (from table E-4):
On budget agencies
Off-budget agencies
Guaranteed loans (primary, adjusted,
from table E-7)
Loans by federally sponsored credit
intermediaries (from E-9)
Total, credit advanced to the
public under Federal
auspices1
Outside the budget

1.9
2.2

.6
15.0

3.4
8.9

46.1
15.4

46.2
30.8

49.6
39.8

6.2

7.7

153.2

154.0

161.7

16.3

14.9

8.7

71.1

86.0

94.7

26.6
24.7

31.3
30.7

28.7
25.3

285.7

317.1

345.7

3.0

43.5

63.5

346.1

389.6

453.1

BORROWING (Credit raised)
Federal borrowing from the public
(from table C-1)___
Guaranteed borrowing (same as
guaranteed loans, above)
Borrowing by federally sponsored
credit intermediaries (net, from
table E-9)

6.2

7.7

153.2

154.0

161.7

14.8

13.6

7.7

65.6

79.2

87.0

Total, credit raised from the
public
under
Federal
auspices 1
Net credit advanced

24.1
2.5

57.9
-26.6

78.9
-50.2

622.8

701.7

564.9

Excludes Federal Reserve credit.

INTEREST SUBSIDIES

It was noted earlier that most Federal credit assistance is not
reflected in the budget. The budget, therefore, does not measure the
fiscal and allocational effects of credit programs. The data gathered
for this analysis still fall far short of measuring the total effects of loans
made under Federal auspices. This analysis cannot, for example, estimate the economic impacts of Federal credit assistance since there is
no way at present to ascertain what the level of credit activity in
each program area would have been in the absence of the Federal
program.
Federal loan programs hold one characteristic in common: They
provide credit on more favorable terms, particularly longer maturities,
higher loan-to-value ratios, and lower interest rates, than are otherwise available for comparable private loans. The measure of these
subsidies of Federal credit programs provides a useful index of likely
program impact.

Table E—11. ESTIMATED INTEREST SUBSIDY VALUES FOR MAJOR DIRECT AND GUARANTEED LOAN COMMITMENTS
(in millions of dollars)
Borrower
loan terms 1

Agency and program

Annual
subsidy
er $100
per
millions

Commitments
1974

1975

Subsidy—Present value
at 10% discount
1976

Percent

Years

1974

1975

1976

7.5
2.8

15.2
40.0

1.8
6.1

353
664

509
575

122
306

49
395

70
342

7.1
2.3
5.1
5.0

1.4
33.0
32.0
35.0

1.7 1,554 1,415
931
6.1
566
4.1 3,328 3,941
4.3
921 1,060

1,769
863
3,681
938

34
330
1,313
380

31
543
1,555
437

39
503
1,453
387

2.7
7.0

13.8
25.0

4.7
2.4

369
55

123
13

129
12

6.0
7.0
8.9
7.5

3.5
1.5
30.0
28.1
2.0

901
2.7
843
32
160
8.4
569
2.5
521
1.0 3,027 12,450
1.4
40

600
52
576

65
4
126
276

70
18
138
114
1

46
6
139

5.0
6.5
9.0
7.0
7.8
8.0
7.9

15.0
6.0
29.3
30.0
8.0
23.9
30.0

174
193
3.4
155
80
72
2.1
436
409
.9
360
151
205
247
2.5
1.4 4,905 5,570 5,375
745 1,587
100
1.6
2,500
1.8

51
7
34
50
418
110
434

46
7
36
60
403
234

DIRECT LOANS

Funds appropriated to the President:
Security assistance
Development assistance
Agriculture:
Price support
CCC: Public Law 480
Farmers Home Administration.
___
Rural Electrification Administration
Health, Education, and Welfare:
Capital for student loans
Medical facilities
Housing and Urban Development:
Urban renewal._.
_
Low-rent public housing
Federal Housing Administration
Government National Mortgage Association
Housing for elderly
Veterans Administration:
Insurance policy loans
Education loans
Housing
_
District of Columbia loans
Export-Import Bank
Federal Financing Bank purchases of unsubsidized loans
Federal Home Loan Bank Board

___
__
_
___

_
_

_
._

879
515

353
58

175

30
36
368
15

Small Business Administration:
Business and investment loans
Disaster loan fund
Other agencies and programs

7.3
8.0
7.5

7.6
3.0
12.5

1.7
1.1
1.7

235
369
5

199
200
273

116
160
214

Total—Major subsidized direct loans

21
11
1

18
6
33

3,614

5,672

3,826

105
22
92
154

116
89 _
186

234

2
136
732
101
34

39
684
255
4
48
92

223
258
3
43
58

1,378

1,512

841

22
14
6

22
45
38

105

5,006

7,227

4,772

GUARANTEED LOANS
Health, Education, and Welfare:
Higher education facilities
Health maintenance organizations
Medical facilities
Student loan insurance
Housing and Urban Development:
Urban renewal
Low-rent public housing
Interest subsidies on insured mortgages
Interior: Indian loans
Department of Transportation WMATA guarantees
Veterans Administration loan and property sales

10
7.0
7.0
7.0

15.0
25.0
25.0
13.0

4.6
2.4
2.4
2.0

293
98
416
1.040

4.8
4.5
3.6
8.0
7.0
8.0

.7
41.5
21.8
10.0
40.0
29.0

6.1
4.8
4.7
1.3
2.7
1.7

58
288
1,763
375
209

324

1
100

402
1,260

1.584

950
1.446
615
46
177
568

471
620
43
160
356

Total—major subsidized guaranteed loans.

AGENCY DEBT ISSUES FINANCED BY
FEDERAL FINANCING BANK
Tennessee Valley Authority
Postal Service
United States Railway Association _
Total debt issue subsidies 3_
Grand total
1
2
3

If terms vary, these are estimated averages.
Based on 10% value of funds.
Interest savings are passed through to private users.

8.0
8.0
8.0

3.0
3.0
15.0

1.1
1.1
1.4

500

780
500
50

750
1,550
347

THE BUDGET FOR FISCAL YEAR 1976

Only the interest subsidy is treated in this section, even though
other subsidy elements may be substantial. Some subsidies not considered here are fees or premiums inadequate to cover costs of administration and losses, waivers of such fees or premiums, or foregiveness of part or all of loan principal. However, for the two programs financed with tax-exempt securities, the analysis includes that
part of the tax subsidy that accrues to the borrower.
The subsidy element in any federally assisted loan, direct or
guaranteed, is the difference between the cost of borrowing under the
Federal program and that cost in private credit markets. These
interest subsidies come about for several reasons. In some direct loan
programs the interest rate established by statutory formula may be at
rates below market rates. In other direct loan programs the laws
provide for interest rates to be set to recover the costs of borrowing by
the Treasury, thereby providing private borrowers loans at rate«
otherwise available only to the U.S. Government. In guaranteed loan
programs, the guarantee8 itself subsidizes interest rates, since risk is a
factor in credit costs. Additional subsidies, most frequently debt
service payments, are often added to loan guarantees. These explicit
subsidies sometimes cover both interest and principal amounts, but
more often cover some designated share of the interest costs.
In evaluating the implicit subsidies in loan programs, it is necessary
to estimate the interest rate that the borrower would have had to pay
in private credit markets. It is difficult and sometimes impossible to
determine what the unassisted interest rates would have been on
a program-by-program basis. In this analysis 10% has been adopted
as a reasonable estimate of the average private sector cost of borrowing
for all activities and loan terms represented.
Because interest subsidies occur throughout the life of the loan, an
evaluation of interest subsidies requires the measurement of a stream
of payments. Since a simple total of future obligations would overstate the true value of the subsidy stream, the preferred measurement
of the successive annual subsidy payments is in "present value" terms.
This is accomplished by capitalizing (or discounting) future subsidies
at an appropriate rate. A discount rate of 10% has been used in this
analysis.
For any single year the budget reflects the current effects of interest concessions made to federally assisted borrowers on outstanding
loans made in previous years. Table E - l l , however, reports only on
the present values of future subsidies provided by new loan commitments.
PROPOSED LEGISLATION

The Administration has proposed and is preparing legislation in a
number of areas related to credit programs.
A $150 million increase in loan guarantee authority under section 215
of the Regional Rail Reorganization Act of 1973 will be proposed to
assist railroads currently in reorganization to maintain and improve facilities and equipment during the period that the United
States Railway Association is planning the restructuring of rail
services in the Northeast and Midwest regions of the Nation. In
addition, the Department of Transportation will reintroduce legislation which would provide loan guarantees to these railroads for both
fixed plant and rolling stock capital improvement programs.
8
In the absence of a more accurate basis for evaluation, "market-rate" guaranteed loans, i.e.,
those in which no explicit subsidies are incurred, are excluded from this analysis.

SPECIAL ANALYSES

In the Administration's new surface transportation regulatory
modernization legislation, Federal loan guarantees of $2 billion will be
proposed to enable railroads to undertake needed fixed plant and
rolling stock improvements.
Other proposals include: Removal of the 5% interest rate ceilings on
certain agricultural credit programs and legislation to permit rates
charged borrowers to reflect prevailing market rates.
Legislation will be submitted to establish a special financing facility,
a new multilateral loan fund, to assist industrialized nations to help
meet financial requirements during the energy crisis. The U.S. contingent commitment to the fund is expected to be up to $7 billion.
NEWLY ENACTED CREDIT LEGISLATION

This summary lists legislation enacted during the last session of
Congress that authorizes new Federal credit programs or revises
existing programs in major respects. It excludes simple extensions of
expiring laws and increases in funds for continuing programs.
Emergency Livestock Credit Act of 1974—Public Law 93-357
Authorizes FMHA to guarantee loans to cattlemen in an amount
not to exceed $2 billion at any time. The guarantee is limited to 80%
of principal.
Housing and Community Development Act of 1974—Public Law 93-383
Authorizes a new coinsurance program for mortgage loans that
will permit the sharing of risks between the Government and the
lenders originating those loans. Required downpayments were lowered
under all mortgage insurance programs, and most of these programs
were extended to June 30, 1977.
Public Works and Economic Development Act of 1965—Public Law 93423
In addition to previously authorized fixed asset loans and guarantees
of loans for working capital, eligible borrowers can now receive direct
working capital loans; guarantees of up to 90% of the outstanding
balance of fixed capital loans made by private lending institutions;
and guarantees of rental payments of leases for buildings and equipment at a rate of up to 90% of remaining rental payments.
Emergency Home Purchase Assistance Act of 1974—Public Law 93-454
Authorizes a temporary program under which the Government
National Mortgage Association will purchase conventional (nonfederally insured) mortgages with below market interest rates.
Depository Institutions Amendments Act—Public Law 93-495
Gives the Federal Home Loan Bank Board the authority to borrow
an additional $2 billion. This authority expires in August 1975.
Vietnam Era Veterans Readjustment Assistance Act of 1974—Public
Law 93-508
Sets up a Veterans Administration education loan fund as a revolving fund to be available for making loans to eligible veterans and
dependents training under Chapters 34 and 35, Title 38, United States
Code.

100

THE BUDGET FOR FISCAL YEAR 1976

National Health Planning and Resources Development Act of 1974—
Public Law 93-508
Extends the direct loan, loan guarantee and interest subsidies provisions first enacted in the Hill-Burton Act Amendments of 1970. The
new act removes the previous statutory limit of $1.5 billion on the
amount of outstanding loan principal that may be guaranteed or made
directly by the Department of Health, Education, and Welfare. Unlike the prior law, the new act does not make taxable the interest on
any loans made to public bodies and sold and guaranteed by HEW.
Export-Import Bank Amendments of 1974—Public Law 93-646
Returns the transactions of the Export-Import Bank to on-budget
status effective October 1, 1976. The Export-Import Bank was removed from the budget in August 17, 1971.

SPECIAL ANALYSIS F
TAX EXPENDITURES

This special analysis focuses on certain provisions of the personal
and corporate income tax that are designed to achieve particular
economic and social objectives. These provisions result in tax expenditures, which are defined as revenue losses attributable to a special exclusion, exemption, or deduction from gross income or to a special
credit, preferential rate of tax, or deferral of tax liability. Tax expenditures are one means by which public policy objectives are pursued by
the Federal Government and, in most cases, can be viewed as alternatives to budget outlays, credit assistance, or other instruments of
public policy.
Tax expenditures are being presented in the budget documents this
year for the first time, as required by the Congressional Budget Act of
1974. The definition of tax expenditures used here is taken from the
Act and its legislative history.
The specific objectives of tax expenditures are varied. Most tax
expenditures are meant either to encourage certain economic activities
or to reduce income tax liabilities for taxpayers in special circumstances. Among the economic activities encouraged by tax expenditures are investment, exporting, petroleum exploration and development, spending by State and local governments, and support of
charitable institutions. The deductibility of medical expenses, casualty
losses, and personal exemptions for the aged and blind are adjustments
of tax liabilities to meet special circumstances.
DEFINING TAX EXPENDITURES

Income tax provisions resulting in tax expenditures are defined as
exceptions to the "normal structure" of the individual and corporate
income tax. They reduce tax liabilities for particular groups of taxpayers. Excluded from this analysis, by definition, are what could be
called negative tax expenditures or tax penalties—i.e., exceptions to
the normal structure of income taxes that result in increased tax
liabilities for certain groups of taxpayers. Limitations on the deductibility of losses on the sale of assets, on the carryover of business losses,
and on income averaging are examples. High, progressive tax rates
could be viewed as creating negative tax expenditures for high income
taxpayers.
The normal structure is nowhere defined in the tax code; the concept
has emerged in recent years from congressional and public review of
the U.S. tax system. It focuses on the definition of the income tax
base and the rates applied to that base. A theoretically pure income
tax could define income in economic terms, as receipts available to
support consumption or additions to net wealth, plus the imputed
value of in-kind consumption and imputed changes in net wealth. The
101

102

THE BUDGET FOR FISCAL YEAR 1976

definition of income embodied in the normal tax structure and used
to identify tax expenditures is not theoretically pure. The impracticality of making the necessary imputations is recognized and the
treatment of individuals and corporations as separate taxpaying
entities is accepted.
Features that specify the structure of progressive rates and that
exclude low-income persons from tax liability are deemed a part of that
normal tax structure. Existing rates are accepted as "normal" even
though there is no theoretical foundation upon which to support any
particular degree of progressivity in the individual income tax rate
structure or any particular corporate income tax rate. When the rate
structure is changed, for whatever reason, the new rate structure becomes, by definition, the new norm.
The existing rate structure for individuals, ranging from 14% to
70%, and the corporate tax rates cannot be presumed to exist independently from current tax expenditures. If major tax expenditure
items were deleted and no other changes made in the tax system or in
budget outlays, rates would undoubtedly be set at lower levels so as to
maintain an appropriate fiscal policy.
If a set of tax rates, to be applied against a theoretically pure
definition of income, could be agreed to on normative grounds, it
would be conceptually possible to identify and measure both positive
and negative tax expenditures against such a norm. If a single tax rate
were taken as the norm, lower actual rates would result in tax expenditures and higher rates in negative tax expenditures or tax penalties.
To illustrate the arbitrariness of accepting the existing rates as a norm,
consider the maximum tax of 50% on earned income, introduced in
1972 by the Tax Reform Act of 1969. It is treated here as part of the
normal structure because the great preponderance of all income is
subject only to the 50% maximum rate. Had the rates applicable
to unearned income been considered the norm, then the 50% maximum rate on earned income would have been identified as a tax
expenditure.
To be more explicit, the following features of the tax system are
defined for the purposes of this analysis to be part of the normal tax
structure and therefore not to result in tax expenditures:
• The progressive rate schedules for the individual income tax. No
tax expenditure results because some income is taxed at lower
rates than other income when progressive rate schedules are
applied to taxable income. The income averaging provision of
the tax code is a part of the normal structure as it limits the
impact of progressive rates when income fluctuates significantly
over several years.
• Personal exemptions and the minimum standard deduction. These
set levels of income, depending upon family size, that are not
taxed by the individual income tax. However, deductions for
additional personal exemptions for those over 65 and for the blind
are tax expenditures because they depend upon more special
circumstances. The percentage standard deduction, to the
extent it exceeds the minimum standard deduction, is also a tax
expenditure because it substitutes for itemized deductions.

SPECIAL ANALYSES

103

Separate rate schedules jor single and married taxpayers, married
taxpayers filing separately, and heads of households. Existing rates
are accepted as part of the normal tax structure.
Deduction oj business expenses. The deduction of business expenses is necessary tc determine taxable income. Tax expenditures do not ordinarily result from applying the definitions of
business expenses prescribed by the Internal Revenue Code
and Internal Revenue Service interpretative regulations. Tax
expenditures do occur when the tax code permits business or
investment expenditures that are capital outlays in economic
terms to be treated as current expenses. A case in point is the expensing of research and development costs; they usually result in
substantial future benefits. Expensing of such costs is treated here
as a tax expenditure even though the Financial Accounting
Standards Board has recently ruled that research and development costs should be expensed when incurred because no satisfactory basis exists for amortizing such costs in individual cases.
All advertising expenditures are allowed as a current expense and
even though future benefits may accrue, no tax expenditure
results. Tax expenditures also result when the tax code permits
depreciation to be taken on buildings sooner than allowed by
straight-line depreciation, even though neither approach may
reflect the true replacement cost or economic obsolescence.
In the case of depreciation on machinery and equipment the
Internal Revenue Code allows as a depreciation deduction "a
reasonable allowance for the exhaustion, wear and tear (including
a reasonable allowance for obsolescence) on property used in
trade or business or for the production of income." In the world
of practical affairs, there is no single, correct number. Prospectively or even by hindsight, what is a "reasonable" allowance is
always a question of judgment. Consequently, audit practices and
standards were for many years not uniform and different taxpayers
using the same property in the same way were often required to
take substantially different deductions. The asset depreciation
range (ADR) system, which became effective in 1971, was
designed to make practices more uniform and realistic. It recognizes that circumstances vary from taxpayer to taxpayer and that
no single number is necessarily correct. It defines a band within
which estimates of useful life will be deemed to be "reasonable."
That band is determined by reference to broad classes of property
and ranges 20% up and 20% down from a published figure designated as the "asset guideline period." The ADR system is a
mechanism to arrive at a "reasonable" allowance and does not
result in a tax expenditure as defined above. The effect of inflation
on the difference between the historical cost of assets, upon which
depreciation deductions are based, and replacement costs exacerbates the difficulty of measuring true economic deterioration.
Exclusion of unrealized capital gains and losses. Although the base
of a theoretically pure income tax could include net capital gains

104

THE BUDGET FOR FISCAL YEAR 1976

on an accrual basis, practical problems prevent identifying or
taxing unrealized capital gains for many types of assets, and the
normal structure taxes only wealth accruals which are "realized".
For this reason the failure to tax unrealized gains during the
holder's lifetime is not listed as a tax expenditure. Similarly, the
failure to tax unrealized capital gains at death is treated here as
part of the normal tax system and not a tax expenditure since
no exchange or sale takes place. No estimate of the revenue loss
due to the failure to tax capital gains at death could be made
unless a specific technique of taxation is supposed such as averaging over a number of years.
• Exclusion of imputed income from owner-occupied housing and
other sources. A theoretically pure income tax could include in its
base an imputation for the income received in kind from the
occupancy of a home owned by the taxpayer and imputations for
in-kind income from the ownership of other durable assets
including art collections, furniture, and books. Because of severe
problems of imputing income to these assets, they are not considered in the computation of tax expenditures even though
such exclusions of imputed income have an effect upon the allocation of the economy's resources, particularly with respect to
housing.
• Exclusion of gifts and bequests received. The normal tax system
subjects gifts and bequests, which are usually made within
a family, to taxes separate from the income tax. The tax expenditure concept could be extended to gift and estate taxes, though
to do so would go beyond the scope of this analysis. The exclusion
of scholarships and fellowships, which are usually granted by
institutions, is treated as a tax expenditure.
• Exclusion of the value of government services received in kind.
The normal tax structure does not define the value of such services
as food stamps, rent supplements, or Medicare as income.
• Foreign tax credits. To avoid the double taxation of income
earned abroad, and thus accommodate the U.S. tax system to
international norms, the normal structure of income taxes includes
tax credits for foreign taxes paid.
• Treatment of individuals and corporations as separate tax paying
entities. A theoretically pure income tax would integrate the
taxation of personal and corporate income so as to avoid multiple
taxation of any particular type of income. Only individuals would
be taxed; corporate income would be taxed as dividends are paid
and retained earnings imputed to shareholders. The normal tax
structure accepts separate taxation.
• Earnings of foreign corporations. The general tax law does not
seek to tax foreign entities or persons on income earned abroad.
Thus, earnings of foreign corporations operating outside the
United States are not taxable. The tax law does, however, tax
U.S. shareholders on dividends from corporations, regardless of
where those corporations are located or operated. The general
principle, however, is that dividends are taxed only when received.
For this reason, not taxing the income of controlled foreign
corporations until received is part of the normal tax structure.
The distinction between the normal tax structure and those exceptions leading to tax expenditures is clear-cut in most cases but in some

SPECIAL ANALYSES

105

it is essentially arbitrary. The distinction should not imply that the
features of the normal tax system are exempt from periodic analysis
and review. Like tax expenditures, many features of the normal tax
structure have major effects upon the level and composition of
economic activity and the distribution of income; some features affect
the everyday activities of corporations, trusts, and partnerships.
Budget outlays, or other policy instruments, are alternative means to
achieve the objectives of some of the features of the normal tax
structure just as they are with tax expenditures.
This analysis does not attempt a complete listing of all the special
tax provisions. Some items are excluded because there is insufficient
information available on which to base a sound estimate. Some items
are omitted because of their relatively small quantitative importance.
MEASURING TAX EXPENDITURES

The tax expenditure estimates reported below in table F - l have
been prepared by the Treasury Department and are based upon current
law. For the fiscal years shown, they estimate the loss of budget
receipts resulting from each of these particular features of the tax
system.
Each estimate is based upon two major assumptions. The first is
that only the tax provision in question is deleted and all other features
of the tax system, including the structure of rates, remain unchanged.
The hypothetical deletion increases the estimated taxable income for
corporations or individuals; the existing marginal tax rates are then
applied, giving the estimated tax expenditure. If, however, major
tax expenditures were in fact deleted, in all probability some features
of the normal income tax, such as rate structures or personal exemptions, would be changed so that the marginal rates used in making
the estimates would no longer apply. Outlay or credit programs might
also be altered or new tax expenditure items added. Such actions
cannot, of course, be anticipated when individual tax expenditure
estimates are made. In the case of itemized nonbusiness deductions
for individuals each estimate of revenue loss is based upon the amount
by which the standard deduction is exceeded.
Second, taxpayer behavior and general economic conditions are
assumed to remain unchanged in response to the hypothetical change
in the tax laws. This assumption is required to estimate tax expenditures but it is, in many cases, unrealistic. In particular, to the extent
that tax expenditures designed to encourage certain economic activities
have been successful, their elimination would presumably change
taxpayer behavior. Thus, if the tax credit for investment were deleted,
both taxpayer behavior and general economic conditions w^ould be
expected to change with a resulting impact on budget receipts generally. At the other extreme, if the special exemptions for the blind
and those over 65 were dropped from the tax code, taxpayer behavior
or general economic conditions would be unlikely to change.
For a variety of reasons tax expenditures can never be reported
with the precision of actual budget receipts and outlays. Whenever
possible, sample data from tax returns are used in making the estimates. These data are not, however, available for the years presented
here, as these returns have not yet been filed or tabulated. The estimates must be made by extrapolating sample tax return data from

106

THE BUDGET FOR FISCAL YEAR 1976

past years by means of other, more current information including the
economic forecast used in estimating budget receipts and outlays (see
Part 3 of the Budget). Moreover, many tax expenditures result from
excluded income, not reported on tax returns. Any changes scheduled
by existing law, such as the phasing in or out of specific provisions,
are accounted for in the estimates. Any major changes in the provisions of the normal tax structures, such as a change in rates, would
affect virtually all the estimates.
Several tax expenditure items are included in the base of the 10%
minimum tax for tax preferences, introduced by the Tax Reform Act
of 1969 in order to assure that individuals and corporations receiving
such tax preferences pay a share of the tax burden. Among them are
accelerated depreciation on real property, excess reserves of financial
institutions for losses on bad debts, percentage depletion in excess of
cost depletion, and one-half of net long-term capital gains. The
minimum tax is, in general, applied to the sum of preference items
reduced by a $30 thousand exemption plus the income tax for the
year. The estimates of tax expenditures presented in this analysis
are net of any minimum tax liabilities associated with particular items.
Some tax expenditure items affect the timing of deductions or the
receipt of taxable income. Examples are depreciation in excess of
straight line for buildings and rental housing and the deferral of
income by domestic international sales corporations (DISC's). These
provisions create a permanent tax expenditure even though for a particular taxpayer, transaction, or asset, the special provision may
really represent a deferral of tax. However, for a stable or growing
business with an indefinite life, for the Government, and for the
entire economy, the deferral of taxes continues forever under most of
these provisions. Furthermore, as the economy grows, these amounts
increase over time. Estimates for these items attempt to show the
difference between budget receipts under the current law and budget
receipts if a different law had always been in effect. These figures do
not, therefore, estimate the revenue that could be obtained in the first
years of a transition from one tax law to another. They are long-run
estimates at the levels of economic activity assumed for the years in
question.
Tax expenditure estimates cannot be simply added together to form
totals for functional areas or a grand total. In some cases the revenue
gain resulting from the deletion of two tax expenditure items would be
greater than the sum of the individual estimates. For example, if
interest income from State and local government securities were made
taxable and capital gains were taxed at ordinary rates, many individuals would be pushed into higher tax brackets than if just one of
these sources of income became fully taxable; the combined effect on
revenue would be greater than the sum of the two separate estimates.
In other cases, the revenue gain from the deletion of two items would be
smaller than the sum of the individual estimates. For example, if the
deductibility of mortgage interest payments and homeowner property
taxes were both repealed, and the standaid deduction unchanged,
many individuals who now itemize their deductions would opt for the
standard deduction, thus limiting the revenue gain. In general,
elimination of multiple items that are personal deductions would

SPECIAL ANALYSES

107

increase revenues by less than the simple sum of the revenue gains from
eliminating each item measured separately since many taxpayers
would switch to using the standard deduction. Conversely, elimination of multiple items that are exclusions from adjusted gross income
would increase revenues by more than the sum of the individual gains
as taxpayers would be pushed into higher tax brackets. Moreover,
if several major tax expenditure items were eliminated, the assumptions of no changes in economic behavior and conditions or in other
features of the tax system would have little validity.
A few aggregations of related tax expenditure items are presented
and discussed in the next section; these aggregates have been specially
estimated so as to account for the interactions referred to above.
Where tax expenditures for both individuals and corporations result
from the same tax code provision, the two estimates may appropriately
be added together.
TAX EXPENDITURES BY FUNCTION

Estimates of tax expenditures are grouped together by functional
category and presented in table F - l . The estimates are shown
separately for individuals and corporations. Whenever possible particular tax expenditures have been classified according to the functional categories used for budget outlays. Many tax expenditures do
not, however, fit into these categories and for that reason three special
functional categories have been added: business investment, personal
investment, and other tax expenditures.
In the case of tax expenditures designed to encourage certain types
of economic activity, it should not be inferred that the benefits of the
special tax treatment rest fully or even mostly with the corporations or
individuals whose taxes are initially affected. Benefits are often passed
on to others in the form of lower prices for particular goods or services
or in other ways become widely diffused. For example, the deductibility of charitable contributions does not merely lower individual or
corporate liabilities; the individuals and institutions that receive the
contributions benefit also.
A brief description of each of the special tax provisions for which a
tax expenditure estimate is shown in table F - l follows.
National defense.—The supplements to salaries of military personnel
by provision of quarters and meals on military bases and off-base
quarters allowances for military families, and virtually all salary
payments and reenlistment bonuses to military personnel serving in
combat zones, are excluded from tax. Disability related military
pensions are largely excluded from taxable income.
International affairs.—For citizens of the United States who are not
employees of the Federal Government, income earned abroad up to
$20 thousand for each complete tax year is exempted from taxation
if the taxpayer is a bona fide resident of a foreign country for an uninterrupted period that includes 1 full tax year or, if he is present
there 510 days during a period of 18 consecutive months. After 3
years, foreign resident taxpayers can exclude up to $25 thousand a

108

T H E BUDGET FOR FISCAL YEAR

1976

Table F-l. TAX EXPENDITURE ESTIMATES, BY FUNCTION*
(in millions of dollars)
Corporations
Description

1974

1975

National defense:
Exclusion of benefits and allowances to Armed
Forces personnel
Exclusion of military disability pensions
International affairs:
Exclusion of gross-up on dividends of LDC
corporations
55
55
Exclusion of certain income earned abroad by
U.S. citizens
Deferral of income of domestic international sales
corporations (DISC)
870 1,070
Special rate for Western Hemisphere trade corporations
50
50
Agriculture:
Expensing of certain capital outlays
170
145
Capital gain treatment of certain income
30
20
Natural resources, environment and energy:
Expensing of exploration and development costs.
750
950
Excess of percentage over cost depletion
1,815 2,200
Capital gain treatment of royalties on coal and
iron ore
5
5
Timber: capital gain treatment of certain income.
130
145
Pollution control: 5-year amortization
35
30
Commerce and transportation:
$25,000 corporate surtax exemption
3,270 3,590
Deferral of tax on shipping companies
35
35
Railroad rolling stock: 5-year amortization
70
60
Bad debt reserve of financial institutions in excess
ofactual
1,000 1,030
Deductibility of nonbusiness State gasoline taxes.
Community and regional development: Housing rehabilitation: 5-year amortization....
35
45
Education, manpower and social services:
Child care facilities: 5-year amortization
5
5
Exclusion of scholarships and fellowships
Parental personal exemptions for student age 19
andoveV.
.
Deductibility of contributions to educational
institutions
155
160
Deductibility of child and dependent care expenses
Credit for employing public assistance recipients
under work incentive program
5
5
Health:
Exclusion of employer contributions to medical
insurance premiums and medical care
Deductibility of medical expenses
Income security:
Exclusion of social security benefits:
Disability insurance benefits
OASI benefits for aged
Benefits for dependents and survivors
Exclusion of railroad retirement system benefits..
Exclusion of sick pay
Exclusion of unemployment insurance benefits...
Exclusion of workmen's compensation benefits_..
Exclusion of public assistance benefits
See footnote at end of table.

Individuals

1976

1974

1975

1976

650
65

650
75

650
85

100

155
25

580
520

480
280

495
340

1,235
2,610

80
305

100
370

130
445

5
155
20

865

850

195

210

-190

655

670

690

155

355

405

435

230

240

250

2,940 3,340
2,125 2,375

3,745
2,630

235
260
2,530 2,655
410
435
160
170
255
275
1»050 2,370
520
570
75
85

28U
2,940
480
180
295
3,83U
620
90

1,320
50

3,570
40
55
980
35
5

SPECIAL ANALYSES

109

Table F—1. TAX EXPENDITURE ESTIMATES, BY FUNCTION*—Continued
(in millions of dollars)
Corporations

Individuals

Description
1974

1975

1976

1974

Net exclusion of pension contributions and earnings:
Employer plans
Plans for self-employed and others
Exclusion of other employee benefits:
Premiums on group term life insurance
Premiums on accident and accidental death
insurance
Privately financed supplementary unemployment benefits
_
Meals and lodging
Exclusion on capital gain on house sales if over 65 _
Excess of percentage standard deduction over
minimum standard deduction
Additional exemption for the blind
Additional exemption for over 65
Retirement income credit
Veterans benefits and services:
Exclusion of veterans disability compensation
Exclusion of veterans pensions
Exclusion of GI Bill benefits
General government: Credits and deductions for
political contributions
Revenue sharing and general purpose fiscal
assistance:
Exclusion of interest on State and local debt.__. 2,805 3,155 3,505
Exclusion of income earned in U.S. possessions. _
350
350
350
Deductibility of nonbusiness State and local taxes
(other than on owner-occupied homes and gasoline)
Business investment:
Depreciation on rental housing in excess of
straightline
105
115
120
Depreciation on buildings (other than rental
housing) in excess of straight line
285
280
275
Expensing of research and development expenditures
.
605
630
660
Capital gain: corporate (other than farming and
timber
745
595
755
Investment credit
3,690 4,160 4,420
Personal investment:
Dividend exclusion.
.
Capital gain: individual (other than farming and
timber)
Exclusion of interest on life insurance savings
Deferral of capital gain on home sales
Deductibility of mortgage interest on owneroccupied homes
---,
Deductibility of property taxes on owneroccupiedhomes
Deductibility of casualty losses
Other tax expenditures:
Exemption of credit unions
105
115
125
Deductibility of charitable contributions (other
than education)
290
295
285
Deductibility of interest on consumer credit
•AH estimates are based on the tax code as of January 1, 1975.

1975

1976

4,790
230

5,200
410

5,740
710

680

740

805

5
175
10

5
180
10

5
190
10

1,260
15
1,150
100

1,370
15
1,200
75

1,420
15
1,250
70

485
25
290

525
30
255

550
35
250

1,060
5

1,160
5

1,260
5

6,955

8,820

9,950

375

405

420

220

215

880

905

950

320

340

360

6,150
1,420
255

3,280
1,620
285

4,165
1,820
315

4,870

5,590

6,500

4,060
255

4,660
275

5,270
300

3,820 4,485
2, 435 2,885

4,840
3, 460

110

THE BUDGET FOR FISCAL YEAR 1976

tax year. Certain allowances received by Federal employees working
abroad are also tax-exempt.
The profits of a Domestic International Sales Corporation (DISC)
are not taxed to the DISC but instead are taxed to the shareholders
when distributed to them. This deferral is available for 50% of the
export income of a DISC. To qualify as a DISC at least 95% of a
corporation's gross receipts must arise from export activities. The
resulting tax expenditure is expected to increase from $0.9 million in
1974 to $1.3 billion in 1976 as additional DISC's are created and a
larger volume of export income is deferred.
Domestic corporations qualifying as Western Hemisphere Trade
Corporations are entitled to a special deduction which reduces their
tax rate by 14 percentage points from 48% to 34%.
When a foreign subsidiary of a U.S. corporation operating in a less
developed country (LDC) repatriates dividends to its parent corporation, that income may be reported net of foreign income taxes paid.
U.S. tax liability is then calculated on that net amount and the foreign
tax is taken as a credit. For non-LDC corporations income must Be
reported gross of foreign taxes paid. The failure to "gross-up" the
dividends by the amount of the foreign taxes paid results in a tax
expenditure.
Agriculture,—Farmers, including corporations, may deduct certain
costs as current expenses even though these expenditures were for
inventories on hand at the end of the year or capital improvements.
Capital gains treatment applies to the sale of livestock, orchards,
vineyards, and comparable agricultural activities. The decline in the
estimate for 1975 is due to expected decreases in certain types of farm
income.
Natural resources, environment and energy,—Certain capital costs
necessary to bring a mineral deposit into production may be deducted
as current expenses rather than spread over the useful life of the
property. Included in this category are the intangible drilling costs
of oil and gas wells, such as the wages of drilling crews, and the cost
of developing other mineral deposits, such as expenditures for mine
shafts, tunnels, and stripping.
Extractive industries may choose between two methods of recovering
capital costs invested in the development of natural resources. Under
one method, actual outlays, to the extent not immediately expensible,
may be deducted as "cost depletion" over the productive life of the
property, much as other businesses may take deductions for the
depreciation of capital goods. Alternatively, businesses in the extractive industries may deduct a prescribed percentage of gross income
(at rates ranging from 22% for oil and gas to 5% for certain minerals, but not more than 50% of net income) where "percentage
depletion" exceeds "cost depletion." Percentage depletion is not
limited to the cost of the investment as is cost depletion. The basis
for "cost depletion" is reduced to the extent certain costs are recovered
through expensing of exploration and discovery costs and intangible
drilling costs. There is no comparable reduction in "percentage
depletion" to allow for costs which are allowed as expenses. Because

SPECIAL ANALYSES

111

of the interaction between these two items, a tax expenditure estimated on the assumption that both were eliminated would be significantly smaller than the sum of the two separate items.
Royalties from coal or iron ore deposits are treated as capital gains,
rather than ordinary income.
The gain on the cutting of timber is taxed at rates applicable to
long-term capital gains, rather than at ordinary income rates.
Taxpayers may elect to amortize a certified pollution control
facility over a 5-year period rather than their longer actual useful
life. If they so elect they may not claim the investment tax credit
on the capital cost of the facility.
Commerce and transportation.—Corporations generally pay income
tax at the rate of 22% on all taxable income plus a surtax of 26% on
taxable income in excess of $25 thousand. Each corporation therefore
enjoys a surtax exemption of $25 thousand. This exemption is intended
to encourage small or new business.
Certain companies which operate U.S.-flag vessels on foreign trade
routes receive an indefinite deferral of income taxes on that portion
of their net income which is used for shipping purposes, primarily
construction, modernization, and major repairs of ships.
Specified classes of railroad rolling stock are eligible for amortization over a 5-year period whether owned by railroad companies or by
lessors, rather than their longer, actual useful life. If 5-year amortization is elected the investment tax credit cannot be claimed.
Commercial banks, mutual savings banks, and savings and loan
associations are permitted to deduct and set aside additions to bad
debt reserves in excess of actual loss experience and reasonable
expectations as to future losses. Commercial banks may maintain a
reserve of 1.8% of uninsured loans. The ratio will phase down to 1.2%
in calendar year 1976. Mutual savings banks and savings and loan
associations may deduct 45% of income in 1975, provided they maintain stipulated fractions of their assets in "qualifying assets," primarily residential mortgages. Under current law their maximum
deduction will phase down to 40% in 1979 and thereafter.
Individuals who itemize their deductions may deduct State gasoline
excise taxes paid. The deduction of any excise tax on gasoline used
for business purposes does not result in a tax expenditure.
Community and regional development.—Taxpayers may, under
certain conditions, elect to compute depreciation on rehabilitation
expenditures for low and moderate income rental housing over a
5-year period. Qualified rehabilitation expenditures may not exceed
$15 thousand per dwelling unit and must exceed $3 thousand.
Education, manpower and social services.—Taxpayers may elect to
amortize over a 5-year period expenditures incurred in acquiring,
constructing, reconstructing, or rehabilitating child care or on-thejob training facilities.
Recipients of scholarships and fellowships may exclude such amounts
from taxable income, subject to certain limitations. The exclusion of

112

THE BUDGET FOR FISCAL YEAR 1976

educational benefits under the GI bill are included in Veterans Benefits
and Services.
Taxpayers may claim personal exemptions for dependent children
19 or over who receive income of $750 or more per year only if they
are full-time students. The student may also claim an exemption
on his or her own tax return, in effect providing a double exemption,
one on the parents' return and one on the student's.
Contributions to nonprofit educational institutions are allowed as
a deduction for individuals and corporations. (See the discussion of
other charitable contributions under Other Tax Expenditures.)
Child and dependent care expenses incurred to permit the taxpayer
and his spouse to work may be taken as an itemized deduction up to a
maximum of $400 per month. The deduction is reduced by 50 cents for
each dollar of adjusted gross income in excess of $18,000 per year.
A credit is allowed against income tax liability equal to 20% of
first-year wages and salaries of employees placed in employment under
the work incentive program. The credit for a taxable year cannot
exceed $25 thousand plus 50% of the excess over that amount.
Health.—Payments by employers for health insurance premiums
and other medical expenses are deducted as business expenses by
employers and excluded from income by employees. The exclusion
from employees' income gives rise to the tax expenditure.
Medical expenses in excess of 3 % of adjusted gross income including
expenditures for prescribed drugs and medicines in excess of 1% of
adjusted gross income may be deducted by individuals as itemized
nonbusiness deductions. Individuals may also deduct half of the
premiums they pay for medical care insurance up to a maximum
deduction of $150 per year, without regard to the 3 % limitation.
Income security.—Several forms of government transfer payments to
individuals are excluded from taxable income. The implicit Federal
revenue loss for each of these items is indicated in table F-1.
Payment of social security disability insurance benefits assumes
almost total inability to work. If the taxpayer had no other
source of income these payments, even if taxable, would not be
sufficient to result in any significant tax liability, given personal
exemptions and minimum standard deduction. Since some
recipients have property income, earnings during the year of
disablement, or may file jointly with working spouses, a tax
expenditure results from this exclusion. Social security payments
received by the aged and dependents and survivors are taxexempt. Payments received under the railroad retirement
system are also tax-exempt.
Unemployment insurance and workmen's compensation benefits are tax-exempt. The former are expected to grow substantially during 1975 and 1976.
Public assistance payments from State and local governments
and the Federal supplemental security income program are also
excluded.
Certain payments, up to $100 per week, financed by an employer in
lieu of wages during periods of employee injury or sickness are excluded from the employee's taxable income.

SPECIAL ANALYSES

113

Certain contributions to pension plans paid by employers, and
amounts set aside by the self-employed, are excluded from current
individual gross income. Income earned by investing these funds is
not taxable currently. The resulting tax expenditures are composed
of two elements, lower effective tax rates after retirement, due to
lower incomes and to special tax provisions enjoyed by the aged, and
the excess of current contributions and investment earnings over
amounts paid out in benefits. The Employee Retirement Income Security Act of 1974 permits the self-employed to increase their deductible contributions to their own retirement plans to 15% of their
income, up to a maximum of $7,500 per year, from a 10% and $2,500
limit under prior law. The act also permits employees not covered by
an employer's plan to deduct annual contributions of 15% of compensation, up to a maximum of $1,500. These changes in the law are
reflected in the estimated tax expenditures shown in table F - l .
In addition to pension plans, many employers provide other employee benefits that are excluded from employee income. The employer's share of these benefits are deductible business expenses.
A taxpayer 65 or older may exclude from gross income any capital
gain allocated to the first $20 thousand of the adjusted sales price
on a sale of his personal residence. This is a once in a lifetime exclusion.
The percentage standard deduction—15% of adjusted gross income
up to a limit of $2 thousand—sets an upper limit on the tax liability
for many taxpayers, predominately in the lower and middle income
range, and for that reason is classified under Income Security. The
standard deduction is a substitute for itemizing deductions; the
estimates shown are for the amount by which the standard deduction
exceeds the minimum standard deduction of $1,300 or the itemized
deductions that would be taken in the absence of this provision,
whichever is greater. This provision also encourages taxpayers to use
the simplified Short Form 1040A. If simplification were the only
objective of this provision it would be classified under Other Tax
Expenditures.
Additional personal exemptions of $750 may be deducted by taxpayers who are over 65 or who are blind. These additional exemptions
may not be claimed for the taxpayer's dependents.
A retirement income tax credit may be claimed by individuals who
are retired, or over age 65, of up to $228.60 (15% of $1,524) for a
single person, or $342.90 (15% of $2,286) for a married couple, based
on retirement income from all sources except social security, railroad
retirement, or other tax-exempt benefits. The provision was designed
to permit taxpayers with taxable retirement income a tax benefit
approximately comparable to that accorded recipients of social
security and similar tax-exempt benefit payments.
The aggregate effect of excluding social security and railroad retirement benefits for the aged, the additional exemption for those
over 65, and the retirement income credit are revenue losses of $4.3
billion in 1974, $4.7 billion in 1975, and $5.1 billion in 1976. These
aggregates are greater than the sum of the individual estimates because more elderly persons would be pushed to taxpaying levels of
income or into higher tax brackets if all of these items were deleted
from the tax code.

530-700 O - 75 - 8

114

THE BUDGET FOR FISCAL YEAR 19 76

Veteran benefits and services.—All compensation due to death or
disability and pensions paid by the Veterans Administration are
excluded from taxable income. GI bill benefits are also excluded.
General government.—Political contributions up to a maximum of
$100 ($200 in the case of joint returns) can be deducted or tax credits
taken up to one-half of contributions but limited to $25 ($50 on
joint returns). Prior to 1975 the maximums were half as large.
Revenue sharing and general purpose fiscal assistance.—The interest
on State and local government debts is excluded from Federal taxation.
Both corporations, mainly commercial banks, and individuals receive
this tax-exempt income. As a result, these governments are able to sell
debt obligations at a lower interest cost than would be possible if
such interest were subject to tax.
U.S. citizens and corporations receiving income from sources in a
U.S. possession may, under certain conditions, exclude such income
from tax.
The deductibility of nonbusiness State and local taxes provides
indirect assistance to these governments. The deductibility of property taxes on owner-occupied homes and excise taxes on gasoline are
classified elsewhere. The estimates shown here are primarily for the
deductibility of State and local income and sales taxes.
Business investment.—To the extent that allowable depreciation
for tax purposes exceeds the rate at which assets actually depreciate,
business tax liabilities are deferred. Businesses may employ a variety
of depreciation schedules for tax purposes, some of which cause a much
larger part of asset values to be written off in early years of the asset's
useful life than do others. The revenue costs of allowing buildings and
rental housing to be depreciated for tax purposes by methods that
reduce asset value more rapidly than straight-line depreciation (the
method typically used in financial statements) are shown.
Research and development expenditures typically result in new
products or processes, cost reductions, or other outcomes the benefits
from which will, in nearly all cases, accrue for well over 1 year. For
tax purposes businesses may deduct all research and development
expenditures in the year during which they are incurred. The tax
expenditure is estimated on the assumption that such expenditures
are amortized over a 5-year period.
Corporations may elect a 30% alternative tax rate on capital gains.
The tax expenditure is estimated on the assumption that these gains
would otherwise be taxed at 48%.
An amount equal to 7% of the cost of qualifying property having a
useful life of over 7 years (generally, tangible personal property used
in a trade or business) may be offset directly against income tax
liability. Lower rates apply to property with useful lives of 3 to 7
years. Public utility property qualifies for a maximum credit of only
4%. The maximum credit which may be claimed in a taxable year is
limited to $25 thousand plus one-half of the excess of tax liability
over $25 thousand. Excess credits may generally be carried back 3
taxable years and forward 7 taxable years, after which they expire
if still unused.

SPECIAL ANALYSES

115

Personal investment.—Grouped together in this category are a
number of tax expenditure items that affect individuals as investors
and holders of both real and financial assets.
The first $100 ($100 per taxpayer on a joint return) of dividend
income may be excluded from taxable income.
Half of the gains from the sale of capital assets held more than
6 months is excluded from income. Long-term capital losses may be
deducted from gains but no more than $1 thousand of long-term losses
may be deducted in any 1 year from ordinary income. No special
recognition is made of the effect of inflation on the value of assets.
Capita] gains treatment under present law is complex for a number of
reasons. It could be contended that:
1. Full taxation of realized capital gains, even with full taxation at death, could result in greater postponement of lifetime
gains thereby limiting tax revenues;
2. With a different treatment of capital gains another approach
to the corporation tax might provide for some integration of
corporate and individual taxes; taxpayers who sell corporate
shares might be given some credit for taxes paid by the corporation on the retained income which is reflected in the value of
those shares;
3. Averaging of capital gains over the length of the holding
period would lower the estimated revenue costs.
The estimate is computed on the assumption that the half of longterm gains currently excluded were taxed at ordinary rates.
Life insurance policies, other than term policies, generally have a
saving element in them. Savings in the form of policyholders' reserves
are accumulated from the premium payment, and interest is earned
on these policyholders' reserves. Such interest income is taxable neither
as it accrues nor as an element of death benefits.
Capital gains on the sale of a home are recognized only to the extent
that the "adjusted sales price" exceeds the cost of a new home purchased and occupied within a year before or after the sale (if a new
house is constructed it must be occupied within 18 months after the
sale). The "adjusted sales price" is the amount realized (gross proceeds minus selling expenses) minus qualified "fixing up" expenses.
A loss on a sale of a home is not deductible.
Owner-occupants of homes may deduct mortgage interest and
property taxes (but not maintenance outlays or depreciation because
the in-kind income from home ownership is not recognized) as itemized
nonbusiness deductions. The tax expenditure from these two items
combined would be $11.3 billion for 1976. This is less than the sum
of the two separately because if both were deleted more taxpayers
would save by using the standard deduction.
Taxpayers may deduct as an itemized nonbusiness deduction the
amount in excess of $100 for each loss due to fire, theft, or other
casualty to the extent not compensated by insurance or other payments. This may encourage individuals to hold assets that are uninsurable or to self-insure.
Other tax expenditures.—Credit unions are exempt from Federal
income tax.
Interest paid on consumer credit for any purpose is allowed as an
itemized nonbusiness deduction for individuals.

116

THE BUDGET FOR FISCAL YEAR 1976

Contributions to charitable, religious, or certain other nonprofit
organizations are allowed as an itemized deduction for individuals
generally up to 50% of adjusted gross income. Taxpayers whose
contributions to charitable or educational organizations are in the
form of capital assets, usually securities, which have appreciated in
value above their cost, obtain a deduction for the contribution at the
appreciated value of the asset without taxation on the appreciation in
value. Contributions to educational institutions are reported under
Education and Manpower.
Corporations may deduct charitable contributions (including those
made to educational institutions which are separately reported in the
Education and Manpower category) up to 5% of their income. In the
absence of this provision of the tax code some of these contributions
might be deductible as business expenses.
PROPOSED CHANGES IN TAX EXPENDITURES

The tax proposals that are a part of the 1976 budget would reduce
nearly every estimated tax expenditure for 1975 and 1976 presented
in table F - l . This is because the proposed reductions in individual and
corporate tax rates and the increase in the minimum standard deduction would change income tax withholding on June 1, 1975. No attempt will be made here to reestimate each of the items.
Several proposals do affect particular tax expenditures more specifically and these will be briefly discussed. The estimates for these
specific changes are shown in table F-2.
Table F-2. ESTIMATES OF PROPOSED CHANGES IN TAX EXPENDITURES
(in millions of dollars)
Description

Excess of percentage standard deduction over minimum standard
deduction
Investment credit
Residential conservation tax credit

Corporations
1975

1976

1,000

2,300

Excess oj percentage standard deduction over minimum

Individuals
1975

200

1976

-1,420
600
500

standard

deduction.—The proposed increase in the minimum standard deduction to $2,000 ($2,600 on a joint return) would raise the amount
of the minimum standard deduction above the current $2,000 maximum for the percentage standard deduction. This change in the normal
tax structure would eliminate the tax expenditure that exists under
current law. The revenue gain that would result from eliminating the
percentage standard deduction is more than offset by the tax cut
associated with increasing the minimum standard deduction. Eliminating the percentage standard deduction is not proposed apart
from increasing the minimum standard deduction.
Investment tax credit.—There would be an increase for 1 year in the
investment tax credit to 12% for all taxpayers, including utilities
(which presently have, in effect, a 4% credit). Utilities would continue
to receive a 12% credit for 2 additional years for qualified investment
in electrical generating facilities which are not oil or gas fired.

SPECIAL ANALYSES

117

With respect to utilities, it includes a temporary increase in the
amount of credit which may be used to offset income tax. Under
current law, not more than 50% of the income tax liability for the
year may be offset by the investment credit. Since many utilities have
credits they have been unable to use because of this limitation, under
this proposal utilities would be permitted to use the credit to offset up
to 75% of tax liability for calendar 1975, 70% for 1976, and so on,
until 1980, when they would in five annual steps have returned to the
50% limitation applicable to industry generally.
The 12% credit would be available with respect to property placed
in service during calendar 1975 and to property ordered during 1975
if placed in service before the end of 1976. The credit would also be
available to the extent of construction, reconstruction, or erection of
property by or for a taxpayer during 1975, without regard to the date
ultimately placed in service. Similar rules would apply to investment
in electrical generating facilities that are not oil or gas fired for which
the 12% credit would continue through 1977.
Residential conservation tax credit.—A 15% tax credit retroactive to
January 1, 1975, for the cost of certain improvements in thermal
efficiency in residences would be provided. Tax credits would apply to
the first $1 thousand of expenditures and could be claimed during the
next 3 years for an aggregate of $150.
Deductibility of dividends on qualified preferred stocks.—To increase
incentives for raising needed capital in the form of equity rather
than debt it is proposed that dividends on qualified preferred stock
be deductible for determining corporate income. Such dividends would
not qualify for the 85% dividends received deduction.

SPECIAL ANALYSIS G
PRINCIPAL FEDERAL STATISTICAL PROGRAMS

An overview of major statistical programs of the Federal Government is presented in this special analysis.
In the 1976 budget there is a special emphasis on improvements in
statistics which are needed by economic policymakers, especially
those series which have deteriorated because of inflation or which will
aid in understanding inflation better. A second area of emphasis is
improvement in local area statistics; in particular, improved estimates
of unemployment, estimates of children in poverty by State, and
current population estimates for revenue sharing. Allowance is also
made for selected improvements in other major program areas.
The 1976 budget for current statistics provides for an increase of 10%
from $449.3 million to a level of $492.5 million. The increase for
1976 includes $7.4 million to respond to the needs related to inflation and $11.5 million for improvements in local-area measurement.
Together these initiatives account* for 44% of the total increase in
current programs.
Total periodic programs will increase in 1976 from $33.2 million to
$36.9 million. The major focus of periodic programs during 1976 will
be active planning for the 20th decennial census and the 1977 economic
censuses and data processing and analysis associated with revision of
the Consumer Price Index and the 1974 Census of Agriculture.
The Office of Management and Budget, with the cooperation and
participation of the major statistical agencies, is increasing its efforts
to improve planning for statistical programs. One of the objectives is
the development of a comprehensive plan for statistical programs in
the 1980s. In 1976 considerable effort will be devoted to the planning
process associated with statistical programs with the expectation that
by the conclusion of calendar year 1977 a comprehensive plan for
long-range development of statistics will be available for consideration.
A number of interagency committees are presently working to resolve statistical issues relating to problems such as the definition of
poverty levels, development of improved productivity measures,
establishing data specifications for the 1980 Census, and making
improvements in specific data series.
118

SPECIAL ANALYSES

119

Table G-1. OBLIGATIONS FOR PRINCIPAL CURRENT STATISTICAL
PROGRAMS, BY BROAD SUBJECT AREAS 1 (dollars in millions)
1974

1975

1976

Labor statistics
Prices and price indexes
Production and distribution statistics
Housing and construction statistics
National economic and businessfinancialaccounts
Energy statistics 2
Environmental statistics

61.9
13.4
67.9
13.9
35.7
8.7
25.8

78.7
17.5
78.8
15.0
36.6
28.0
32.2

82.9
19.6
90.2
17.1
40.1
28.4
31.9

Subtotal for economic and related statistics

227.3

286.8

310.2

82.6
6.5
15.6
27.0
12.9

90.0
5.5
21.4
30.5
15.1

94.1
6.8
38.7
29.3
13.4

Subtotal for demographic, social, and related statistics

144.6

162.5

182.3

Total, principal current programs

371.9

449.3

492. 5

Health statistics
_
Population statistics
Educational statistics
Criminal justice statistics
Income maintenance and welfare statistics

1
2

Classifications are based on primary use of statistics.
Includes items classified differently in previous years.

IMPROVEMENTS IN STATISTICS RELATED TO INFLATION

The preparation of the 1976 statistical budget reflected an important
review of the immediate needs of economic policymakers undertaken
by the Subcommittee on Economic Statistics of the Economic Policy
Board. The subcommittee was particularly concerned with the quality
of statistical measurement of: (1) business inventories, (2) exportimport prices, (3) wholesale prices, (4) farm income, and (5) wage rates,
earnings, and employment levels. The 1976 budget proposes program
increases in each of these areas of concern.
Business inventories ($0.6 million).—The measurement of inventory change has long been troublesome in the estimating of gross
national product data. Recent patterns of rapid price changes have
highlighted deficiencies in current inventory estimates. Several
specific projects have been included in the Social and Economic
Statistics Administration's budget to improve the statistics in this
difficult area.
A mandatory annual survey of inventories of merchant wholesalers
will be introduced for rebenchmarking the monthly inventory estimates and improving the overall quality of the monthly survey.
The Census Bureau will conduct a project to determine whether
the monthly wholesale inventory panel could be based on a fixed
panel of reporters. The present methodology exhibits a bias in wholesale inventory estimates which is suspected to be due to the rotating
of firms into and out of the sample.

120

THE BUDGET FOR FISCAL YEAR 1976

A detailed survey of the recordkeeping practices of manufacturing
firms will be taken to explore inventory valuation methods and the
frequency of physical inventory calculations with special attention
to some of the more volatile industries.
A feasibility study will be conducted to see whether the monthly
retail inventory panel can be expanded from 2,000 reports per month
to 15,000 reports per month by adding the inventory questions to the
monthly retail sales survey without reducing the quality of the retail
trade estimates.
Expert consultants and Government statisticians will be employed
to explore in depth the most pressing issues in inventory statistics
methodology and to make recommendations concerning future
avenues of improvement.
Export-import prices ($1.2 million).—With the growing importance
of foreign trade and the policy implications of rapidly changing
world prices, it is important to improve export-import price data.
The 1976 budget includes funds to speed up the program of the
Bureau of Labor Statistics so that 60% of exports and 40% of imports
will be covered by the end of the period.
Wholesale prices ($0.5 million).—Planned improvements in the
Wholesale Price Index for 1976 include expansion of the use of
probability sampling, accelerating the program to obtain transaction
prices where list prices are currently being reported, and improvement
in the underlying concepts including more attention to the stage of
processing approach. New weights, based on the 1972 economic
census, will be employed.
Farm income ($3.6 million).—Estimates of farm income for 1973
were significantly revised in June 1974. Some of the important components are available currently while others, available only with a
long time lag, must be estimated based on the continuation of past
relationships. When the data which had been estimated became
available in 1974, it appeared that past relationships had been
broken in serious and significant ways. For example, rapid changes in
prices caused farmers to change their inventory behavior. New steps
are therefore required to develop more timely and accurate statistics
to measure this phenomenon.
The highest priority for the Economic Research Service of the
Department of Agriculture in 1976 will be the development of an
annual economic survey of farmers. This survey will include data
on marketing patterns, ownership of inventories on and off the farm,
purchases and sales of livestock, inventories of purchased inputs at
the end of the taxable year, and the cost of production of cattle and
hogs. The Statistical Reporting Service will develop and maintain a
comprehensive list sample frame of farmers for this and other surveys.
Wages, earnings, and employment ($1.5 million).—In order to
develop more consistent and complete data on wages and employment
to meet the needs of policymakers and private decisionmakers, the
Bureau of Labor Statistics will undertake or continue several projects
in 1976.

SPECIAL ANALYSES

121

The General Wage Index program will be expanded from its current
industry coverage, which focuses on the private nonfarm sector,
toward the goal of including all sectors of the economy. Research on
nonwage costs will be undertaken.
Resources are recommended for the current employment statistics
program to conduct research and experimentation to test alternative
approaches for counteracting a downward bias in current employment estimates believed to be due to failure to include new establishments in the program sample during the period of initial hiring. In
addition, the quality of the sample used for preliminary estimates will
be strengthened and research on sample and estimation methodology
will be conducted. Instead of mail, teleprocessing techniques will
be used by States to send data to the Bureau of Labor Statistics.
Funds are recommended to develop revised procedures for processing
State quarterly employment and payroll data (the ES-202 program)
and for monitoring State performance to improve the timeliness and
quality of the data, which are important for making wage estimates
in the national accounts and for benchmarking the current employment statistics (790) program.
IMPROVEMENTS IN LOCAL-AREA ESTIMATES

Population,

per capita income, and government expenditure

esti-

mates.—In the past few years there has been significant legislation
which requires the Census Bureau to provide official estimates between
censuses. The Federal Election Campaign Act of 1971 (Public Law
92-225), for example, requires annual estimates of the voting age
population by congressional district. General revenue sharing requires periodic estimates of the population, per capita income, and
government revenue for approximately 39,000 governmental jurisdictions. The Census Bureau will generate the required estimates using
a variety of sources such as birth and death registration, school
enrollment, building permits and demolitions, social security data,
Immigration and Naturalization Service data, Internal Revenue
Service data, and other information available from local sources.
In 1976 the Census Bureau will obligate approximately $2.3 million,
an increase of $0.6 million over the 1975 level, to generate population
estimates and estimates of per capita income; an additional $1.3
million will be used to conduct a survey of revenues of States and local
units of government.
Unemployment estimates.—National unemployment estimates are
developed through the Current Population Survey (CPS), a household
survey conducted by the Bureau of the Census for the Department
of Labor. In 1975 the Department of Labor provided for the design
of an expanded CPS sample to obtain data for each State that could
be used both directly as inputs into the distribution formulas for
the Comprehensive Employment Training Act of 1973 (CETA)
and as State-level controls against which State and local-area data
developed through the use of administrative records could be benchmarked. For 1076 the Manpower Vdministratio*
will provide funding
from CETA title III funds to produce such da4 for all States on an
average annual basis. It is expected that this sample augmentation—

122

THE BUDGET FOR FISCAL YEAR 1976

principally to take place in the less populous States—will also improve
the national data with regard to minorities.
Children in poverty.—The educational amendments of 1974 require
that a survey be conducted to provide current State estimates of
the number of school-age children (ages 5-17) living in families
with incomes below the poverty threshold. Data from this survey,
conducted by the Bureau of the Census in consultation with the
Department of Health, Education, and Welfare (DHEW) are
scheduled to become available late in calendar 1976.
A simultaneous research effort is being carried out by the DHEW
and the Department of Commerce to determine the feasibility of
providing updated counts of the number of children from families in
poverty by school district in order to make adjustments in grants
which local education agencies receive under title I of the Elementary
and Secondary Education Act of 1965.
STATISTICAL IMPROVEMENTS IN MAJOR PROGRAM AREAS
SOCIAL STATISTICS

Health statistics.—A $3.6 million increase is provided for the National
Center for Health Statistics (NCHS) in 1976. With this increase,
NCHS will continue development of a Federal-State-local cooperative
health statistics system. In this system responsibility for identification
of the data elements to be collected and the costs of this collection
will be shared by the three levels of Government. The data elements
are chosen to meet the needs of the Federal Government as well as
those of the State and local governments. Responsibility for collection
of the data eventually will lie with the States and localities.
Other changes in health statistics reflect increases in areas where
Federal programs or responsibilities have been expanding. The
Consumer Product Safety Commission has an additional $1.6 million
to fulfill the requirement of the Consumer Product Safety Act of 1970
to estimate and analyze the economic impact of proposed standards
and regulations on both industry and the consumer, and to encourage
additional input from consumers on products which may represent
unreasonable risks of injury to consumers. The Center for Disease
Control has a $1.5 million increase for maintenance of its surveillance
system on occupational hazards, injuries, and illnesses resulting from
the work environment, and statistical analysis of the coal mine medical
examination program. The statistical activities of the National Cancer
Institute have been increased $0.5 million for environmental carcinogenesis studies, completion of the third national cancer survey, studies
of high-risk groups, and studies of the relationships between cancers,
congenital defects, and other diseases. The statistical activities of the
National Heart and Lung Institute have also been increased ($0.3
million) to give added statistical support to the three major ongoing
clinical trials. These trials are important for prevention and treatment
of cardiovascular disease.
Educational statistics.—The 1976 budget includes an increase of $8.9
million for the statistical activities of the National Center for Educational Statistics (NCES). Significant new activities of the Center will

SPECIAL ANALYSES

123

include several new surveys and the establishment of an interagency
consortium to provide Government agencies, the Congress, and the
public better access to educational data. The new surveys deal
with: (1) types of education outside of the traditional primary,
secondary, and higher education sequence; (2) teacher supply and
demand; (3) educational needs of individuals of limited Englishspeaking ability; and (4) longitudinal observation of the high school
class of 1978. The national assessment of educational progress and
Federal/State cooperative statistical programs will continue to be
major activities of NCES.
Several major educational surveys required by the educational
amendments of 1974 will be initiated by other agencies. The Office of
Education (OE) will initiate a longitudinal study to assess the sustaining effects of title I of the Elementary and Secondary Education Act
of 1965. OE will also conduct a survey to ascertain the rates of participation of economically and educationally disadvantaged children in
title I programs. The National Institute of Education will study the
purposes and effectiveness of compensatory education programs in
the Nation. The Bureau of the Census will conduct a special study to
produce State estimates for 1976 of the number of children 5-17 years
of age from families in poverty.
Income maintenance and welfare statistics.—A net decrease of $1.7
million for income maintenance statistics reflects the completion of
field work and initial data processing for the survey of the low income,
aged, and disabled population, and a number of the surveys of the
disabled. The decrease of $2.3 million in these areas was partially offset
by an increase of $0.5 million in surveys of the social and economic
status of the retired population and of young survivors and other
young beneficiaries. The 1976 budget provides for continued work on
the planning and development of an improved data base for the program of aid to families with dependent children and for better information about the types of social services provided. Funds are also
provided for small projects designed to improve the measurement of
noncash income, the preparation of special poverty tabulations, and
further extension of the longitudinal study of family economics.
Criminal justice statistics.—The 1976 budget provides $29.3 million
for criminal justice statistics programs in the Department of Justice, a
net decrease of $1.2 million from 1975. The Federal-State-local
cooperative statistics program, however, will continue to receive
priority attention within the Law Enforcement Assistance Administration (LEAA). These funds enable the States to develop comprehensive
crime and criminal justice statistics and provide the mechanism for
analysis for planning and evaluation. LEAA funds will continue to
provide sample data on the incidence of common crime, its costs, and
characteristics of victims and criminal events. Efforts will continue to
improve further the scope and quality of the uniform crime reports of
the Federal Bureau of Investigation. Early warning on the abuse of
some 2,500 dangerous drug substances will be provided by 1,300 early
warning facilities located in 29 metropolitan areas established by the
Drug Enforcement Administration.

124

THE BUDGET FOR FISCAL YEAR 1976
ECONOMIC STATISTICS

Wage statistics.—In 1976 the Bureau of Labor Statistics will undertake improvements in the professional, administrative, technical, and
clerical wage survey (PATC), which is used for establishing comparability between Federal and private pay systems ($0.4 million).
It is anticipated that bonus payments will be included in the survey,
and the industry and establishment-size scope will be expanded.
Production and distribution statistics.—Improvement and updating
of the sample panels are proposed for the current surveys of retail,
service, and wholesale trade to reflect the 1972 revisions in the standard industrial classification and the information collected in the 1972
economic censuses on kind of business, geographic area, and size of
firm or establishment. These new samples, to be developed for introduction in 1977, will insure continued comparability and usefulness of the information derived from these important up-to-date
measures of the state of the U.S. economy ($1.0 million). Funds
are budgeted to initiate a rotating series of benchmark surveys of
industries for which complete information is required more frequently
than every five years. Industries which are important users of scarce
resources, such as fuel and water, will be surveyed more frequently
than other industries, although the program provides for some flexibility in scheduling as new situations arise ($0.4 million).
The Department of Agriculture's Statistical Reporting Service
will continue its research cooperation with the National Aeronautics
and Space Administration into the practical use of signals transmitted
by the Earth Resources Technology Satellite (ERTS-1) for generating information on agriculture production as related to ground truth
($0.6 million).
A pilot test of a survey of the performance, costs, capacity, and other
aspects of the nonfarm portion of the food industry will be made to
determine whether it would be productive to add such questions to the
economic censuses or to conduct other surveys ($0.3 million). The
statistical portion of an Economic Research Service study to explore
the factors influencing foreign demand for U.S. agricultural exports
will require $0.2 million.
The budget also includes $1.3 million for the Agricultural Research
Service to initiate a national food consumption survey which will
provide information for monitoring trends in food consumption,
determining the nutrient value of diets of various population groups
and income levels, and facilitating the development of programs in
food production, marketing, and distribution. One of the most important applications of data from this survey is its use in the estimation of the population in poverty.
Several programs which contributed marginally to the Statistical
Reporting Service's mission, e.g., surveys of timber prices, mushrooms, mink, and floriculture production, will be discontinued in
1976 (—$1.0 million).
National economic and business financial accounts.—The recently
initiated program to develop information on commodity imports
valued inclusive of ocean insurance and freight charges (c.i.f.) will be

SPECIAL ANALYSES

125

enhanced by collecting data on the imports from foreign affiliated
companies valued as though the importer and the exporter were not
related (arms-length transactions). In addition, expansion in U.S.
international commodity trade is expected in 1976 to result in a 20%
increase over 1974 levels in the number of import and export documents to be processed by the Census Bureau, only part of which can be
accommodated by increases in productivity ($1.4 million). Funds are
programed to complete the benchmark survey of foreign direct investments in the United States as required by the Foreign Investment
Study Act of 1974 ($0.5 million). This survey, including information on financial, employment, and operating data as well as detailed
balance-of-payments and investment position data, will be coordinated with a similar survey on foreign portfolio investment in the
United States to be conducted by the Treasury Department under
the exchange stabilization fund.
In recent years, the Bureau of Economic Analysis (BEA) has developed, improved, and updated the methodology for producing annual
estimates of the distribution of the comprehensive personal income
component of the gross national product accounts, classified by size
and family characteristics, including money and nonmoney income.
In 1976, this series will be established as an annual publication with a
large amount of detail on the type of income received and the age,
race, and sex classifications of the recipient individuals and families. In
another BEA effort, the national input-output tables will be expanded
to add detail on the use and production of energy and other potentially
scarce materials. This information will be useful in evaluating the
impact on U.S. energy consumption of alternative policies and of
different industry growth patterns ($0.5 million).
Housing and construction statistics,—An additional $2.1 million for
construction and housing statistics principally reflects the increased
cost of the annual housing survey during 1976. Tabulations for 1973,
which was the first year of the national sample, will be released in
March 1975. An advance report of the data for 1974 is scheduled for
release during the summer of 1975. The basic construction and
housing statistics program includes statistical series on construction
activity, building permits, housing starts, construction progress,
alterations, repairs, and construction price indexes.
Energy statistics.—In previous special analyses, energy and energyrelated data have been included in the various other subject areas
within economic statistics. This year, however, because of their
national importance and interest, single and joint-purpose statistics
relating to energy are displayed separately. The principal collectors of
energy information include the Bureau of Mines (Department of the
Interior), the Federal Power Commission and the Bureau of the
Census. The focal point for energy (and energy-related) statistics,
however, is the Federal Energy Administration (FEA). During 1975,
FEA organized and began operation of the National Energy Information Center which serves as the interagency clearinghouse for energy
information. In addition, the Federal Energy Administration's Office
of Data collects information not provided by other sources, analyzes

126

THE BUDGET FOR FISCAL YEAR 1976

and evaluates requirements for energy data, and prepares reports
and disseminates information. Particular responsibilities include
reports required by Congress, such as the independent petroleum
reserves survey and a market shares analysis for branded versus
nonbranded gasoline at the wholesale distributor and retail levels.
Other functions, performed in the Office of Policy and Analysis,
include data processing support for the fuel allocation program,
analytical support for Project Independence, and developing and
refining long-range supply/demand balancing models. For 1976,
additional initiatives include evaluation of data related to the impact
of alternative energy policies on individuals in different income
groups.
Environmental statistics.—The major program areas of the Environmental Protection Agency (EPA) (air, water, noise, and pesticides)
continue to be supported by the collection of regulatory data and
special statistical surveys. During 1975 a number of experimental surveys have also been undertaken to coordinate energy/environmental
evaluations for power generation plants, to assess community perceptions and implicit economic trade-offs in selected pollution abatement
areas, and to explore the pollutant sensitivity of the demand for
water-related recreation. In addition, other agencies are collecting data
with environmental implications, e.g., Bureau of the Census/Bureau
of Economic Analysis on expenditures for pollution abatement and
Bureau of the Census/National Science Foundation on industrial
research and development for pollution abatement. Funding in 1976
will provide opportunities for improved data retrieval and coordination
within EPA, enhanced quality control of surveys to be conducted, and
increased interagency coordination of data relating to the environment.
PERIODIC PROGRAMS

1977 Census of Governments.—Preparation for taking the 1977
Census of Governments will continue in 1976 with questionnaire
design, planning for the processing of the data, and an identification,
count, and classification of all local governmental units.
1977 economic censuses.—Funds are provided to conduct the initial
work for the 1977 economic censuses, which are central to producing
estimates of the national economic accounts, Industrial Production
Index, and input-output tables. Plans and specifications will be
developed for collection, processing, and publishing, and the content
of the survey forms will be reexamined. The Census Bureau will
conduct feasibility studies to determine which of the items recommended in the interim report of the gross national product data
improvement project are feasible for addition to the economic census
program.
1974 Census oj Agriculture.—The quinquennial census of agriculture provides extensive detail on the U.S. food and fibre economy
with detail published to the county level. The data collection, processing, and tabulation phases of the 1974 Census of Agriculture,

SPECIAL ANALYSES

127

referring to calendar year 1974, will be largely completed in 1976;
many State and local reports will be published; and the evaluation
phase will be undertaken.
1978 Census of Agriculture.—Legislation will be proposed to accelerate the conduct of the next census of agriculture and eventually to
synchronize the taking of future censuses with the quinquennial economic censuses which are conducted for the years which have two or
seven as a last digit. The advantage of this proposal to develop a
complete canvass of U.S. economic activity, both agricultural and
nonagricultural, referring to the same period is that it facilitates
consistent coverage, classification, and nonduplication of economic
activities and provides an exhaustive picture of the interrelationships
among all sectors of the economy. Under this plan the subsequent
censuses would be conducted for 1982 and every 5 years thereafter.
Preparation jor the Twentieth Decennial Census.—In 1976 funds are
included to continue preparations for the 1980 Census. The efforts
over the last several years to provide Federal funds to State and local
governments on a formula basis have increased reliance on the census
for benchmark data. In addition to population counts other data,
such as information on income, family size and composition, and housing conditions, are critical to funding and policy decisions.
1976 is the third planning year for the 1980 Census. A series of
pretests is planned to examine: (1) coverage improvement, (2) extension of the mail method of data collection, (3) alternative processing
approaches, (4) question wording, and (5) questionnaire formats. The
major groups of activities ($0.8 million) will involve new mapping and
related geographic activities, the development of a decentralized
processing capability, and improvement in data dissemination vehicles.
Liaison between the Census Bureau and various advisory groups will
reach a period of maximum activity during 1976.
Periodic programs geographic support.—This program provides the
capability to produce data accurately coded by geographic regions
of the country by maintaining geographic reference files for small
areas and jurisdictions. The boundary and coding guide system is
being extended to the present boundaries of each standard metropolitan statistical area (SMSA) including the 37 newly established
SMSA's. The geographic base file program will be supplemented in
1976 by the updating of the files for communities with population
between 2,500 and 10,000. This activity supports major Census Bureau
programs including the forthcoming 1977 economic censuses and
other large-scale surveys.
Revision of the Consumer Price Index.—Work is proceeding on
schedule toward revision of the Consumer Price Index (CPI). The
revision will utilize consumer expenditure weights based on the 1972-73
consumer expenditure survey and will incorporate substantial methodological improvements. During 1976, work should progress to compilation of the revised index on a test basis. Publication of the revised
CPI is scheduled for 1977.

128

THE BUDGET FOR FISCAL YEAR

1976

Revision oj series to 1972^ standard industrial classification.—The 1976
budget includes $1.3 million to increase comparability among statistical series produced by the Federal Government through conversion
of all BLS establishment-based series to the revised (1972) standard
industrial classification (SIC). Such conversion will permit comparative analyses of current and previous data. In 1976, BLS will
initiate retabulation and benchmarking of all national, State, and
local series affected by the revisions in the SIC. Major programs
affected include the Quarterly Keport of Insured Employment and
Wages (ES 202), the Current Employment Statistics (BLS-790), and
the Labor Turnover Statistics (DL-1219) statistical systems.
Table G-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)
Agency

1976

1975

1974

CURRENT PROGRAMS
Department of Agriculture:
• Agricultural Research Service
• Economic Research Service
• Foreign Agricultural Service
_
Statistical Reporting Service
___
Department of Commerce:
• Domestic and International Business Administration
• Economic Development Administration
• National Bureau of Fire Prevention
_
• National Marine Fisheries Service
_
l
Social and Economic Statistics Administration
Department of Defense:
• Corps of Engineers
__
Department of Health, Education, and Welfare:
• Alcohol, Drug Abuse, and Mental Health Administration
• Center for Disease Control
• Food and Drug Administration
Health Resources Administration:
• National Center for Health Statistics
• Other Health Resources Administration
• Health Services Administration
National Center for Educational Statistics
• National Institutes of Health
• Office of Education
• Social and Rehabilitation Service
_
• Social Security Administration
• Office of Assistant Secretary for Human Development
• Office of Assistant Secretary for Planning and Evaluation. _
• Department of Housing and Urban Development
Department of the Interior:
• Bureau of Mines
• Fish and Wildlife Service
• Mining Enforcement and Safety Administration
Department of Justice:
• Drug Enforcement Administration
• Federal Bureau of Investigation
• Law Enforcement Assistance Administration

.2
4.8

.5
5.8
.3
30.7

1.8
7.6
.6
34.2

2.0
41.4

5.6
.5
.2
2.0
49.6

5.8
.5
1.1
1.9
55.3

1.5

1.6

1.8

14.8
2.6
2.2

7.0
3.2
2.4

7.1
4.7
2.4

18.7
6.7
1.7
15.6
22.3

25.6

1.6
19.4
.2
2.1
8.8

22.0
1.2
1.8
13.1
23.0
8.3
2.1
33.3
.3
2.8
8.5

2.9
4.0
1.6

3.2
4.3
2.0

3.5
4.3
2.0

.8
2.0
24.8

1.1
2.6
27.6

1.1
2.8
26.2

26.0
5.0
.8

1.8
22.0
23.9
16.7
2.3
29.7
.3
3.1
10.0

'SPECIAL ANALYSES

129

Table G-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL
BY AGENCY (in millions of dollars)—Continued
1974
actual

Agency
CURRENT

PROGRAMS,

1975
estimate

1976
estimate

38.0
.6
20. 7
5.1

48.4

53.7

1.4
4.0
1.5
7.2

PROGRAMS—Continued

Department of Labor:
Bureau of Labor Statistics
• Employment Standards Administration
• Manpower Administration
• Occupational Safety and Health Administration
Department of Transportation:
• Office of the Secretary
• Federal Highway Administration
• Federal Railroad Administration
• National Highway Traffic Safety Administration
Department of the Treasury:
• Office of the Secretary
• Internal Revenue Service
• U.S. Customs Service
__
Civil Aeronautics Board
Consumer Product Safety Commission
Environmental Protection Agency
Federal Energy Administration
Federal Home Loan Bank Board
Federal Power Commission
Federal Trade Commission
Interstate Commerce Commission
National Science Foundation
Securities and Exchange Commission
Special Action Office for Drug Abuse Prevention

Total, current programs

30.1

31.0

5.5

5.6

1.7
4.1
1.0
7.8

2.5
4.2
1.1
9.3

12.4

12.8

3.2
1.7
4.2

3.2
2.0
5.8

27.1
23.1

26.8
23.1

2.3
1.8
1.2
1.0
3.3
.6
1.0

2.5
1.9
1.4
1.1
3.0
.7

371.9

449,3

492.5

10.4

.2
.4
6.0

1.5

8.9

.1
16.5
2.9
1.5
2.1
21.4
5.0
2.2
1.5
.8
1.0
2.8
.6
.5

PERIODIC PROGRAMS

Department of Commerce: Social and Economic Statistics Administration:
1972 Census of Governments
1977 Census of Governments
1972 economic censuses
1977 economic censuses
1974 Census of Agriculture
1978 Census of Agriculture
1970 decennial census
1980 decennial c e n s u s . . . . . .
Intercensal demographic estimates
Periodic programs geographic support
Data processing equipment
General administration and other
Department of Labor: Bureau of Labor Statistics:
Revision of Consumer Price Index
Standard industrial classification revision program
Total, periodic programs
Total, principal statistical programs
1

Includes Bureau of the Census and Bureau of Economic Analysis.
• = Covers only funds for agency's statistical activities.

http://fraser.stlouisfed.org/
580-700 O - 75
Federal Reserve Bank of St. Louis

.7
.5
1.6

3.8
9.1
.9
—
4.3
1.8
2.7
4.1
1.2

.7
1.3

2.8
1.5
2.0
3.8
1.0

9.6

6.6

7.1
1.3

27.0

33.2

36.9

398.9

482.5

529.4

SPECIAL ANALYSIS H
CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH

Total Federal civilian employment in the executive branch as of
June 30, 1974, was 2,793,877. This is a decrease of 226,088 positions,
or 7.5%, since June 1968. For the period from June 30, 1974, through
June 30, 1975, total employment is estimated to increase by nearly
7,900 positions, and will remain level through June 30, 1976.
FULL-TIME PERMANENT CIVILIAN EMPLOYMENT

Full-time permanent employment totaled 2,479,779 as of June 30,
1974. This is a decrease of 151,216 permanent positions, or nearly
5.8% since June 1968. Excluding the Postal Service, the remainder
of the executive branch gained 41,887 full-time permanent employees
between June 30, 1973, and June 30, 1974, but was still about 26,400
below the 1974 estimate, as shown in the 1975 budget.
With the objective of minimizing the increase in full-time permanent
employment, the President announced on August 31, 1974, his goal of
holding Federal civilian employment in the executive branch (exclusive of the Postal Service) on June 30, 1975, to 1,928,100 or 40,000
below the estimate for June 30, 1975, as shown in the 1975 budget.
The estimates presented in table H-l project executive branch fulltime permanent employment (excluding the Postal Service) at 1,930,700 or within 2,600 of the goal, despite the fact that significant
increases were necessary in manpower, veterans, and energy programs.
Each executive agency head has been directed to hold employment
so that the levels shown will not be exceeded. He has also been asked to
minimize hiring to the extent feasible. It is expected that a number of
agencies will have lower actual employment than the estimate shown
and that the President's goal will be attained.
The projected total for June 30, 1976, is 1,947,600, which includes
an allowance for contingencies of 5,000. Of this number, which excludes the Postal Service, 50% work for the Department of Defense
and 10% for the Veterans Administration.
Table H-l displays the year-end full-time permanent employment,
and projected changes, by major agency.
130

-SPECIAL ANALYSES

131

Table H I . SUMMARY OF FULL-TIME PERMANENT CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH
As of June 30 1
Agency

Agriculture
Commerce
Defense—military functions
Defense—civil functions
Health, Education, and Welfare
Housing and Urban Development,.._
Interior2
Justice
Labor___

State
Transportation
Treasury
Energy Research and Development
Administration2
Environmental Protection Agency,..
General Services Administration
National Aeronautics and Space Administration
Veterans Administration....
Other:
Agency for International Development
Civil Service Commission
Federal Energy Administration 2 ..
Nuclear Regulatory Commission 2__
Panama Canal
Selective Service System
Small Business Administration
Tennessee Valley Authority
United States Information Agency.
Miscellaneous
.
Subtotal
Contingencies3
Subtotal
Postal Service

Total

1974
actual

1975 estimate
—
In 1975
Current
budget

79,621
28,549
973,778
29,072
126,692
15,021
56,558
48,188

80,200
29,100
995,900
29,100
126,200
14,200
56,100
51,000

80,200
28,700
960,800
29,300
127,300
15,200
57,900
49,900

1976
estimate

81,100
28,600
953,300
28,800
128,300
15,200
58,800
50,800

Change
1975-76

900
-100
-7,500
-500
1,000
900
900

12,788

13,000

13,600

13,700

100

22,644
69,524
104,391

23,400
71,300
111,400

23,200
69,900
109,000

23,300
72,000
112,500

100
2,100
3,500

6,736
9,144
36,733

6,900
9,200
38,000

7,400
9,200
36,400

7,600
9,300
36,700

200
100
300

24,854
174,515

24,600
181,800

24,300
186,200

24,300
195,700

9,500

8,961
6,190
2,002
1,538
13,841
2,333
3, 957
14,001
8,829
35,844

9,500
6, 300
3,300
1,900
14,100
2,200
4,300
14,400
9,100
36,600

8,700
6, 400
3,100
2,100
13,800
2,200
4,200
14,100
9,000
38,600

8,500
6, 700
1, 700
2,300
13,800
1,700
4,200
15,100
9,000
39,600

-200
300
- 1 , 400
200

1,916,304 1,963,100
5,000

1,930,700

1,942,600
5,000

11,900
5,000

1,916,304 1,968,100 1,930,700
563,475
534,700
556,800

1,947,600
541,200

16,900
-15,600

2,479,779 2,502,800 2,487,500 2,488,800

1,300

-500
1,000
1,000

1
Excludes developmental positions under the worker-trainee opportunity program and certain
disadvantaged
youth programs.
2
Adjusted for comparability purposes to reflect the change from the Atomic Energy Commission
to the Energy Research and Development Administration and the Nuclear Regulatory Commission, both of which were activated January 19, 1975. Positions were transferred from the Atomic
Energy
Commission and the Department of the Interior to staff these new agencies.
3
Subject to later distribution.

132

THE BUDGET FOR FISCAL YEAR 1976

The majority of the domestic agencies will have small increases in
employment from 1975 to 1976. Several will need moderate increases
to meet additional program requirements, including:
(a) Increased research efforts in livestock and food production and
nutrition as well as intensified land management efforts (Department
of Agriculture);
(b) Increased workload in the areas of education, health, and social
rehabilitation activities (Department of Health, Education, and
Welfare);
(c) Expanded Federal energy programs (Interior Department,
Energy Research and Development Administration);
(d) Increased activity in the areas of law enforcement, litigation,
and investigation (Justice Department);
(e) Improved capabilities in air traffic control, aids to navigation,
and search and rescue (Transportation Department);
(f) Intensified bank examining activities, expanded collection
activities, and increases in the number of tax returns audited (Treasury
Department);
(g) Expanded and improved veterans' medical care (Veterans
Administration); and
(h) Requirements for increased services and benefits that relate
to the growth of the Nation's population.
These increases are partially offset by projected decreases in the
Department of Defense, the Postal Service and smaller decreases
in some other agencies.
TOTAL FEDERAL GOVERNMENT EMPLOYMENT

In 1976, full-time permanent employees will comprise about 89%
of all civilian employees in the executive branch. The remaining 11%
covers part-time employees, intermittent employees (those employed
on an irregular basis) and full-time temporary employees (those in
positions occupied for less than a }rear). As used in table H-2,
"Total Federal Government employment" includes civilian employees
of the legislative and judicial branches, the civilian employees of the
executive branch (as previously described) and military personnel.
The end of American involvement in the Vietnam war as well as a
reduction in cold war tensions in recent years have contributed to a
significant shift in the size and distribution of the total Federal workforce. First, the overall size of the workforce, including military personnel on active duty, has decreased from about 6.6 million on June 30,
1968, to about 5 million on June 30, 1974, or nearly one-quarter.
Second, the proportion of Department of Defense personnel (active
duty military and civilians) to total Federal Government employment has decreased from 74% in 1968 to 64% in 1974. This Defense
component is projected to decrease further, to about 62% in 1976.

SPECIAL ANALYSES

133

Table H-2. TOTAL FEDERAL GOVERNMENT EMPLOYMENT
As of June 30

Description
1974
actual

Civilian employment in the executive branch:
Full-time permanent* (excluding Postal Service)
Other than full-time permanent2 (excluding Postal Service)
Subtotal

1975
estimate

1976
estimate

1,916, 304 1,930,700 1,947,600
175,978
174,500
178,600
2,092,282 2,105,200 2,126,200

Postal Service:
Full-time permanent
Other than full-time permanent
Subtotal
Military personnel on active duty:
Department of Defense3
Department of Transportation (Coast Guard)
Subtotal

563,475
138,120

556,800
139,800

541,200
134,400

701,595

696,600

675,600

2,161,162 2,129,000 2,100,000
36, 730
37, 500
37,800
2,197,892 2,166,500 2,137,800

Total
Legislative and judicial personnel:4
Full-time permanent
Other than full-time permanent
Subtotal

4,991,769 4,968,300 4,939,600
27,887
18,009
45,896

Grand total

5,037,665

1
2

Excludes developmental positions under the Worker-Trainee Opportunity program.
Excludes disadvantaged summer and part-time workers under Civil Service Commission programs
such
as summer-aides, stay-in-school, and junior fellowship.
3
Excludes Reserve components.
4
1975 and 1976 estimates are not available.

PERSONNEL COMPENSATION AND BENEFITS

Direct compensation of the Federal workforce includes regular pay,
Sunday and holiday pay, premium pay for overtime, differentials
for night work and overseas duty, and flight and other hazardous
duty pay. Related compensation in the form of personnel benefits
consists primarily of the Government's share (as employer) of health
insurance; term life insurance; and Federal retirement and old-age
survivors' and disability insurance. Some additional benefits are
uniform allowances (when paid in cash), cost-of-living and quarters
allowances, and, in the case of uniformed military personnel, reenlistment bonuses, and allowances for subsistence.

134

THE BUDGET FOR FISCAL YEAR 1976

Table H-3. PERSONNEL COMPENSATION AND BENEFITS (in millions of dollars)
Description

Civilian personnel costs:
Executive branch: l
Direct compensation
Personnel benefits
Subtotal
Legislative and judiciary:
Direct compensation
Personnel benefits

1974
actual

1975
estimate

26,553
4,935

29,100
5,960

30,340
7,160

31,488

35,060

37,500

421
36

490
40

530
50

457

530

580

Subtotal
Allowance for civilian pay raise
Total, civilian personnel costs
Military personnel costs:
Direct compensation

1976
estimate

980
31,945

35,590

39,060

17,906

18,630

18,430

Personnel benefits

4,566

4,580

4,700

Subtotal

22,472

23,210

23,130

Allowance for military pay raise

830

Total, military personnel costs

22,472

23,210

23,960

Grand total, personnel costs

54,417

58,800

63,020

Excludes Postal Service pay, reflecting conversion to independent status, consistent with the
Postal
Service Reorganization Act of 1970.
2
Excludes Members and officers of Congress.
3
Excludes Reserve components.

Obligations for civilian personnel compensation and benefits in
1976 are projected to be $39.1 billion, excluding the Postal Service.
The estimated costs for civilian and military pay increases for 1976
are covered by lump sum allowances in the 1976 budget.
Under the Federal Pay Comparability Act, salary rates for Federal
employees under the "General Schedule" and most other statutory
pay systems are adjusted periodically so as to be related to rates paid
for the same work levels in private enterprise. The bases for these
adjustments are appropriate annual surveys conducted on a nationwide basis by the Bureau of Labor Statistics. Legislation is being
proposed to limit these pay increases to 5% in 1976.
A high-level panel will be established to make policy recommendations to the President on how the Federal Government can best
determine the appropriate level of total compensation for its employees
under the principle of comparability with the private workforce.
Current law provides that pay scales for blue-collar workers under
the Federal wage-board system are to be adjusted annually so as to
achieve rates corresponding to the prevailing area rates in private
industry. Legislation will also be sought to limit these adjustments to
5% until June 30, 1976.

135

SPECIAL ANALYSES

The current wage board pay law requires the use of wage rate data
outside of the local area involved. Legislation will be proposed to
repeal this feature, so that the process for determining Federal wage
rates is more consistent with the long-standing principle that such
rates will be comparable with prevailing area rates.
POPULATION

AND GOVERNMENT

EMPLOYMENT

COMPARISONS

The proportion of Federal civilian employment relative to total
employment of all governmental units (Federal, State, and local)
is projected at 18.6% for 1976. As the accompanying table H-4
illustrates, the Federal proportion of all governmental employment
has declined significantly over the last two decades.
Government Civilian Employment

«946
End of Fiscal Year

1952

1958

1964

1970

1976
Estimate

136

THE BUDGET FOR FISCAL YEAR 1976

Table H-4. GOVERNMENT EMPLOYMENT AND POPULATION, 1946-76
Government employment

1946
1947
1948
1949
1950
1951.. _
1952
1953.
1954
1955. . . .
1956
1957.. . .
1958
1959 2
I960
19612
1962
19633
19643
1965
1966
1967
1968
1969*
19702
197P
1972
1973 . . .
1974
1975 (cst.)
1976 (est.).

Federal

State and

branch l
(thousands)

ments
(thousands)

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
2,469
2,496
2,664
2,877
2,951
2,980
2,884
2,823
2,770
2,722
2,794
2,802
2,802

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
7,683
8,259
8,730
9,141
9,496
9,869
10,257
10.640
11.065
11,501
(5)
(5)

mental
units
(thousands)

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
10.179
10,923
11,607
12,092
12,476
12,753
13,080
13,410
13,787
14,295

Population
percent of
all governmental
units

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
24.4
24.8
24.4
23.9
22.6
21.6
20.7
19.7
19.5
19.1
18.6

United
States
(thousands)

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
180,671
183.691
186,538
189,242
191,889
194,303
196,560
198,712
200,706
202,677
204,875
207,045
208,842
210,396
211,909
213,651
215,379

Federal
employment per
1,000
population

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
13.2
12.9
12.8
13.6
14.5
14.7
14.7
14.1
13.6
13.3
12.9
13.2
13.1
13.0

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 Camfr
worker-trainee programs.
paign;
and beginning in 1970, excludes various disadvantaged wo
2
3 Includes temporary employees for the decennial census.
Excludes 7,411 project employees in 1963 and 406 project employees in 1964 for the public works
acceleration
program.
4
On Jan. 1, 1969, 42,000 civilian technicians of the Army and Air Force National Guard converted by law from State to Federal employment status. They are included in the Federal employment
figures in this table after and including 1969.
5
An official projection of State and local government employment is not available. The percentages shown for these years are consistent with a range of reasonable estimates based on recent trends
in population and State and local government activity.

When compared to the Nation's population, the ratio of Federal
civilian employment is estimated to be 13.0 per thousand in 1976,
a ratio that (excepting the period 1966-70) has varied only slightly
since 1960.
Table H-4 includes temporary and part-time as well as full-time
employment.

PART 2

FEDERAL SOCIAL PROGRAMS

137

INTRODUCTION
Part 2 furnishes Government-wide program and financial information in six social program areas—education, manpower, health, income
security, civil rights, and crime reduction. It includes the special
analyses designated I through N.
The figures used in these analyses differ from the data shown under
somewhat similarly titled categories of the functional classification
used in Part 5 of the Budget and elsewhere. In the functional classification, each activity is categorized according to its major purpose;
thus all the military spending of the Department of Defense falls into
the functional category, National defense. In these special analyses,
however, all spending for education, health, etc., is included, even if
the activity has a different primary purpose. Thus the tabulations
here are more comprehensive with regard to these particular types of
social programs.
Special Analysis I discusses education-related programs, including
direct Federal activities, and programs that provide aid to States and
localities, to institutions of higher education, and to students.
Special Analysis J identifies the Federal programs designed to increase the skills and employment opportunities of persons already in
the work force and of persons who desire to join the work force but
lack vocational preparation or face other employment barriers.
Special Analysis K summarizes Federal spending for health and
health-related activities.
Special Analysis L discusses Federal benefits to maintain or supplement income of persons and families whose capacity for self-support
is reduced by old age, disability, illness, unemployment, poverty, or
death of the primary wage earner.
Special Analysis M identifies Federal spending for civil rights enforcement activities.
Special Analysis N discusses the Federal crime reduction program,
which complements activities of State and local governments. Federal
assistance in the form of grants-in-aid, training, and technical assistance contributes to the effectiveness of State and local crime reduction
programs.
138

SPECIAL ANALYSIS I
FEDERAL EDUCATION PROGRAMS
Federal expenditures for education-related programs will be $16.2
billion in 1976. These programs provide aid to State and local educational agencies, to institutions of higher education, to students,
and certain direct Federal educationally related activities.
The amounts included in this analysis are those which are directed
toward supporting student-teacher relationships for the transmission
of organized knowledge or the provision of services to the community
at large aimed at expanding individuals' opportunities for professional
or career advancement. (See Special Analysis P for further details
on Federal research and development programs.) The analysis is
organized by such criteria as Federal goal served, level of education,
or by the type and institutional vehicle of support. This year, as in previous years, it covers all Federal programs which have the direct support
of educational activities as a major purpose, or which involve the use
of educational resources to achieve other purposes. It excludes amounts
for noneducational research conducted at academic institutions which
do not fall within the purposes described above. For comparability
with the analyses that accompanied the 1973 and earlier budgets,
these amounts are shown at the bottom of table 1-1.
OVERVIEW:

1976

Total Federal education outlays will be $16.2 billion in 1976, a
decrease of $271 million below the 1975 estimate, and an increase of
$2.2 billion over 1974 outlays.
Outlays for programs directed toward national education goals are
estimated to be $8.6 billion, 3% above the estimated 1975 level.
Within this total elementary and secondary education is estimated at
$4.4 billion in 1976. This is only a slight decrease below the 1975
funding and a $300 million increase over the 1974 level.
Outlays for higher education student support programs in the
Education Division will reach an estimated $2.0 billion in 1976, an
increase of 15% above the 1975 level, and 105% above the 1974 level.
In addition, four tax expenditures, ranging in size from $0.2 billion to
$0.7 billion each will also support higher education in 1976.
Substantial Federal educationally related expenditures are directed
toward activities whose purposes are not primarily educational. The
Federal Government invests in the education of specialized manpower
for many activities; the largest of which is defense related and the
second largest of which is in the health field. An estimated $7.4 billion
of outlays will be provided in 1976 which are beneficial to the interests
of education but are directed toward other ancillary purposes. The
1976 estimate is 7% lower than the 1975 level of $8.0 billion. The
largest components of this change are veterans readjustment, child
nutrition and health manpower program reductions.

139

140

THE BUDGET FOR FISCAL YEAR 1976

• Veterans.—The bases for the reductions are as follows:
—Legislation has been proposed to repeal a 2-year extension of
GI bill entitlement;
—A slight drop in veteran enrollment under the GI bill, reflects
a reduced volume of military separations.
• Child nutrition.—The Administration proposal to substitute a
bloc grant for the current set of fragmented and overlapping
child feeding programs provides reimbursement only for needy
children. In addition, a 5% limit is placed on program outlays
which reflect changes in the food-away-from-home component
of the Consumer Price Index.
• Health manpower.—A reduction in health manpower spending
reflects a policy of phasing out unnecessa^ institutional operating
subsidies and categorical student scholarships and loan activities,
as well as the elimination of construction grants to health professions and nursing schools.
An additional quarter billion dollars will be provided in the form of
payments for education of Federal employees, or their children.
Table 1-1. FEDERAL OUTLAYS FOR EDUCATION
Purpose and program

Outlays (millions)
1974
actual

Educationally deprived children
Emergency school aid
Federally affected areas
Other ESEA
Salaries and expenses
Basic opportunity grants
Other higher education student support (OE)
Other higher education (OE)
Student loan insurance fund
Occupational, vocational, adult
Educational development
Education for the handicapped
Library resources
Other Office of Education
National Institute of Education
Special institutions
Student grants (OASDI)
Office of Human Development
Other HEW
Other

1975
estimate

1976
estimate

1,460
205
559
207
77
49
837
290
84
570
246
123
150
30
97
113
937
414
106
427

1,599
207
631
292
112
451
1,099
260
176
631
160
125
169
54
82
135
1,053
443
110
516

1,755
122
371
439
105
502
1, 290
258
192
646
43
138
125
57
84
118
1,189
467
123
546

6,981

8,305

8,570

Federal outlays—education support for other basic purposes:
Health manpower
Veterans readjustment
Defense
Child nutrition
Other

546
2,914
967
1,267
1.112

613
3,377
1,029
1,617
1,324

519
3,091
1,072
1,463
1,247

Subtotal, education support for other purposes

6,806

7,960

7,392

238

249

281

14,025

16,514

16,243

1,856

2,040

2,056

Subtotal, national education goals

Federal outlays—salary supplements

Total, education outlays
.
Amounts previously carried for academic research not directed toward educational objectives

SPECIAL ANALYSES

141

RENEWAL AND REFORM

The provision of basic educational services in the United States
is the responsibility of the State and local educational authorities. The
Federal role is devoted to developing and encouraging improvements
in the educational process through research, innovation and reform,
and to extending and assuring equal educational opportunity.
To fulfill this role, the Administration has adopted a program of
renewal and reform in education which includes:
• Consolidation of certain categorical educational programs and
the provision of advanced funding for most elementary and
secondary education support (1-2 below).
• Reform in the distribution of funding for the education of
disadvantaged children.
• A focusing of aid on school districts facing critical problems of
desegregation.
• Funding of basic educational opportunity grants of up to $1,400
for all eligible undergraduate postsecondary students.
Table 1-2. 1977 APPROPRIATIONS AUTHORIZED TO BE PROVIDED IN 1976
(In thousands of dollars)
1977 budget
authority
requested
in the 1976
budget

Education of the disadvantaged
Support and innovation
Education of the handicapped
Occupational, vocational, and adult education
Libraries and instructional resources

1,900,000
172,888
50,000
67,500
137, 330

These activities, reauthorized under the Education Amendments of
1974, and funded in 1975 will provide funds for academic years 1974-75
and 1975-76, thereby making these programs advance funded.
Support and innovation, as well as libraries and instructional resources, are consolidated education grant programs that place under
two broad funding authorities several categorical programs previously
funded individually. The aim of these new initiatives is to provide
the States greater flexibility and responsibility in determining their
own educational priorities and funding needs.
New legislation is also being proposed for vocational education,
impact aid and library resources. In addition, renewed emphasis will
be placed on the relationship between education and work and upon
educational research.

142

THE BUDGET FOR FISCAL YEAR 1976

Vocational education.—In 1976, support for activities previously
authorized under the Vocational Education Act are being requested
under proposed legislation. The legislative proposal would consolidate
the present five State grant categorical programs for vocational
education into a single basic grant program. The legislation will also
incorporate into a single category the present innovation, curriculum
development, research and special needs activities.
The Federal role will shift substantially in 1976 from support
services assistance to the support of innovative projects which will
enable the States to improve their capacity for reforming the vocational education system. Individual innovative projects would be
limited to 3 }^ears duration.
Outlays for this legislative proposal are estimated at $260 million in
1976.
Impact aid.—In 1976, legislation will be proposed to initiate new
funding policies for this program which provides payments to school
districts where enrollments are affected by Federal activities. This
legislative proposal will provide funding to districts for those children
whose parents live and work on Federal property ("a" category) and
those children whose parents either live or work on Federal property
("b" category). The proposed legislation will make payments as follows: 100% of entitlement for u a" category children who comprise
25% or more of total children in average daily attendance; 90%
of entitlement for "a" category children who comprise less than 25%
of total children in average daily attendance; 68% of entitlement
for " b " categor}^ children, less the amounts such agencies would
receive for "b" category children who reside outside of the State
in which their school district is located. Payments will be made on
the rates specified above, less 5%^ of each agency's total operating
expenditures for the preceding year.
Outlays for this legislative proposal in 1976 will be $158 million.
Library resources.—In 1976 legislation will be proposed to initiate a
program to support the integration of library and information
services and the demonstration of new methods for delivery of library
services. This initiative will stress greater efficiency and cost-effectiveness in the provision of services and the focusing of these services on
high priority target populations such as the disadvantaged. Outlays
for this legislative proposal will be $11 million in 1976.
Education and work.—The isolation of education from the world of
work will be addressed by the Fund for the Improvement of Postsecondary Education, the Office of Education and the National Institute of Education.

SPECIAL ANALYSES

143

These agencies will develop and demonstrate methods of providing
information to educators and young people on the world of work and
work experience, increasing the understanding of problems that education can help to resolve, and improving the transition from education to work.
National Institute of Education.—The Institute (NIE) will continue
to develop and coordinate research strategies in education, and serve
as a focal point for educational research and experimentation. This
research will include learning for the disadvantaged, career education,
educational technology, basic skills and school finance and productivity. Research results will be disseminated to local educational authorities so that they can determine what will work best in their individual
schools. In 1976, NIE outlays for educational research and development will be $84 million.
OTHER PROGRAM DEVELOPMENTS

Health manpower.—A program of national health service scholarships has been initiated, under which health professions and nursing
students can receive full scholarship assistance in return for equal
periods of public service, after their training is completed. (See Special
Analysis K for further details on Federal health programs.)
GI bill.—The GI bill amendments, signed into law December 1974,
provide increased benefits to an expanded set of recipients. The legislation was designed to provide more funds for trainees to partially
meet rising costs of education.
Emergency school aid.—This program, enacted in 1972, will provide
aid to elementary and secondary schools and their faculties engaged
in the process of desegregation. In 1975 and 1976, the Administration is
proposing to provide funding for this program in a fully discretionary
way to those areas of greatest need.
NATIONAL EDUCATION GOALS

National education purposes are estimated to account for $8.6
billion of educational expenditures in 1976. Of this total, over $4.4
billion, or 51%, will be spent at the elementary and secondary education levels. Higher education will benefit from $3.4 billion or an
additional 40%. The remainder is directed toward adult and continuing education, public libraries, research, and some cultural activities.
Most Federal expenditures for education at the elementary and
secondary school levels are provided through the activities of the
Education Division. In 1976, Office of Education programs account for
$3.4 billion or 77% of the total level of $4.4 billion.

144

THE BUDGET FOR FISCAL YEAR

1976

Table 1-3. FEDERAL OUTLAYS FOR NATIONAL EDUCATION GOALS BY
LEVELS
Level and program

Outlay* (million*)
1974

Elementary and secondary:
Educationally deprived children (ESEA)
Supplementary services, State plans (ESEA)
Other ESEA
Federally affected areas
Emergency school aid
Educational development
Library resources
Education for the handicapped
Occupational and vocational education
National Institute of Education
Office of Child Development
Student grants (OASDI)
Bureau of Indian Affairs
Other

1975

1976

1,460
165
42
559
203
184
84
123
334
45
409
244
149
96

1,599
170
120
631
205
117
93
125
373
33
436
274
183
132

1, 755
123
315
371
121
32
72
138
388
33
465
309
173
117

4,097

4,491

4,412

49
261
294
281
26
45
66
111
140
84
618
36
23
202

451
462
370
255
7
95
58
137
159
94
695
38
32
222

502
521
437
313
4
104
62
156
156
87
785
46
32
193

2,236

3,075

3,398

96
44
75
86
17

99
48
84
102
22

102
37
95
121
25

Subtotal, adult and continuing education

318

355

380

Other:
Office of Education salaries and expenses
Student loan insurance fund
National Institute of Education
Smithsonian Institution
Corporation for Public Broadcasting
National Foundation on the Arts and the Humanities
Other

77
39
44
36
22
14
98

112
81
43
44
27
25
52

105
88
46
56
32
26
27

330

384

380

6,981

8,305

8,570

Subtotal, elementary and secondary
Higher education:
Basic opportunity grants
Work-study and supplementary grants
Guaranteed student loans
Direct student loans
College teacher fellowships
Student loan insurance fund
Construction loans and grants
Disadvantaged students and developing institutions
Occupational and vocational education
Special institutions
Student grants (OASDI)__
National Science Foundation
Bureau of Indian Affairs
Other
Subtotal, higher education
Adult and continuing education:
Occupational and adult education (OE)
Public libraries (OE)__-___
Social Security Administration
Library of Congress
Other

Subtotal, other
Total

SPECIAL ANALYSES

145

Under programs in other offices, an estimated $1.1 billion will be
spent in 1976 for elementary and secondary education. Office of Child
Development activities account for $465 million, mostly in the Head
Start program. Under the social security system (OASDI), children
between the ages of 18 and 22 who are still in school will continue to
receive benefits if they are students. These funds are a legal entitlement
of the recipient student and wall be paid direct^ to the student upon
his request. In 1976 an estimated $309 million of social security payments will be made to high school students.
The Federal Government additionally aids or directly provides
education for certain groups such as Indians, Cuban refugees, and
residents of Pacific territories. The National Science Foundation and
the National Foundation on the Arts and Humanities also have selected activities at the elementary and secondary school levels.
An estimated $3.4 billion will be spent in 1976 for higher education,
an increase of 78% over the 1974 level. Expenditure for higher education will be 40% of total expenditures for education goals. The Office of
Education will provide $2.3 billion out of the $3.4 billion total.
Student support accounts for the majority of the funds for educational purposes at this level. In 1972, the year in which Congress
enacted higher education amendments, $933 million for Office of
Education student support programs (wTork-study and supplementary
grants, guaranteed student loans and direct student loans) constituted
43% of the total. In 1976, under Administration proposals, Office of
Education student aid expenditures will reach $1,984 million, more
than double the level 4 years before. Social security benefits to students
at institutions of higher education will provide an additional $785
million of student support in 1976, an increase of $90 million over 1975
levels and $167 million over 1974 levels. The focus of aid in higher
education will continue to shift from institutional support to direct
student support with the full funding of the basic opportunity grants.
Outlays in 1976 for adult and continuing education and other educational activities will be $380 million. Various Federal activities such
as the Library of Congress and the Smithsonian Institution are included in this category. The total outlays in 1976 for these activities
will increase by $25 million over 1975.
EDUCATION SUPPORT FOR OTHER PURPOSES

Almost half of the expenditures for education are in programs
directed to multiple purposes.
The largest single program in this category is veterans readjustment
benefits (the GI bill). Veterans readjustment is a means of redressing
postservice job and educational inequities. Expenditures reflect estimated utilization of program benefits by entitled veterans. These
outlays are estimated to peak in 1975 at $4.0 billion. This represents
an increase of $715 million over 1974 levels, a portion of which can
be accounted for by recently enacted increases in GI bill benefits.
In 1976, the continuing reduction in Armed Forces separations and
proposed legislation which would allow a veteran 8 rather than
10 years to use these benefits lead to a decreasing workload, and therefore a reduced estimate of expenditures.
School lunch, school breakfast, school milk, and other programs
benefiting school children nutritionally accounted for $1.5 billion in

146

THE BUDGET FOR FISCAL YEAR 1976

1975. The Administration proposes to substitute comprehensive
bloc grants for existing child feeding programs in order to rationalize
the administratively complex programs under the child nutrition and
school lunch acts. Outlays in 1976 will be $1.6 billion.
The GI bill and child nutrition programs will constitute an estimated 54% of outlays for noneducational purposes in 1976. Of the
remaining programs, $655 billion or 9% will be accounted for by
manpower training for specialized purposes. The largest single purpose
for training is defense. The Department of Defense trains personnel
already in service, as well as future service personnel through the
Reserve Officers Training Corps and in the service academies. Outlays
for inservice training are estimated to reach $491 million in 1976, an
increase of 3 % over estimated 1975 levels.
Table 1-4. FEDERAL OUTLAYS FOR OTHER BASIC PURPOSES BY LEVEL
Outlays (millions)

Level and program

1974
dual
Elementary and secondary:
Child nutrition
Public service jobs
Community planning and development
Veterans Administration
Other
Subtotal, elementary and secondary
Higher education:
Veterans readjustment
Military service academies
Reserve Officers Training Corps
Other DOD
Health Resources Administration
Health manpower (NIH)
--.— " .
Alcohol, Drug Abuse and Mental Health Administration
Other

1975
estimate

1976
estimate

1,267
129
74
67
178

1,617
208
44
86
204

1,463
176
36
80
231

1,715

2,159

1,986

2,309
220
157
96
546

2,703
240
165
96
613

2,539
262
171
96
519

144

164

14]

83
200

103
253

75
228

Subtotal, higher education

3,755

4,337

4,031

Adult and continuing education:
Agriculture extension service
Veterans readjustment
Other

193
538
36

214
588
32

220
472
28

767

834

720

446
20

479
22

491
11

466

501

513

3!
72

32
97

39
103

103

129

142

Subtotal, adult and continuing education
Training of Federal military employees:
Defense
Coast Guard
Subtotal, training of Federal military employees.
Other:
Department of State
Other
Subtotal, other
Total

6,806

7,960

7,392

SPECIAL ANALYSES

147

An additional $162 million in 1976 will be provided for training
of specialized personnel in State, local, and private sector activities
which are not military or health related. These include training for
merchant marine, for law enforcement officers, for persons in various
scientific fields, and for social workers.
SALARY SUPPLEMENTS

Salary supplements in the form of allowances or direct provision
of education for Federal employees or for their dependents will reach
an estimated $281 million dollars in 1976. These supplements consist
almost entirely of Defense Department expenditures for overseas
dependents education and for off-duty education of military personnel.
The two programs will account for $276 million of outlays in 1976,
an increase of $32 million over their 1975 levels.
Table 1-5. FEDERAL EDUCATION OUTLAYS FOR SALARY SUPPLEMENTS
Level and program

Outlays (millions)
1974
actual

1975
estimate

1976
estimate

238

249

281

Elementary and secondary
Higher education
Adult education
Other

212
1
21
4

202
1
43
3

226

Defense:
Overseas dependents education.
Off-duty military personnel
Other

212
21
5

202
43
4

226
50
5

Total, salary supplements..

50
4

EDUCATIONAL PERSONNEL TRAINING AND RESEARCH

Educational personnel training and research is funded under many
programs already identified as directed to education goals. They
account for a small part of total education expenditures by the Federal
Government. Outlays for this purpose, in programs directed toward
educational goals, are estimated to reach $641 million in 1976, or 4%
of all education-related expenditures.
Educational personnel training is a declining component of this
total, estimated at $187 million in 1976, compared to $227 million for
1975. Outlays for educational research are estimated to rise, and will
constitute an increasing portion of total educational expenditures.
These outlays will reach an estimated $454 million in 1976, an increase
of 14% over their 1975 level.

148

THE BUDGET FOR FISCAL YEAR 1976

Table 1-6. FEDERAL OUTLAYS FOR PERSONNEL TRAINING AND
RESEARCH IN EDUCATION
Program

Education personnel training:
Educational development
Occupational, adult and vocational
Emergency school assistance
Education for the handicapped
College teacher fellowships (OE)
Office of Child Development
National Science Foundation
Other
Subtotal, education personnel training
Educational research:
Educational development
Elementary and Secondary Education Act
Education for the handicapped
Occupational, vocational and adult education
National Institute of Education
National Foundation on the Arts and Humanities.
National Science Foundation
Other

Outlays (millions)

1974

1975

1976

actual

estimate

115
14
16
32
26
22
13
7

80
32
14
39
8
22
17
15

28
52
12
33
4
20
14
24

245

227

187

123
22
35
50
97
20
31
21

68
83
31
48
82
34
37
43

11
98
32
102
84
36
41
50

Subtotal, educational research

399

426

454

Total

644

653

641

The Office of Education funds most of the educational training and
the National Institute of Education funds a significant part of educational research through a wide range of programs. The Office of
Education will provide 70% of the money for personnel training in
1976; the National Institute of Education will provide 20% of the
funds for research in 1976.
EDUCATIONAL LEVEL OF SUPPORT

Approximately half of Federal funds for education are directed to
elementary and secondary education. Of this total 67% are provided
through programs directly focusing on educational goals. Some 42% of
funds go to higher education, but of these, 46% are in programs whose
primary goal is education.

SPECIAL ANALYSES

149

Table 1-7. FEDERAL OUTLAYS FOR EDUCATION BY PURPOSE AND LEVEL
Outlays (millions)
1974
actual

Elementary and secondary:
Education
Other basic purposes
Salary supplements
Total, elementary and secondary
Higher education:
Education
Other basic purposes
Salary supplements
Total, higher education
Adult and continuing education:
Education
Other basic purposes
Salary supplements
Total, adult and continuing education
Other:
Education
Other basic purposes
Salary supplements
Total, other
Total, outlays for education

1975
estimate

1976
estimate

4,097
1, 715
212

4,491 4,412
2,159 1,986
202
226

6,024

6.852

6.624

2,236
3,755
1

3.075
4.337
1

3,398
4.031
1

5,992

7,413

7.430

318
767
21

355
834
43

380
720
50

1,106

1,232

1.150

330
569
4
903
14,025

384
630
3

380
655
4

1,017 1,039
16,514

16,243

Most of the support to elementary and secondary education reaches
the educational process through grants to States and to local educational agencies.
Table 1-8. FEDERAL OUTLAYS FOR ELEMENTARY AND SECONDARY
EDUCATION BY SUBLEVEL AND TYPE OF SUPPORT
Sublevel and type of support

Outlays (millions)
1974
actual

Total, elementary and secondary

1975
estimate

1976
estimate

6,024

6,852

6,624

Early childhood
Elementary and secondary
Supporting services

653
5,009
362

698
5,861
293

676
5,739
209

Current operations
Facilities and equipment
Student support
Education personnel training
Educational research

5.081
144
348
197
254

5.794
184
400
210
264

5.539
153
435
199
298

150

THE BUDGET FOR FISCAL YEAR 1976

The outlays in support of higher education are generally not channeled through a State or local government. Instead, grants or loans
are made to the educational institution or go to the student who then
chooses which institution to attend. Federal support to higher education continues in transition from an emphasis on institutional support
to one of direct student assistance. In 1976, an estimated $5,783 million
or 78% of total outlays for higher education will be direct grants or
subsidies on loans to students. Another $1,520 million are estimated to
go to institutions for currrent operations or facilities and equipment.
In comparison, in 1974, $4,391 million or 73% of the total provided
grants or subsidized loans to students.
The Federal Government also aids education through four tax
expenditures whose benefits are predominantly at the higher education
level. The exclusion from taxable income of veterans readjustment
benefits (the GI bill) is estimated to reduce Federal revenues by $0.2
billion in 1976, and to make these benefits correspondingly more
valuable to their recipients. The similar exclusion for other scholarships and fellowships results in a revenue loss of $0.2 billion in 1976.
Parents may claim a personal exemption for full-time students over 18,
even if the students have a substantial income of their own. This tax
expenditure of $0.7 billion in 1976 aids families with older children in
school. Finally, the deductibilit}^ of contributions to educational
institutions is estimated to reduce Federal receipts by $0.6 billion in
1976. This provision allows individuals and businesses to make a
dollar's contribution to education at a net cost to themselves of
considerably less than $1.
Table 1-9. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY TYPE OF
INSTITUTION AND TYPE OF SUPPORT
Outlays (millions)
1974
actual

Total, higher education

1975
estimate

1976
estimate

5,992

7,413

7,430

2-year institutions
Other undergraduate
Graduate and professional

1,572
3,166
1,254

2,033
3,961
1,419

1,999
4,112
1,319

Current operations
Facilities and equipment
Student support
Education personnel training
Educational research

1,083
432
4,391
45
41

1,181
472
5,661
44
55

1,081
440
5,782
63
64

There is a shift in the level of educational institutions benefiting
from Federal education expenditures. Outlays for 2- and 4-year
institutions will increase $1.4 billion from 1974 to 1976 almost entirely accounting for the increase in Federal outlays for higher education over the 2-year interval.
More than half of higher education funds, $4.1 billion, are estimated
to go to 4-year undergraduate institutions in 1976. Of the remainder,
$2.0 billion will go to 2-year institutions and $1.3 billion to graduate
and professional schools.

SPECIAL ANALYSES

151

STUDENT SUPPORT

About $5.8 billion of student support will be available in 1976, 86%
of which will be undergraduate student assistance. The GI bill will
provide 44% of student assistance. The Office of Education will spend
another 33% or an estimated $1.9 billion to support various grant,
loan and work-study programs.
The Office of Education estimates that almost 4 million student
grants and loans will be made in 1976 under its programs. Students
receiving aid under more than one program account for at least onethird of this total. The number of students aided is estimated to
increase about 21% from 1975 to 1976 after allowances for program
overlap are taken into account.
Table 1-10. STUDENT SUPPORT BY AGENCY: FEDERAL OUTLAYS AND
NUMBER OF STUDENTS
Outlays (millions)
Agency

1974
actual

Undergraduate:
Health, Education, and WelfareOffice of Education
Social Security Administration.
Health agencies and other
Veterans Administration
Defense
Justice
Other
Subtotal, undergraduate
Graduate:
Health, Education, and Welfare:
National Institutes of Health _ _
Office of Education
Other
...
Veterans Administration
National Science Foundation
Defense
Other
Subtotal, graduate
1

Total
1

1975
estimate

Student (thousands)

1976
estimate

853
618
47
1,991
95
31
33

1,551
695
45
2,332
121
34
43

1,779
785
28
2,191
123
22
42

3,668

4,821

4,970

89
90
113
317
16
83
15

102
110
149
370
11
82
16

91
126
150
348
13
71
13

723

840

812

4,391

5,661

5,782

1974
actual

1975
estimate

1976
estimate

2,523
430
59
1,211
72
87
24

3,169
446
43
1,272
81
88
23

3,825
461
35
1,132
80
51
23

13
293
74
193
2
4
8

12
292
61
202
2
4
7

12
327
59
180
2
3
5

Student totals not shown because some students receive awards under more than one program.

OUTLAYS BY EDUCATIONAL SUBLEVEL

In order to provide data in a form comparable with earlier education special analyses the following tables are provided which display
program and agency outlays by education sublevels in 1974, 1975,
and 1976.

152

THE BUDGET FOR FISCAL YEAR 1976

Table 111. FEDERAL OUTLAYS FOR ELEMENTARY AND SECONDARY
EDUCATION BY AGENCY
Outlays (millions)

Sublevel, agency and program

1974
actual

Early childhood:
Food and nutrition service
Elementary and secondary
Child development
Appalachian regional development
Other
Subtotal, early childhood
Elementary and secondary:
Food and Nutrition Service
Defense
Office of Education:
Educationally deprived children
Other ESEA
Federally affected areas
Emergency school aid
Education for the handicapped
Occupational and vocational education
Student grants (OASDI)
Bureau of Indian Affairs
Public service jobs
Community Planning and Development
Veterans readjustment
Other
Subtotal, elementary and secondary
Supporting services:
Office of Education:
Educational development
Education for the handicapped
National Institute of Education
Department of Defense
National Science Foundation
Other
Subtotal supporting services
Total

1975
estimate

1976
estimate

25
150
409
24
45

33
163
436
25
41

5
139
465
22
45

653

698

676

1,242
205

1,584
196

1,458
215

1,460
56
559
203
43
334
244
142
129
63
67
262

1,599
124
631
205
40
373
274
174
208
38
86
329

1,755
289
371
121
56
387
309
164
176
31
80
327

5,009

5.861

5.739

184
60
45
43
26
4
362

117
66
33
41
29
7
293

32
62
33
47
24
11
209

6,024

6,852

6,624

SPECIAL ANALYSES

153

Table 1-12. FEDERAL OUTLAYS FOR HIGHER EDUCATION BY AGENCY
Outlays (millions)

Sublevcl, agency and program

1974
actual

2-year institutions:
Office of Education:
Basic opportunity grants
Other higher education
Occupational and vocational education
Student grants (OASDI)
Health Resources Administration
Veterans readjustment
Other
Subtotal, 2-year institutions
Other undergraduate:
Military service academies
Reserve Officers Training Corps
Health manpower (NIH)
Office of Education:
Basic opportunity grants
Work-study and supplementary grants
Guaranteed student loans
Construction loans and grants
Disadvantaged students and developing institutions
Direct student loans
Other
Student grants (OASDI)
Special institutions
Office of the Secretary
Bureau of Indian Affairs
International Development Assistance
Veterans readjustment
National Science Foundation
Other
Subtotal, other undergraduate
Graduate and professional:
Health Services Administration
Health manpower (NIH)

1975
estimate

24
172
140
67
66
1, 000
103

225
231
156
75
70
1,171

1976
estimate

251
270
151
85
47
1,099

105

1,572

2,033

1,999

220

240
165
98

262

157
87
25
204
177
52
91
239
51
552
53
66
16
29
992
19
136

226
361
222
44
118
216
99
620
56
61
25
53
1,162
23
172

251
407
262
47
125
266
110
700
48
60
26
95
1,092
26
98

3,166

3,961

4,112

171
66

31
317
89
17
31

24
164
95
445
121
18
38
370
89
14
41

26
141
71
405
134
12
39
348
89
19
35

Subtotal, graduate and professional

1,254

1,419

1,319

Total

5,992

7,413

7,430

ADAMHA

.--.- — .-

Health Resources Administration
Higher education
Social and Rehabilitation Service
Special institutions
Veterans readjustment
Department of Defense
National Science Foundation
Other

21
144
75
392
120

154

THE BUDGET FOR FISCAL YEAR 1976

Table 1-13. FEDERAL OUTLAYS FOR ADULT EDUCATION AND OTHER
ACTIVITIES BY AGENCY
Outlays (millions)

Sublevcl, agency and program

1974
actual

Adult basic and extension:
Agriculture extension service
Office of Education
Social Security Administration
Veterans readjustment
Other
Subtotal, adult basic and extension
Public and national library services:
Library of Congress
Library resources (OE)
Other
Subtotal, public and national library services
Training of Federal, State, and local civilian employees:
Justice
Federal Aviation Administration
Other
Subtotal, training of public civilian employees
Training of Federal military employees:
Defense
Coast Guard
Subtotal, training of Federal military employees-_
Foreign educational activities:
State
Subtotal, foreign educational activities
Other:
Office of Education, salaries and expenses
Other Office of Education
National Institute of Education
Smithsonian Institution
Corporation for Public Broadcasting
National Foundation on the Arts and Humanities
Other
Subtotal, other
Total

1975
estimate

1976
estimate

193
96
75
538
57

214
103
84
588
75

220
107
95
472
79

959

1,064

973

86
44
17

102
48
18

121
37
20

147

168

9
6
23

10
13
32

446
20

479
22

491
22

466

501

513

77
136
44
36
22
14
41

112
136
43
44
27
25
43

105
113
46
56
32
26
38

370

430

416

2,249

2,189

2,009

SPECIAL

155

ANALYSES

Table 1-14. FEDERAL FUNDS FOR EDUCATION BY AGENCY
Agency

Legislative branch:
Library of Congress
.
Funds appropriated to the President:
International Development Assistance
Appalachian Regional Commission
Agriculture
Commerce
Defense—Military
Defense—Civil
Health, Education, and Welfare:
Office of Education
Other HEW
Housing and Urban Development
Interior
Justice
Labor
State
Transportation
Treasury
Atomic Energy Commission
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies:
ACTION
Corporation for Public Broadcasting
National Foundation on the Arts and Humanities
National Science Foundation
Smithsonian Institution
United States Information Agency
Total

Outlays (millions)
1974
actual

1975
1976
estimate estimate

Budget
authority
(millions)
1976

102

121

124

49
63
1,521
13
1,200
1

91
73
1,895
14
1,274
1

157
71
1,748
16
1,348

107
45
1,720
17
1,533
21

4,885
2,508
91
200
54
129
36
29
50
5
6
11
5
2,914

5,965
2,781
36
242
62
208
38
38
88
6
4
12
4
3,377

6,043
2,779
13
232
48
176
46
42
52
9
3
14
4
3,091

5,963
2,461
34
234
43
176
46
42
30
9
3
14
4
3,105

15
22
28
65
36
3

15
27
45
69
44
3

17
32
51
71
56
3

19
70
100
69
56
3

16,243

16,048

14,025

16,514

SPECIAL ANALYSIS J
FEDERAL MANPOWER PROGRAMS
SCOPE OF THIS ANALYSIS

Federal manpower programs aim to increase the skills and employment opportunities of individuals already in the work force and of
persons who desire to join the work force but lack vocational preparation or face other employment barriers. Manpower programs provide
skill training, rehabilitation, transitional employment experience, job
placement assistance, and related child care and social and health
services.
Manpower programs are distinguished from educational programs
by their operating characteristics. Generally, they: (1) Operate outside the normal educational process, (2) provide skill training for
non-professional jobs, (3) provide services for less than 1 year, and
(4) target on the disadvantaged or unemployed sector of the
population.
This analysis covers all programs classified as manpower training
in the functional classification of the budget. It also includes some
programs directed toward similar objectives from other functional
classifications such as income security, and veterans benefits and
services.
Not included in this analysis are programs of vocational and technical education and paraprofessional training, such as are authorized
by the Vocational Education Act, Adult Education Act, and Elementary and Secondary Education Act. As a practical matter at the local
operational level, these programs may be considered in the same context. However, since they operate within the normal educational
process they are covered in Special Analysis I, Federal Education
Programs.
The 1976 budget provides $6.3 billion for manpower programs
to serve an anticipated 2.9 million new enrollees.
PROGRAM DEVELOPMENTS
COMPREHENSIVE MANPOWER ASSISTANCE

(CMA)

The delivery system for the largest single appropriation for manpower services is changing radically as a result of the move to special
revenue sharing through decentralized and decategorized programing. Entering its second full-year of operation in 1976, the Comprehensive Employment and Training Act (CETA) has substituted
broad-based formula grants to State and local governments for narrow
categorical programs. CETA provides local discretion within broad
Federal priorities for local officials to plan and operate training and
employment programs that best fit the needs of the local labor market
situation.
156

SPECIAL ANALYSES

157

Basic program appropriations for this legislation (titles I through V)
are reflected in the budget under Department of Labor, Comprehensive Manpower Assistance.
In 1975 States and localities are spending about $2.2 billion under
CMA to finance locally conceived manpower plans. Other CMA
activity includes national training programs for migrant workers,
Indians, and the Job Corps, as well as research and evaluation projects.
MODEL CITIES

Manpower activity formerly carried out through the model cities
program under the Department of Housing and Urban Development
(HUD) will be affected by title I of the Housing and Community
Development Act of 1974. This title establishes a new community
development block grant program to succeed seven terminated categorical programs, including model cities. Information is not currently
available on the degree to which localities will use grant funds for
manpower activity. H U D financed manpower activity will be reflected in future Special Analyses if data become available.
ACTION-FOSTER

GRANDPARENTS

Prior Special Analyses included funds for this program. The
Domestic Volunteer Service Act of 1973 mandates that participants
be out of the labor force. This program is therefore not appropriate
for inclusion.
TEMPORARY EMPLOYMENT ASSISTANCE

(TEA)

In response to economic conditions, the Administration requested
legislation to expand unemployment compensation and to increase
public job opportunities in October, 1974. Legislation was enacted
December, 1974. Unemployment compensation is discussed in Special
Analysis L, Income Security. Temporary public jobs were authorized
by the Emergency Jobs and Unemployment Assistance Act. Funds
were appropriated under the temporary employment assistance
account. Approximately 110,000 temporary jobs will be financed in
calendar 1975. The program is administered by the Department of
Labor through grants to States, localities, and Indian tribes.
W O R K INCENTIVE PROGRAM

(WIN)

Employable recipients of Aid to Families with Dependent Children
(AFDC) are required to register for the W I N program which provides
job placement, counseling, and training. Child care and related supportive services are available depending on client needs. Increasing
emphasis is being placed on referring W I N registrants to available
jobs. Some are offered placement in subsidized jobs, training, and
basic education.
VOCATIONAL REHABILITATION

(VR)

The H E W VR program began to provide rehabilitation services to
the aged, blind, and disabled under the new supplemental security

158

THE BUDGET FOR FISCAL YEAR 1976

income program which became operational January 1, 1974. VR
programs are also operated by the Veterans Administration (VA).
PROJECT TRANSITION

In the Department of Defense, Project Transition provided assistance to servicemen prior to discharge. At congressional direction,
Transition in 1975 became a part of the regular Defense activity,
rather than a special separately funded program. No applicable data
is therefore available after 1974.
COMMUNITY SERVICES ADMINISTRATION

(CSA)

The Community Services Act of 1974 has replaced the Office of
Economic Opportunity with a new Community Services Administration. CSA activity reported in this analysis reflects an estimate
of manpower activity undertaken by community action agencies.
PROGRAM APPROACHES

Manpower programs are classified into seven major approaches to
summarize the delivery of services. Those approaches and the activities
included in each are as follows:
—On-the-job training—provides training for regular job vacancies
generally by reimbursing employers for the added costs of hiring
and training disadvantaged individuals. Employers are generally
expected to retain the individual once reimbursement ends.
—Institutional training—provides instruction in vocational skills
and remedial education in a classroom setting.
—Vocational rehabilitation—helps individuals overcome physical
and mental handicaps to employment, through skill training,
counseling, allowances and supportive services.
—Work experience—provides temporary employment experience,
generally part time, primarily for youth and older workers.
—Public service employment—provides employment, generally
intended to be transitional, in public sector jobs for individuals
who (1) need to acquire work discipline and skills to compete
for nonsubsidized jobs, or (2) who are temporarily unable to find
regular employment.
—Labor market services—encompasses services to assist individuals
in obtaining employment, including (a) job placement assistance,
(b) collection and analysis of labor market information, (c) equal
employment opportunity activities (excluding individual agency
civil rights activities other than contract compliance—see
Special Analysis M), (d) supportive services such as child care,
health care, transportation, legal aid, and counseling which enable
individuals to participate in training and to take and hold jobs,
and (e) other miscellaneous activities.
—Federal program support—includes research, development and
evaluation activities as well as planning, technical assistance and
program direction.
Some activities can be classified entirely under one approach.
Others, such as WIN and CMA, offer a range of work, training and
supportive services, and thus are divided among several approaches.

159

SPECIAL ANAI/

Estimates by approach for State and local programs under CMA,
in 1975 and 1976 are based on program operating plans submitted
by prime sponsors for 1975. Data attributed to CMA in 1973 and
1974 were derived from amount < for the comparable portions of the
categorical program authoritie which CETA has replaced. For
purposes of indepth program analysis and evaluation, detailed data
on program participants is available at the local level and through
surveys.
PROGRAM MEASURES

The three principal measures used to summarize the level of program services are:
—Man-years of service, which measures the average year-round
enrollment;
—New enrollees, which counts the number of individuals entering
the activity during the year; and
—Outlays, which measures the level of expenditures during a
fiscal year.
Man-Years of Service in Manpower Activities
Millie

Millie

-3.0

1968

1969

Fiscal Years

1970

1971

1972

1973

1974

1975
Estimate

1976

160

THE BUDGET FOR FISCAL YEAR 19 76

New Enrollees in Manpower Activities
Millions

Millions

3.0 —

2.0-

1.0

1.0 —

1968

1969

1970

1971

1972

1973

1974

1975

Fiscal Yean

1976

Estimate

Outlays for Federal Manpower Activities
$ Billions

$ Billions

— 6.0

6.0Public Service

Employment

4.0 —

— 4.0

2.0 —

— 2.0

1964

J965

1966

Fiscal Y*ars

1967

1968

1969

1970 1971

197?

1973

1974

1975

1976

Estimate

SPECIAL ANALYSES

161

Table J-l. DISTRIBUTION OF APPROACH CATEGORIES (in percent)
Outlays
1974
actual

Public service employment. __
Work experience
On-the-job training
Institutional training
Rehabilitation
Labor market services

1975

12
17
17
10
14
18
29

22
12
10
15
15
26

Man-years
1976

21
13
10
16
15
25

New enrollees

1974
actual

1975

1976

1974

1975

1976

4
23
11
17
45

9
20
11
19
41

2
20
10
19
42

3
44
8
27
18

8
34
8
32
18

5
38
8
31
18

PROGRAMS BY APPROACH

The following tables show activity of major programs by approach.
Narratives with each table reference only significant changes reflected
on the tables, and include program descriptions if necessary.
On-the-job training (OJT).—Outlays for veterans OJT in 1975
and 1976 reflect the provisions of Public Laws 93-508 and 93-602,
which increased the monthly allowances for OJT by 22.7%. Differences
in the relationships among programs between man-years and new
enrollees are due to variances in duration of enrollment.
Table J-2. O N - T H E - J O B TRAINING (outlays in millions, individuals in thousands)
Individuals served
Program

Outlays
1974
actual

Comprehensive manpower assistance.....
Work incentive program
On-the-job training for veterans. _
Other
Total....

Man-years

1975 1976 1974
est.
est. actual

1975
est.

New enrollees
1976 1974
est. actual

1975 1976
est. est.

153
58
262
10

276 306
53 46
319 301
7
6

42
11
123
2

60
10
132
2

66
9
124
1

116
33
95
8

138
13
101
4

139
13
74
2

483

655

178

204

200

252

256

228

659

Institutional training.—Included in this approach under CMA
is the Job Corps, a specialized program conducted in a residential
setting for youth aged 14 through 21 for which an outlay of $171 million
is expected in 1976. The primary component of Job Corps is institutional training but with emphasis on the provision of supportive
services to prepare disadvantaged youth for entry into the labor
market.
The entry for social services on this table and hereafter is for programs operated by State agencies for public assistance recipients, but
is exclusive of service to WIN participants.
Other institutional training includes programs for Indians, offenders,
and others.

530-700 O - 75 - 11

162

THE BUDGET FOR FISCAL YEAR 1976

Table J - 3 . INSTITUTIONAL TRAINING (outlays in millions, individuals in thousands)
Individuals served
Program

0 utlays
1974

Comprehensive manpower assistance
_.
Work incentive program
Social services training
Other
Total

Ma n-years

1975

1976

1974

1975

New enrollees
1976

1974

1975

1976

535
47
30
44

801
18
62
43

870
18
50
52

85
20
170
12

142
8
200
11

155
8
188
11

208
58
523

349
5
650
41

350
10
575
22

656

924

990

287

361

362

833 1,045

957

Vocational rehabilitation.—Outlays
for veterans in VA rehabilitation programs reflect the 22.7% increase in allowances effective
September 1, 1974.
Table J-4. VOCATIONAL REHABILITATION
(outlays in millions, individuals in thousands)
Individuals served
Program

Outlays
1974
actual

HEW vocational rehabilitation.-.
Veterans vocational rehabilitation.
Total

1975
est.

Man-years
1976
est.

New enrollees

1974
actual

1975
est.

1976
est.

1974 1975
actual est.

1976
est.

755
85

819
131

830
133

736
15

779
21

799
20

540
U

560
27

516
21

840

950

963

751

800

819

557

587

537

Work experience.—Includes summer youth program under
CMA. In light of Lhe magnitude of resources available in basic grants,
it is expected that prime sponsors will operate programs in calendar
years 1975 and 1976 at approximately the same levels as calendar year
1974. The 1974 entry for other youth programs reflects the use by
States and localities of funds available under emergency employment
assistance for the calendar year 1973 summer youth program.
Table J - 5 . W O R K E X P E R I E N C E (outlays in millions, individuals in thousands)
Individ uals served
Program
1974

Comprehensive manpower assistance
_
_
_____
Other youth programs
Work incentive program
Other
Total

Man-years

Outlays

1974
ac

1975

1976

1975

613

674

717

275

162
5
12

82
4
17

81
4
6

93
3
2

59
3
4

792

777

808

373

393

New enrollees
1976

1974

1 975
est.

V,7 354 1,076 1 ,038

1976
est.

63
12
7

1,089
53
9
2

404 1,367 1, 120

1,153

47
2
1

265
17
9

SPECIAL ANALYSES

163

Public service employment.—Outlays
for Emergency employment
assistance reflect spending out of appropriations for which authority
was available only in 1972 and 1973. CMA includes authority under
regular prime sponsor grants (title I), special grants in areas with an
unemployment rate of 6.5% or more for 3 consecutive months (title
II) and national programs (title III). Shown separately on the line
"CMA/EEA" is the effect of a one-time appropriation enacted at the
end of 1974 under CETA transitional authority to extend financing of
projects originally funded by the expired Emergency Employment
Act. Additional jobs were made available under temporary employment assistance, authority for which expires in 1975.
Table J-6. PUBLIC SERVICE EMPLOYMENT
(outlays in millions, individuals in thousands)
Individulals served
Program

Outlays
1974

Comprehensive manpower assistance
CMA/EEA
Emergency employment assistance
Temporary employment assistance
Work incentive program
Total

1975

1976

1974

666 625
250 . . . .
516 58

350 650
31 29

New enrollees

Man-years

550 1,355 1,304

1975 1976

1974

1975

1976

73 69
28 . . . .
21

127 117
30
11

39
5

113
3

72
4

64 166 145

42
4

77 284 163

Labor market services.—Job placement assistance.—The State
Employment Service (ES), is the major federally financed deliverer
of job placement assistance for the general labor force, as well as the
disadvantaged. In cooperation with welfare agencies, ES also provides placement services to WIN and food stamp recipients. Specialized placement assistance is provided by the Veterans Administration
and the Bureau of Indian Affairs.
Labor market information.—Activities are those of the Department
of Labor.
Equal employment opportunity.—Includes the Equal Employment
Opportunity Commission, the Employment Standards Administration
of the Department of Labor (including the Office of Federal Contract
Compliance—OFCC, the equal pay, and age discrimination programs),
and contract compliance activities within other agencies conducted
under OFCC aegis.

164

THE BUDGET FOR FISCAL YEAR

1976

Table J-7. JOB PLACEMENT ASSISTANCE, LABOR MARKET INFORMATION
AND EQUAL EMPLOYMENT OPPORTUNITY (in millions of dollars)
Outlays
1974
actual

Employment service
Work Incentive program
Food stamp recipient services. _
Other placement assistance
Labor market information
Equal employment opportunity
Total

._.

1975

1976

414
74
16
53
38
75

492
97
24
39
48
95

481
100
28
38
56
104

670

795

807

Supportive services.—The social services program funds child care
services directly through State social service agencies and also supports child care through an income disregard to the AFDC payment.
Data for services other than child care are based on total costs, including when applicable, the local matching portion.
Table J - 8 . CHILD CARE (outlays in millions of dollars)
Program

Child care:
Work incentive program
Social services program
Model Cities
Subtotal

Outlays
1974
actual

1975
estimate

1976
estimate

44
343
11

42
555
6

47
446
5

398

604

498

Table J-9. APPLICABLE COSTS FOR SUPPORTIVE SERVICES FOR
SELECTED PROGRAMS (in percent)
1974
actual

CMA (State and local)
Work incentive program
HEW vocational rehabilitation
Veterans programs
Indian programs (Interior)
1

0)
55
79
6
21

1975
estimate

12
62
79
6
21

1976
estimate

12
63
79
6
15

Comparable data not available.

Federal program support.—Activities shown are funded primarily
by the Department of Labor. Program direction includes costs for
national program planning and administration.

SPECIAL ANALYSES

165

Table J-10. FEDERAL PROGRAM SUPPORT (in millions of dollars)
Outlays

Program
1974

Research and development
Evaluation
Planning and technical assistance
Program direction
Total

1976

1975

20
3
11
90

14
4
11
103

18
7
9
104

124

132

138

Costs by approach.—Costs include the various labor market and
supportive services usually provided to supplement the indicated
training or work program, as well as administrative and training
costs. Cost changes reflect minimum wage increases and inflation effect.
Table J-11. COSTS BY APPROACH, 1973 AND 1975
Average
man-years per
participant
(years)

On-the-job training
Institutional training
Vocational rehabilitation
In-school work experience
Postschool work experience
Public service employment

Average
cost per
man-year
(dollars)

1973

1975

1973

0.72
.28
1.25
.64
.28
.92

0.81
.30
1.26
.68
.26
.71

2,625
2,669
1,091
1,275
2,290
7,963

1975

Average
cost per
participant
(dollars)
1973

1975

3,241 1,885 2,638
2,622
742
793
1,310 1,364 1.649
1,422
815
966
2,082
645
542
8,840 7,332 6,315

IMPACT OF MANPOWER PROGRAMS

There are significant limitations to the ability to discern the impact
that manpower programs exert on national economic conditions,
especially since impact on total employment conditions cannot yet be
adequately measured or controlled. This constrains assumptions of the
value of program change as a means of altering basic economic
conditions. For example, the potential impact of one of the largest
approaches, public service employment, is diluted by substitution
effects. Under the Emergency Employment Act (FY 1972-74) only
about 40% to 50% of funds for programs financing transitional public
service employment appear to have created new jobs. The balance
appears to have resulted in substituting Federal funding for jobs that
would otherwise have been funded by States and localities. The degree
of substitution tends to increase substantially the longer a public jobs
program is in place.
In other programs, services are oriented first toward overcoming individual barriers to employment, not to affecting overall labor market
conditions.

166

THE BUDGET FOR FISCAL YEAR 1976

In addition, experience has shown that it is extremely difficult from
the national level to precisely design programs that can target effects
properly on the particular nature of problems for local workers affected
by discrete economic factors. Limitations that operate at the national
level are not necessarily a factor restricting manpower programs
planned and operated in specific local areas. The goal of Comprehensive Manpower Assistance is to enable more direct response to
local needs in accord with the broad direction indicated by national
trends.
People served.—Most Federal manpower programs focus on
low-income individuals and others with severe barriers to employment
as they are least likely to be able to improve their employment opportunities without assistance. Changes over time in characteristics of
participants frequently result from programmatic or statutory
changes rather than shifts within the general population served. For
example, decreases in the proportion of those with less than a high
school education is largely reflective of increases in the proportion
hired for jobs with relatively high entry standards under public jobs
programs.
Manpower programs generally target by statute on the poor, the unemployed, the less educated, minorities, youth, and welfare recipients.
TableJ-12. CHARACTERISTICS OF UNEMPLOYED WORKERS, ADULT
POVERTY POPULATION AND MANPOWER PROGRAM PARTICIPANTS
Unemployed
workers
(age 16 and above)
civilian
noninstitutional l

Average number (millions)
Percent:
Age 21 or less
Male
Less than high school education __
Poor
Welfare recipients
Minority
1
2

Poverty population
(age 14—64)
civilian
noninstitutional 2
1970

1972

1974

Manpower program
participants
(age 14 and
above) 3

1970

1972

1974

1970

4.1

4.8

5.1

11.1 12.7 12.1

1.3

2.3

37 38 39
55 54 53
46 48 47
17 21 20
NA NA NA
18 20 20

23 31 32
39 39 39
68 66 NA
100 100 100
35 NA NA
30 33 31

36
58
56
73
23
40

31
48
47
75
43
40

Poor represent family heads; less than high school educated based on March CPS.
Does not include Spanish-speaking.
* Excludes in-school programs.
NA—Not available.

1972

1974

2.1

31
44
43
67
42
35

SPECIAL ANALYSES

167

Table J-13. CHARACTERISTICS OF ENROLLEES BY APPROACH,
1970, 1972, 1974 (in percent)
Poor
1970

On-the-job training
Institutional training
Vocational rehabilitation
Work experience
Public service employment

61
89
67
99

21 or younger

1972 1974

72
94
67
100

53
92
63
100

Male
1970

On-the-job training
Institutional training
Vocational rehabilitation
Work experience
Public service employment

75
52
58
53

30
36
21
95

1972 1974

31
36
23
97
14

24
32
25
93
34

Minority race

1972 1974

73
28
57
58
72

1970

74
21
58
54
65

1970

43
54
21
56

47
56
55
96

43
49
50
84
25

33
42
44
91
36

Welfare recipients

1972 1974

39
49
21
53
36

Lets than high
school education
1970 1972 1974

28
41
23
55
40

SELECTED PROGRAM ACCOMPLISHMENTS IN

1970

12
57
11
29

1972 1974

13
77
15
29
11

29
78
18
37
18

1974

—232,200 individuals placed in jobs through CMA training programs.
—177,300 WIN participants placed in jobs, 118,500 of which
lasted 90 days or more.
—Assistance provided to programs serving 400,000 apprentices.
—3 million individuals placed in 4-day or longer jobs by the Employment Services.
—346,000 persons rehabilitated by HEW vocational rehabilitation
programs including 110,000 who were severely disabled.

168

THE BUDGET FOR FISCAL YEAR 1976
MANPOWER FUNDS BY AGENCY

The following table shows manpower obligations and outlays by
administering agency and major program or account. Two agencies—
the Departments of Labor, and Health, Education, and Welfare will
account for about 90% of all manpower outlays in 1976.
Table J—14. FEDERAL FUNDS FOR MANPOWER PROGRAMS BY
ADMINISTERING AGENCY (in mUlions of dollars)
Obligations
Agency and program

Community Services Administration: CSA manpower
Department of Defense: Project transition
Department of Health, Education, and Welfare:
Social services
W I N support services...
Vocational rehabilitation
High school work study
CETA support.._
__
Subtotal.HEW

1974
actual

1975
est.

Outlays
1976
est.

1974
actual

1975
est.

14
11

30
10

370
90
788
8

624
70
826
8

495
97
847

373
108
755
8

617
94
819
7

495
97
830
6
2

1,244

1,537

1,430

2
1,256

1,528

1,441

Department of Housing and Urban Development:
HUD manpower....
7
19
46
29
Department of Justice: Prisoner training
5
5
4
5
5
Department of the Interior: Indian programs
33
36
50
30
36
Department of Labor:
Comprehensive manpower assistance
_ 1,982 2,800 2,394 1,454 2,785
Emergency employment assistance
8
605
59
Temporary employment assistance
__
1,000
350
Work incentive training and employment
250
140
233
232
222
Food stamp recipient services
_
16
24
28
16
24
Older Americans Community Service Employment.
10
10
Employment service
443
515
503
434
515
Labor market information
13
17
21
13
17
Equal employment opportunity
__
_
7
9
10
7
9
Program administration
88
85
85
74
85
Subtotal, Labor
Veterans Administration:
On-the-job training for veterans.
Veterans vocational rehabilitation
Veterans assistance centers
Subtotal, VA
Equal Employment Opportunity Commission: Equal
employment opportunity
_
Other Federal Agencies:
Disadvantaged youth programs
Federal contract compliance...

Total

1976
est.

2,817 4,590

3,274

2,835

4,076

22
4
49
2,684
650
218
28
503
20
10
89
4,202

262
262
85
85
4
4

319
319
131
131
7
7

301
301
133
133
7
7

262
262
85
85
4
4

319
319
131
131
7
7

301
133
7

351
351

457
457

441
441

351
351

457
457

441

74
28

75
33

75
36

74
26

75
32

75
34

4,641 6,827 5,411 4,692 6,326 6,343

SPECIAL ANALYSIS K
FEDERAL HEALTH PROGRAMS1

Overview.—Federal health programs will account for almost $38
billion in outlays in 1976, an increase of $2.7 billion (8%) over 1975.
Federal health outlays have assumed a growing siiare of the Federal
budget, as shown in Table K - l .
Table K-1. FEDERAL OUTLAYS FOR HEALTH COMPARED TO THE TOTAL
FEDERAL BUDGET (dollars in billions)
Estimated

Actual
1969

1971

1972

1973

1974

1975

1976

Total Federal outlays _
$184.5 $211.4 $231.9 $246.5 $268. 4 $313.4 $349.4
Federal health outlays
$16.6 $20.2 $24.5 $26.0 $29. 2 $35.0 $37.7
10. 9
10.8
10.6
Health as percent of total outlays. __
8.9
9.5
10.6
11.2

Table K-2 summarizes and distributes Federal health outlays by
major category for 1974 through 1976. Expenditures for financing
or providing health services, primarily through Medicare and Medicaid, account for a $2.6 billion increase over 1975.
Table K-2. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED
ACTIVITIES BY CATEGORY (in millions of dollars)
Outlays
1974
actual

Development of health resources, total
Health research
Training and education
Construction
Improving organization and delivery
Provision of hospital and medical services, total
Direct Federal services
Indirect services
Prevention and control of health problems, total
Disease prevention and control
Environmental control
Consumer protection
Total, health programs

1975
estimate

1976
estimate

4,383
2,085
1,146
761
392
23,918
4,797
19,120
888
419
90
378

5,242
2,424
1,324
967
527
28,783
5,390
23,393
1,019
458
129
432

5,362
2,512
1,145
1,108
596
31,348
5,828
25,520
989
405
137
446

29,189

35,044

37,699

1
Included in this analysis are outlays from many agencies and programs that fund health or
health-related activities. Part 5 of the Budget estimates 1976 expenditures for health at $28 billion;
it excludes outlays of agencies and programs devoted to health, but classified under other functions
such as National Defense or Veterans Benefits and Services. The following table bridges 1976 health
outlays from Part 5 to the total used here (in billions of dollars):
Outlays in Part 5
28.0
Plus health outlays assigned to other functions in:
Department of Defense
3. 5
Veterans Administration
4. 0
All other agencies
2- 2

Total health outlays in this analysis

37. 7

169

170

THE BUDGET FOR FISCAL YEAR 19 76

Since World War II, a number of trends have been evident with
regard to health care in the United States. The most prominent trend
has been the increase in total spending for health, which has grown
from $12 billion in 1950 to $104 billion in 1974—from $78 to $485
per capita. Public spending on health has also increased dramaticallv.
During the 1950-74 period, spending by Federal, State, and local
governments increased from $3 billion to $41 billion—from 26%
to 40% of the total—primarily due to the enactment of the Medicare
and Medicaid programs in the 1960's. Figure K-3 illustrates both the
increase in public financing as well as the increase in total expenditures
from 1965 to 1974.
Public and Private Health Expenditures

K-3

PUBLIC

Fiscal Year

1965
$38.9 Billion

Fiscal Year

1974
$104.2 Billion

Another significant trend during the 1950-74 period has been the
aggregate growth in health resources. The number of active physicians, for example, has risen from 272,000 in 1963 to an estimated
363,000 in 1975. During the same time, the number of active registered nurses has grown from 582,000 to about 940,000. Presently,
more than 4.4 million persons are employed in health-related
careers—about 4% of the civilian labor force. Health workers comprise the third largest occupational grouping in the United States.
Increases in health spending and in the availability of health
resources have coincided with downward trends in the Nation's
overall death rates and infant mortality rates, which have been
underway since early in the 20th century. Since that time, significant
advances through research have taken place in medicine. Knowledge
of how to prevent and treat disease has made possible the virtual
elimination of certain diseases, particularly infectious diseases, that
previously were major health problems. Table K-4 illustrates some
indicators of health status in the United States. These advances have

SPECIAL ANALYSES

171

lengthened life for many persons. On the other hand, the degenerative
processes that come with age result in increased incidence of chronic
diseases—which generally are more costly to treat or cure than the
acute and infectious diseases.
Table K-4. SELECTED INDICATORS OF HEALTH STATUS (annual rates)
1950

Birth rate (per 1,000 population)
Death rate (per 1,000 population)
Average life expectancy at birth in years
Infant mortality rate (deaths under 1 year of age per 1,000 live
births)
Leading causes of death (per 100,000 population):
Diseases of the heart
Cancer
Cerebrovascular disease
Accidents
Tuberculosis, all forms
Kidney diseases
Diabetes
Cirrhosis of liver

1960

1970

24.1
9.6
68.2

23.7
9.5
69.7

18.4
9.5
70.9

29.2

26.0

20.0

355.5
139.8
104.0
60.6
22.5
16.4
16.2
9.2

369.0
149.2
108.0
52.3
6.1
6.7
16.7
11.3

362.0
162.8
101.9
56.4
2.6
3.7
18.9
15.5

The United States has the highest per capita health expenditures
in the world. The general health status of Americans, however, does not
compare favorably with some of the other advanced industrialized
nations. Average U.S. life expectancy rates, for example, are generally
lower—especially for the nonwhite population—than those for a number of Western European countries and Canada.
Table K-5. LIFE EXPECTANCY BY SEX AT SELECTED AGES, BY
SELECTED COUNTRIES: 1970
Age in years
Country

Male

Sweden
Canada
France
_
Italy
United Kingdom: England and
Wales
Germany: Federal Republic
United States:
Total
_.
White
_
Other

35
Female

Male

Female

Male

Female

39.8
37.8
37.2
37.5

44.0
43.6
43.9
42.7

21.9
20.5
20.2
20.0

25.6
25.4
25.7
24.3

14.4
13.7
13.4
13.0

17.2
17.4
17.4
16.1

36.6
36.2

42.2
41.3

18.9
18.9

24.1
23.1

12.0
11.9

16.0
15.0

36.0
36.5
32.5

42.4
43.0
38.5

19.5
19.6
18.5

24.8
25.0
22.7

13.1
13.1
13.3

17.0
17.1
16.4

HEALTH

RESOURCES

Federal programs for the development of health resources include
support for health research, health professions training and education,
construction of medical and health facilities, and efforts to improve
the organization and delivery of health services. The combined outlays
for these programs, as shown in Table K-6, will be $5,362 million in
1976, an increase of $120 million from 1975.

172

THE BUDGET FOR FISCAL YEAR

1976

Table K-6. FEDERAL OUTLAYS FOR DEVELOPMENT OF HEALTH
RESOURCES (in millions of dollars)
Outlays
1974
actual

Health research
Training and education
Construction
Improving organization and delivery
Total

1976

1975

2.085
1.146

2,424
1,324

761
392

967
527

4,383

5,242

2,512
1.145
1.108

596
5,362

Health research.—Through the support of both basic and applied
research efforts, Federal biomedical and behavioral research programs
attempt to provide new knowledge for use in the diagnosis, treatment,
prevention, and control of disease. Federal outlays for such research
has increased tremendously in recent years, from $1,102 million in
1966 to $2,512 million in 1976.
Funds for Medical Research and Development

K-7

$ Billions

$ Billions
5

5
I O t h e r Support (Other Private Support and State and Loco! Government)

I Industry Support

-4
Federal Support'

2.69

2—

—2

1.84

—I

1.67

I960

1955
Fiscal Yean

1965

1969

1974

Covers obligations for medical and health-related research and development excluding training or constructs

SPECIAL ANALYSES

173

The Federal Government supports the majority of biomedical
research in this country, with 65% of total biomedical research funding.
The largest Federal biomedical research agency is the National Institutes of Health (NIH) within the Department of Health, Education,
and Welfare (HEW). NIH administers 65% of Federal health research
funds.
Table K-8. FEDERAL OUTLAYS FOR HEALTH RESEARCH (in millions of dollars)
Outlays
1974
actual

Cancer
Cardiovascular
Mental health
_
Neurological and visual
Population and family planning
Environmental health
Aging
Metabolic diseases
Child health
Infectious diseases.
Pulmonary
Dental...
Other research and development

1975
estimate

397
232
123
140
47
245
46
143
72
132
42
41
425

Total.

2,085

517
263
133
158
55
311
52
161
82
132
47
46
469
2,424

1976
estimate

547
250
124
151
56
386
53
149
77
136
45
39
500
2,512

In addition to HEW, other Federal agencies support and conduct
health research in support of their program missions. The three largest
such agencies are the Energy Research and Development Administration, the Department of Defense (DOD), and the Veterans Administration (VA). Together, these agencies account for 15% of all Federal
biomedical research expenditures.
Table K-9. FEDERAL FUNDS TO MEDICAL SCHOOLS (in millions of dollars)
Outlays

Agency
1974
actual

Department of Health, Education, and Welfare

Research and development
Education and training
Construction
Department of Defense

Education and training
Veterans Administration
Education and training

National Aeronautics and Space Administration

Research and development

...

Total

Research and development
Education and training
Construction..,..

----

1976
estimate

(1,068)

(1.116)

(1,078)

759
215
94

797
195
124

787
163
128

(12)

(14)

(15)

12
(0)
0
(4)
4

(13)

(18)

13
(4)
4

18
(3)
3

(12)

(13)

12
(3)
3

13
(3)
3

(ID

Energy Research and Development Administration

Research and development
Other agencies
Research and development

1975
estimate

11
(3)
3

1,098

777
227
94

1,162

816
222
124

1,130

806
196
128

174

THE BUDGET FOR FISCAL YEAR 1976

Training and education.—Between 45% and 50% of the revenues of the Nation's medical schools are derived from Federal grants
or contracts. Table K-9 shows the Federal funds provided to medical
schools from selected agencies. These outlays do not include payments
for medical services from Medicare and Medicaid.
The Federal Government will spend a total of $1,145 million in 1976
for health training and education, as shown in table K-10. The principal programs of direct support for health professions schools are
administered by HEW and include:
• operational support grants tied to enrollment levels;
• special projects to stimulate, test, and demonstrate educational
reforms and innovations in all the health disciplines; and
• special educational initiatives in such areas as improving access
to health professions education for the disadvantaged, developing
new types of health workers, stimulating the practice of family
medicine, and integrating medical education with health care
delivery in medical scarcity areas.
A program of national health service scholarships—funded at a
level of $23 million—supports approximately 2,000 health professions
students. These scholarships will pay all educational costs and generous
stipends in return for periods of service to meet public needs, including
Federal service. This program addresses the financial needs of many
deserving students, the Federal Government's requirements for health
professionals to discharge its essential health care responsibilities, and
the problem of geographic maldistribution of health personnel.
Table K-10. FEDERALLY AIDED HEALTH TRAINING AND EDUCATION
(In millions of dollars)
Outlays
1974
actual

Degree or certificate training
Research personnel
Physicians
Dentists
Nurses
Mental health professionals
Other health professionals
Paramedical personnel
All other training
Total

1975
estimate

989
105
414
75
133
40
112
110
157

1,B3

1,146

1,324

117
492
86
125
49
139
125
191

1976
estimate

973

105
462
80
75
37
102
111
172
1,145

The United States is well-supplied with total numbers of health
manpower. As indicated earlier, the number of physicians in 1975 has
increased 33% over the number in 1963 and registered nurses have
increased by 62% in the same period. Moreover, from 1970 to 1985
the overall supply of physicians is projected to increase by 6 1 %
(Fig. K - l l ) , dentists by 38% and registered nurses by 74%.
Despite growing numbers, the geographic distribution of physicians
and other health professionals is generally far from optimal. Among
the States, the number of physicians per 100,000 population range
from 196 in New York and 178 in Massachusetts, to 76 in Mississippi

175

SPECIAL ANALYSES
Active Physicians, Domestic and Foreign Trained

K-ll

Thousands Active M.D.'s and D.O.'s

600-

600
i

| Foreign Trained Physicians (Including Canada Graduates)
U.S. Trained Physicians

500—

— 500
447

400-

— 400
363
323

305

300 —

272

— 300

1 15 '

200-

— 200

100-

-100

(963

1967

1970

1975

1980

1985

Projected

Calendar Year

Active M.D.'s Per 100,000 Population in Metropolitan and
Non-metropolitan Counties, 1973

K-12

Total,
Non-Federal M.D.'s

Total,
Primary Care M.D.'s

General Practice

J28

Internal Medicine

J Metropolitan Counties
I

Pediatrics

i j Non-Metropolitan Counties

Obstetrics,
Gynecolojy

100

150

200

176

THE BUDGET FOR FISCAL YEAR 1976

Physician Supply and Mortality Rates in Selected States, 1972

K-13

Death Rate Pet 1,000 Population
12.5
Active Non-Federal M.D.'s Providing
Patient Care (December 31, 1971)

M.D.'s Per 100,000 Population

250

Death Rate Per 1,000 Population, 1972

2008-6

1621

170

7.5

t50

100 —

— 5.0

— 2.5

£•

UNITED Connecticut Massachusetts
STATES

North
Dakota

Colorado

Idaho

Maryland

West
Virginia

and 71 in South Dakota. Figure K-12 shows the tendency for physicians to locate disproportionately in metropolitan rather than rural
counties. Approximately 25% of the Nation's 25,000 psychiatrists,
for example, practice in the New York, Boston, and Washington,
D.C., metropolitan areas. General practitioners are found in somewhat larger proportions in nonmetropolitan counties, but their numbers are steadily declining as older physicians retire from practice
and fewer new physicians choose general practice.
The uneven distribution of health resources, especially health
professionals, is frequently cited as a reason for this country's poor
health status in relation to that of other comparable countries. The
relationship between the availability of physicians, however, and one
common indicator of health status, mortality rates, is ambiguous
(Fig. K-13). Clearly, there are factors that bear heavily upon health
other than the availability of health care services: genetic and hereditary factors; the quality of the natural environment; social and
economic well-being; safe working conditions; proper housing, sanitation, and nutrition; as well as personal patterns of exercise, smoking,
and drinking. All of these influence individual health status.
Construction of health care facilities.—The Nation is well
supplied in the aggregate with medical facilities. Figure K-14 suggests
that, in contrast to the distribution of health professionals, the less
populous States are relatively well-endowed with hospital beds. This
geographic distribution probably reflects the impact of over 25 years
of Federal hospital construction assistance through the Hill-Burton

177

SPECIAL ANALYSES
General Hospital Beds Per 1,000 Population in Selected States, 197)
1

K-14

North Dakota
S

1
0

6.9

Nebraska

"1i>

7.0

South Dakota

6.4

Montana
1

1
6.4

Rhode Island

[6.2

West Virginia
I

UNITED STATES
i

(
^4.8

Indiana
Hawaii
Jj

Washington

Connecticut

^ 4 . 2

^ 4 . 2
1

4.0
1

|
—'

4.9

New Jersey

4.0

Vermont

4.0

Maryland

^3.7

program. Under its statutory formula, which favored the less populous
and poorer areas, the Hill-Burton program allocated more than $4
billion in grants to the States.
The basic task for which the Hill-Burton program was created—
improving the supply of health facilities in shortage areas—is largely
completed. The Hill-Burton program's expenditures have declined
over the past decade, from about 13% of total national medical
facility construction expenditures in 1963, to 5% in 1972. The vast
majority of medical facility construction is now financed through
long-term debt service of loans from the private capital markets.
Depreciation costs and debt servicing are legitimate expenses included in reimbursements from health insurance. In just the four
years from 1969 to 1973, for instance, the percentage of private nonprofit hospital construction being financed by debt service increased
from 40% to 60%. This trend offset reductions in the share of construction costs borne by government, philanthropy, and internally
generated funds.
Federal programs for the construction of health care facilities include
the support of both community health care facilities to serve the
general public, and facilities operated by Federal agencies for special
beneficiary groups. In 1976, Federal outlays for the construction of
health care facilities, including environmental health facilities, are
estimated at $1,108 million.

178

THE BUDGET FOR FISCAL YEAR 1976

Table K-15. HOSPITAL AND HEALTH FACILITY CONSTRUCTION
(In millions of dollars)
Outlays

1974

Federally supported construction:
Hospitals, new
Hospitals, modernized and replaced
Long-term care facilities
Research facilities
Environmental health facilities
Ambulatory care facilities
Health professions educational facilities _
Other facilities

1975

1976

60
75
22
11
150
42
123
17

51
64
25
37
153
72
153
24

41
51
23
33
143
62
169
19

Total, federally supported

516

579

541

Federal hospitals and health facilities:
Hospitals, new
Hospitals, modernized and replaced.
Long-term care facilities
Research facilities
Environmental health facilities
Ambulatory care facilities
Other facilities

38
141
5
18
31
5
7

185
8
26
44
8
21

Total, Federal

245

388

58
325
9
25
44
27
79
567

Total, construction

761

967

1,108

In 1976, $100 million of Federal construction grant assistance
will be available through HEW, primarily to correct unsafe conditions
in existing medical facilities, and to assist in hospital modernization
and construction of outpatient facilities in medical scarcity areas.
Other Federal agencies also assist in the construction of community
health facilities. The Department of Housing and Urban Development, for example, provides mortgage insurance for construction of
hospitals, nursing homes, and group practice facilities.
Organization and delivery of health services.—The principal
efforts to improve the organization and delivery of health services
include health services research, support of health planning at the
State and local level, and limited demonstration activities. Outlays
for these purposes are estimated at $596 million in 1976.
Health services research includes studies of ways to improve the
organization, delivery, quality, and financing of health care services
In 1976, health planning will be assisted through recently authorized
Federal funding of health systems agencies throughout the country,
and Federal matching grants to State health planning agencies. This
new program replaces the expired comprehensive health planning,
regional medical program, and Hill-Burton programs.

SPECIAL ANALYSES

179

The primary Federal health care delivery demonstration activities
include:
• grants and contracts to assist States and localities in developing
comprehensive emergency medical services systems;
• grants, loans, and contracts to plan, develop, and provide initial
operating support for health maintenance organizations that
deliver comprehensive medical care on a prepaid basis; and
o the National Health Service Corps, which will locate approximately 405 health professionals in underserved areas in 1976, to
demonstrate the ability of such communities to support health
personnel.
Funding for these activities is included in the following section,
since health services are also financed through them.
FINANCING AND PROVIDING MEDICAL SERVICES

Expenditures for health care in the United States continue to grow
at a rapid rate. In 1969, $56 billion of total health expenditures—6.2%
of the gross national product (GNP)—went for health services and
supplies. By 1974, just 5 years later, national spending on such health
services reached $97 billion and 7.2% of GNP. Per capita health services expenditures in the United States rose from $271 to $457 during
this same period. These huge sums purchase annually over 1 billion
physician visits by the U.S. civilian population, approximately 30
million incidents of hospitalization, 2.5 billion drug prescriptions, and
other health services.
This growth in health expenditures is attributable to various factors,
such as increased demand for health services by the public, payment
mechanisms that reduce out-of-pocket expenditures by individual consumers and encourage inflation of charges and unnecessary utilization, expansion of health resources, and advances in medical therapies.
Figure K-16 depicts health care expenditures in per capita terms for
different age groups and the sources of financing these costs in 1973.

180

THE BUDGET FOR FISCAL YEAR 1976

Personal Health Care Expenditures Per Capita

K-16

Dollars

1200

-1200
FISCAL YEAR 1973

$1,052

-900

900 —
Federal

-600

600

$364

State and Local

— 300

300$167

Private

Under
19 Years

Since the enactment of the Medicare and Medicaid programs in the
mid-1960's, public funds have become a major source of financing for
most health services—particularly hospital and nursing home care.
Figure K-17 indicates the relative importance of these funds which
account for nearly 40% of national health expenditures.

SPECIAL

181

ANALYSES

K-17

Sources of Health Expenditures
$ Billion.

SBillic
40.9

FISCAL YEAR J974

40 —

-40

Federal
— 30

State and Local
19.0

20--

-20

Private
— 10

107.5

Hospital
Cafe

Physicians
Services

Nursing Home
Care

The impact of the increased public spending for health care for the
low-income population is reflected in changing utilization patterns for
health services. While the numbers of physician visits and hospitalizations per capita have not changed markedly in the past decade, surveys now disclose that the Nation's low-income population uses these
health resources at higher rates than the nonpoor population (see
table K-18). Another result of the changing trends in health spending
is the more than 100% growth from 1964 to 1974 in the number of
residents of U.S. nursing homes. These developments stem, in large
part, from increased Government financing of medical services through
the Medicare and Medicaid programs for the aged, disabled, and
poor, together with the different health status of the poor and nonpoor.
Table K-18. ANNUAL U.S. DOCTOR VISITS PER PERSON,

1964 AND

1964

All ages
Under 17 years
17 to 44 years
45 to 64 years
65 years and over.

1973

Poor

Nonpoor

Poor

Nonpoor

4.3
2.3
4.1
5.1
6.0

4.6
4.0
4.7
5.1
7.3

5.6
3.8
5.7
6.3
6.5

4.9
4.3
5.0
5.4
6.9

182

THE BUDGET FOR FISCAL YEAR 1976

Federal programs to finance or provide hospital and medical services include Medicare and Medicaid, which account for 71% of outlays
for these purposes, as well as directly administered programs for
health services provided by the Department of Defense, the Veterans
Administration, and HEW. Table K-19 shows Federal expenditures
for financing and providing hospital and medical services.
Table K-19. FEDERAL FINANCING AND PROVISION OF HEALTH SERVICES
(dollars in millions)
Outlays
1974
actual

Financing of indirect hospital and
medical services:
General hospital inpatients
$11,886
Psychiatric hospital inpatients
266
Long-term care inpatients
2,250
Outpatient mental health services. _
252
Outpatient services
3,294
Other services
1,172
Total, financing of indirect
services
Provision of direct hospital and
medical services:
General hospital inpatients
Psychiatric hospital inpatients
Long-term care inpatients
Outpatient mental health services.._
Outpatient services
Other services
Total, provision
services

1975
estimate

Patients treated (thousands)
1976
estimate

1974
actual

1975
estimate

$14,508 $15,389 11,481 12,193
379
416
829
972
2,766
3,174
1,290
1,433
364 1
398
3,996 4,667 jii 35,351 37,052
1,346
1,510 23,647 23,963

19,120

23,393

2,655
489
135
28
1,310
181

2,988
529
146
36
1,472
220

3,249
1,905
519
190
165
30
42 } ; f i A71
1.602 / 58.671
252
6,338

4,797

5,390

5,828

23,918

28,783

31,348

1976
estimate

12,249
731
1,484
35,284
24,944

25,520

1,938
194
30
co o^i
59,831
6,497

1,985
195
31
en on/:
60,896
6,649

direct

Total, financing and provision
ofservices

Medicare and Medicaid are the Federal Government's largest
health activities. In 1976, they will account for over $22 billion or
59% of Federal health outlays, and will cover more than 20% of the
Nation's population.
Medicare.—Medicare finances health care for the aged, disabled,
and those suffering from kidney disease. It includes both hospital
insurance (HI), which pays for inpatient care and subsequent skilled
nursing home and home health benefits, and supplementary medical
insurance (SMI), which pays for physicians' and other outpatient
services.
HI is financed largely through social security taxes on earnings,
while SMI is financed by premiums from enrollees—currently $6.70
per month—and contributions from general tax revenues. Both
insurance components are administered primarily through private
insurance companies under contract with the Social Security
Administration.

SPECIAL ANALYSES

183

Medicare has increased rapidly in cost, rising an average of 17.5%
annually from 1971-76, even including proposed savings of $1.4
billion in 1976. Estimated outlays of $15 billion will provide average
benefits of nearly $1,800 per person receiving hospital insurance
benefits, and over $300 per person receiving supplementary medical
insurance benefits.
The following table displays basic data concerning the Medicare
program coverage, benefits, and administration.
Table K-20. MEDICARE COVERAGE, BENEFITS, AND ADMINISTRATION
(In million of dollars)
1974
actual

Hospital insurance (HI):
Persons with protection (millions)
Beneficiaries receiving services (millions)
Benefit payments
Inpatient hospital services
Skilled nursing facility services
Home health services
Administrative expenses
Claims received (millions)
Supplementary medical insurance (SMI):
Persons with protection (millions)
Beneficiaries receiving services (millions)
Benefit payments
Physicians' services
Outpatient services
Home health services
Other medical and health services
Administrative expenses
Claims received (millions)

1975
estimate

1976
estimate

23.0
5.3
$7,806
$7,537
$206
$64
$259
10.2

23.5
5.5
$9,646
$9,320
$232
$94
$287
11.2

24.0
5-6
$10,020
$9,683
$239
$98
$330
11.8

22.7
11.6
$2,874
$2,417
$347
$36
$74
$409
80. 6

23.2
12.7
$3,551
$2,886
$529
$43
$93
$420
94.6

23.8
13.3
$4,126
$3,293
$677
$50
$106
$515
102.5

Although Medicare offers identical benefits to all enrollees, its
reimbursements differ substantially in various regions of the country.
These differences reflect variations in resource availability, utilization
practices, and service costs. Table K-21 summarizes information on
these patterns for recent years.
Table K-21. MEDICARE UTILIZATION AND REIMBURSEMENT BY
GEOGRAPHIC REGION
Northeast

Hospital Insurance (HI):
Hospital beds per 1,000 population (1971)
Hospital admissions per 1,000 enrollees (1972).
Average length of hospital stay (days) (1969).
HI reimbursement per enrollee (1972)
Supplementary Medical Insurance (SMI):
Physicians per 100,000 population (1971)
SMI reimbursement per enrollee '1972)

North
Central

South

West

8.7
268

7.4
325

7.3
346

5.9
313

15.1
$331

13.6
$301

11.9
$249

10.6
$321

161

111

104

144

$126

$90

$105

$144

184

THE BUDGET FOR FISCAL YEAR 1976

Medicaid.—Medicaid is a State-Federal program that finances
medical services to families with dependent children receiving public
assistance and to most aged, blind, and disabled persons eligible for
supplementary security income payments. States may also choose to
finance medical services for the medically needy, i.e., those persons
with income slightly above the public assistance level who are unable
to pay their medical expenses.
In 1976, health care services under Medicaid will be provided to
approximately 26 million recipients. The Federal outlays will be $7.2
billion, an 18.2% annual rise since 1971, even including proposed
legislative savings in 1976 of $610 million. State and local governments
will spend an additional $6.9 billion in 1976. The following [table
depicts Federal obligations and other selected program indicators
based on State estimates.
Table K-22. MEDICAID COVERAGE, BENEFITS, AND ADMINISTRATION

Total payments to medical vendors (millions)
Federal share..
...
Total administrative costs (millions)
Federal share
.
Recipients of service (millions)
Aged 65 or over
Blind and disabled
Children under 21
Adults in AFDC families

1974
actual

1975
estimate

$9,756
$5,563
$473
$270
24.3
4.2
2.2
11.1
6.8

$12,167
$6,493
$481
$275
24.7
4.3
2.3
11.3
6.9

1976
estimate

$13,525
$6,829
$574
$327
25.6
4.3
2.3
11.7
7.2

Approximately 65% of Federal Medicaid benefits payments will
finance inpatient and long-term care in 1976. The remaining dollars
will finance outpatient services, as shown in table K-23.
Table K-23. ESTIMATED MEDICAID BENEFITS, 1976
Outlays
(millions)

Hospitals
Mental hospitals
Long-term care facilities
Physicians services
Outpatient drugs
Dental care
Outpatient hospital and clinic service
Other
Total

$1,767
$281
$2,403
$701
$453
$190
$441
$593
$6,829

Percent

26
4
35
10
7
3
6
9
100

SPECIAL ANALYSES

185

The States determine most of the eligibility levels and medical
benefits under the Medicaid program. As a result, there are variations
in these program elements among States. Although the Medicaid
matching formula provides higher Federal matching to low-income
States, most of the program funds go to high-income States. More
affluent States have proved better able and willing to expand the
population and services covered. Six of the highest income States
received over 50% of all Federal Medicaid funds in 1974, and two
States—New York and California—received over 30% of these funds.
Proposed legislation will attempt to address these discrepancies by
reducing the minimum Federal match from 50% to 40% for the 13
highest income States.
Tax expenditures.—After Medicare and Medicaid, the greatest
Federal support for health expenditures results from special provisions
of the tax code. The exclusion of employer health insurance contributions from the taxable income of the employee will result in $3.7
billion of tax subsidies for health insurance premiums in 1976. An
additional $2.6 billion in revenue loss will result from itemized deductions for certain health expenditures and insurance premiums on
individual income tax.
Other programs.—In addition to Medicaid and Medicare, the
Federal Government finances or provides medical services for certain
special categories of beneficiaries—such as Armed Forces personnel,
retirees, and their dependents, veterans, and American Indians and
Alaska Natives. In addition, the Federal Government provides
assistance to States and local governments to finance comprehensive
health services. This assistance takes the following forms:
• Federal formula and project grants and contracts.—Federal assistance is provided for the support of State-administered maternal
and child health centers, neighborhood and family health centers,
migrant health centers and family planning services. The Federal
Government also provides operating assistance for existing community mental health centers, and centers for alcohol and drug
abuse. Outlays for these health and social services grants and
contracts will amount to $886 million in 1976.
• Indian health services.—Outlays for Indian health services and
facilities will rise to $322 million in 1976, a $29 million increase
over 1975. These funds provide comprehensive health care with
an emphasis on ambulatory care, as well as construction of
sanitation facilities, hospitals, and clinics.

186

THE BUDGET FOR FISCAL YEAR 1976

Table K-24. SELECTED INDICATORS OF INDIAN HEALTH STATUS
(Annual rates)
[Selected indicators of health status of American Indians and the general U.S. population]

Indians and Alaska Natives

Birth rate (per 1,000 population)
Death rate (per 1,000 population)
Average life expectancy at birth (years)
Infant mortality rate (deaths under 1 year of
age per 1,000 live births) 1
Leading causes of death (per 100,000 population) :
Heart
Accidents
Influenza and pneumonia
Certain diseases of early infancy
Cancer
Cirrhosis of liver
1

General
population

1950

I960

1970

1973

1970

1973

36.2
12.9
60.0

42.7
9.1
61.7

32.6
7.7
64.0

30.9
7.7
65.1

18.4
9.5
70.9

15.0
9.4
71.3

85.8

50.3

23.8

19.5

20.0

17.6

148.8 135.5
125.9 155.2
1C8.0 95.0
77.3
66.7
60.3
65.2
7.7
20.7

142.0
157.1
38.6
29.6
62.6
45.5

131.0
174.3
41.1
19.6
67.0
45.5

362.0 359.5
56.4 54.8
30.9 29.1
21.3
14.8
162.8 168.4
15.5
16.0

Excludes Alaska Natives.

Over the last 20 years, the health status of Indians and Alaska
Natives has greatly improved. Since 1950, for example, there has
been an increase in Indian average life expectancy, and a decline in
infant mortality and deaths due to diseases such as influenza and
pneumonia. In recent years, the overall health status of Indians
and Alaska Natives has come close to that of the general U.S.
population, as indicated in table K-24. Differences in health
status remain, however, especially in connection with causes of
death associated with reservation social conditions. Efforts to
further improve the health status of American Indians will continue
in the coming years. Based on an eligible federally recognized
Indian population of 500,000, 1976 spending on Indian health care
will result in over $640 per Indian, or over $2,500 per Indian
family of four. This compares to the national average per capita
expenditures for health from all sources of about $600 in 1976.
• Medical care to active and retired military personnel and their
dependents.—In 1976, DOD will operate 183 hospitals and other
health facilities directly and will contract with community
facilities to provide additional care for its beneficiaries. Outlays
for these services will be $3.5 billion in 1976, or $244 million
more than in 1975.
• Medical care to veterans.—VA will operate 171 hospitals, 107
long-term care facilities, and 229 outpatient clinics. It will
also provide contract care for certain veterans at an estimated
cost of $91 million in 1976, an increase of $6 million over the
1975 level. Outlays for outpatient care in 1976 are expected to rise
to $672 million. Total VA outlays for direct and contract care
will amount to $3.5 billion in 1976.

SPECIAL ANALYSES

187

• Health insurance for Federal employees.—Health benefits are
provided to 2.9 million Federal civilian employees and annuitants
and their dependents under the Federal employees health benefits
programs managed by the Civil Service Commission. In 1976,
Federal payments to finance these programs will increase by $187
million to $1,009 million.
Distribution of health care outlays by age groups and economic status.—Table K-25 distributes Federal outlays for the
financing and direct provision of hospital and medical services among
three major age groups and between indigent and nonindigent persons.
Outlays for the development of health resources and for prevention
and control of health problems are excluded from the table, since they
are not normally distributed by population group or income.
Table K-25. ESTIMATED FEDERAL HEALTH CARE OUTLAYS BY
POPULATION AND INCOME GROUPS (in millions of dollars)
Outlays

Total, all recipients
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
Indigent persons, total
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
Nonindigent persons, total
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)

.
.

1974
actual

1975
estimate

1976
estimate

23,918

28,783

31,348

13,542
8,198
2,178

15,984
10,250
2,550

17,269
11,351
2,728

7,739

9,216

10,086

2,730
3,726
1,283

3,258
4,464
1,494

3,557
4,909
1,620

16,180

19,566

21,262

10,641
4,499
1,040

12,620
5,759
1,187

13,557
6,447
1,259

PREVENTION AND CONTROL OF HEALTH PROBLEMS

The Federal Government supports programs to prevent and control
health problems, mainly in the areas of communicable disease control,
occupational health, mental illness prevention, consumer safety, environmental control, accident prevention, and foreign health assistance. Table K-26 shows Federal outlays for the prevention and control
of health problems, which in 1976 are estimated at $989 million, compared to $888 million in 1974.

188

THE BUDGET FOR FISCAL YEAR 19 76

Table K-26. FEDERAL OUTLAYS FOR THE PREVENTION AND CONTROL
OF HEALTH PROBLEMS (in millions of dollars)
1974
ctual

1975
estimate

420
90
378

Disease prevention and control
Environmental control
Consumer safety
Total, prevention and control.

1976
estimate

458
129
432

405
137
446

1,019

989

Disease prevention and control.—-Disease control includes those
activities directed toward the prevention of diseases and injuries
through research, regulator activities, provision of preventive services, and public education.
Reported Cases of Selected Communicable Diseases in U.S., 1964—1974 K-27
See scale in ( }'s

See scale in ( )'s
•6

K
\

4—

3—\

Diphtheria (OO's) J

Rubella (0, OOO's)

Measles (00, 000's)

2—

1—

1972

1973

1974

These activities seek to avoid medical problems through proper preventive measures. Incidence of the most common communicable
diseases, for instance, has dropped significantly in the last decade as
increasing numbers of the population have been immunized against
polio, measles, diphtheria, and other such diseases (see Figures K-27
and K-28). The Federal Government began its efforts in the early
1960's to raise immunization rates through assistance to States and
localities. The resulting improvements in immunization rates are
credited with preventing many illnesses and deaths.

189

SPECIAL ANALYSES
Immunization Rates of Children 1—4 Years Old, 1964—1974

K-28

Percent

Percent
— 100

100
Diphtheria "Tetanus " Pertussis

— 80

20-

1964

1965

1966

Calendar Year

1967

1968

1969
lB:i:::

1970

1971

1972

1973

1974

'Robdlo (G«emm> Me<nl«) votcine wo* li<:ens«<J in lime 19«

The Center for Disease Control in HEW will continue in 1976 to
focus its efforts on the control of communicable diseases through assistance to States and localities in the form of grants, technical assistance,
and public education.
The Federal Government will undertake expanded occupational
health programs in 1976 to detect and eliminate hazards in the workplace. Increased emphasis will be placed on the development of
occupational safety and health standards to be applied by the Department of Labor and the Department of the Interior.
In the area of mental illness, the Alcohol, Drug Abuse, and Mental
Health Administration provides grants to States and localities, and
supports clearinghouses and media campaigns. These activities help
develop State and local capacity for initiating prevention programs,
demonstrate new and more effective prevention methods, and provide
the public—especially high risk populations—with accurate information about substance abuse and mental health problems.
Consumer safety.—In 1976, outlays of $446 million will be
spent on efforts to protect the public from unsafe foods, drugs, and
other products, and to reduce injuries from automobile accidents.
The Food and Drug Administration (FDA) in HEW will continue
to play a major role in improving the quality and safety of the Nation's
food supply, and in helping assure the safety and effectiveness of
drugs and medical devices. FDA and the Environmental Protection
Agency (EPA) will continue support of the National Center for Toxicological Research, which performs long-term studies of the effects of
low concentrations of chemicals in the environment and foods.

190

THE BUDGET FOR FISCAL YEAR 1976

In 1976, the Consumer Product Safety Commission will continue
research, information dissemination, and regulatory measures to
protect consumers from unreasonable risks from certain consumer
products. The Department of Transportation will also work to prevent
automobile accidents and to reduce injuries from such accidents
through its emergency medical services program. In 1973, about 56,000
deaths resulted from motor vehicle accidents.
Environmental control.—The major Federal effort in environmental control is administered by EPA, which maintains surveillance
of the effects of environmental pollution on the health of the American
people, promulgates environmental standards, and monitors compliance. In other environmental activities, HEW will continue demonstration programs in selected urban communities in 1976 to control
childhood lead-based paint poisoning and rodents.
Foreign health assistance.—In 1976, the United States will
provide $135 million for disease prevention and control assistance
to other nations. These funds will support efforts by the Agency for
International Development, the Peace Corps, and international
agencies to which the United States contributes financially such
as the World Health Organization and the Pan American "Health
Organization.
SPECIAL SUMMARIES

Special summaries in the health analysis include drug and alcohol
abuse or substance abuse, prevention activities, the provision of
family planning services, and venereal disease prevention activities.
Substance abuse.—In 1976, the estimated outlays for substance
abuse prevention activities will be $810 million.
Most of the federally supported substance abuse treatment, rehabilitation, prevention, and research activities are funded through the
Social and Rehabilitation Service and the Alcohol, Drug Abuse, and
Mental Health Administration (ADAMHA) within HEW. Defense
and VA will continue efforts to remedy drug and alcohol problems
among military personnel and veterans. Within the Department
of Justice, the Bureau of Prisons administers drug and alcoholrelated treatment and rehabilitation services for Federal prisoners,
the Drug Enforcement Administration conducts education and research programs, and the Law Enforcement Assistance Administration supports a broad range of community efforts to prevent the
abuse of alcohol and drugs. The Special Action Office for Drug Abuse
Prevention terminates June 30, 1975, as mandated by Congress;
many of its program responsibilities will be assumed by the National
Institute on Drug Abuse within ADAMHA.
Total drug abuse treatment capacity has stabilized, although
shifts among geographic areas continue. Treatment capacity now
exists for virtually every heroin addict who seeks treatment. Outlays
for all drug abuse prevention activities rose from $403 million in
1974 to $510 million in 1975. This effort will continue in 1976 with
outlays of $466 million. These outlays are in addition to law enforcement activities which amount to $305 million in 1976 and are discussed in Special Analysis N. In sum, total 1976 outlays for all Federal
drug abuse activities will be $771 million compared to $603 million
in 1974.

Table K-29. ESTIMATED OUTLAYS FOR SUBSTANCE ABUSE PREVENTION PROGRAMS (in millions of dollars)
Alcohol abuse

Treatment and rehabilitation (total)

Department of Health, Education, and Welfare:
Alcohol, Drug Abuse, and Mental Health Administration.
Social and Rehabilitation Service
Office for Human Development
Department of Defense
Veterans Administration
Department of Justice
__
Other*
Prevention and education (total)

Department of Health, Education, and Welfare:
Alcohol, Drug Abuse, and Mental Health Administration.
Office of Education
Department of Defense
_
Veterans Administration
_
_
Department of Justice
Department of Transportation
Other*
Research, planning, and coordination (total)

Department of Health, Education, and Welfare:
Alcohol, Drug Abuse, and Mental Health Administration.
Other H E W . . . .
._
Department of Defense
_
Veterans Administration
Department of Justice
Department of Transportation
Other*
TotaL

Drug abuse

Total substance abuse

1975

1976

1974

1975

1976

1974

1975

1976

215.4

284.1

276.0

267.5

349.8

325.1

482.9

633.9

601.1

57.2
77.0
30.0
8.6
37.7
.3
4.6

109.1
88.0
32.0
9.2
41.5
.2
4.1

92.6
81.0
33.0
10.3
54.8
4.3

92.8
54.0
8.8
43.0
28.8
24.4
15.7

158.2
59.0
9.3
37.3
30.0
30.8
25.2

148.9
63.0
7.2
41.0
31.0
30.0
4.0

150.0
131.0
38.8
51.6
66.5
24.7
20.3

267.3
147.0
51.3
46.5
71.5
31.0
29.3

241.5
144.0
40.2
51.3
85.8
30.0
8.3

30.3

38.3

33.6

59.3

62.2

55.6

89.6

100.5

89.2

23.3

30.0

24.7

36.0
5.9
10.6
.4
4.0
.1
5.2

36.9
1.9
8.0
.4
3.9
.1

53.7
6.1
13.0
.6
3.8
4.1
8.3

oO.O

5.9
14.3
.6
4.0
3.9
5.8

61.6
1.9
12.2
.6
3.9
3.9
5.1

1974

2.3
.2

3.7
.2

4.2
.2

4.0
.5

3.8
.6

3.8
.7

30.4
6.1
10.7
.4
3.8
.1
7.8

43.7

40.4

35.1

76.2

98.4

84.8

119.9

138.8

119.9

11.0
.5
2.4
2.5
.2
27.0
.1

18.5
.6
2.1
2.8
.1
16.2
.1

15.6
.6
2.3
3.1

42.2
4.0
19.6
1.9
4.2
.5
26.0

45.1
3.3
18.9
1.8

13.4
.1

38.1
5.1
14.9
1.1
3.0
0.4
13.6

.6
10.2

49.1
5.6
17.3
3.6
3.2
27.4
13.7

60.7
4.6
21.7
4.7
4.3
16.7
26.1

60.7
3.9
21.2
4.9
4.9
14.0
10.3

289.4

362.8

344.7

403.0

510.4

465.5

692.4

873.2

810.2

4.9

•Includes Special Action Office for Drug Abuse Prevention and substance abuse prevention activities within, HUD. Labor. State, Agriculture, and other agencies.

192

THE BUDGET FOR FISCAL YEAR 1976

Outlays for alcoholism and alcohol abuse prevention activities will
rise from $289 million in 1974 to $345 million in 1976. The National
Institute on Alcohol Abuse and Alcoholism in ADAMHA will continue
to support its ongoing alcoholism treatment and prevention demonstration projects. The Social and Rehabilitation Service in HEW
will spend at least $81 million for treatment and rehabilitation of
persons with alcohol-related problems.
Other Federal programs involved in the effort to reduce alcoholism
and its effects are administered by VA and Defense, which in 1976 will
spend $75 million to address alcohol-related problems among veterans
and military personnel. In 1976, the Department of Transportation
will spend over $17 million for research and developmental activities
designed to reduce alcohol-related deaths and accidents occurring
on the Nation's roadways.
In addition to the estimated funds for substance abuse prevention
shown in table K-29, the Federal Government will spend an estimated
$2.7 billion in 1976 through the Department of Labor's comprehensive
manpower assistance program. Communities can use these funds,
according to their determination of need, for broad manpower service
programs that include training and employment of alcohol and drug
abusers.
Family planning.—As table K-30 indicates, obligations in 1976
for Federal family planning services are estimated at $240 million
in the Health Services Administration and the Social and Rehabilitation Service in HEW. Efforts will continue to focus on providing
services to low-income persons who desire, but could not otherwise
afford, these services.
Family planning research activities are supported by the National
Institutes of Health and the Agency for International Development.
Obligations for this research will increase to $55 million in 1976.
Table K-30. F A M I L Y P L A N N I N G S E R V I C E S A N D

RESEARCH

(In millions of dollars)
Obligations
1974
actual
Research:
Department of Health, Education, and Welfare
Department of State: Agency for International Development.
Research,total.
__
_
Services:
Department of Health, Education, and Welfare:
Health Services Administration
_
_
Social and Rehabilitation Service
Services, total

_____

Family planning programs total
1
2

1975
estimate

1976
estimate

46
5

50
5

2 160
87

139
101

136
104

247

240

303

291

295

Includes $7 million under the 1973 continuing resolution, released for obligation in 1974.
Includes $30 million under the 1973 continuing resolution, released for obligation in 1974.

SPECIAL ANALYSES

193

Venereal disease.—The incidence of gonorrhea has been increasing
steadily in the United States since the early 1960's, and the rate of
syphilis has been increasing since 1970. In 1972, the Federal
Government increased its effort to assist in controlling both of these
diseases through substantially increased support to States and localities. During 1974, the incidence of infectious syphilis leveled off and
the rate of increase of gonorrhea dropped to 7%, compared with
annual increases of 12% and 14% in the previous 2 years. In 1976,
Federal outlays for venereal disease control are estimated to be
$31 million, excluding Federal assistance for venereal disease treatment through the Medicaid program.
Table K-31. VENEREAL DISEASE TRENDS
Primary and
secondary syphilis
Cases
reported

1941
1950
1957
1965
1969
1970
1971
1972
1973
1974.

68,231
32,148
6,251
23,250
18,679
20,186
23.336
24,000
25,080
24,728

Rates per
100,000

51.7
21.6
3.8
12.3
9.3
10.0
11.5
11.7
12.1
11.9

Gonorrhea
Cases
reported

193,468
303,992
216,476
310,155
494,227
573.200
624,371
718,401
809,681
874,161

Rates per
100,000

146.7
204.0
129.8
163.8
245.9
285.2
307.5
349.7
392.2
420.1

EXPENDITURES FOR HEALTH ACTIVITIES BY AGENCY

The following tables distribute the health-related outlays of Federal
agencies by the categories used in this analysis. Health activities of
HEW, the Consumer Product Safety Commission, parts of the
Civil Service Commission, the Departments of Housing and Urban
Development, Interior, Labor, and Agriculture are included under
the health function (550) in Part 5 of the Budget document. Healthrelated outlays of all other agencies are, because of their major
purpose, assigned to other functions. The following tables, therefore,
indicate the predominant budget functional code for each agency.
Other special analyses such as those on research and development,
education, and manpower also include all Federal outlays in their areas.
They will thus include, where pertinent, the same outlays that are
tabulated in this analysis.

580-700 O - 75 - 13

Table K-32. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1974
(In millions of dollars)
Functional
code

Department of Health, Education, and Welfare (total)
Health Services Administration
Health Resources Administration
Alcohol, Drug Abuse, and Mental Health Administration
Center for Disease Control
National Institutes of Health
Food and Drug Administration
Assistant Secretary for Health
Social Security Administration
Social and Rehabilitation Service
OtherHEW
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Environmental Protection Agency
National Aeronautics and Space Administration
Energy Research and Development Administration
Department of Labor
Department of State
National Science Foundation
Other agencies
Agency contributions to employee health funds
Total outlays for health, 1974

550
551
551
550
550
553
550
553
550
551
551/600
500
051
703
451
350
304
250
251
553
150
250

Health
research

(1,583)
55
2
128
36
1,386
20
4
3
1
107
78
45
17
64
115
1

Training
and
education

(767)
33
452
106
1
145

OrganizaConstrue- tion and
tion
delivery

(377)
38
277
15

(244)
-11
182
33

28
1
1

26
12

Direct
Federal
hospital
and
medical

Indirect
Federal
hospital
and
medical

(218)
176

(17,741)
525

256

11
11,348
5,586
15
474
148

2
30
191
167

17
86
107
156
1

1
18
54

Prevention and
control
of health
problems

2,062
2,488

44
31

4
7
2
8

4
12
28

11
745

2,085

1,146

761

392

4,797

19,120

551

Total

(454) (21,384)
135
901
17
929
56
632
96
134
1,584
144
165
8
38
11,348
5,591
2
62
13
2,934
3,006
210
244
290
3
20
64
121
61
69
25
45
45
88
255
745
888

29,189

Table K-33. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1975
(In millions of dollars)
Functional
code

Department of Health, Education, and Welfare (total)
Health Services Administration
Health Resources Administration.,..
Alcohol, Drug Abuse, and Mental Health Administration
Center for Disease Control
National Institutes of Health
Food and Drug Administration
Assistant Secretary for Health
Social Security Administration
Social and Rehabilitation Service
Other HEW
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
_
Environmental Protection Agency
National Aeronautics and Space Administration
Energy Research and Development Administration
Department of Labor
Department of State
National Science Foundation
Other agencies
Agency contributions to employee health funds
Total outlays for health, 1975

550
551
550
556
553
550
553
550
551
551/600
500
051
703
450
350
304
250
251
553
150
250

Training
and
education

Health
research

(1,845)
5
2
136
41
1,633
22
3

(860)
38
490
132
2
165

Construetion

Organization and
delivery

(476)
62
325
25

(363)
31
221
65

43
2
1

Direct
Federal
hospital
and
medical
services

Indirect
Federal
hospital
and
medical
services

(260)
211

(21,473)
617

407

4
2
2
23
33

11
13,903
6,517
18
592
223

33
219
223

9
157
142
156
8
6

46
53

1
5
7
2
7

31
1,073

2,424

1,324

966

527

5,390

23,393

103
91
47
29
65
143
2

2,187
2,911

4
12

____

551

Prevention and
control
of health
problems

Total

(504) (25,781)
156
1,120
18
1,056
56
866
96
139
1,868
171
196
7
38
13,903
6,525
61
11
3,271
3,613
189
262
317
5
34
65
150
91
102
24
45
48
122
356
1,073
1,019

35,044

Table K-34. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1976
(In millions of dollars)
Functional
code

Department of Health, Education, and Welfare (total)
Health Services Administration
Health Resources Administration
Alcohol, Drug Abuse, and Mental Health Administration
Center for Disease Control
National Institutes of Health
Food and Drug Administration
Assistant Secretary for Health
Social Security Administration
Social and Rehabilitation Service
Other HEW
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Environmental Protection Agency
National Aeronautics and Space Administration
Energy Research and Development Administration
Department of Labor
Department of State
National Science Foundation
Other agencies
Agency contributions to employee health funds
Total outlays for health, 1976

550
551
550
550
553
550
553
550
551
551/600
500
051
703
450
350
304
250
251
553
150
250

Health
research

Training
and
education

(1,831)
5
2
128
44
1,621
254
3
1
118
95
51
43
81
168
1
51
73

(661)
38
370
93
2
143

15
222
230

Construetion

Organization and
delivery

(451)
72
304
25

(390)
86
159
65

42
3
1

4
279
190
146
1

Direct
Federal
hospital
and
medical
services

Indirect
Federal
hospital
and
medical
services

Prevention and
control
of health
problems

(235)
226

(23,367)
553

379

7
9
2
21
26

1
1
2,314
3,245

16
14,990
7,412
17
566
238

10
5
8
2
18

4
13
31

140

1
34

551

1,348
2,512

1,145

1,108

596

5,828

25,520

Total

(469) (27,404)
112
1,091
6
841
50
745
104
150
1,833
187
215
8
70
14,990
7,423
2
46
14
3,515
4,019
172
272
324
4
47
81
178
107
117
27
49
53
96
392
1,348
989

37,699

SPECIAL ANALYSIS L
FEDERAL INCOME SECURITY PROGRAMS

Federal income security programs provide essential income protection for millions of Americans. A major, although not exclusive, objective of these programs is to increase the income of people at the lower
end of the income scale. The programs included in this analysis are
divided into two broad categories:
—Cash benefits, such as social security and other income replacement programs.
—In-kind benefits, such as health care and food stamps, which
effectively increase real income by providing necessary goods.
In addition, several major tax expenditures contribute to income
security.
OVERVIEW

Total Federal income security benefits are estimated to exceed
$152 billion in 1976. This represents an increase of over $41 billion
or about 38%, from the 1974 total of $111 billion.
There are many factors accounting for this change:
—By law, $96 billion of the 1976 outlays are in programs tied to
the cost of living.
—Primarily because of increased costs of medical care, health care
benefits will increase.
—The new supplemental security income program has increased
both average benefits and the number of eligible recipients
compared to the State-operated adult programs for the aged,
blind, and disabled, which it replaced.
—Outlays of $17.4 billion for unemployment insurance reflect
both an increase in benefit levels and also in the number of
eligible workers.
For those programs presently tied by law to changes in the Consumer
Price Index, legislation will be proposed to limit benefit increases to
5% during 1976.

197

198

THE BUDGET FOR FISCAL YEAR

1976

Table L-1. FEDERAL INCOME SECURITY BENEFITS

Federal outlays for cash benefits (millions):
Social security (OADSI)
Federal employee benefits
Veterans benefits
Public assistance
Unemployment insurance
Railroad retirement
Other programs
Proposed legislation included above
Subtotal outlays, cash benefits

1974
actual

1975
estimate

1976
estimate

54,007
11,322
7,167
6,832
5,208
2,621
1,097

62,294
14,122
8,000
8,410
13,581
2,972
1,073
(—60)

68,753
15,534
8,061
9,214
17,047
3,211
1,069
(—4,632)

88,255 110,511

122,889

Federal outlays for in-kind benefits (millions):
Food and nutrition
Healthcare
Housing
Proposed legislation included above

4,466
16,669
1,776

5,534
20,171
2,190
(—255)

5,207
22,079
2,653
(—2,025)

Subtotal outlays, in-kind benefits

22,912

27,895

29,940

111,167 138,346

152,829

Total benefits

TARGET GROUPS

Federal income security programs maintain or supplement income
of persons and families whose capacity for self-support is reduced by
old age, disability, illness, unemployment, poverty or death of the
primary wage earner.
Where self-support is possible in part, or in the future, income
security programs provide supplementary or temporary support.
Where self-support is not possible, income security programs provide
basic support.
The analysis below is organized by target group in that programs
are discussed as they provide support to people sharing similar
problems and circumstances—the aged (annuitants and others);
the unemployed; mothers with small children and no breadwinner;
and those low-income persons who do not earn enough to provide
for basic needs. Needs-tested benefits are also indicated by target
group.
Table L-2. INCOME SECURITY BENEFITS BY TARGET GROUPS

Annuitants
Other aged
Disabled
Mothers and children.
Temporarily unemployed
Other transitional low income
Other
Total

1974
actual

1975
estimate

1976
Percent
estimate of total
1976

31,813
33.884
16,750
8,559
5,530
8,082
6,549

37,051
39,473
20,925
9,608
13,903
9,569
7,816

40,391
43,211
23,140
10,471
17,423
10,412
7,781

26.7
28.2
15.1
6.8
11.4
6.8
5.0

111,167 138,346 152,829

100.0

Change
1974-76

9,118
9,327
6,390
1,912
11,893
2,330
1,232
41,662

Percent
change
1974-76

28.7
27.5
38.2
22.3
15.1
28.8
18.8
37.5

SPECIAL ANALYSES

199

THE AGED

Income security benefits for the elderly consist of wage replacement
for workers retired from full-time gainful employment, benefits to
women who depended on their husband's incomes as the main source
of support, and assistance to those who were needy before they became
aged.
In-kind program benefits received by the aged include medical
care through medicare and medicaid, as well as food and shelter on
an income-tested basis.
Several provisions of the Federal personal income tax are designed
to benefit the aged. The largest benefits result from the extra personal
exemptions available to persons 65 or over and from the exclusion of
all social security benefits (not just the portion representing a return
of contributions) from taxable income. These two tax expenditures
are expected to result in a loss of receipts of $1.2 billion and $2.9 billion,
respectively, in 1976. In addition, the retirement income credit and the
exclusion from income of railroad retirement benefits are tax expenditures estimated at $0.1billion and $0.2 billion in 1976. The combined
loss of tax receipts from the retired and elderly due to these four provisions is an estimated $5.1 billion in 1976 (larger than their simple sum).
Other tax provisions are directed to the future security of aged persons by encouraging private provision for retirement years. The major
benefits flow from the exclusion of employer contributions to and earnings of qualified pension funds from the employee's taxable income.
After allowing for deferred taxes collected from present retirees, the
net loss in receipts from this tax expenditure is estimated to be $5.7
billion in 1976. Pension reform legislation enacted in 1974 expanded
the similar tax provisions for noncovered or self-employed persons,
and will result in an estimated tax expenditure of $0.7 billion for these
persons in 1976.
Table L-3. INCOME SECURITY BENEFITS FOR THE AGED
Benefit (millions)
1974
actual

1975
estimate

1976
estimate

Percent
increase
1974-76

Covered employment:
Social Security (OASI) members
Railroad employees
Federal civilian employees
Uniformed services members
Coal miners* widows
Public assistance....
Income-tested veterans pension....

42.762
2.337
4,251
758
194
1,438
1,421

48,984
2,651
5,478
919
213
1,887
1,496

53,777
3,019
5,996
978
238
2,023
1,533

25.8
29.2
41.0
29.1
22.8
40.7
7.9

Subtotal cash benefit outlays

53,161

61,628

67,565

27.1

9,899
2,248
389

11,781
2,648
490

12,424
3,060
554

25.5
36.1
42.3

Subtotal in-kind benefit outlays

12.535

14,919

16,038

27.9

Total

65,696

76,547

83,602

27.3

Medicare
Medicaid
Other in-kind

200

THE BUDGET FOR FISCAL YEAR

1976

Annuitants.—In all four federally run contributory retirement
systems, the benefit calculations are based upon past earnings and are
subsequently increased to reflect cost-of-living increases. All four
systems have also overcompensated for inflation. Between 1970 and
1976, the CPI will have increased 51% while OASI benefits have
increased 77% and civil service and foreign service benefits have
increased 55%.
Under old-age and survivors insurance (OASI), 12.4 million retired
workers received benefits in 1974. Some recipients in 1974 were primary beneficiaries under the railroad retirement system, but about
39% of these retirees were also beneficiaries under the social security
system. A total of 691,000 persons were beneficiaries of the civil service
and of the foreign service retirement system. Approximately 43% of
the beneficiaries of the two Federal civilian employee systems are
also receiving social security.
The probable total number of primary beneficiaries of all the
contributory retirement systems is thus 11.9 million persons in 1974
and 13.1 million in 1976.
Table L-4. ANNUITIES TO PRIMARY BENEFICIARIES IN CONTRIBUTORY
RETIREMENT SYSTEMS: ANNUITY BENEFITS, BENEFICIARIES, AND
AVERAGE PAYMENTS BY SYSTEM
Benefit outlays
(millions)
1974
1975
1976
actual
est.
est.

Old-age and survivors
insurance
Railroad Retirement
Board.
.__
Civil Service Commission
Foreign Service retirement
Total

26,556 30,488 33,194

Number of primary
beneficiaries (thousands)
1974
1975
1976
actual
est.
est.

12,394

12,859

13,616

179

203

227

296
464

319
541

350
579

1,394
3,831

1,572
4,946

1,743
5,400

386
688

399
762

401
777

31,813 37,051 40,391

Average monthly
payments
1974 1975 1976
actual est.
est.

971 1,208 1.278
__..

....

Other aged.—This category includes income support to the aged in
which the benefits are based upon criteria other than past earnings.
The criterion of the program may be a work history of some related
person, and is not necessarily based on any measure of need. Underlying the purpose of these programs is the presumption that persons
past a certain age (for example, 65) are generally not self-supporting
through their own current earnings.
Aged widows.—Aged widows account for $15.4 billion in benefit outlays in 1976—or 36% of all benefits to the aged outside of annuities
to primary beneficiaries. The 32.8% increase in benefit outlays to aged
widows between 1974 and 1976 is due largely to the increase in widows'
benefits to 100% of the deceased husband's primary insurance amount
and increased benefit levels under the social security and the railroad
retirement systems. Some 4.8 million aged widows will receive benefits from social security in 1976 with 1.2 million widows covered in
other programs. There is considerable overlap of these program beneficiaries with those covered by social security. Tax expenditures again

SPECIAL ANALYSES

201

augment the value of these benefits. The exclusion from taxable
income of social security benefits for dependents and survivors is
estimated to result in a $0.5 billion revenue loss in 1976.
Aged wives of retirees.—The entitlement of wives under OASI and
railroad retirement is independent of any contribution history of
their own, and requires only that they exceed a particular age. Where
a wife has dual entitlement under social security based upon her
earnings history, as well as her husband's, she will receive only the
larger benefit. In the railroad retirement system, she receives both
benefits. In 1976, 536,000 wives will have dual entitlement under social
security in which the wife's benefit exceeds the benefit based upon her
own earnings.
Table L-5. BENEFITS FOR THE AGED EXCEPT ANNUITIES TO PRIMARY
BENEFICIARIES: BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENT
Number of beneficiaries
(thousands)

Benefits (millions)
1974
actual
Benefits to aged widows:
Social security (OAS
DI) members
Railroad employees
Federal civilian employees
Uniformed
services
members
Coal miners
Benefits to aged wives of
living retirees:
Social security (OAS
DI) members
Railroad employees.._
Minimum benefit payments:
Social security (OAS
DI) members
Railroad employees
Dependents of aged retirees: Social security
(OASDI) members. __
Aged retirees uniformed
services
Aged veterans
Medicare
Public assistance to the
aged:
Old-age assistance
Supplemental security
income
Medicaid
In-kind benefits to needy
aged:
Food
Housing
Total
1
2
3

1974

1975 1976

1975

1976

1974

1975

1976

9,764

11,309

13,037

4,402

4,639

4,826

575

668

835

280

290

163
165

183
183

202
237

388

486

542

182

191

198

178

212

228

709
194

778
213

792
239

636
83

635
91

620
98

93
195

102
194

106
205

3,748

4,324

4,565

345

388

416

3,335
2,100

3,416
2,130

3,411
2,175

89
137

100
144

111
150

1,942

1,981

1,878

1,815

74
136

82
146

90
156

858

940

1,039

651

653

680

110

120

127

563
79
60

586
84
62

1,836

1,923

591

650

9,899

1,047
11,758

1,070
12,424

1,122
15,714

1.105
16,246

1,064
16,768

488
74
52

*588

1,877

479
991

850
2,248

1,860
2,648

3 2,010
3,060

145
244

182
308

176
378

33,883

Benefits for first half of year.
Benefits for second half of yeai
Federal payment only,

Average monthly
paymenti

39,473

43,211

1,760
4,200

843
625

2,055
4,263

991
694

2,345 2 380
4,327
45

1,015

786

14
33

36
3

29
3

15
37

14
40

202

THE BUDGET FOR FISCAL YEAR 1976

Payments based on the minimum.—These are statutory minimum
amounts paid to retired workers, to the dependents of such retired
workers, and to noninsured beneficiaries age 72 and over.
Aged retirees of the uniformed services.—The retirement systems for
the uniformed and military services are noncontributory, with benefits based on time in service and the rank achieved at the time of
retirement, rather than the overall earnings history of the individual.
Because military service is credited for social security coverage, there
is substantial overlap between the military retirement systems and
OASI.
THE DISABLED

Disabled.—The disabled constitute the second target group for
whom there is a presumption of permanent inability to achieve selfsupport. Eligibility for an income security benefit for the disabled
person may be based on: membership in a contributory retirement
system (OASDI or civil service), on military service, on occupation
(coal miner), or on indigency (welfare).
Members of the social security system and the railroad retirement
system are eligible for retirement benefits computed on their earnings
history to the date of permanent disability. They are also eligible for
medicare benefits. Federal civilian employees receive a disability
benefit based on total disability for their previous occupation—paying
a minimum benefit of 40% of the average of their highest 3 years of
earnings.
Benefits to the disabled in the uniformed services are scaled to the
degree of physical impairment rather than previous levels of earnings.
Disability retirement from the military, and veterans compensation
and indemnities, are both provided for disabilities which are presumptively service-connected. Veterans' pensions provide benefits
to persons who have seen wartime military service for non-serviceconnected but presumptively total disability where financial need
can be demonstrated.
Under the Federal Coal Mine Health and Safety Act, compensation is paid to black lung victims in amounts related to the workmen's
compensation law provided for Federal employees (FECA). Eligible
persons began registering for benefits in the spring of 1970. Many
received a one-time retroactive benefit in 1974.
Beginning in 1974, 1.3 million needy disabled received assistance
under the new Federal Supplemental Security Income program
enacted in 1972 to replace State administered programs of assistance
to the blind and disabled. By 1976, that number will grow to almost
1.6 million needy disabled.
Approximately 4% million persons will receive disability benefits
under social security in 1976. Another 291,000 individuals will receive
benefits through Federal civilian employee programs. There is a
substantial overlap between these two groups and those receiving
disability benefits because of prior military service or employment in
coal mines.

SPECIAL ANALYSES

203

Table L-6. BENEFITS FOR THE DISABLED: BENEFITS, BENEFICIARIES,
AND AVERAGE PAYMENT
Benefits (millions)
1974
actual

Civilian covered employment:
Disability insurance...
Federal civilian employees..
Railroad employees...
Coal miners
Medicare for the disabled.
Uniformed services:
Military service-connected disability..._
Other: Income-tested..
Other: Non-incometested
_
Public assistance to the
disabled:
Aid to the blind
Aid to the permanently
and totally disabled.
Supplemental security
income
AFDC (disabled male
head of family)
Medicaid
In-kind benefits to needy
disabled: Food
_.
Total

Number of beneficiaries
(thousands)
1974
1975
1976
actual
est.
est.

Average monthly
payments
1974 1975 1976
actual est. est.

1975
est.

1976
est.

6,159

7,636

8,776

3,561

3,897

4,256

222

250

277

1,129
221
655
781

1.438
241
623
1,439

1,603
208
618
1,722

260
115
321
1,701

285
113
359
1,964

291
110
351
2,167

362
160
170
110

421
178
145
160

459
158
147
178

3,989
463

4,608
489

4,630
500

3,117
735

3,127
724

3,125
697

107
52

123
56

123
60

310

359

381

132

(2)

(4)

(*)

M51

1,218

35955 *2,220

2.615 H.329

M.620

l,980 M21 «114

20
5

114

396
1,436

440
1,690

467
1,909

1,105
2,244

1,122
2,278

1,147
2,312

30
53

33
62

34
69

371

341

345

____

___.

_...

16,750 20,925 23,140

Benefits for first half of year.
2 Less than $500 thousand.
Benefits for second half of year.
<Less than 1.000.
8
Federal benefit only.

It is estimated that in 1976 3.1 million adults and children will be
supported by public assistance based on disability. Nearly all of these
persons are eligible for medicaid benefits.
Disabled persons benefit from the exclusion from taxable income of
social security disability insurance benefits, of workmen's compensation benefits, and of payments such as sick pay and private disability
insurance benefits. These exclusions are estimated to reduce receipts
in 1976 by $0.3 billion, $0.6 billion, and $0.3 billion respectively. The
exclusion from taxable income of veterans service-connected disability
compensation is an additional tax expenditure of $0.6 billion.

204

THE BUDGET FOR FISCAL YEAR

1976

NEEDS-TESTED BENEFITS

Mothers and dependent children.—Benefit eligibility varies
considerably for this last target group for whom self-support is not
assumed to be universally possible. This group includes mothers with
dependent children and no male breadwinner. Eligibility is determined
either by the work history of a deceased husband or through a means
test.
Table L-7. BENEFITS FOR MOTHERS WITH DEPENDENT CHILDREN AND
NO HUSBAND: BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENT
Benefits (millions)
1974
actual

Benefits to widows of
covered employees:
Social security (OAS
DI) members
Railroad employees-_.
Federal civilian employees
Uniformed
service
members
Coal miners
Public assistance (AF
DC) mothers with
preschool children:
Cash payments
Medical services
Total

Number of beneficiaries
(thousands)

Average monthly
payments

1975
est.

1976
est.

1974
actual

1975
est.

1976
est.

5,087
29

5,674
32

6,200
39

3,548
12

3,542
12

3,570
12

250
188

109

135

152

349
34

395
37

415
40

559
24

563
25

553
26

52
118

59
124

63
126

5,309 5,388 5,511
10,155 10,358 10,772

30
9

33
10

34
11

1,905
1,047

2,115 2,242
1,218 1,383

8,559

9,608 10,471

1974 1975 1976
actual est. est.

279 306
208 270
50 195 234 253

Transitional low income.—The intent of income security outlays
for able-bodied persons is to tide them over periods in which they
cannot support themselves, until other measures correct the causes of
such inability to provide self-support.
The major system of unemployment insurance, constituting 90%
of unemployment benefits paid in 1974, is State-administered. As a
result, States vary in eligibility requirements, benefit levels, and
duration of benefits.

"SPECIAL ANALYSES

205

Table L-8. BENEFITS FOR TRANSITIONAL LOW INCOME AND OTHER:
BENEFITS, BENEFICIARIES, AND AVERAGE PAYMENT
ficiaries
(thousand: 0

Benefits (millions)

Temporary
unemployment:
Unemployment insurance system
Other unemployment
benefits
Long-term unemployment:
Unemployed fathers.
Mothers with all
children in school _
Other income tested l
In-kind benefits, low income:
Food 2
Housing 2___
Medical

1976

ithly
paymenli i

1974
actual

1975
est.

1976
est.

1974
actual

1975

1974

1975 1976

5.139

13,497

16,971

6,222

13,760

13,930

102

392

406

453

385

361

357

106

153

170

178

405

411

416

1,554
291

1,600
312

1,696
315

4.025
413

4,075
411

4,167
394

32
59

33
63

34
67

3.729
1,532
822

4.650
1,882
956

4,863 24.107 23,310 22,829
2,275 5.053 5,582 6,170
1,085 7,680 7,883 8,147

7
25
9

8
28
10

11
31
11

427

490

509

Subtotal, transitional low income
13,612 23,473 27,836
Uniformed services retirees under 65 __
Food for non-needy children
_
Other
Subtotal, other.._
Total

944

4,529

5,548

6,125

528
1.493

624
1,645

92 15,633 14,904
1,570

6,549

7,816

7,781

884

995

20,162 31,289 35,617

Includes all AFDC related assistance to refugees and Indians.
2 Include all benefits to AFDC and UF families.

Special unemployment benefit programs are provided for Federal
employees and ex-servicemen, railroad employees, and unemployed
workers in industries adversely affected by foreign trade. These programs are federally financed, but except for railroad retirement
unemployment insurance, are State-administered.
The exclusion from taxable income of unemployment insurance
benefits is a tax expenditure expected to grow from $1.0 billion in
1974 to $3.8 billion in 1976.

206

THE BUDGET FOR FISCAL YEAR

1976

A second set of programs providing income security benefits to
able-bodied men and women are means-tested cash and in-kind
programs.
Additional benefits are provided to uniformed services retirees
under the age of 65.
NeedS'tested benefits.—Public assistance, veterans and survivors
pension, medicaid, and food and housing programs provide benefits to
individuals based on a test of need. In addition to that test, eligibility
for cash assistance may be based on such considerations as prior military service, age, disability, or absence of a male breadwinner in
a family.
Table L-9. NEEDS-TESTED BENEFITS BY TARGET GROUPS AND PROGRAM
Benefits (millions)
1974
actual

Total, needs-tested benefits

20,759

Benefits to the aged:
Public assistance
Veterans and survivors pension
Medicaid
Other
Subtotal, benefits to the aged
Benefits to the disabled:
Public assistance
Veterans and survivors pension
Medicaid
Other
Subtotal, benefits to the disabled
Benefits to mothers:
Public assistance.
Medicaid
Other.
Subtotal, benefits to mothers

Benefits to the unemployed and other low income:
Public assistance
Medicaid
Food
Housing
Other....
Subtotal, benefits to unemployed
Public assistance..
.
Veterans and survivors pension
Medicaid
Food
Housing

1975
estimate

1976
estimate

24,797

27,236

1,438
1,421
2,248
389

1,887
1,497
2,648
490

2,023
1,534
3,060
554

5,495

6,522

7,170

1,844
463
1,436
64

2,673
489
1,690
78

3,087
500
1,909
75

3,807

4,930

5,571

1,905
1,047
202

2,115
1,218
211

2,242
1,383
217

3,153

3,544

3,843

1,707
822
3,729
1,532
513

1,770
956
4,650
1,882
544

1,874
1,085
4,863
2,275
554

8,303

9,802

10,651

6,963
2,530
5,552
3,938
1,776

8,524
2,661
6,512
4,910
2,190

9,302
2,729
7,437
5,115
2,653

SPECIAL ANALYSES

207

Table L-10. FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM
Benefit outlays (in millions
of dollars)

Department, agency and program

Department of Health, Education, and Welfare:
Social security:
Old-age and survivors insurance
Disability insurance
Hospital insurance
Supplementary medical insurance
Supplemental security income
Public assistance:
Maintenance payments
Medicaid
Special benefits for disabled coal miners. _
Assistance to refugees
Public health service officers retirement
Medical care for retired commissioned officers
Proposed legislation included above

Total Veterans Administration
Department of Labor:
Unemployment insurance (State programs)
Railroad unemployment
Unemployment compensation for Federal employees and exservicemen
Trade adjustment activities
Employee compensation
Special benefits for disabled coal miners
Total Labor
Department of Defense—Military:
Military retirement..
Medical care for retirees
Proposed legislation included above
Total Defense
Department of Agriculture:
Food stamps
_
_._
Child nutrition..
Special m i l k . . .
Removal of surplus commodities
Proposed legislation included above
Total Agriculture

1975
estimate

1976
estimate

47,849
6,159
7,806
2,874
1,815

54,658
7,636
9,646
3,551
4,080

59,777
8,776
10,020
4,126
4,625

5,017
5,552
965
86
17
4

Total Health, Education, and Welfare
Veterans Administration:
Disability and dependency and indemnity compensation
Veterans and survivors pensions.
Life insurance (net subsidy)
Other veterans benefits.

1974
actual

4,330
4,589
6,512
7,437
939
960
65
40
20
23
4
6
(—315) (—5,119)

78,144

91,442

100,579

3,985
2,530
518
135

4,627
2,661
527
185

4,596
2,729
536
200

7,167

8,000

8,061

5,139
50

13,497
50

16,971
50

350
19
272
2

350
34
327
20

405
26
396
20

5,832

14,278

17,867

5,128
433

6,281
457

6,889
490
(—574)

5,561

6,738

7,379

2,728
1,506
49
183

3,501
1,765
119
149

3,386
1,773
18
31
(—293)

4,446

5,534

5,207

208

THE BUDGET FOR FISCAL YEAR 1976

Table L-10. FEDERAL OUTLAYS FOR INCOME SECURITY BENEFITS, BY
DEPARTMENT AND PROGRAM—Continued

Department, agency and program

Benefit outlays (in millions
of dollars)
1974
actual

Civil Service Commission:
Civil service retirement
Proposed legislation included above

Total Civil Service Commission
Railroad Retirement Board:
Railroad retirement
Proposed legislation included above
Total Railroad Retirement Board
Department of Housing and Urban Development:
Public housing..
Rent supplements
Interest supplements
Total Housing and Urban Development
Department of Transportation: Coast Guard retirement
Total Transportation
Department of State:
Foreign Service retirement. _
Proposed legislation included above
Total State
Department of the Interior: General assistance to Indians
Total Interior
Department of Commerce: NOAA officers retirement
Total Commerce
Total Federal outlays
Proposed legislation included above

1975
estimate

1976
estimate

5.429

6,983

7,641
(—768)

5,429

6,983

7,641

2,621

2,972

3,211
( — 116)

2,621

2,972

3,211

1,116
137
523

1.380
185
625

1,710
223
720

1,776

2,190

2,653

105

116

105

116

63
(—5)

111,167

138,346 152,829
(—315) (—6, 657)

SPECIAL ANALYSIS M
FEDERAL CIVIL RIGHTS ACTIVITIES
COVERAGE AND SCOPE OF THE ANALYSIS

This analysis of Federal civil rights activities comprises more than
the traditional programs and policies related to civil rights enforcement. In addition to Federal activities regarding the protection of
such rights as voting, public accommodations, fair housing, and equal
employment opportunity in the public and private sectors, there are
included Federal programs related to civil rights research and information dissemination and to the conciliation and prevention of
racial disputes. Outlays to enforce these civil
rights have risen from
$90 million in 1970 to $395 million in 1976.1
Outlays for Civil Rights Activities

M-l

$ Million

400

1
The thruit of this analysis focuses on civil rights enforcement activities. Because of the conceptual
difficulties inherent in developing data on minority assistance programs, including duplication and
lack of reliability of some data, the discussion of such programs previously included has been deleted.
However, for comparative purposes a table on minority assistance (M-4) appears at the end of this
analysis. Outlays under the Emergency School Aid Act as project grants will also be included in table
M-4 rather than under enforcement.

580-700 O - 75 - 14

209

210

THE BUDGET FOR FISCAL YEAR 1976

Programs relating to problems of the economically and socially
disadvantaged, even when they include substantial minority participation, whether in manpower training, community development, or
bilingual education, will not be treated as civil rights activities for they
are more properly considered in other analyses in this document.2
Federal service equal opportunities.—The head of each Federal
executive department and agency is charged by Executive Order 11478
and the Civil Eights Act of 1964, as amended by the Equal Employment Opportunity Act of 1972 (Public Law 92-261), with establishing
and maintaining an affirmative program of equal employment opportunity within the agency. Enforcement responsibility for the Government-wide program is assigned by law and Executive order to the
Civil Service Commission and special procedures are available to
employees and applicants who believe they have been discriminated
against in any aspect of Federal service. Under these procedures,
31,484 persons contacted equal employment opportunity counselors
during 1974 for advice and assistance, and of this total, 3,435 filed
formal discrimination complaints. If equal employment opportunity
counseling, impartial investigation and a third-party hearing do not
resolve the matter to an individual's satisfaction, the complainant
may appeal to the Commission's Board of Appeals and Review or
may file a civil action in U.S. District Court.
Table M-1. FEDERAL CIVIL RIGHTS OUTLAYS BY PROGRAM CATEGORY
(in millions of dollars)
1974
actual

Civil rights enforcement:*
Federal service equal employment opportunities
Military services equal opportunities 2
Private sector equal employment opportunities
Equal educational opportunity 3
Fair housing *_____________
Enforcement and investigation5
Research and information dissemination
Indian programs
Civil rights conciliation and prevention of disputes
Total

1975
estimate

1976
estimate

117. 83
37. 78
73.10
11.89
13.50
24.12
9.02
.41
3.79

148.93
41.72
93.12
19.41
15.92
26.97
9.88
.89
3. 74

167.19
42. 66
103.02
21.14
17.64
28.52
10.01
.72
3.93

291.43

360.58

394.83

1
2

Civil rights enforcement programs guarantee and protect the basic civil rights as defined by law.
Excludes outlays of $17.1 million for contract compliance, fair housing and title VI activities
reported
elsewhere. Includes U.S. Coast Guard.
3
Excludes outlays under the Emergency School Aid Act. Cf. table M-4.
* Excludes funds for contract compliance and departmental personnel who directly administer
housing and urban development programs but also concern themselves with the objectives of fair
housing laws.
« Includes all title VI efforts except HEW and HUD.

Government policy is clear that personnel actions shall be free
from discrimination based on race, color, religion, sex or national
origin and that Federal agencies shall take affirmative action to
1
For example, expenditures for minority participants in manpower training programs (35%)
are not included. See Special Analysis J. Federal manpower programs.

SPECIAL ANALYSES

211

assure equal employment opportunity. Agency equal employment
opportunity programs are documented in written national and regional
plans of action which include, where appropriate, agency established
goals and timetables. These plans must be submitted to the Commission annually for review and approval. Careful consideration is to be
given to assure that recruitment activities reach all sources of job
candidates, that present employee skills are fully utilized, that
opportunities for upward mobility are provided and that managers
are trained with regard to their equal employment opportunities
responsibilities.
Outlays for Federal civil service employment opportunity programs
(including upward mobility) will increase by 42% in the 2 years,
1974 to 1976 to $167 million. Work-years will increase by 2,172 to
10,220. Although firm projections on the results of these increased
efforts are difficult to make, the favorable trends observed in recent
years should continue.
As of November 30, 1973, over one-fifth (20.9 percent) of Federal
employees were members of minority groups. Recent surveys have
reflected a continuing trend of more minorities in the middle and upper
grade and pay levels despite a decrease in overall Federal employment.
As of October 31, 1973, women represented 40.8 percent of the nonpostal full-time Federal white-collar work force. Despite an overall
decrease in general schedule employment of 11,232 positions, the
number of women increased by 1,926 from October 1972 to October
1973, while the number of men decreased by 13,158.
Two special emphasis programs address the specific employment
problems of particular groups. Within the overall equal employment
opportunity program, the Federal women's program addresses the
particular employment needs and problems of women, and the
Spanish-speaking program assists in providing opportunities for
Spanish-speaking citizens. The successful placement of many additional women and Spanish-speaking Americans in middle-management
and executive-level Federal jobs during a period of employment
contraction is largely attributable to special efforts under these
programs.
Finally, under the Intergovernmental Personnel Act of 1970, the
Civil Service Commission provides financial and technical assistance
in personnel management and employee training and in monitoring
merit employment requirements applicable to many State and local
grant-in-aid programs. Major emphasis is placed on equal employment
activity. Under this program in 1974, the Commission has:
• Awarded grants for 23 State and local government projects relating to equal employment opportunity.
• Aided more than 500 State and local agencies administering
grants-in-aid in the development of affirmative action plans.
• Made over 4,000 contracts geared to removing artificial employment barriers and improving personnel systems at State and local
levels through expenditures for equal employment opportunity
related technical assistance.

212

THE BUDGET FOR FISCAL YEAR 1976

Increase in Minorities by Grades 1 November 1969-November 1973
Percent Change

Percent Change

100-

1-4

"General Schedule

5-8

9~U

12-13

14-15

16-18

nd biroilar Orodc Oroupings.

In 1976, the Commission will continue to award grants to help
advance equal employment opportunity.

Military services equal opportunities.—Each of the military

services has placed equal opportunity officers and their staffs at
various levels within individual command structures. They guide,
monitor, and evaluate all matters pertaining to the equal opportunity
and treatment of military personnel and their dependents and are
responsible for and participate in race relations councils, seminars,
and training. In 1976, outlays for providing equal opportunities for
members of the Armed Services,
excluding fair housing expenditures,
will increase to $42.7 million.3 4,156 work-years will be devoted to
these efforts.
Equal opportunity for servicewomen has received added emphasis.
As the number of women in the military services continues to rise
at a rapid rate, greater utilization is being made of their talents. The
Army has now opened 90% of their enlisted occupational specialties
to women as opposed to 30% previously. All services are now training
women as noncombat pilots. The Air Force has increased the skill
ladders open to women from 43% to 98%. All services have opened
their ROTC programs to women and five women serve at general/flag
officer rank in the military services.
3

Military services equal opportunities includes the U.S. Coast Guard.

SPECIAL ANALYSES

213

The Defense Race Relations Institute, located at Patrick Air Force
Base, Fla., trains officers and enlisted men for service with their units as
instructors. The Institute has graduated over 3,322 instructors from
all the services in the past 4 years. Training and education in race
relations are included in service schools ranging from basic training to
the senior service colleges. Special programs are also designed to
increase minority participation in skilled jobs, examine current
testing procedures for cultural bias, and to develop race relations
handbooks.
Recruiting efforts will continue to insure balanced minority participation in the military services. All services have increased the
percentage of minority recruiters. An example of success is the service
academies where the enrollment of 465 minority cadets in the 1974
class is double the number entering in 1971. Presently there are over
1,103 minority cadets enrolled in the academies. Significant progress
has also been made in procuring minority officers from reserve officer
training programs and officer candidate training schools and in the
detailing of qualified minority officers to attend senior and intermediate level professional military schools.
At the present time, there are 18 minority general officers on active
duty. Prior to 1971, only four minority officers had ever achieved
general/flag officer rank in the entire history of the Armed Services.
Minority personnel have also been increasing their proportion in the
top enlisted ranks, and currently, the top enlisted position in the Air
Force is held by a minority.
Private sector opportunities.—Title VII of the Civil Rights Act
of 1964, as amended, prohibits discrimination in employment on the
basis of race, color, religion, sex, or national origin by either employers,
unions, or employment agencies. Executive Order 11246, as amended,
requires Federal and federally assisted Government contractors and
subcontractors to provide similar opportunities. Outlays for the
agencies charged with these responsibilities, the Equal Employment
Opportunity Commission, the Justice Department, the Department of4
Labor and 16 cooperating agencies, will total $103 million in 1976.
The Equal Employment Opportunity Commission will spend $60.3
million in 1976, an increase of 12%, to carry out its responsibilities
relating to nondiscrimination in employment in the private sector and
State and local government. An estimated 77,700 charge resolutions
are projected through the combined efforts of the Commission and
State and local agencies to which, under law, charges are deferred. The
Commission will more than double to $8 million the amount of its
grants to these State and local agencies which administer fair employment practices statutes in order to bring such agencies into a full
partnership in handling an increasing volume of charges. As a result of
these actions, an estimated 40,000 persons will receive $70 million in
cash benefits in 1976.
Enforcement of title VII, as amended, is also the responsibility of
the Justice Department which, through conciliation and litigation,
seeks to secure compliance with the law where it finds patterns or
practices of employment discrimination in State and local governments and their agencies. In 1976, the Justice Department plans to
Excludes amounts for nondiscrimination against the aged and handicapped.

214

THE BUDGET FOR FISCAL YEAR 1976

Equal Employment Opportunity Commission Activities
$ Millions

Completed Investisations

45,000

7542,000
; Completed InvesHsations
EEOC Expenditures

$60.3

50-

30,000

-15,000

1971

J972

1973

1974

1975*

1976'

Fiscal Years
i Include* investigations to be done by EEOC as welt as bit deferral ajencie

spend $1.3 million to help eliminate such discrimination in the State
and local public sectors.
Executive Order 11246 prohibits the practice of discrimination in
Federal contracts, subcontracts, and on federally assisted construction projects. Nondiscrimination assurances cover construction as
well as industrial work forces and require affirmative action on the
part of recipients of Federal contract moneys to promote the equal
employment of minorities and women. In 1976, the Federal agencies
responsible for implementing this order will spend $39.3 million.
Approximately 500,000 new hires and promotions will be effected by
such affirmative action goals.
Seventy "citywide" plans for affirmative action in the construction industry, including the well-known "Philadelphia plan,"
have been put into effect. In addition, the Office of Federal Contract
Compliance, Department of Labor, is continuing to develop proposals
for statewide construction contracts. The goal for 1976 is to insure
that all areas with substantial minority populations are covered under
either a voluntary or imposed affirmative action plan.
Other highlights include:
• The Federal Communications Commission, an independent
regulatory agency, will spend $0.4 million in 1976 to investigate
complaints of employment discrimination by broadcasters, cable

215

SPECIAL ANALYSES
Federal Contract Compliance Activities

M-4

$ Millions
60

Hires and Promotions, (Thousands)
600

Hires and Promotions'

500,000

Contract Compliance Expenditures

500

$39.3
40-

-400

300

30-

200

$13.3
-J00

10-

197f

1972

1973

J974

1975

Fiscal Years
3

From affirmative action plans ifl non-consfructic

1976
Estimate

ntraefs. Data prior to 1972 i

litable.

television systems, and common carriers, to review licensees'
annual reports of employment patterns, and to enforce the rules
of the Commission relating to equal employment opportunity.
• The Department of Labor will spend $3.9 million in administering the Equal Pay Act. In 1976, as a result of these efforts, $9.1
million in wages illegally withheld will be received by 44,000
employees, primarily women. An additional $13.7 million in
annual future income will also be forthcoming.
Equal education opportunity.—The
Department of Health,
Education, and Welfare and the Justice Department have primary
responsibility for assuring equal educational opportunity in public
schools for all citizens and a nondiscriminatory policy relating to faculty
and administrators. In 1976, educational programs in support of these
goals will spend $21.1 million, excluding capital assistance to predominately black colleges (developing institutions and land-grant
colleges) and the emergency school assistance program.5
To enforce Federal laws requiring equal education opportunities
for public school students, the Justice Department will spend $1.8
million in the coming year. Although substantial compliance with
the constitutional mandate has been achieved in recent years, the
Justice Department continues its enforcement supervision through
6

Excludes amounts for nondiscrimination against the handicapped.

216

THE BUDGET FOR FISCAL YEAR 1976

235 cases involving 540 schools systems.6 Currently, the Federal
Government is also taking steps to provide equal educational opportunity for Spanish-speaking and other non-English-speaking
pupils by insuring that special education programs and bilingual
and bicultural education programs are provided.
Title IX of the Higher Education Amendments of 1972 charged the
Department of Health, Education, and Welfare with the responsibility
of insuring nondiscrimination on the basis of sex in some 2,700 institutions of higher education throughout the United States. In 1976,
the Department expects to conduct 100 onsite compliance reviews
and to investigate 80 complaints.
Fair housing.—Title VIII of the Civil Rights Act of 1968 makes
unlawful any discrimination on the basis of race, color, religion,
sex or national origin in the sale, rental, or financing of housing.
Executive agencies are required to cooperate with the lead agency in
this area, the Department of Housing and Urban Development
(HUD), in the administration of title VIII, and to conduct their
programs and activities in a manner that affirmatively furthers fair
housing opportunities for all Americans.
Expenditures for the administration of fair housing programs in
executive departments and agencies will increase by 11% in 1976
to $17.6 million.
• HUD will spend $5.2 million to strengthen its efforts under title
VIII and enable it to reduce the backlog in the reactive complaint
system.
• The Department of Justice will spend $1.9 million in the
development, litigation, and negotiation of cases to enforce
title VIII.
• The Department of Defense will spend $5.3 million to assure
the rights of all military personnel to available off-base housing.
• The General Services Administration (GSA) will spend $1
million to assure that federally constructed, purchase-contract
or leased space is located where there is an adequate supply of
low- and moderate-income housing available on a nondiscriminatory basis.
• In cooperation with the fair housing goal of the executive branch,
the independent Federal financial regulatory agencies will continue to monitor the institutions subject to their supervision to
assure that their real estate lending services are available without
regard to race, color, religion, sex, or national origin.
• The Housing and Community Development Act, approved in
1974, prohibits sex discrimination in connection with the sale,
rental or financing of housing.

SPECIAL ANALYSES

217

• The Equal Credit Opportunity provision (title V of Public Law
93-495), approved in 1974, makes it unlawful for any creditor to
discriminate against any applicant on the basis of sex or marital
status with respect to any aspect of credit transactions, including
those relating to real estate.
HUD will continue its efforts to insure that the administration of
all Federal housing-related programs further the fair housing objectives of title VIII. Such efforts include oversight of affirmative marketing and advertising guidelines and policies for project selection of
federally assisted programs; a national advertising campaign and
expanded affirmative action programs aimed at all elements of the
public; and community wide hearings and reviews of title VIII
compliance.
Table M-2. FEDERAL CIVIL RIGHTS OUTLAYS BY TYPE OF ACTIVITY
(in millions of dollars)
1974
actual

Civil rights enforcement:*
Complaint conciliation
Complaint investigation
Compliance review and monitoring
Legal enforcement
Program direction, research and information dissemination
Technical assistance
Upward mobility
Total
1

1975
estimate

1976
estimate

18.44
33.58
58.07
21.00
86.87
29.46
44.00

21.14
38.48
77.15
23.48
106.19
33.10
61.04

22.94
42.60
83.82
24.57
112. 23
38.44
70.24

291.43

360.58

394.83

Civil rights enforcement programs guarantee and protect the basic civil rights as denned by law.

The Justice Department has brought or participated in 214 suits
against some 600 defendants in 33 States and the District of Columbia.
At least 182 court orders have been entered, most of them requiring
comprehensive affirmative relief to correct the effects of past housing
discrimination and to maximize equal opportunity in the future. The
Department has also obtained supplemental relief or brought contempt
of court proceedings in 15 cases where defendants had failed to implement provisions of earlier orders. Voluntary compliance agreements
have been concluded with the real estate boards of major cities, and
negotiations with the National Association of Realtors resulted in the
publication of an industry-wide guide which promotes equal housing
opportunity.
The Defense Department expects to continue its successful implementation of the open off-base housing program. In 1967, less than
20% of the multiunit rental facilities surveyed were indicated as
available to all military personnel on an equal opportunity basis.
Today, 98% of surveyed facilities are pledged to a policy of nondiscrimination. Recently, Defense revised its proced res to take stronger
measures against landlords practicing race and sex discriminat'or In
1976, Defense will devote 548 years of effort to furthering this
record of achievement.

218

THE BUDGET FOR FISCAL YEAR 1976

GSA, under Executive Order 11512, will expend 46 work-years on
matters relating to the positive impact that selection of sites for
Federal facilities can have on the social and economic conditions in
the area. GSA and HUD are continuing to develop affirmative action
plans where necessary to insure that an adequate supply of low- and
moderate-income housing: will be available on a nondiscriminatory
basis. For agencies like Energy Kesearch and Development Administration which procure space and facilities on their own, efforts
similar to the above will be carried out.
Civil rights enforcement.—Primary responsibility for the enforcement of civil rights laws and constitutional guarantees is vested in the
Justice Department. This includes the development, negotiation,
conciliation, and litigation of cases and complaints. In 1976, the
Justice Department and other agencies with enforcement responsibilities will spend $28.5 million to carry out the above mandate. In
addition to activities related to employment discrimination, fair
housing and public education, which are treated elsewhere in this
analysis, the efforts of the Department will strengthen its coordination
of Federal agencies' enforcement activities under title VI of the 1964
Civil Rights Act which prohibits discrimination in federally assisted
programs and under the general revenue sharing legislation. Increased
emphasis by the Department should result in a continuing improvement of title VI enforcement. The Department will also continue its
enforcement activities directed toward compliance with laws which
prohibit the interference with basic civil rights, including the right to
vote and the use of public accommodations and facilities.
In 1976, the Justice Department will continue to allocate resources
as necessary for investigation and litigation to protect the civil rights
of citizens who may have suffered violence or threats of violence including special protections for migrant workers, prison inmates, and,
along with the Interior Department, American Indians. Attention will also continue to be directed to civil litigation involving
injustices and substandard conditions in correctional institutions,
mental hospitals, and juvenile homes.
The voting rights program continues its efforts to secure to all
citizens the right to register and vote without discrimination or intimidation. In addition, all proposed changes affecting voting under section
5 of the Voting Rights Act of 1965 are submitted to the Attorney
General and must be investigated, reviewed, and adjudicated in the
Department of Justice. 3,847 such changes have been received since
1970. In support of the voting rights program, the Civil Service
Commission provides personnel to prepare and maintain lists of
eligible voters and to observe election procedures in States or other
political subdivisions designated by the Attorney General. The Commission receives complaints, hears and determines challenges, and
assists in the defense of challenge cases filed in the U.S. circuit courts
of appeals. In 1976, the Commission will spend $0.6 million to assist in
this responsibility.

Civil rights research and information

dissemination.—Ex-

penditures grouped in this category include all moneys for civil rights
activities not counted elsewhere as well as Federal research and

SPECIAL ANALYSES

219

information dissemination efforts. Outlays in this area will total $10
million in 1976.
• The Commission on Civil Rights will spend $7.74 million in 1976
to carry on its factfmding function relating to denials of equal
protection under the law.
• The Women's Bureau, Department of Labor, will devote $2
million to questions and issues relating to the utilization of
womanpower and the economic, legal, and civil status of women.
The Bureau works with appropriate State, national, international,
local, and union organizations, and concerned individuals in
achieving its goals and also provides support services to the Citizens Advisory Council on the Status of Women.
• The women's action program, Department of Health, Education,
and Welfare (HEW), will spend $0.2 million in 1976 to analyze the
effects of HEW programs on women and the changes required to
help attain equality for women.

Civil rights conciliation and prevention of disputes.—The

Community Relations Service of the Department of Justice was
established by title X of the Civil Rights Act of 1964 to provide assistance to communities in resolving difficulties arising from discriminatory practices which disrupt peaceful relations among citizens. It also
seeks to reduce and prevent racial tensions. The Service actively
cooperates with appropriate Federal, State, and local agencies, private
and public groups, and individuals on methods and programs for the
peaceful resolution of racial disputes.
In 1976, the Service will spend $3.9 million to reduce racial tensions.
This will permit an expansion in crisis resolution and State liaison
activities. State liaison representatives will be working with State and
local officials in developing their own crisis contingency plans to enable
communities to eventually provide community relations services for
themselves.

220

THE BUDGET FOR FISCAL YEAR 1976

Table M-3. FEDERAL CIVIL RIGHTS OUTLAYS BY DEPARTMENT AND
AGENCY (in millions of dollars)
1974
actual

Civil rights enforcement:1
Department of Agriculture_
Department of Commerce
Department of Defense
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
2
Civil Service Commission
Commission on Civil Rights
Energy Research and Development Administration 3
Environmental Protection Agency
Equal Employment Opportunity Commission
Federal Communications Commission
_
General Services Administration
4
Community Services Administration
Postal Service 5
Small Business Administration
_
_
Veterans Administration
Other independent agencies
Total..

1
2

9.96
.84
51.54
13.66
8.45
1.54
18.65
8.23
*
2.94
.76
118.05
6.06
1.31
.61
42.10
.25
3.51
.39

1975
estimate

1976
estimate

.73
.77
1.08

10.17
.85
57.61
23.93
10.69
2.17
20.13
10.11
*
3.55
1.06
149.45
7.15
1.59
1.01
53.68
.36
4.43
.34
__
.79
.86
.65

10.43
.80
59.34
25.82
11.91
2.15
20.91
10.81
*
3.80
1.25
167.81
7.74
2.27
1.25
60.26
.44
5.11
.59
_
.83
1.23
.08

291.43

360.58

394.83

Civil rights enforcement programs guarantee and protect the basic civil rights as defined by law.
All Federal service equal employment opportunity outlays, including upward mobility, are reported
under the lead agency, Civil Service Commission.
3
The Atomic Energy Commission expired Jan. 19, 1975. The majority of its resources were transferred to this new agency upon its expiration.
* The Office of Economic Opportunity was replaced by the Community Services Administration
on January 4, 1975.
5
Postal Service outlays appear in the Annexed Budget.
* Less than $10 thousand.

SPECIAL ANALYSES

221

Table M-4. FEDERAL MINORITY ASSISTANCE PROGRAMS
MINORITY ASSISTANCE OUTLAYS BY PROGRAM CATEGORY 1
(in millions of dollars)
1974
actual

Indian programs 2
Minority business enterprise 3
Emergency School Aid Act
Minority Higher Education Assistance 4
Total...

1975
estimate

1976
estimate

1,112.10 1,338.60 1,403.00
972.46 1,062.35 1,059.35
202,92
206,96
143.64
66.49
93.10
111.06
2,353.97 2,701.01

2,717.05

1
Minority assistance programs broaden opportunities for economic participation and selfitermination.

MINORITY ASSISTANCE OUTLAYS BY AGENCY i
(in millions of dollars)
1974

Department of Agriculture
Department of Commerce
Department of Defense
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Labor
Environmental Protection Agency
Energy Research and Development Administration
National Aeronautics and Space Administration
Small Business Administration2
Veterans Administration
Other agencies
Total....

13.53
82.53
79.37
510.05
53. 31
852.07
13.02
7.00
7. 50
7.89
663.03
11.90
52.77

1975

18.08
97.37
83.37
673.12
37.15
908.32
41.16
9.00
8.15
8.50
751.47
13.00
52.32

2,353.97 2,701.01

1976

19.41
88.57
87.47
650.55
34. 32
945.05
41.51
10.00
9. 10
10.00
753.85
14.50
52.72
2,717.05

1
Minority assistance programs broaden opportunities for economic participation and self-determination and include Indian programs. Loans, surety bonds, guarantees and 8(a) contracts are included
at 2their obligated values.
All Federal procurement from minorities through sec. 8(a) of the Small Business Act is reported
under the lead agency. Small Business Administration.

SPECIAL ANALYSIS N
FEDERAL PROGRAMS FOR THE REDUCTION OF CRIME
Reduction of crime is a high Federal priority. Sixteen Federal
agencies and commissions participate in providing a national response
to the crime problem. Federal programs are not only concerned with
enforcing statutes and administering criminal justice but are also
designed to increase understanding of the causes of criminal behavior,
prevent the commission of criminal acts, rehabilitate offenders, and
reform Federal criminal laws. The objective is to reverse the trend of
rising crime so that the losses in economic and human resources associated with crime are substantially reduced, and the fear of criminal abuse or exploitation in our communities is alleviated.
The Federal crime reduction program complements activities of
State and local governments which have the widest responsibilities
for law enforcement and administration of justice. Federal assistance in the form of grants-in-aid, training, and technical assistance
contributes to the effectiveness of State and local crime reduction
programs.
ACCOMPLISHMENTS OF THE PAST YEAR

There were numerous accomplishments in the area of crime reduction during the past year. Among the most significant developments
were:
• Strike force indictments increased from 548 in 1973 to 800 in 1974,
and in convictions from 930 to 1,544.
• Major gains in cooperative international enforcement efforts to
stop drug traffic before it reaches the United States.
• Enactment of speedy trial legislation requiring, after an initial
period, trial of accused persons within 100 days after arrest of
persons accused of Federal violations.
• Located 37,891 fugitives during 1974, the highest number in
the history of the FBI.
• Losses to the public resulting from the passage of counterfeit
currency declined by 27% from 1973 and 49% from the record
level in 1972.
• Completion of an LEAA victimization survey on the amount of
crime committed in the United States.
1976 BUDGET HIGHLIGHTS

Federal outlays for the reduction of crime will total $3.0 billion
in 1976, as compared with $2.8 billion in 1975 and $2.4 billion in
1974. It is estimated that expenditures for this purpose by all levels of
government—Federal, State, and local—will exceed $16.5 billion in
1976. Of the $3.0 billion in Federal expenditures, $1.2 billion or 4 1 %
will be used to assist State and local governments to improve their
criminal justice systems. The Department of Justice will continue
its extensive Federal crime reduction program with expenditure of
$1.9 billion in 1976. The Treasury Department has the second largest
Federal program which is budgeted for $374 million in 1976.
222

SPECIAL ANAI

223

SES

Table N-1. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME
AGENCY *

(in thousands of dollars)
Outlays

Agency

1974
actual

The Judiciary
Department of Agriculture
Department of Commerce
_
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
Department of the Treasury
General Services Administration
Veterans Administration.
Other independent agencies
_
_

Total Federal outlays.

1975
estimate

1976
estimate

79,145
92,360
107,219
7,869
9,826
10,425
1,837
2,137
2,342
5,941
6,807
7,164
197,620
259,195
254, 797
28,109
15,680
12,190
46,465
48,631
52,874
1,569,740 1,816,046 1,938,613
6,135
7,900
7,900
5,162
26,800
37,800
37,788
30,435
32,741
282,221
343,367
373,516
72,123
68,062
70,289
90,551
111,279
118.413
427
458
527
2,431,133 2,838,983

3,026,810

1
Does not include Department of Defense—Military and $36.1 million of outlays for the U.S.
Postal Service which are included in the Annexed Budget for 1976.

Application of resources to the reduction of illicit drug traffic will
be further expanded throughout the full range of Federal criminal
justice activities. The Drug Enforcement Administration (which consolidated Federal drug enforcement activities previously scattered in
four separate agencies) is continuing development and implementation
of a comprehensive Federal enforcement strategy. A new El Paso
Intelligence Center (which will support the Customs Service, Immigration and Naturalization Service, and the DEA) is expected to be fully
operational in 1976. Emphasis will be on improving interdepartmental
cooperation at the Federal level and increasing effectiveness of State
and local enforcement officers in drug investigations. A summary of
expenditures related to enforcing drug laws is contained in table N-2.
Table N-2. FEDERAL OUTLAYS FOR DRUG ENFORCEMENT

(in millions of dollars)
Outlays

Agency

Department of Agriculture
Department of Defense—Civil
Department of Justice
Department of State
_
Department of the Treasury
Total Federal outlays
1

..
_
_

1974
actual

1975
estimate

1976
estimate

1.6
0.3
139.7
5.2
52.7

1.5
0.4
187.9
26.8
64.4

1.5
0.4
203.3
37.8
62.1

199.5

281.0

305.1

Does not include Department of Defense—Military and U.S. Postal Service.

224

THE BUDGET FOR FISCAL YEAR

1976

CRIME REDUCTION PROGRAMS BY ACTIVITY

Budget outlays included in this special analysis represent all Federal
programs related 1to crime reduction except expenditures of the Department of Defense. The analysis covers estimated costs of the Judiciary
related to criminal adjudication. Even though such programs may
indirectly reduce crime, the analysis excludes general social programs,
unless they are clearly within the context of crime reduction or
prevention, such as vocational training of prisoners or treatment and
rehabilitation of narcotic addicts. This analysis does not include
cost of background investigations for employment, administrative
inspections, or investigations of a regulatory nature which might in
rare cases result in the application of criminal sanctions. Where
activities involve both criminal and civil proceedings, such as operation of Federal courts, an allocation of outlays to the crime-related
function has been estimated. The narrative is not intended to be
all-inclusive, but rather highlights new initiatives contained in the
1976 budget and portrays the wide range of activities and agencies
involved in the Federal crime reduction program.
Table N-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND SELECTED ACTIVITY1 (in thousands of dollars)
Outlays

Major program and selected activity

1974
actual

1975
estimate

1976
estimate

Crime research and statistics:

Statistics on crime, criminals, and criminal justice system
Research on criminal behavior and sociology of crime
Program total
Reform of criminal laws

31,509
64, 661

37,988
72,401

37,342
72,881

96.170

110,389

110,223

3,292

3,907

3,879

26,158
146, 771
168,992
42,507

27,620
223, 351
169,951
35,682

18,964
227,113
177,509
32,255

384,428

456,604

455,841

676,992
51,285
183,449

781,236
56,453
221,599

839,177
63,063
234,287

911,726 1,059,288

1,136,527

Services for prevention of crime:

Public education on law observance, enforcement, and crime
prevention
_
_
Special programs for the rehabilitation of narcotic addicts. _ _
Prevention and control of juvenile delinquency
Development of other community crime prevention services. _
Program total....
Criminal law enforcement:

Investigations into violations of Federal criminal law
Federal protection of individuals and facilities
Assistance to State and local governments for enforcement. _
Program total

1
Defense Department outlays for crime reduction are not included in this analysis. However, a
summary of Defense Department outlays for law enforcement are estimated as follows (in thousands
of dollars):

Department of Army
Department of the Navy
Department of the Air Force
Total. Department of Defense

---

1974

1975

1976

312,874
11,633
430,824

327,169
11,662
433,102

341,726
9,248
451,406

755,331

771,933

802,380

SPECIAL ANALYSES

225

Table N-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND SELECTED ACTIVITY 1 (in thousands of
dollars) —Continued
Major program and selected activity

Law enforcement support:
Criminal intelligence and information systems
Education and training of enforcement officers
Laboratories and criminalistics
International programs in support of domestic law enforcement
Program total
Administration of criminal justice:
Conduct of Federal criminal prosecutions
Operation and support of Federal court systems
Assistance to States and localities for improved administration
of justice
Program total
Rehabilitation of offenders:
Operation of Federal correctional institutions
Federal probation, parole, and community treatment
___
Federal inmate education and training
Federal inmate medical treatment
Other programs supporting Federal corrections
Assistance to States and localities for improved correctional
programs
Program total
Planning and coordination of crime reduction programs
Total Federal outlays
1

Outlays
1974
actual

1975
estimate

1976
estimate

43, 850
219,139
32,864

58, 195
248,655
42, 792

59, 305
260, 111
47,046

13,926

41,193

56,894

309,779

390,835

423,356

63,751
98,907

78,533
115, 120

88,697
126,114

60,223

71,409

68,281

222,881

265,062

283,092

165,973
21,008
9,606
18,211
1,824

173, 772
25,394
13,010
20,362
2,101

207,474
32,597
14,021
21,903
2,649

228,990

256,583

263,701

445,612

491,222

542,345

5 7,245

61,676

71,547

2,431,133 2,838,983

3,026,810

Does not include Department of Defense—Military and U.S. Postal Service.

Crime research and statistics.—Crime research and statistics encompass Federal activities designed to produce numerical data and
other information concerning crime, criminals, and the criminal justice
system, and to develop new techniques and methods for operation of
that system.
• Total Federal outlays for crime research and statistics are
estimated to be $110 million in 1976. Of this amount $37.3
million will be spent for collection of quantitative data, and
$72.9 million for research.
• DEA will improve its ability to monitor drug abuse trends
and techniques for determining sources of illegal drugs. Research
will focus on developing tools and techniques to improve productivity of investigators and agents.
• The Coast Guard will continue research to improve its capability
for detecting and assessing the environmental impact of pollution
law violations. Prototype airborne classification and quantification sensors will be constructed and tested in 1976.

580-700 O - 75

226

THE BUDGET FOR FISCAL YEAR 1976

• The U.S. Postal Service will improve postal security and detection
devices such as a letter tracing system, antitampering devices
for mail sacks, and portable containers for suspect letter bombs.
• The Immigration and Naturalization Service will expand research
to improve its enforcement programs against illegal aliens.
• Expenditures by the Law Enforcement Assistance Administration to develop and evaluate new enforcement technology will
total $36.3 million in 1976 while criminal statistical collection
will account for $31.3 million.
Reform of criminal laws.—Criminal law reform consists of efforts to
improve the quality of criminal statutes and assure that they accurately reflect the values and standards of our society.
• $3.9 million will be spent on criminal law reform in 1976. Approximately 90% of the 1976 expenditures will support law reform
efforts in State and local governments.
• In 1976, the National Commission for the Review of Federal and
State Laws Relating to Wiretapping and Electronic Surveillance
will be conducting its second full year of study into the impact
provisions of the Omnibus Crime Control Act of 1968 authorizing
the use of wiretaps for law enforcement purposes.
• A special unit within the Criminal Division of the Justice
Department has been created to establish procedures and coordinate use of the immunity provisions of the Organized Crime
Control Act of 1970, as well as to monitor requests for immunity.
• The Drug Enforcement Administration will draft and revise regulations and procedures for the Comprehensive Drug Abuse Prevention and Control Act which wdll be applicable to individuals
and industry alike.
• During 1976 the Commission to Review National Policy Toward
Gambling will hold public hearings and conduct studies and
surveys to determine the nature, extent, and public attitude
toward gambling in order to formulate recommendations on a
national policy.
• The Department of Justice and the Federal Judiciary will
implement the provisions of recently enacted "speedy trial"
legislation requiring, after a period of years for implementation,
that accused criminal offenders be brought to trial within 100
days of arrest.
• The Federal Election Campaign Act Amendments of 1974, created
a commission which will be established to administer, obtain
compliance with, and formulate policy with respect to Federal
campaign financing.
Prevention of crime.—Crime prevention includes efforts to limit the
probability that criminal acts will be committed through means other
than direct enforcement or general correctional activities. This
category therefore encompasses public education, drug addict
rehabilitation, juvenile delinquent programs, and projects to improve
police-community relations.
• An estimated $456 million will be concentrated on crime prevention programs in 1976.

SPECIAL ANALYSES

227

• The bulk of the Federal drug treatment, rehabilitation, research,
and prevention programs will be located in the National Institute
on Drug Abuse within the Alcohol, Drug Abuse, and Mental
Health Administration in HEW.
• In 1976, HEW will continue to support drug treatment capacity
which together with State and local treatment resources should
provide sufficient care for every heroin addict seeking help.
• The Urban Mass Transportation Administration expects to make
$1 million in grants to State and local governments in 1976 for
procurement and installation of public transit equipment containing crime prevention devices.
• During 1976, the Law Enforcement Assistance Administration
will continue to encourage States and localities to adopt the crime
prevention standards developed by the National Conference on
Criminal Justice.
• The Department of Justice, in cooperation with other Federal
agencies, established an Advisory Committee on False Identification to analyze the problems resulting from the ready availability
of falsified identification documents.
• The Departments of Justice, Treasury, and Transportation
will continue their combined efforts to encourage better security
against cargo theft.
Criminal law enforcement.—Criminal law enforcement includes activities to detect, identify, and apprehend violators of criminal laws.
Federal support of State and local enforcement is also included in this
category, as is investigation by Federal agents into all Federal offenses.
Representative programs include policing of Federal property, special
activities against organized crime and illicit drug trafficking, and
grants to upgrade the effectiveness of State and local law enforcement.
• Criminal law enforcement will account for $1.1 billion in outlays
during 1976, including $238 million in support of State and local
enforcement programs.
• DEA will continue enforcement actions to suppress illicit drug
distribution on a national and worldwide basis, directing a
majority of its resources toward arrest and prosecution of the
highest level drug traffickers.
• The Justice Department's Antitrust Division will step up its
efforts to reduce public and private interference with the free
market system, and add support to government programs regulating abuses of market power, in order to relieve artificial
inflationary pressures on costs and prices.
• The Department of Labor will continue its participation in the
Federal program against organized crime by providing compliance officers to identify, investigate, and assist in the prosecution of labor racketeers who manipulate welfare and pension
funds.
• The FBI and other elements of the Department of Justice will
continue placing high priority on investigating and prosecuting
white collar and organized crime offenders.
• In 1976, the Immigration and Naturalization Service (INS) will
add 213 additional border patrol agents to strengthen the enforcement program.

228

THE BUDGET FOR FISCAL YEAR 1976

• The INS will issue a new alien documentation card which will
help reduce illegal entry into this country with forged documents.
• The Securities and Exchange Commission will continue to give
top priority to cases involving organized crime, particularly those
instances concerning criminal infiltration into the securities
industry.
• In 1976, the Secret Service will add 130 Executive Protective
Service officers to provide security for foreign diplomatic missions
in Washington, D.C.
• The Bureau of Alcohol, Tobacco and Firearms of the Treasury
Department expects to perform over 40,000 firearms traces
which will assist Federal, State, and local enforcement agencies
in identifying firearms used in crimes.
• Customs will continue emphasizing investigations of fraudulent
importations and smuggling of imports into the United States.
Law enforcement support.—Law enforcement support entails activities contributing to the effectiveness of criminal law enforcement.
Included are operation of criminal intelligence systems, education and
training of enforcement officers, activities of forensic laboratories, and
international programs supporting domestic enforcement efforts,
primarily in the area of narcotics control.
• Outlays of $423 million are projected for law enforcement support in 1976. Of this amount, $222 million will assist State
and local enforcement by funding laboratories, training programs,
and criminal intelligence networks.
• The Drug Enforcement Administration will support State and
local drug enforcement activities in 1976 by conducting training
schools for law enforcement officers and forensic workshops for
chemists.
• The Veterans Administration will provide financial assistance
for 21,500 policemen to pursue on-the-job training and related
academic instruction during 1976.
• The Bureau of Alcohol, Tobacco and Firearms will train over
40,000 police officers representing over 2,500 police agencies in
the areas of explosive and firearms investigations.
• During 1976, the State Department will continue to finance
training programs, advisory services, crop substitution projects,
and other drug prevention activities to assist foreign governments in their efforts to disrupt the international flow of illicit
narcotics. Funds are also provided to support the activities of
the United Nations Fund for Drug Abuse Control.
• Outlays of $20.7 million are planned in 1976 for the new Federal
Law Enforcement Training Center, which will provide basic and
specialized training to Federal personnel in a variety of law
enforcement subjects.
Administration oj criminal justice.—This category includes the
preparation and prosecution of criminal cases, operation of court systems, trial of cases, provision of adequate defense, and related supporting activities.
• Over $283 million will be devoted to prosecution of criminal cases
and administration of criminal justice in 1976, including $68
million for assisting State and local prosecution and court sys

SPECIAL ANALYSES

•
•
•

•
•

229

terns. Operation of the Federal judiciary will require expenditure
of $126 million in 1976 and criminal prosecutions will account for
$89 million.
In 1976, the U.S. Attorney's offices will add 247 additional staff
members to cope with increased workload.
The Commission on Revision of the Federal Appellate Court
System will continue its study of the jurisdiction and procedures of
the Federal Courts of Appeals.
During 1976, the Drug Enforcement Administration will encourage State officials to prosecute more cases under uniform State
controlled substances acts and conduct revocation proceedings
before State licensing boards.
The U.S. Marshals Service will enhance its witness security
program with 30 additional deputies and continue upgrading the
service of Federal warrants by deputy marshals.
The fees and expenses of witnesses appearing on behalf of the
Federal Government to provide factual information or expert
testimony will require expenditure of $15.6 million in 1976.

Rehabilitation of offenders.—These programs encompass Government
custody and rehabilitation of criminal offenders, including supervision
and operation of correctional institutions, inmate and offender treatment and training programs, probation and parole services, and other
supportive functions.
• Expenditure of $542 million will support rehabilitation of
offenders in 1976 as compared with $491 million in 1975 and
$446 million in 1974.
• In 1976, LEAA will allocate $264 million to States and localities
for non-Federal correctional activities.
• During 1976, $253 million will be spent on correctional programs
of the Bureau of Prisons, with continued emphasis on developing
a balanced system of community and institutional facilities for
the reintegration of offenders into society.
• The U.S. Board of Parole with regionalized operations and new
decisionmaking criteria will ensure greater equity, consistency,
and speed in the parole process in 1975 and 1976.
• The President established through Executive order the Presidential Clemency Board to review certain convictions of persons
under the Military Selective Service Act and the Uniform Code of
Military Justice and to make recommendations for Executive
clemency.
Planning and coordination.—Included in this category are outlays
supporting State and local criminal justice planning, as well as
the coordination of Federal enforcement activities nationally and with
respect to international enforcement efforts.
• Approximately $72 million will be spent on planning and
coordination of crime reduction programs in 1976, consisting
primarily of $70.6 million in expenditures by the Law Enforcement Assistance Administration to encourage State and local
governments to plan and evaluate their criminal justice activities.
• In 1976, the State Department will continue to coordinate interagency efforts to assist foreign governments and international
organizations in carrying out their drug control programs.

230

THE BUDGET FOR FISCAL YEAR

1976

Table N-4. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY1 (in thousands of dollars)
Outlays

Major program and agency
1974
actual

1975
estimate

1976
estimate

Crime research and statistics:

The Judiciary
Department of Defense—Civil
Department of Health, Education, and Welfare
Department of Justice
Department of Transportation
Department of the Treasury
Program total
Reform of criminal laws:
Department of Justice
Services for prevention of crime:
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 Transportation
_
Veterans Administration.

Program total.

814
16
3,995
87.196
3,309
840

1,049
18
4,595
101,257
2,630
840

3,711
20
4,267
98,154
3,231
840

96,170

110,389

110,223

3,292

3,907

3,879

147
136,956
23,424
1,251
196,862
100
25.688

169
198, 326
13, 160
1,325
216,176
200
27,248

176
200,460
10,350
1,325
214.457
1,000
28,073

384,428

456,604

455,841

7,869
4,487
43,060
545,598
2,400
34.267
273,618
427

9,826
5,207
44,594
645,351
2,900
27,486
323,466
458

10,425
5,481
48,321
698,412
2,900
28,382
342,079
527

Criminal law enforcement:

Department of Agriculture....
Department of Defense—Civil__
Department of the Interior
Department of Justice..
Department of Labor
Department of Transportation
Department of the Treasury
Other independent agencies

Program total

911.726

1,059,288 1,136,527

143
4,015
503
153,260
5,162
110
7,763
72,123
64,863
1,837

164
172
4,000 _
732
883
185,731
190,807
26,800
37,800
117
126
19,061
30,597
68,062
70,289
84,031
90,340
2,137
2,342

309,779

390,835

Law enforcement support:

Department of Defense—Civil
_
Department of Health, Education, and Welfare
Department of the Interior._
__
Department of Justice
Department of State
Department of Transportation
_
Department of the Treasury
.._
General Services Administration.
Veterans Administration
Department of Commerce
Program total.
See footnote at end of table.

423,356

SPECIAL ANALYSES

231

Table N-4. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME
MAJOR PROGRAM AND AGENCY 1 (in thousands of dollars)—Continued

Outlays
Major program and agency

Administration of criminal justice:
The Judiciary
Department of Defense—Civil
Department of the Interior
Department of Justice
Department of Transportation
Department of Health, Education, and Welfare
Program total
Rehabilitation of offenders:
The Judiciary
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
Program total
Planning and coordination of crime reduction programs:
Department of Justice
Total Federal outlays
1

1974

1975

1976

66,254
84
1,382
155,009
2
150

76,770
99
1,711
186,480
2

82,905
103
2,076
198,006
2

222,881

265,062

283,092

12,077
1,064
52,504
4,685
269
371,278
3,735

14,541
1,150
52,274
2,520
269
415,468
5,000

20,603
1,212
50,070
1,840
269
463,351
5,000

445,612

491,222

542,345

57,245

61,676

71,547

2,431,133 2,838,983

3,026,810

Does not include Department of Defense—Military and U.S. Postal Service.

232

THE BUDGET FOR FISCAL YEAR

1976

Table N-5. SELECTED CRIME REDUCTION DATA
1972
Federal outlays for crime reduction:
Federal crime reduction outlays assisting States and
localities
_
Federal crime reduction outlays for reduction of Federal
crimes
Total Federal outlays for reduction of crime

(dollars in thousands)
1973

$674,785

$966,863

$1,023,906

$1,131,608

$1,326,831

$1,407,227

$1,352,755

$1,806,393

$2,431,133

Federal personnel:
Full-time Federal criminal investigators l__
17,507
19,117
U.S. attorneys and assistant attorneys (man-years on
criminal workload) ____
763
722
2
Attorneys—criminal division (man-years)
253
273
U.S. district court judgeships
401
400
State and local crimes: 3
Serious crimes recorded (UCR—table 2)
8,173,400
8,638,400
Violent crimes recorded ( U C R - t a b l e 2)
828,820
869,470
Rate of serious crimes per 100,000 inhabitants (UCR—
table 2)
_
.....
3,925
4,116
Rate of violent crimes per 100,000 inhabitants (UCR—
table 2)
398
414
Percent index crimes cleared by arrest (UCR—table 15
in 1972, table 14 in 1973)
22.0
21.2
Percent found guilty of persons charged by police (UCR—
table 18 in 1972 and 1 9 7 3 ) . . . .
65.2
63.7
Federal investigations:
FBI, investigative matters received
824,252
774,579
Immigration and Naturalization Service (investigations
completed)
30,245
30,940
Postal Service, criminal caseload
510,220
462,671
IRS. cases closed
8,518
8,500
U.S. Customs Service, cases closed
40,076
40,276
Secret Service, cases closed
« 158,871
124,389
Bureau of Alcohol, Tobacco, and Firearms, cases closed..
6,964
5,403
Disposition of Federal criminal matters:
Investigative matters presented for prosecutive decision—
prosecution declined
119,064
93,926
Federal criminal cases commenced 6
47,043
40,367
Federal criminal cases terminated 6
46,090
41,389
Federal criminal cases pending 6
25,438
24,416
Federal criminal defendants c o n v i c t e d . . . . .
37,220
34,983
High echelon organized crime figures convicted
60
69
Corrections:
Average Federal jail population
5,160
5,870
Average Federal prison population
21,329
22,294
Court commitments to Federal institutions
16,832
17,540
Average Federal prison sentences (months)
_
47.9
51.0
Persons under supervision of Federal probation system
(end of year)
....
49,023
54,346
Federal paroles granted...
6,174
6,339
Warrants issued for violation of conditions of release from
prison....
._
1,906
1,635
Executive clemency petitions granted
_
___
255
207
1
2
3

CSC jobs classified in series 1811 as of April 30.
Includes internal security functions transferred into the Criminal Division.
From FBI uniform crime report.
< Not available.
5 Reflects closing out case backlog where no further investigation was warranted.
• Excludes transfers.

1974

19,130
775
324
400
(*)
(*)
(*)
(«)
(«)
(4)
745,840
32,101
319,293
7,215
21,981
128,947
5,455

86,301
43,319
44,255
27,644
34,699
69
5,877
23,332
16,789
(4)
59,534
5,540
1,591
195

PART 3

SPECIALIZED ASPECTS AND
VIEWS OF FEDERAL PROGRAMS

233

INTRODUCTION
Part S discusses trends and developments in selected areas of
Government activity—aid to State and local governments, research
and development, and environmental quality. It groups three special
analyses, those designated O through Q.
Special Analysis 0 summarizes Federal grants to State and local
governments as well as loans and indirect assistance. It traces the
development of Federal aids over time and relates them to the finances
of both the Federal Government and State and local governments.
This analysis also provides a profile of Federal grants by region, and
that portion benefiting metropolitan areas.
Special Analysis P identifies Federal programs for the conduct of
research and development, and for facilities related to such activities.
Special Analysis Q identifies Federal funding for selected environmental activities, including pollution control and abatement, environmental protection and enhancement, sewer and water programs, and
understanding, describing, and predicting the environment.
234

SPECIAL ANALYSIS O
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
In 1976, Federal aid to State and local governments is expected to
total $56.0 billion, including $381 million in net loan outlays. This
represents an increase of $3 billion over 1975, and an average annual
increase of 15% since 1970.
{Billions
60
Re venue
Sharing

50-

40Total

30-

20-

1966

1967

1968

Fiscal Yean

1969

1970

1971

1972

1973

1974

1975

(976

Estimate

These totals exclude many other Federal benefits to State and local
governments which are not direct grants, shared revenues, or loans.
Among those excluded are:
• Federal programs such as the $5.5 billion supplemental security
income program for the aged, blind, and disabled, which provide
Federal resources for programs formerly financed by State and
local governments;
• The exemption of interest on State and local securities from
Federal income taxes;
• The deducibility of State and local taxes from Federal taxable
income, which results in a portion of these taxes being offset by a
reduction in Federal taxes; and
• Federal technical assistance, publications, and similar services,
which provide indirect savings to these governments.

235

236

THE BUDGET FOR FISCAL YEAR 1976
HIGHLIGHTS OF THE FEDERAL A I D PROGRAM

The Federal aid program for 1976 will continue recent efforts to
simplify government operations and transfer planning and management functions to State and local governments. These efforts are highlighted by a proposal that will soon be transmitted to the Congress
to renew general revenue sharing through 1982. As of January 6,
1975, $17.3 billion has been distributed to State and local governments under this program, helping them to provide needed services,
to reduce debt burdens, and to reduce taxes. The proposed renewal
would continue the authorization and appropriation of specific annual
amounts, increasing to $7.2 billion for 1982.
Additional payments will be made to State and local governments
to compensate them for increased energy costs resulting from proposed energy taxes. These "energy tax equalization payments" will be
distributed according to the general revenue sharing formula. The
payments will start in the last quarter of 1975, and will total $500
million in 1975 and $2 billion in 1976.
The Administration will propose major new highway grant legislation, and will focus Federal highway efforts on completing vital
segments of the Interstate Highway System. Simultaneously, the
consolidation of other highway programs would provide additional
flexibility to State and local governments in the use of these funds,
and would allow them to preempt over $1 billion in existing Federal
motor fuel taxes starting in 1978. The 1976 program level for highways is estimated to reach $5.4 billion, including $3 billion for the
Interstate System.
Under the new temporary employment assistance program, $1
billion has been appropriated to help State and local governments
provide about 100,000 temporary public service jobs in 1975 and 1976.
The primary recipients of these jobs will be those who have exhausted
or did not have unemployment insurance benefit eligibility.
The Budget includes estimates for a number of new, flexible Federal
aid programs that recently have been enacted. Grants-in-aid provided
through the community development bloc grant program, the Comprehensive Employment and Training Act, the National Mass Transportation Assistance Act of 1974, a new Economic Development
Administration program, and the Education Amendments of 1974
provide State and local officials substantially increased flexibility
within broad Federal guidelines. In addition, some older programs,
such as law enforcement assistance and waste water treatment grants
have increased the discretion of State and local governments in the
use of funds by delegating planning, monitoring, and enforcement
functions to them.

SPECIAL ANALYSES

237

Table 0-1. FEDERAL-AID EXPENDITURES BY AGENCY (in millions of dollars)
Agency

Department of Agriculture
Department of Commerce
Department of Defense—Military
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of Transportation
Department of the Treasury
Environmental Protection Agency
Veterans Administration
Community Services Administration
District of Columbia
Legal Services Corporation
Washington Metropolitan Area Transit Authority
Other
Energy tax equalization payments
Total expenditures for Federal grants

1974
actual
5, 112
260
64
19, 138
3, 147
452
637
2,651
5,108
6,302
1,623
26
639
187
170
522

46,040

1975
estimate

1976
estimate

6,279
277
73
20,579
3, 372
540
698
4,117
5,592
6,505
2,429
53
462
230
42
185
717
500

5,874
263
83
20,259
4,678
605
754
4,161
6,239
6,637
2,478
66
347
254
65
182
687
2,000

52,649

55,632

In total, Federal aid will finance about 22% of State and local
expenditures in 1976. As can be seen in table O-l, about 36% of this
aid is administered by the Department of Health, Education, and
Welfare.
HISTORICAL PERSPECTIVES

Though grants from the National Government technically predate
the Constitution, they were very small until the end of the 19th century,
and did not become a truly significant factor in government expenditure until after World War II. In 1950, Federal grants to State
and local governments totaled $2 billion, and by 1960 they had risen
to only $7 billion. In 1974, they reached $46.1 billion, an average annual
increase of 14% since 1960. This may be compared to an average
annual growth of 8% for total Federal outlays over the same period.
The growth of Federal aid outlays slowed significantly in 1974. To a
large extent, this slowdown was illusory. The introduction of general
revenue sharing in 1973 included the payment in that year of retroactive benefits for 1972, thus inflating the 1973 totals as compared to
1974. Additionally, the supplemental security income program that
began on January 1, 1974, replaced a Federal grant program with a
program operated by the Social Security Administration. This shift,
which resulted in direct Federal payments to individuals, reduces the
nominal amount of Federal grants without reducing (and often
increasing) benefits.
The functional composition of the grant program has changed significantly over the years, as shown in table O-2. The most dramatic
growth has occurred in the health area, which has increased from 4%
of Federal aid in 1961 to an estimated 16% in 1976. This increase is
primarily attributable to the medicaid program. The most striking
recent changes are the addition of general revenue sharing, the increases in outlays for environmental protection, and the relative
decline in grants for transportation programs.

238

THE BUDGET FOR FISCAL YEAR

1976

Table 0-2. PERCENTAGE FUNCTIONAL DISTRIBUTION OF FEDERAL
AIDS TO STATE AND LOCAL GOVERNMENTS

Natural resources, environment, and
energy
Agriculture
Commerce and transportation
Community and regional developmentEducation, manpower, and social
services
Health. .
.
.
.
Income security
Revenue sharing and general purpose
fiscal assistance
. . .
Other
Total

1951

1956

1961

1966

1971

1
4
19
*

1
10
20
1

2
5
37
3

2
3
31
9

3
2
17
10

6
1
12
8

10
8
56

13
4
48

10
4
36

17
10
26

21
15
30

19
16
22

3
1

2
1

1
1

100

1976

*LCM than 0.5%.

The structure of the grant system has also changed significantly in
recent years. Grant programs were originally set up to meet specific
categories of national needs, and Federal controls were imposed to
insure that funds were used to satisfy those needs. As the grant system
grew, other programs were established to meet needs as perceived by
other sponsors. While these "categorical" grant programs were often
beneficial, the uncoordinated nature of the resulting system created
many problems, including:
• Excessive Federal administrative requirements.
• Rigid funding and organizational arrangements that were unresponsive to changes in priorities.
• Unnecessary Federal limitations on the authority of State and
local elected officials.
• The creation of competitive and duplicative State and local
governmental institutions.
In the late 1960's and early 1970's, two forces merged to provide a
strong impetus for reform. First, many State and local governments
were experiencing fiscal difficulties, as the demand for higher levels
of public services escalated. The Federal Government responded with
large increases in aid through categorical grant programs. While this
relieved much of the fiscal pressure on these governments, it aggravated the problems inherent in the categorical grant structure.
Simultaneously, a strong interest developed in better defining the
appropriate functional responsibilities of different levels of government
and in distributing decisionmaking authority accordingly. The Federal
Government began an effort to differentiate those programs that
clearly require direct national involvement from those which can
be better administered at the State and local level.
As a result, during recent years the expansion of grant expenditures
has been accompanied by continued reform efforts. These efforts have
borne fruit, resulting in significant improvements in grant programs
and their delivery mechanisms.

SPECIAL ANALYSES

239

REFORM OF THE GRANT SYSTEM

Efforts to reform the grant system have focused on four basic
approaches:
• Decentralization of program management functions to Federal
field officials;
• Simplification of Federal grant administrative requirements;
• Maximum possible sharing of planning and management functions with State and local governments; and
• Consolidation of overlapping Federal grant programs.
The decentralization of Federal management functions has focused
on standardizing the Federal field structure into a system of 10
administrative regions, and the creation of a Federal Regional Council
in each regional headquarters city. This enables State and local officials to work more closely with the Federal authorities who sit on the
councils, and facilitates coordination among Federal agencies at the
regional level. Most Federal assistance agencies now not only share
common geographic boundaries, they also have developed common
services arrangements, procedures for multiagency funding of applications, and improved techniques for responding to the needs of
States and localities on an interagency basis.
The simplification of Federal administrative requirements for grants
has been carried out through issuance of Government-wide standards
and selected reductions in grant application and reporting requirements. The recently enacted Joint Funding Simplification Act of
1974 should further this process. Joint funding, which until recently
had been carried out on a trial basis, simplifies funding and other procedures in cases where a grantee receives assistance from two or more
different agencies or programs within one agency.
The budget includes a number of programs aimed at increasing the
abilities of State and local governments to plan and manage federally
assisted activities. Almost $600 million was spent by the Federal
Government in 1974 toward strengthening the program management
capability of State and local governments. This was done primarily
through grants-in-aid, but also through technology transfer and
technical assistance. A 16% increase in this effort is projected for 1976.
In addition, new efforts will be made to coordinate the various agency
programs into a more coherent overall Federal strategy for strengthening policy management capability.
A significant amount of already enacted legislation consolidates
programs and delegates decisionmaking authority and responsibility
to recipients. General revenue sharing provides a broad foundation
for these efforts. Now in its third year, this program distributes
Federal funds to virtually all State and local governments with
minimal restrictions. The proposed renewal would extend the program
through 1982 in essentially its current form. The constraint on a
jurisdiction's maximum per capita allocation would be eased, and
present reporting and public participation provisions would be
improved.

240

THE BUDGET FOR FISCAL YEAR

1976

Table 0-3. GENERAL REVENUE SHARING (in billions of dollars)

Fiscal year

Current iprogram
Entitlements
enacted

1972
1973
1974
1975
1976
Transition quarter
1977
1978

2.6
5.6
6.1
6.2
6.4
1.7
1.7

Total

30.2

Outlays
estimates

Fiscal year

Proposed re
Entitlements

Outlays

6.6
6.1
6.2
6.3
1.7
3.3
.1

1977
1978
1979
1980 _ _
1931
1982
1983

4.8
6.6
6.8
6.9
7.1
7.2

3.2
6.6
6.8
6.9
7.1
7.2
1.6

30.2

Total

39.4

The community development grant program begins its first full year
of operation in 1976. This program replaces seven categorical grant
and loan programs, including urban renewal and model cities. The
bloc grant approach permits local governments greater flexibility in
responding to unique local needs and priorities. Funds are distributed
among local governments in both urban and rural areas according to a
formula based on objective measures of need. To insure a smooth
transition, localities that received disproportionate assistance under
the seven phased-out programs are eligible to receive allocations in
excess of their formula share for a limited period under a declining
"hold-harmless" provision.
Recent amendments to the Economic Development Administration
(EDA) authorizing legislation will allow the States more flexibility in
using a portion of their EDA funds. Money for this new program will
be allocated according to a formula based on previous levels of funding,
and may be used by the States to supplement grants to local governments or to initiate eligible new projects.
The Rural Development Act of 1972, is being administered in a
manner supportive of the plans and priorities of State and local
governments. The recommended 1976 level of funding for business
and industrial development loans is $300 million. In addition, funding
levels of $600 million in loans and $160 million in grants for water,
sewer, and other community facilities are proposed. These funds are
allocated among the States on the basis of rural population.
The Comprehensive Employment and Training Act oj 1973 (CETA)
is a major advance toward the goal of permitting substantial local
discretion in manpower program design and resource allocation
decisions. Under the former manpower programs (Manpower Development and Training Act and title I of the Economic Opportunity Act),
most activity was conducted through some 10,000 direct Federal
contracts. In comparison, CETA provides for grants to about 400
States and localities to use in accord with their own analysis of area
program needs. Funds are distributed through a formula based on
prior-year funding, unemployment level, and number of low-income
individuals. This approach offers at least three key advantages:

SPECIAL ANALYSES

241

(1) local elected officials will be accountable to their citizens for
program choice and performance;
(2) broad national priorities can be applied in a meaningful way to
local situations; and
(3) stable local manpower programs will permit a better tracking of
their effectiveness.
The National Mass Transportation Assistance Act of 1974 changes the
basic concept of Federal support for mass transit. The act provides
contract authority of $11.8 billion to be available through 1980. Of
this total, $7.8 billion is earmarked for existing Federal assistance
programs. The remaining $4.0 billion will be distributed by formula
among State and local governments to divide as they see fit between
capital expenditures and operating subsidies. The formula is based on
each urbanized area's relative population and density. Funds can be
used to cover up to 80% of project construction costs. When used for
transit operating subsidies, Federal funds must be matched by
equal subsidies from recipient governments.
The Education Amendments of 1974 consolidate several programs
into two groups. A new educational support and innovation program
consolidates four categorical programs (supplementary educational
centers, dropout prevention, health and nutrition, and aid to State
departments of education), giving recipients more discretion in the
allocation of resources among the programs. Similarly, the libraries
and instructional resources program consolidates the school library
program, the guidance and instructional resources program, and the
equipment program of the National Defense Education Act. The
authorization provides that these consolidations will take place only if
funds for these programs are appropriated 1 year in advance and at
required levels.
In 1976, the nonhighway programs of the Appalachian Regional
Commission will continue to undergo changes, providing greater
flexibility for the Commission in meeting the diverse problems and
needs of A.ppalachia. The new approach allows the Appalachian States
to determine for themselves the best mix of investments for meeting
the changing needs of the region. State involvement will be increasingly emphasized in the planning, budgeting and program management activities of the Commission.
Law enforcement assistance grants and waste water treatment
grants both involve State and local officials in planning and monitoring
functions. Grant outlays for LEAA will rise 8% to $754 million in
1976. Waste water treatment grants will leach $2.5 billion, about the
same level as 1975.
T H E IMPACT OF FEDERAL AID

Federal aid has become an increasingly important factor in the
finances of all levels of Government. In 1976, Federal grants will
constitute 1.6% of total Federal outlays, or 22% of budget outlays for
domestic civil purposes. In 1965, grants were only 9% of the budget.
Federal aid has also increased as a percentage of State and local
governmental expenditures, growing from 15% to 22% during the
same period.

242

THE

BUDGET FOR FISCAL YEAR

1976

Table 0-4. IMPACT OF FEDERAL GRANT OUTLAYS ON GOVERNMENTAL
EXPENDITURES
Federal aid
Fiscal year

1960
1965
1970 _._.
1971.
1972
1973._
1974
1975 estimate.
1976 estimate.
1
3

Amounts —
(millions)

$7,040
10,904
23,954
29,849
35,940
43,963
46,040
52,649
55.632

As a percent of—
Total
Federal
outlays
7.6
9.2
12.2
14.1
15.5
17.8
17.2
16.8
15.9

Domestic
Federal
outlays 1

State-local
expenditures 3

15.9
16.6
21.1
22.7
23.8
26.1
24.7
23.6
22.3

14.7
15.4
19.1
21.1
23.0
25.2
23.6
23.3
22.2

Defined for this purpose as excluding national defense and international programs.
As defined in the National Income Accounts.

The influence of Federal aid is substantially greater than the figures
alone indicate. Many grant programs are intended to encourage innovation by State and local governments by testing a new concept's
validity. Other programs restrict States by requiring them to establish
and maintain specific agencies, though many of these provisions are
being phased out. Most importantly, many programs require the
recipient government to match Federal aid funds with its own resources. In the last few years, State and local governments have
allocated about 10% of their own revenue to match Federal grant
moneys. Broad-based formula grants generally reduce or eliminate
matching requirements, thereby freeing resources to be used according
to State and local priorities.
Federal aid is also provided through two types of tax expenditures
that aid State and local governments. First, the exclusion of interest
on State and local securities from Federal taxable income permits these
jurisdictions to borrow at reduced interest rates. The exclusion will
reduce Federal receipts by approximately $4.8 billion in 1976, and will
subsidize State and local borrowing by a somewhat smaller amount.
Second, the, deducibility of most State and local taxes permits taxpayers to offset part of these taxes with a reduced Federal income tax
liability. Hence, a State or locality can raise a dollar of revenue with
significantly less than a dollar net cost to its taxpayers. The receipts
foregone by the Federal government are estimated to be $0.8 billion
for gasoline taxes, $5.3 billion for property taxes on owner-occupied
homes, and $10.0 billion for other non-business State and local taxes.

SPECIAL ANALYSES

243

(There is no tax expenditure associated with taxes that businesses pay
to States and localities, because these are normal business expenses.)
Federal aid on a per capita basis varies widely among regions, and
even among States in the same region. The thinly populated Western
States traditionally rank high because of highway construction grants
and shared revenues from Federal land holdings. For example, the
Rocky Mountain States have the lowest regional population density,
extensive Federal land holdings, and, until recently, the highest per
capita aid.
Table 0-5. PER CAPITA DISTRIBUTION OF GRANTS, SELECTED
FISCAL YEARS
Federal region i

I—Maine, Vermont, New Hampshire, Massachusetts,
Connecticut, Rhode Island
II—New York, New Jersey, Puerto Rico, Virgin Islands
III—Virginia, Pennsylvania, Delaware, Maryland,
West Virginia, District of Columbia. _ _
IV—Kentucky, Tennessee, North Carolina, South
Carolina, Georgia, Alabama, Mississippi, Florida
V—Illinois, Indiana, Michigan, Ohio, Wisconsin,
Minnesota
VI—Arkansas, Louisiana, Oklahoma, New Mexico,
Texas
VII—Iowa, Kansas, Missouri, Nebraska
VIII-Colorado, Montana, North Dakota, South
Dakota, Utah, Wyoming
IX—Arizona, California, Nevada, Hawaii, other
territories
X—Idaho, Oregon, Washington, Alaska
United States

Percent
change
1969-74

1969

1971

1973

1974

$102
$102

103

$144
159

$202
235

$231
254

126
147

147

220

223

137

101

142

200

203

101

105

172

184

139

111
88

145
117

209
168

206
161

86
83

136

178

251

242

116
117

168
172

228
267

226
258

95
121

141

212

215

117

1
These are not the same regions as those used for National Income Account computations.
Source: "Federal Aid to States," Department of the Treasury; and "Governmental Finances
in 1973-74," Bureau of the Census. These reports provide additional information concerning State
distribution of Federal grants.

This effect has diminished in recent years, however, as human
resources programs have grown relative to physical resources programs. Further, the addition of general revenue sharing has tended to
equalize per capita figures among the regions. Region VIII, which had
per capita grants 37% above the national average in 1969, now has
grants only 13% over the average, while region V has risen from 22%
below the average to only 14% below. Region II has experienced the
most rapid growth during this period.

244

THE BUDGET FOR FISCAL YEAR 1976
Table 0-6. THE IMPACT OF FEDERAL GRANTS ON SMSAs
(in millions of dollars)
1974

National defense
Natural resources, environment, and energy:
Environmental Protection Agency
Other
Agriculture:
Distribution of surplus commodities
Other
Commerce and transportation:
Highways
Airports
Urban mass transportation
Washington metropolitan area transit authority
Other
Community and regional development:
Appalachia
Community development grants
Model cities
Urban renewal
Community Services Administration
_'
Other
Education, manpower, and social services:
Elementary and secondary education
Vocational education
Rehabilitation services
Social services
Comprehensive manpower assistance
Emergency employment assistance
Unemployment trust fund
Other
Health:
Health services
Alcohol, drug abuse, and mental health
Health resources
Medical assistance
Other
Income security:
Commodity distribution
Food and nutrition service
Public assistance
Housing payments
Unemployment trust fund
Revenue sharing and general purpose fiscal assistance:
General revenue sharing
Other
Other functions:
Law enforcement assistance
Other
Energy tax equalization payments
Total aids to urban areas

1975

1976

1,217
192
140
208

1,822
220

1,858
235

96
131

2
138

2,589
194
346
170
8

2,624
232
714
185
12

2,783
288
994
182
12

112
443
904
502
449

130
225
265
898
369
464

130
1,300
218
898
281
468

1,356
501
868
1,103
852
597
310
1,220

1,536
555
1,051
1.467
1,832
58
373
1,475

1,782
568
1,076
1,182
1,738

371
266
419
3,567
53
446
2,395
4,019
837
366

419
432
502
4,039
54
287
3,322
3,507
980
564

4,274
301

4,323
429

369
402
435
4.387
67
24
3,397
3,458
1,078
517
4,410
456

560
17

612
65
350

662
88
1,400

32,214

36,666

356
1,285

38,974

In addition, an important qualitative shift has been taking place in
Federal grants—a greater share is going to urban areas. The American
population is becoming increasingly urban; today, over 70% of the
population lives in the 265 standard metropolitan statistical areas
(SMSA's). About $39 billion or 70% of Federal grants will be spent
in or directly affect these SMSA's in 1976. This is an increase of $19
billion, or 94%, over the level provided to urban areas in 1969.

SPECIAL ANALYSES

245

FEDERAL STATISTICS ON GRANTS TO STATE AND LOCAL
GOVERNMENTS

The Federal Government produces three major statistical series for
Federal aid to State and local
governments—the national income
accounts grants-in-aid series,1 the Federal payments (Census) series,
and the budget series exhibited in this special analysis. The budget
series is designed to provide a comprehensive picture of Federal aid,
focusing on programs that are financed but not directly administered
by the Federal Government. The Census and NIA series are parts of
broader statistical concepts encompassing the entire economy, and as
a consequence they define Federal grants somewhat more narrowly
than the budget series. They both omit the following items which the
budget series includes:
• Federal aid to the governments of Puerto Rico and U.S.
territories;
• Payments in-kind, primarily commodities purchased by the
Department of Agriculture and donated to the school lunch and
other nutrition programs;
• Food stamp payments, which are similar in nature to public
assistance grants but are administered somewhat differently;
and
• Payments to private, nonprofit entities (such as manpower
training programs %and nonprofit hospitals) which operate under
State auspices or within a State plan.
Table 0-7. THREE MEASURES OF FEDERAL AID TO STATE AND LOCAL
GOVERNMENTS, 1965-73 (in billions of dollars)
1965

1968

Budget (Special 0)
Less principal exclusions:
Agricultural commodities
Food stamps
Geographical exclusions
Plus payments for research
All other, net

10.9

18.6

-.4
__*
-.3
.8
*

-.5
-.2
-.3
1.1
-.7

Federal payments (Census)
Less low-rent public housing
All other, net

11.1
11.1
-.2
.1

18.1

Grants-in-aid (national income accounts)

10.9

1971

29.8
6

1972

35.9

1973

44.0

-1." 5

-.6

-.5

-1.9

-2.1

4
i! 4
-i. 2

-.4
1.1
-.5

-.6
1.2
-.3

27. 5
>5
—. 2

33.6

-.3
*

41.7
-1.0

17.8

26.8

32.9

-.7
*

-.5
40.2

* Lets than $50 million.

The only major group of payments which the budget definition of
grants excludes but Census and the NIA series include is payments for
research conducted by public universities. The budget series excludes
these payments because they are considered to be largely a purchase
of services for the Federal Government rather than aid for State programs. Since both Census and the NIA series focus on cash payments
to State and local governments, they count these as grants. The one
major outlay included in the budget and Census definitions but ex1

Special Analysis A of this volume contains additional information on the NIA grant series.

246

THE BUDGET FOR FISCAL YEAR 1976

eluded from the NIA series is payments for low-rent public housing,
which the NIA count as purchases by the Federal Government rather
than as grants.
There are other minor differences in the coverage of the three series.
The series also define functions such as health and welfare along
different lines.
Table 0-7 illustrates the differences among these series, and demonstrates the growing divergence between the budget series and the
other two. This divergence is due primarily to the growth of the food
stamp program, which increased from $248 million in 1969 to $2.8
billion in 1974.
Table 0 - 8 . FEDERAL AID TO STATE A N D LOCAL GOVERNMENTS »
(outlays in millions of dollars)
Agency and program

National defense:
Department of Defense—Military:
Civil defense shelters andfinancialassistance
Construction of Army National Guard centers
Other..

Functional
code

051
051
054

1974
actual

1975
estimate

1976
estimate

32
33

40
33
*

43
40

301
302
302
306

97
8
26
18

88
10
31
19

77
11
31
17

302
301
301
303
303
303
306
305
304
301
301

106
1
7
151
54
5

161
6
8
150
70
10

196
4
7
160
72
11

5
1.623
31
3

8
2,429
37
5

7
2.478
50
3

2,137

3,031

3,123

30
83
162
234
2

35
96
178
160
2

36
106
185
3

511

470

330

Total, national defense
International affairs and finance:

East-West Cultura 1 and Technical Interchange Center. 153
Total, international affairs and finance
Natural resources, environment, and energy:

Department of Agriculture:
Watershed planning and flood prevention
Resource conservation and development
Forest Service
Department of Commerce: NOAA
Department of the Interior:
Bureau of Land Management (shared revenue)
Bureau of Reclamation
Office of Water Research and Technology.
Land and water conservation fund
Fish and Wildlife Service
National Park Service
Bureau of Mines
_
Energy Research and Development Administration
Environmental Protection Agency
Tennessee Valley Authority (shared revenue)
Water Resources Council
_
Total, natural resources, environment, and energy.

•

Agriculture:

Animal and Plant Health Inspection Service
Cooperative State Research Service
Extension Service
Commodity Credit Corporation
Agricultural Marketing Service
Total, agriculture
See footnotes at end of table.

352
352
352
351
352

SPECIAL ANALYSES

247

Table 0-8. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i - C o n .
(outlays in millions of dollars)

Agency and program

Functional
code

Commerce and transportation:
Department of Agriculture: Housing
401
Department of Commerce:
Minority business development
403
State marine schools
406
Department of Housing and Urban Development:
Urban transportation
404
Department of Transportation:
Grants-in-aid for natural gas pipeline safety
407
State boatiiig safety assistance
406
Grants-in-aid for airports
405
Highway beautification
404
Highway trust fund
404
Other highway aid
404
National Highway Traffic Safety Administration. __ 404
Federal Railroad Administration
404
Urban Mass Transportation Administration
404
Washington Metropolitan Area Transit Authority
404

1974
actual

1975
estimate

1976
estimate

3
*

5
*

1
4
243
23
4.361
35
93

2
6
360

348
170

2
6
290
48
4,395
49
83
2
717
185

4,682
47
84
15
999
182

5,288

5,794

6,435

452
453
452

286
107

333
220
1

333

451
452

34
*

50
6

452
452

202
38

217
37

203
38

99
466
80
136
1,205

225
107
279
75
140
1,197

1.300
60
229

44
4

41
4

1,197
239
3
3

1
622

1
457

1
347

3,324

3,390

4,204

1,665
10
529
202
43
569
68
137

1,887
23

2,189
23
170
121
55
646
39
108

Total, commerce and transportation

Community and Regional development:

Funds appropriated to the President:
Appalachian development
Disaster relief
Public works acceleration
Department of Agriculture:
Rural water and waste disposal grants
Rural development grants
Department of Commerce:
Economic Development Administration
Regional Action Planning Commissions
Department of Housing and Urban Development:
Community development bloc grants
Comprehensive planning grants
_._
Model cities.
Open space land
Basic water and sewer
Urban renewal
-Liquidating programs
Other...
Department of the Interior: Bureau of Indian Affairs..
Joint Federal-State Land Use Planning Commission for
Alaska.
Community Services Administration

451
451
451
451
451
451
451
451
452
452
451

Total, community and regional development

175
1

Education, manpower, and social services:

Department of Health, Education, and Welfare:
Elementary and secondary education
Indian education
School assistance in federally affected areas
Emergency school aid
_
_
Education for the handicapped._
Occupational, vocational, and adult education
Higher education
Library resources
See footnotes at end of table.

501
501
501
501
501
501
502
503

587
205
38
631
40
153

248

THE BUDGET FOR FISCAL YEAR 1976

Table 0 - 8 . FEDERAL AID TO STATE AND LOCAL GOVERNMENTS >—Con.
(outlays in millions of dollars)
Agency and program

Functional
code

Education, manpower, and social services—Continued
Department of Health, Education, and Welfare—Con.
Educational development
503
Innovative and experimental programs _
503
Assistant Secretary for Education
502
Work incentives
504
Social services
506
Assistant Secretary for Human Development:
Child Development
_
501
Rehabilitation services__
_
_ _ _ 506
Allied Services
__
506
Department of the Interior: Indian education programs. 501
Department of Labor:
Comprehensive manpower assistance
504
Community service employment for older Americans _ 50 4
Temporary employment assistance
504
Emergency employment assistance
504
Grants for employment services
504
Unemployment trust fund (manpower training)
504
Corporation for Public Broadcasting
503
National Foundation on the Arts and the Humanities.. 503
Community Services Administration _
501

Total, income security
See footnotes at end of table*

1976
estimate

36
6
12
296
1,576

130

323
1,471

297
1,956

409
831

436
1,066

1,137

2.318

598
60
374
48
8
17

2.443
10
350
58
64
450
62
17
4

8,721

10,945

10,404

553

551
553

530
51

598
41

527
52

551
552
551

302
558
5.818

491
669
6,589

457
580
7,156

553

7,292

8,431

8,818

604
604
604
604

743
2.779
793

479
3,583
1,431

39
3,535
1,644
6

604
601

5.423
*

4,733

4.667

604
603

1,116
458

1,307
705

1.648
646

11,311

12,237

12,185

Total, health
Income security:
Department of Agriculture:
Agricultural Marketing Service (commodity distribution)
Food stamps
Child nutrition programs and special milk
Food donations
Department of Health, Education, and Welfare:
Public assistance
_
Special benefits for disabled coal miners
Department of Housing and Urban Development
(housing payments).
Department of Labor (unemployment insurance)

1975
estimate

197

Total, education, manpower, and social services. _
Health:
Special Action Office for Drug Abuse Prevention
Department of Health, Education, and Welfare:
Health Services Administration
Center for Disease Control
Alcohol, Drug Abuse, and Mental Health Administration
Health Resources Administration
Medicaid
Department of the Interior: Mining Enforcement and
Safety Administration
._.
_
Department of Labor: Occupational Safety and Health
Administration

1974
actual

465
1.072
5
28

650
74
429
70
15

SPECIAL ANALYSES

249

Table 0-8. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS L-Con.
(outlays in millions of dollars)
Agency and program

Veterans benefits and services:
Veterans Administration:
Aid to State homes..
Grants for construction of State nursing homes
Administrative expenses
Health manpower
Grants for State cemetaries
_

Functional
code

703
703
703
703
705

Total, veterans benefits and services _
Law enforcement and justice:
Department of Justice: Law enforcement assistance.. 754
Equal Employment Opportunity Commission
751
Legal Services Corporation
754
Total, law enforcement and justice
General government:
Department of the Interior:
Administration of Territories
_
806
Trust Territory of the Pacific Islands __
_
806
General Services Administration
804
Civil Service Commission (intergovernmental personnel
assistance)
806
Total, general government
Revenue sharing and general purpose fiscal assistance:
General revenue sharing
_
Federal payment to the District of Columbia (shared
revenue)
_
_
Forest Service (shared revenue)
Department of Defense: Civil (shared revenue)
Department of the Interior: internal revenue collections
for the Virgin Islands (shared revenue)
Department of the Treasury: tax collections for Puerto
Rico and the Virgin Islands (shared revenue)
Federal Power Commission (shared revenue)
Total, revenue sharing and general purpose fiscal
assistance

851

1974
actual

1975
estimate

21
4
]

25
5
1
22

25
6
1
30
5

637
2

698
2
42

754
4
65

639

742

823

17
63
1

16
70

15
92

100

122

6,106

6,176

6,301

254
119
3

852
852
852

187
115
3

852

852
852

196
*

329
*

336
*

6,624

6,876

7,030

500

2,000

52,649

55,632

Allowance for energy tax equilization payments
Total, grants and shared revenues

1976
estimate

46,040

230
121
4

"'Lessthan $500 thousand.
Grants unless otherwise specified. Excludes loans, which are shown separately in table O-9.

250

THE BUDGET FOR FISCAL YEAR 1976

Table 0-9. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS
(in millions of dollars)

Disbursements
Agency and program by function

1974
&CvU&l

Net outlays

1975
C8L1IX)&LC

1976
£ft*rl fflft TC

1974
ftCtllftl

1975
1976
Cff^l mfttC C111 Wkft%• C

Natural resources, environment, and
energy:
Department of the Interior: Reclamation loans

14.0

11.1

14.3

11.6

8.4

11.1

Total natural resources, environment and energy

14.0

11.1

14.3

11.6

8.4

11.1

Commerce and transportation:
Department of Transportation:
Right-of-way revolving fund....
Urban mass transportation

23.0
—.8

25.9
—.2

41.0
—.2

23.0
—.8

25.9
—.2

41.0
—.2

Total commerce and transportation
_

22.2

25.7

40.8

22.2

25.7

40.8

5.8

8.0

4.8

5.8

8.0

4.8

-3.0
843.4
24.0

-2.2
900.5
25.0

19.9
600.0

-8.3
-83.0
15.4

-6.6
50.0
16.0

11.4
50.0

152.0
.8

205.4
.8

247.4
.8

152.0
.8

205.4
.8

247.4
.8

1.023.0 1,137.6

872.9

82.6

273.6

314.4

.9
3.2

*
-1.9

.9
-1.6

.9
-2.0

-21.5

-28.2

-35.8

Community and regional development:
Department of Commerce: Economic development assistance
Department of Housing and Urban
Development:
Revolving fund (liquidating programs;
Urban renewal
Public facility loans
District of Columbia:
Loans for capital outlay
Advances to stadium sinking fund.
Total community and regional
development
Education, manpower, and social
services:
Department of Health, Education,
and Welfare:
Higher education
Higher education facilities
Department of Housing and Urban
Development: College housing
Total education, manpower,
and social services
Health:
Medical facilities

Total health
Income security:
Department of Housing and Urban
Development: Low-rent public
housing
Total income security
See footnotes at end of table.

*
3.3

.9
3.2

3.3

4.1

-23.4

-28.9

-36.9

25.7

66.3

55.0

—2.0

13.3

10.0

25.7

66.3

55.0

—2.0

13.3

10.0

622.7

675.0

650.0

21.0

622.7

675.0

650.0

21.0

SPECIAL ANALYSES

251

Table 0-9. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS—Con.
(in millions of dollars)
Disbursements
Agency and program by function

Net outlays

1975
estimate

1976
estimate

2.6

4.0

2.1

2.6

4.0

2.1

2.6

4.0

2.1

2.6

4.0

2.1

Revenue sharing and general purpose
fiscal assistance:
District of Columbia: Repayable
advances

40.0

Total revenue sharing and general purposefiscalassistance..

40.0

General government:
Administration of territories
Total general government

Total
* Lett than $500 thousand.

1974
actual

1,714.3 1,963.8 1,679.2

1974
actual

115.3

1975
1976
estimate estimate

336.1 381.5

SPECIAL ANALYSIS P
FEDERAL RESEARCH AND DEVELOPMENT PROGRAMS

Total Federal obligations for conduct of research and development
(R. & D.) in 1976 will increase by 15% over 1975, and outlays by 11%.
Specific amounts for conduct of R. & D. and for related facilities in
1974,1975, and 1976 are shown in table P - l .
Table P - 1 . TOTAL FEDERAL F U N D I N G FOR CONDUCT OF R. & D . AND
RELATED FACILITIES (in billions of dollars)
Obligations
1974

1975

Conduct of R. & D
R. & D. facilities

17.4
.9

18.8
1.0

Total

18.3

19.8

Outlay*
1976

21.6
1.0
22.6

1974

17.5
.7
18.2

1975

1976

18.6
.9

20.7
1.0

19.4

21.7

Specific amounts for each of the broad program areas of R. & D
are shown in table P-2.
Table P - 2 . CONDUCT OF R. & D . B Y MAJOR PROGRAM AREA
(obligations in billions of dollars)
Program

Conduct of R. & D:
Defense^
Space 2
Civilian (other than space)
Total3

1974

1975

1976

9.0
2.5
5.9

9.5
2.7
6.6

11.4
2.9
7.3

17.4

18.8

21.6

1
Includes military related programs of the Energy Research and Development Administration—
transferred
from the AEC.
2
Includes all NASA programs except aeronautical research, space applications (e.g., pollution
monitoring, communications, earth observations), energy technology application, and technology
utilization,
which are classified under civilian programs.
3
These data do not reflect amounts of Federal support for private sector R. & D. through tax
expenditures and allowances to defense and space contractors for independent R. & D. Tax expenditures, discussed by Special Analysis F, are estimated to have grown from about $0.60 billion to $0.65
billion during the period 1974 to 1976. Independent R. & D. allowances are estimated at approximately
$0.4 billion per year during this same period.

• Defense.—Defense R. & D. obligations will increase by 20%
for R. & D. efforts in both strategic and tactical weapons systems.
Major increases include:
—further development of strategic weapons systems, including
the Trident long range ballistic missile and submarine system
and the B - l strategic bomber; and
—development of an advanced tactical air combat fighter for the
Navy and the Air Force.
. 252

•SPECIAL ANALYSES

253

• Space.—The increase of $0.2 billion in R. & D. obligations for
the space program in 1976 will primarily provide for the buildup
in development of the manned space shuttle system which is
designed to enhance operational capabilities and reduce costs of
space operations in the 1980's and beyond.
• Civilian.—While R. & D. funding increases in the civilian area,
totaling $0.8 billion in 1976, will be directed to a number of
pressing needs such as food and transportation, the largest
increase is for continued orderly acceleration in the energy
R. & D. effort.
The 1976 direct energy R. & D. program includes $1,837 million in
obligations and $1,663 million in outlays for conduct of R. & D. and
related facilities. These represent increases of 10% in obligations and
36% in outlays over 1975. The program is designed to accelerate
the development of technologies needed to achieve and maintain a
capability to utilize more fully domestic energy resources within
acceptable environmental and economic costs.
The funds for energy R. & D., shown in table P-3, will support a
broadly based and balanced development effort on technologies for
energy supply, environmental control, and conservation. In addition
to direct energy R. & D., supporting programs will provide essential
basic information on materials, techniques, and fundamental processes
related to energy development, and on environmental impacts of
energy systems.
Table P-3. FEDERAL ENERGY RESEARCH AND DEVELOPMENT PROGRAM
(in millions of dollars)
Obligations
Program area

Direct energy R. & D.:
Fossil energy
Solar and geothermal
Conservation. _
Nuclear energy
Environmental control
Total direct

Support program:
Environmental effects
Basic research
Total support

1974

1975

Outlays
1976

1974

1975

1976

110
45
39
756
66

435
102
86
942
103

123
88
1,102
83

90
19
27
629
58

253
54

825
36

380
116
83
991
94

1,016

1,669

1,837

823

1,222

1,663

138
175

264
233

273
250

120
156

173
194

241
211

313

497

523

275

367

452

440

Longer term trends in Federal support of K. & D. by major program
area are reflected in figure P - l .

580-700 O - 75 - 17

254

THE BUDGET FOR FISCAL YEAR

1976

Conduct of Research and Development—Oblations

1967

1968

Fiscal Yeats

1969

1970

1971

1972

1973

1974

1975 1976
Estimate

Since 1967, civilian R. & D. programs have received the largest increase in Federal funding, growing from obligations of $3.3 billion in
1967 to $7.3 billion in 1976, or 120%. Federal funding for defense related R. & D. has increased by $2.8 billion or 33% since 1967, while
space R. & D. programs decreased by $1.8 billion or 38%. Thus, the
share of the total Federal R. & D. obligations devoted to civilian programs has grown from 20% in 1967 to 34% in 1976.

SPECIAL ANALYSES

255

AGENCY RESEARCH AND DEVELOPMENT PROGRAMS
More than 99% of Federal R. & D. is supported by 14 major
departments or agencies. Table P-4 summarizes obligations and outlays for conduct of R. & D. by these agencies.
Table P-4. CONDUCT OF RESEARCH AND DEVELOPMENT BY MAJOR
DEPARTMENTS AND AGENCIES
(in millions of dollars)
Obligations
Department or agency

Defense-Military functions
National Aeronautics and Space Administration
Energy Research and Development Administration
Health, Education, and Welfare
National Science Foundation
Agriculture
Transportation
Interior
Environmental Protection Agency
Commerce
Veterans Administration
Nuclear Regulatory Commission
Housing and Urban Development
Justice
All other

1974
actual

Outlays

1975
1976
estimate estimate

1974
actual

1975
1976
estimate estimate

8,396

8,833

10,608

8,791

8,913

9,997

3,024

3,327

3,526

3,181

3,107

3,390

1.475
2,286
556
384
370
198
177
181
87
44
65
37
127

1,893
2,092
619
428
368
303
287
211
102
59
58
67
135

2,346
2.285
680
468
402
315
300
230
102
96
65
45
134

1,475
1,888
571
377
328
202
163
177
80
42
58
44
143

1,893
2,176
573
428
372
259
230
204
96
55
56
58
155

2,346
2,223
630
470
379
312
304
220
97
88
61
45
138

Total

17,408

18,780

21,602

17,522

18,575

20,698

Total, conduct of research
Total, conduct of development..

7,163 7,545
10,245 11,235

8,256
13,346

6,783
10,739

7,435
11,140

8,188
12,511

Table P-5 separately aggregates obligations and outlays by major
agency for the construction and renovation of facilities used in the
conduct of R. & D. and for acquisition of major items of equipment.
Table P-5. RESEARCH AND DEVELOPMENT FACILITIES BY MAJOR
DEPARTMENTS AND AGENCIES
(in millions of dollars)
Department or agency

Energy Research and Development
Administration
Defense-Military functions
National Aeronautics and Space Administration
National Science Foundation
Health, Education, and Welfare.
Transportation...
Agriculture
_
Commerce..
Environmental Protection Agency
All other.
Total facilities

Obligations
1974
actual

Outlays

1975
1976
estimate estimate

1974
actual

1975
1976
estimate estimate

485
169

468
228

503
225

350
165

427
183

463
238

98
10
46
13
9
12
1
17

154
17
47
25
16
10
6
30

105
35
30
14
10
6
2
28

75
14
33
35
6
12
11
16

100
14
47
28
12
9
12
27

108
27
45
24
9
4
5
31

860

1,001

959

717

862

955

256

THE BUDGET FOR FISCAL YEAR 1976

There is no major change in the overall funding of R. & D. facilities
between 1975 and 1976. However, large single facilities or major equipment acquisitions may cause funding fluctuations from year to year
for individual agencies. This is true, for example, of the relatively large
drop in obligations for NASA in 1976 following the initiation of several
large space shuttle R. & D. facilities in 1975 and the relatively major
increase for the National Science Foundation in 1976 which includes
the one-time procurement of aircraft for the U.S. Antarctic research
program.
Facilities and equipment amounts shown in table P-5 for the
Department of Defense and NASA are somewhat understated because
some items to be funded through R. & D. contracts with industry and
other non-Federal institutions are not included. Such items would be
included in "conduct of R. & D." in table P-4.
The content and major thrusts of the agency programs are described
below.
DEPARTMENT OF DEFENSE—MILITARY

Department of Defense obligations in 1976 for research and development, including construction of R. & D. facilities and the cost of
associated military personnel, will increase by $1,772 million over the
1975 level, reaching a total of $10,833 million. Obligations for the
conduct of research will increase by $232 million to a level of $2,011
million, and obligations for development programs will increase by
$1,543 million to a level of $8,596 million.
The increased funding levels will offset the effects of inflation on
development costs of major weapons systems and will permit real
increase in R. & D. effort in both strategic and tactical weapons programs. In the strategic area, major increases are provided for the
continued development of the Trident long range submarine and
missile system and- the B-l strategic bomber. Efforts will also be
increased on ballistic missile warhead and accuracy improvements
and on options for possible future deployment of a new intercontinental
ballistic missile system for silo or mobile basing. The development of
a strategic cruise missile system which can be launched from either
air or subsurface platforms will continue. In the strategic defensive
area, the site defense of Minuteman program will be reoriented to
emphasize subsystem development and antiballastic missile technology
efforts will be strengthened to guard against technological surprise
and to provide future deployment options if they are needed.
In the tactical forces area a major increase is planned for development of an advanced air combat fighter for the Navy and the Air Force.
This program is designed to provide a low cost aircraft system to complement the sophisticated and costly aircraft now being deployed by
our tactical air forces. Increased efforts are also programed by the Army
for attack and utility helicopters, low altitude air defense missile
systems, and counterartillery radars. The Navy will continue to
emphasize antisubmarine warfare and fleet air defense missile systems
and will increase funding for development of antiradiation missiles.
The Air Force will increase development efforts on devices and systems to enhance its capability to penetrate enemy air defenses.
Increases are also provided for research and technology that are
necessary for improved systems in the future and for rapid response
to changing threats. Lasers, electron device technology, and night

SPECIAL ANALYSES

257

vision technology are areas receiving increased emphasis. Efforts will
also be directed toward achieving life cycle cost savings in the development of future military systems.
Table P-6. DEPARTMENT OF DEFENSE—MILITARY RESEARCH AND
DEVELOPMENT (obligations in millions of dollars)
Purpose and budget title

Conduct of R. & D.:
Research, development, test, and evaluation:
Military sciences
Aircraft and related equipment
Missiles 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
Other appropriations
Total conduct of R. & D.
Total conduct of research, included above
Total conduct of development, included above
R. & D. facilities
Total

1974
actual

1975
estimate

1976
estimate

418
1,660
2,071
585
648
418
1,612
584
401

424
1,621
2,126
524
668
469
1,852
719
430

476
2,114
2,477
622
664
564
2,186
1,072
432

8,396

8,833

10,608

1,780
6,616
169

1,780
7,053
228

2,011
8,596
226

8,565

9,061

10,833

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

The 1976 NASA budget—classified entirely as research and development provides for continuing programs in manned space flight,
space science, space applications, and aeronautics. The increase in 1976
obligations of $200 million for conduct of R. & D. reflects the
orderly buildup in the development and production of prototype
space shuttles designed to provide for economical manned access to
space in the 1980's.
In manned space flight, the next mission will be the Apollo-Soyuz
test project to rendezvous and dock U.S. and U.S.S.R. spacecraft in
1975, and then the Space Shuttle is planned for initial orbital flight in
1979. Today the United States relies on expendable rockets to launch
Earth orbiting and planetary spacecraft. The shuttle will reduce the
cost of operations in Earth orbit in the 1980's and beyond because it
is reusable and can recover satellites for repair and reuse.
The space science programs emphasize the exploration of the
solar system and the universe using unmanned spacecraft. Two
Pioneer spacecraft recently completed the first photographic examination of the planet Jupiter. Preparations continue on two Viking
unmanned orbiter/lander spacecraft scheduled for launch to Mars
in 1975 and to start the search for life on that planet in July
1976. Two Mariner spacecraft are being developed for the JupiterSaturn flyby missions scheduled for launch in 1977. An orbiter and
probe spacecraft are being developed to be launched to Venus in
1978 to initiate atmospheric investigation of that heavenly body.

258

THE BUDGET FOR FISCAL YEAR

1976

In addition to these planetary missions, development will continue
in 1976 on spacecraft to conduct high energy and ultraviolet astronomy
from earth orbit. The major astronomy emphasis is on the High Energy
Astronomy Observatories to be launched during 1977-79 to study
X-ray, and gamma-ray sources in the Earth's galaxy and distant parts
of the universe.
In the space applications program, NASA is launching, early in
1975, a second Earth resources technology satellite (LANDSAT)
to continue experiments on the utility of space gathered information
for agricultural, geologic, and other applications. Funds also are provided in the 1976 budget for a third Earth resources technology satellite. Development is proceeding on a new generation of satellites,
Tiros-N, to provide major improvements in weather forecasting, the
first of which will be launched in 1977. Work is continuing on a spacecraft, Heat Capacity Mapping Mission, to be launched in 1977 to
locate and map potential sources of geothermal energy. A new satellite,
Nimbus-G, is being developed for launch in 1978 to demonstrate the
capability of monitoring worldwide pollution from space. An additional satellite, Seasat-A, is being developed to be orbited in 1978 to
monitor ocean conditions.
Aeronautical research and technology will continue to emphasize
ways to reduce engine noise of existing aircraft and to improve the
performance, reduce the energy requirements, and mitigate undesirable
environmental effects of civil and military aircraft. Work will continue on clean, quiet, efficient propulsion systems for short takeoff
and landing aircraft.
Table P-7. NATIONAL AERONAUTICS AND SPACE ADMINISTRATIONRESEARCH AND DEVELOPMENT (in millions of dollars)
Program and type of activity

Conduct of R. & D.:
Manned space
flight
Space sciences...
Space applications
Space and nuclear research and technology
Aeronautical research and technology
Energy programs..
Supporting activities
Research and program management

1974
actual

1976
estimate

252
744

1,110
535
182
71
166
4
254
765

1,415
571
187
75
175
6
250
776

3,055
101
3,156

3,089
143
3,231

3,454
85
3,539

Conduct of research, obligations
Conduct of development, obligations

1,458
1,566

1,622
1,705

1,717
1,810

Total conduct of R. & D., obligations
R. & D. facilities, obligations

3,024
98

3,327
154

3,526
105

3,122

3,481

3,631

Total conduct of R. & D. budget plan
R. & D. facilities, budget plan
Total budget plan

Total obligations

1,000
650
175
66
168

1975
estimate

SPECIAL ANALYSES

259

Funds are also provided in the 1976 budget to develop new technology for future missions in space science and applications. The areas
of emphasis include improved materials, structures, propulsion,
electric power sources, communications and data handling systems.
ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION

Obligations of the Energy Research and Development Administration for conduct of R. & D. will increase from $1,893 million in 1975
to $2,346 in 1976, and obligations for related construction and equipment will total $503 million in 1976. The 1976 budget reflects increased emphasis on energy R. & D. while maintaining continued
support for military R. & D. and other basic and applied research
programs.
In fossil energy development, high priority will continue to be given
to coal liquefaction, gasification, and advanced combustion processes
in order to produce clean and efficient energ}^ from coal. Increased
funds are provided for the development of the means for producing
oil and gas from shale in its underground location, thus eliminating
the environmental problems associated with above-ground processing.
Efforts will continue on developing technologies for enhanced recovery
of oil and gas. Increases also are provided for research on basic coal
science, on advanced processes for clean gaseous and liquid fuels, on
materials for gasification and liquefaction processes, and on the basic
properties of hydrocarbons.
In solar energy, an accelerated research program will be conducted
to establish the economic viability of several important solar applications such as the heating and cooling of buildings, and wind energy
conversion. In geothermal energy, efforts will be continued to develop
the technological base necessary to stimulate the installation of
substantial electricity generating capacity by the middle of the next
decade. In advanced energy systems, investigations will be conducted
to improve the efficiency of electric generating plants through the use
of magnetohydrodynamics and other advanced power conversion
technologies.
Energy conservation R. & D. will be conducted to improve the
efficiency of electric power transmission, automotive power, and
storage systems. End-use energy conservation studies will be initiated
to develop new technologies for reducing the utilization of energy
particularly in commercial and residential buildings.
In nuclear energy, greater support is provided for the development of fusion power technology which has the long-range potential
advantages of plentiful and inexpensive fuel, inherent safety against
nuclear runaway, and minimal environmental impact. In fission reactor development, additional support is provided for the liquid metal
fast breeder reactor. Work on this fission technology will be increasingly oriented to the engineering requirements necessary to achieve
highly reliable, safe, and economic breeder powerplants. In addition,
efforts will be initiated on advanced light water breeder applications as
well as continuing R. & D. on gas cooled and molten salt breeder
reactor concepts. Increased support also is provided for nuclear materials
production technology to provide for process improvements to assure
efficient and safe operations and to develop more economical methods

260

THE BUDGET FOR FISCAL YEAR 1976

of nuclear materials production. Additional funds are provided for
advanced isotope separation technology which has the potential to
reduce the cost of isotopically enriched materials.
In national security, funds will be increased to continue the development and testing of nuclear weapons as well as development of
laser fusion technology which has both military and commercial power
applications. In environmental and safety research, increased support
is provided for the study of nuclear and fossil energy environmental
effects, developmental work on long-term management of radioactive
wastes, transportation methods and packaging of radioactive materials.
Basic and applied research programs will be expanded by $205
million over 1975. Increased funding will be devoted to biomedical
and environmental studies of the effects of energy production on
living systems; investigations in the physical sciences; and research
related to weapons technology and detection techniques.
Table P-8. ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATIONRESEARCH AND DEVELOPMENT (obligations in millions of dollars)
Program and type of activity

1974
actual

1975
estimate

1976
estimate

Conduct of R. & D.:
Fossil energy development:
Coal utilization
Petroleum and natural gas
Oil shale
Solar, geothermal, and advanced energy systems development:
Solar energy
Geothermal energy
Advanced energy systems
Physical research
Conservation:
Electric power transmission
Fuel economy
End-use conservation
Nuclear energy development:
Fusion power
Fissionpower
Naval reactor development
Space nuclear systems
Nuclear materials
Advanced isotope separation techniques
National security:
Weapons activities
Laserfusion
Nuclear materials security
Environmental and safety research:
Biomedical and environmental research
Waste management and transportation

70
8
3

188
17
3

289
23
8

4
6
4
253

9
14
12
281

57
28
23
313

2
3

6
10

12
17
3

53
272
154
26
45
3

85
370
167
27
51
12

120
409
186
31
65
24

412
37
4

443
41
6

495
54
11

104
12

130
20

153
25

Total conduct of R. & D

1,475

1,893

2,346

Total conduct of research, included above
Total conduct of development, included above

470
1,005

594
1,299

799
1,547

485

468

503

1,960

2,360

2,849

Research and development facilities
Total

SPECIAL ANALYSES

261

The ERDA budget for construction of R. & D. facilities in 1976
provides for obligations of $503 million. Included are $103 million for
initial site preparation and for long lead time hardware procurement
associated with the Clinch River breeder reactor demonstration
program; $81 million for continued construction of the fast flux
test facility in support of the liquid metal fast breeder reactor program;
$20 million for design and long-lead procurement for a clean boiler
fuel demonstration plant; $10 million for continued construction of a
high energy laser facility; $12 million to complete construction of the
heavy ion research facilities in support of the physical research program; and $8 million to start the design and construction of a Tokamak magnetic fusion test reactor for the fusion power research and
development program.
HEALTH, EDUCATION, AND WELFARE

Department of Health, Education, and Welfare (HEW) obligations in 1976 for the conduct of research and development will increase
by $193 million over the 1975 level, reaching a total of $2,285 million.
Obligations for facilities will be $30 million in 1976.
The largest share of the Department's R. & D. funds are devoted to
the biomedical area where, through the National Institutes of Health
(NIH), the Federal Government continues to provide almost twothirds of all U.S. R. & D. funds. R. & D. obligations by NIH for 1976
will increase by $73 million from $1,548 million in 1975 to $1,621 million
in 1976. The funds will support research on diseases affecting human
health, including cancer, heart, and lung diseases, sickle cell anemia,
aging, and venereal disease. Through other HEW components, preventive health care research is being pursued by investigation into infant and child health, new approaches to drug abuse treatment, new
pharmacological agents for the treatment and prevention of addiction
and on the general epidemiology of the drug problem; new ways to
treat, control, and prevent alcohol abuse; basic and chemical research
on the multiple causes of alcoholism; and development of new knowledge and approaches to the causes, diagnosis, treatment and prevention of mental illness. Additional health services research and development is being pursued through funding of demonstrations of health
maintenance organizations, family planning, and emergency medical
systems.
The Office of Education is expanding innovation and development
activities in the areas of vocational education and education of the
handicapped. The National Institute for Education supports research
in the areas of equality of education, essential skills education, education and work, dissemination of research information, and school
finance, productivity, organization and management.
Social services research will investigate the causes and possible
means of remedying poverty, the results of various income maintenance efforts, redistributive effects of social security benefits, and the
effects of various methods of health insurance financing on economic
security.
Table P-6 exhibits the departmental obligations and outlays by
agency.

262

THE BUDGET FOR FISCAL YEAR

1976

Table P-9. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARERESEARCH AND DEVELOPMENT (in millions of dollars)
Obligations
Program areas and
organizational units

1974
actual

Conduct of R. & D.:
Health, total
National Institutes of Health
Alcohol, Drug Abuse, and Mental
Health Administration
Food and Drug Administration. __
Center for Disease Control
Health Resources Administration.
Assistant Secretary for Health
Health Services Administration. _ _
Education, total
Office of Education
National Institute of Education..
Welfare, total
Office of Human Development
Social Security Administration
Office of the Secretary.
....
Social and Rehabilitation Service.
Total conduct of R. & D
Conduct of research, included
above
Conduct of development, included above

R. & D. facilities
Total

Outlays

1975
1976
estimate estimate

1974
actual

1975
1976
estimate estimate

2,046
1,730

836
548

1.897
1,621

1,640
1,389

1,911
1.636

1,896
1.622

155
44
41
56
9
12
130
54
76
110
70
19
19
2

123
46
39
52
14
13
120
49
70
136
62
33
29
12

122
52
45
31
15
12
255
175
80
133
62
30
29
13

127
20
36
43
11
12
161
64
97
88
64
19
2
3

135
22
41
53
10
13
137
55
82
128
68
33
19
8

128
25
44
53
13
12
193
108
84
135
63
30
32
11

2,286

2,092

2,285

1,888

2,176

2,223

1,872

1,700

1,752

1,516

1,776

1,752

414

392
47

533
30

372
33

400
47

472
45

2,332

2,139

2,316

1,921

2,223

2,268

NATIONAL SCIENCE FOUNDATION

National Science Foundation obligations for R. & D. will increase
from $619 million in 1975 to $680 million in 1976. In addition, $35
million will be obligated for facilities in 1976, an increase of $18
million over 1975. A higher level of support for basic science and for
research on selected domestic problems will be provided.
Basic science support will be increased by 13% concentrating
especially in those disciplines which relate most directly to long-term
energy development and economic growth, and those which have
experienced declining support in mission agencies, e.g., physical and
engineering sciences.
Under its national and special research programs and national
research centers, the Foundation supports large national facilities
such as the National Center for Atmospheric Research, four national
astronomy centers, and the academic oceanographic fleet and also
supports integrated research efforts such as the International Decade
of Ocean Exploration and the Antarctic Research Program. These
national and international programs will continue to emphasize
research to improve understanding of the physical environment
(earth, atmospheric, and oceanic species) as a means to improve
management of the environment.

SPECIAL ANALYSES

263

The $18 million in increased support for facilities will be used to
procure two ski-equipped aircraft for the U.S. Antarctic program.
DEPARTMENT OF AGRICULTURE

Obligations of the Department of Agriculture for the conduct of
research and development will increase from $428 million in 1975 to
$468 million in 1976. Obligations for facilities will be $10 million. The
major thrust of the Department's R. & D. effort will be toward
agricultural productivity: Improving the efficiency of meat animal
production; developing improved forage and rangeland to reduce the
use of grains in red meat production; developing additional vegetable
grains in red meat production; developing additional vegetable
sources of useable proteins; reducing genetic vulnerability to crop
diseases; and reducing food losses during transportation, storage and
marketing.
Increased emphasis also will be placed on protection of soil, water
and forest resources; and increasing the efficiency of energy use in the
agricultural sector of the economy. Environmental research will
include the further development of nonchemical means for controling
agricultural pests, and the development of information required for
the clearance of agricultural pesticides for use in cooperation with
the Environmental Protection Agency.
The Department of Agriculture, in cooperation with State and
private research organizations, will develop a national system designed to improve coordination in the planning, financing, and evaluation of agricultural research. The goal of such a system will be to
increase the overall efficiency and effectiveness of agricultural research.
In addition, new efforts will be made to improve the ability to forecast
agricultural trends to aid in production, marketing, and price setting
decisions. This will include developing methods for obtaining improved
data on the agricultural input, food processing and food marketing
industries, an economic analysis of alternative methods of predator
control, and an expanded survey of forest resources to implement the
recently enacted Forest and Rangeland Renewable Resources Planning Act. Current information also will be obtained on the nutritional
status and requirements of the American public through the implementation of a nationwide food consumption survey.
DEPARTMENT OF TRANSPORTATION

Obligations of the Department of Transportation for the conduct
of research and development will be $368 million for 1975 and $402
million for 1976. Obligations for related facilities will be $14 million
for 1976. Increased emphasis will be placed on socioeconomic aspects
of the Nation's transportation requirements and the achievement of
solutions for today's problems. More efficient utilization of existing
systems is an increasingly important goal—including cost reduction,
energy conservation, environmental protection, improved safety,
and reduced travel times.

264

THE BUDGET FOR FISCAL YEAR 1976

Urban mass transportation R. & D. will demonstrate improved
higher capacity, quieter, and lower polluting transit buses and continue development of advanced rail and personal rapid transit technology. Transit service and methods demonstrations will encourage
low-cost service innovations and regulatory actions to improve the
use of the current urban transportation systems. Expanded support
will be provided for innovative tunneling R. & D. particularly for use
in urban areas.
Highway research and development funding will continue to
strengthen cooperative programs with State governments to increase
highway and pedestrian safety, reduce the high costs of highway construction and maintenance, increase the capacity of highways and
roadways through improved traffic management techniques, and to
reduce undesirable environmental effects of highway structures. Highway traffic safety research will emphasize accident investigation and
data analysis and will support the setting of Federal safety standards
leading to improved vehicle occupant protection, the reduction of
drug and alcohol related accidents, and the improvement of driver
performance.
Railroad research will emphasize improved rail freight and passenger
services, as well as rail safety. The intermodal program to integrate
highway and rail freight systems is being expanded, to demonstrate
the potential reduction in time and cost of freight service from origin
to destination. The tracked levitated vehicle program is being terminated
in 1975, reflecting a greater emphasis on improvements to existing
technology and associated infrastructure.
Air transportation research provides for continued upgrading of the
air traffic control system and for increasing airport and airway capacity through improved surveillance, communication and landing aid
development, and increased automation of the air traffic function.
The increased research funding level will permit the development of
air traffic control equipment and systems needed to operate the air
transportation networks of the 1980's. Also emphasized are aviation
safety and aircraft noise and pollution abatement activities.
Coast Guard R. & D. will continue to stress maritime pollution
control systems development, all weather harbor traffic monitoring,
improved aids to navigation, and programs to improve safety at sea.
including commercial vessel and recreational boating safety.
DEPARTMENT OF THE INTERIOR

Obligations for the Department of the Interior for conduct of research and development will show a net increase from $303 million in
1975 to $315 million in 1976.
The Department's R. & D. activities derive from a broad range of
responsibilities for encouraging wise development of the Nation's
energy and nonenergy mineral, water, land, and recreation resources,
and for managing those resources on the public lands in the public
interest.
Research programs are conducted to provide an accurate appraisal
of the Nation's mineral resources, including new or improved methods,
and techniques and instruments for mineral exploration on land on
submerged continental margins. Basic information is developed on

SPECIAL ANALYSES

265

geologic principles and processes relating to terrain conditions and
causes of earthquakes. An extensive program of investigation of new
technologies for surface and underground mining is designed to lead
to improvements in productivity and in mine health and safety and to
reduction in the environmental impact of mining. Research on extraction, processing, and use of nonenergy minerals will help to assure an
adequate supply of raw materials to meet expanding national needs.
Land use problems, the quality of the physical environment, and
the efficient allocation and conservation of scarce water and waterrelated resources will be studied. Special attention will be accorded
studies directed toward better understanding of basic principles of
hydrology necessary for the appraisal and evaluation of the Nation's
water resources, including the effects of underground waste storage, for
improving the quantity and quality of water for municipal and industrial uses, and for augmenting water supply by precipitation management, water salvage and improved water methods.
Research is conducted to improve the management of habitat on
Federal lands to protect fish and wildlife resources. Studies also support the direct management of fisheries and migratory birds. These
studies include population dynamics, bird banding, fish disease
prevention and control, and restoration of endangered species.
Many of these programs have at least an ancillary objective of
environmental protection. Energy related research of the Bureau of
Land Management and the Fish and Wildlife Service, for example, includes extensive environmental baseline data collection and monitoring activities as a necessary background to understanding potential
impacts of energy development on the environment, and as a basis for
managing resource programs on the public lands so as to minimize
environmental impact.
DEPARTMENT OF COMMERCE

Department of Commerce obligations for the conduct of research
and development will increase by $19 million in 1976, from $211
million in 1975 to $230 million in 1976. Obligations for related facilities
will be $6 million in 1976. Increases are provided for the research
and development programs of the National Oceanic and Atmospheric
Administration (NOAA), the National Fire Prevention and Control
Administration, and the National Bureau of Standards.
The principal objectives of the research and development programs
in the Department of Commerce are to continue to improve the
Nation's environmental prediction and warning capabilities, develop
technology to improve the competitive position of the U.S. maritime
industry, and encourage advancement of science and technology
through improved measurements and standards.
In 1976, NOAA will continue research to help reduce loss of life
and property from natural disasters by improving the detection and
tracking of weather systems and violent storms, and by extending the
forecasting and data gathering programs. In the marine sciences,
NOAA will conduct research aimed at the conservation and management of commercial fisheries in the United States. NOAA will also
continue research programs in marine ecosystems analysis.

266

THE BUDGET FOR FISCAL YEAR 1976

The National Fire Prevention and Control Administration will
conduct research to reduce the loss of life and property from fires and
will provide the essential technical knowledge on which new and
improved fire prevention efforts can be based.
The National Bureau of Standards will continue research aimed at
development and maintenance of the Nation's physical measurements
and standards, providing necessary support for the advancement of
science and technology and for productivity enhancement. Special
emphasis will be placed on measurements and standards needed for
environmental pollution, improved use of materials, and improved
Federal application of computers. The computer program will be
increased in the areas of computer security and standards.
The Maritime Administration will continue to assist the U.S.
maritime industry to develop the technology necessary to improve
its international competitive position. The emphasis in 1976 will be
on improvements in ship-building methods and equipment, and
development of shipping operations information systems.
ENVIRONMENTAL PROTECTION AGENCY

Obligations of the Environmental Protection Agency (EPA) for
conduct of research and development will increase from $287 million
to $300 million in 1976. Obligations for facilities will be $2 million
in 1976.
EPA supports K. & D. to determine the sources and effects of
pollution and to develop and test pollution control technologies. The
overall objective is to provide the scientific basis for standards development and effective control strategies and to identify and evaluate
long-range environmental problems. Efforts are directed specifically
to problems of air and water pollution control, water supply protection, solid and toxic waste management, pesticides control, radiation
protection, noise abatement, energy development, and interdisciplinary
studies.
The air program seeks to develop predictive models of pollutant
emission, transport, transformation, and removal, and to verify these
models by actual measurement. In 1976, information on health
effects of selected pollutants and catalytic-related emissions will be
obtained. Work will continue on prototype demonstrations of processes
for control of nitrogen oxide emissions.
In the water program, increased attention will be given to demonstration of control technologies capable of reducing the capital and
operating costs of municipal waste treatment, investigation of the
health effects of land disposal of sludge, development of criteria for
ocean dumping and outfalls, and evaluation of the cost and technical
feasibility of specific nonpoint control measures designed to deal with
agricultural runoff. Additional effort also will be given to development of more cost effective technologies suitable for small water supply
systems, and a survey on the nature and toxicity of organic and inorganic contaminants and pathogenic organisms present in treated
wastewater,
The energy-related research effort will be increased to (1) determine environmental effects (and hence the control requirements)
associated with energy resource extraction, transmission, conversion
and use, (2) identify, develop and demonstrate necessary control

SPECIAL ANALYSES

267

techniques based on the source effluent and ambient pollutant control requirements, and (3) evaluate the environmental, economic, and
social consequences of alternative control strategies for energy systems as input to EPA policy formulation.
RESEARCH AND DEVELOPMENT IN COLLEGES AND
UNIVERSITIES
A portion of the funds discussed above will be committed by the
agencies to colleges and universities to perform R. & D. to assist in
achieving agency missions. As shown in table P-10, the 1976 budget
will provide $2,254 million obligations for this purpose as contrasted
with $2,147 million in 1975.
Table P-10. RESEARCH AND DEVELOPMENT IN COLLEGES AND
UNIVERSITIES * (in millions of dollars)
Obligations
Department or agency

Health, Education, and Welfare
National Science Foundation
Department of Defense—Military_.._
Agriculture
Energy Research and Development
Administration
National Aeronautics and Space Administration
All Others
Total
1

1974
actual

Outlays

1975
1976
estimate estimate

1974
actual

1975
1976
estimate estimate

1,238
422
186
95

1,058
452
197
106

1,088
487
213
118

1,058
434
187
92

1,171
418
197
102

1,148
460
209
113

106

116

106

116

99
125

90
139

86
146

99
106

99
130

95
137

2,259

2,147

2,254

2,067

2,224

2,278

Amounts reported in this table are included in totals for conduct of R. & D. in previous tables.

Federal funds are expected to continue to furnish the largest source
(more than half) of the total support for university research and
development activities. The funds assist in supporting faculty investigators and provide valaable experience and training for graduate
students through employment on R. & D. projects.

SPECIAL ANALYSIS Q
FEDERAL ENVIRONMENTAL PROGRAMS
INTRODUCTION

$6.5 billion in outlays on environmental programs has been
initiated by 19 agencies and departments within the Federal Government in 1975 and $6.9 billion is expected to be spent in 1976. Although these programs span a wide spectrum of activities; ranging
from basic ecological research to abatement of pollution from Federal
facilities, all Federal expenditures on the environment can be classified
in one of three broad categories: Pollution control and abatement;
understanding, describing, and predicting the environment; and
environmental protection and enhancement activities. The distribution of outlays by the Federal Government on these three categories
of activity are displayed in chart Q-l, and summarized by type of
spending for 1976 in the following schedule:

268

SPECIAL ANALYSES

269

1976 BUDGET AUTHORITY AND OUTLAYS—FEDERAL ENVIRONMENTAL PROGRAMS
[In millions of dollars]
Protection and enhancement
Understanding, describing, and predicting
Pollution control and abatement
Construction grants__

Total

Authority
1,036.4
1,379.1
1,933.2
(*)

Outlays
1,069.5
1,309.3
2,102.3
2,439.6

4,348.7

6,920.7

Contract authority for the Environmental Protection Agency's 1976 sewage facility grant program is included as 1975 budget authority since it is allocated and available for obligation in 1975

It should also be noted that Federal expenditures, unlike those of
the private sector, can occur either as an outlay by a Federal agency
for services rendered to itself (in-house activities) or as a transfer
(grant) to States or local governments which, as the ultimate distributors of those funds are also rendered the services.
The distinctions between direct Federal expenditures and those
transferred to State and local governments are summarized by type
of spending for 1976 in the following table:
1976 FEDERAL OUTLAYS FOR ENVIRONMENTAL PROGRAMS
[In millions of dollars]
Outlays
Enhancement
Understanding, describing, and predicting
Pollution abatement (excluding construction grants)
Construction grants..
Total.
* Not applicable.

Direct
659.5
1,309.3
1,789.9
(l)

Transfer
410.0
(*)
312.4
2,439.6

3,758.7

3.162.0

POLLUTION CONTROL AND ABATEMENT ACTIVITIES

The largest portion (66.0%) of Federal outlays expended on the
environment occur for purposes of cleaning up the environment and
preventing further deterioration. In 1976, outlays are estimated to be
$4,541.9 million.
POLLUTION CONTROL AND ABATEMENT EXPENDITURES
(INCLUDING CONSTRUCTION GRANTS)
[In millions of dollars]

Budget authority
Outlays
1
See footnote at bottom of Table Q - 1 .

1974
actual
6,894.8
2.974.2

1975
estimate
5,245.0
4,212.5

1976
estimate
* 1,933.2
4,541.9

Within the pollution abatement and control category there are three
primary areas of direct Federal activity—direct action to reduce
pollution from Federal facilities, establishing and enforcing standards,
and actions designed to research and develop technology and procedures to abate pollution as well as to identify the nature and sources
of those pollutants.
Two additional types of activity occur under the category pollution
abatement and control. They are the allocation of substantial funds
to State and local governments under financial assistance programs

580-700 O - '

270

THE BUDGET FOR FISCAL YEAR 1976

and a small amount of funding for manpower development. Table Q - l
reflects these five major activities.
Table Q-l. POLLUTION CONTROL AND ABATEMENT ACTIVITIES BY
FUNCTION (in millions of dollars)
Outlay*

Budget authority
Type of activity

Financial aid to State, interstate,
and local governments
Research and development
Standard setting and enforcement.
Reduce pollution from Federal
facilities
Manpower development
Other
Total

1974

1975

226.1
710.4

1,867.2
414.5

2,698.7
581.3

2,752.0
683.6

371.5

433.9

303.7

368.4

416.5

337.2
11.5
82.6

343.6
10.7
87.2

415.4
17.4
130.0

300.6
9.5
78.7

469.3
10.3
84.5

570.7
13.4
105.7

6,894.8

5,245.0

1,933.2

2,974.2

4,212.5

4,541.9

1974

1975

5,644.8
506.2

3,718.6
713.4

312.5

1976

1
Contract authority for the Environmental Protection Agency's sewage facility grant program is
included as 1975 budget authority since it is allocated and available for obligation in 1975. It therefore appears in columns for budget authority for that year instead of the 1976 column.

Activities involved.—Financial aid.—A substantial portion of
1976 Federal outlays in the financial aid category will be directed
toward the construction of sewage treatment facilities. Of the $2,752.0
million in outlays, $2,439.6 million will be expended on the construction
of these plants. These grant funds cover 75% of the eligible costs
of these projects. Also included in this activity are funds made available to State, regional, and local agencies to help support their air
and water pollution control programs. Outlays of $312.4 million
will be generated in 1976 to provide financial assistance for such
objectives as implementing the national primary and secondary
ambient air quality monitoring systems, emission inventories, plans
for effective enforcement of standards, transportation control plan
development, and air pollution emergency plans.
Research, development, and demonstration.—Table Q-l indicates that
outlays on research and development will increase from $581.3 million
in 1975 to $683.6 million in 1976.
The research and development outlay figures include both primary
and secondary activities. Primary refers to a research activity which
has pollution control and abatement as its sole purpose; whereas
secondary refers to a research activity which contributes to pollution
abatement but which has some other primary purpose; for example,
research on fish or animal migrations. Research and development
activities begin with efforts directed toward identifying pollutants
determining their sources and establishing their effects on the environment in general. Research on pollution control technology provides
the next step in the research process. Once the sources and effects of
dangerous pollutants have been identified, research efforts are shifted
to the development of devices and techniques for removing emitted
pollutants (retrofit devices) or reducing the initial generation of those
pollutants (in-process changes). Health effects research is then initiated
to determine the hazardous levels of pollutants on human beings.

SPECIAL ANALYSES

271

The specific result of this research effort is the establishment of air,
water, and hazardous waste emission standards.
Monitoring research follows, and is primarily concerned with the
development of devices and techniques for monitoring point source
emissions and the ambient quality of the air and water. Since much
research effort in the private sector is devoted to the development of
monitoring equipment, research efforts within the Federal Government have generally emphasized monitoring techniques and sampling
procedures.
In addition, water quality research will continue with the development of criteria for protection of marine and fresh water fish and other
aquatic life. Air quality research and development efforts will concentrate on the effects of pollution through field investigations, regional
air pollution models, and epidemiological and toxicological studies of
the effects of pollutants on man and animals. Ongoing demonstrations
of stack gas treatment technology will be completed and efforts will
be directed to long-term technologies relative to the development of
clean fuels.
Standard setting and enjorcement.—Table Q-l shows that outlays for
standard setting and enforcement will increase from $368.4 million in
1975 to $416.5 million in 1976. Standard setting and enforcement
includes a wide range of activities related to the regulatory efforts of
the Federal Government in the area of pollution abatement, but
primary emphasis is placed on monitoring, surveillance, standard
setting, and enforcement.
Monitoring and surveillance actions refer to Federal agency efforts
related to the monitoring of discharged pollutants from point sources
and the testing of ambient levels of pollutants, respectively. The
accumulated monitoring data is then linked to Federal efforts to
develop and review new or existing standards and to the enforcement
of those Federal standards. It should be noted that grants to air and
water control agencies which have standard setting and enforcement
responsibilities are included in the financial assistance data presented
in table Q-l.
Pollution abatement from Federal facilities.—Federal agencies are
actively involved in activities to control pollution from their facilities.1
Outlays for these and other activities to reduce pollution from Federal
facilities will increase from $469.3 million in 1975 to $570.7 million in
1976. In general, outlays for pollution abatement from Federal facilities
refer to remedial actions, process changes, fuel switching, and their
related operating costs.
Remedial actions refer to the placement of retrofit devices on existing
facilities or facilities under construction. Retrofit devices treat pollutants after their generation only and are separately identifiable abatement technologies such as dust collectors, electrostatic percipitators,
or treatment plants.
Outlays on process changes refer to incremental expenditures for
structures or equipment due to the incorporation of pollution abatement features. These process changes reduce or eliminate pollutant
emissions by employing material substitution, reuse of waste or water,
1
Outlays are for facilities or properties which are either owned or leased by the Federal Government and reflect expenditures on existing facilities, additions to existing facilities or new facilities.

272

THE BUDGET FOR FISCAL YEAR 1976

and equipment or production process alterations. Outlays for fuel
switching include the increased costs for fuel and power incurred to
reduce pollution (e.g., low sulfur fuel, or increased fuel or power
consumption to operate retrofit devices). Operating costs include the
costs of cleaning, servicing, and monitoring remedial or process change
devices.
Remedial actions continue to be the dominant activity for reducing
pollution from Federal facilities (85%). Special attention is currently
being given to the construction, or modification, of waste treatment
plants, stack gas cleaning on Federal power facilities and joint projects with State and local governments for the disposal of solid or
liquid waste. However, as standards become more clearly defined
and as technological know-how increases, the use of remedial actions
will drop relative to process changes.
Manpower development.—Outlays for manpower development programs refer to in-house training activities, and fellowships, traineeships, and training grants.

Pollution abatement

by media.—Table Q-2 expresses the

Nation's funding for pollution control and abatement by media polluted. Due to grants and loans for the construction of waste treatment
plants, water receives the largest share of total Federal pollution
control obligations (74.0%). Included in the funding for pollution control and abatement in table Q-2 are activities which directly contribute
to the reduction of pollution. Activities which may ultimately lead to
abatement and control but are carried on for some other purpose are
excluded.
Table Q-2. POLLUTION CONTROL AND ABATEMENT ACTIVITIES B Y
MEDIA OR POLLUTANT (in millions of dollars)
Media or pollutant

Media polluted:
Water:
Construction grants or loans
Other
Air.
Land
Other (e.g., living things, materials).
Multimedia (i.e., more than one of above)
Total
Selected pollutants:l
Solid wastes
Pesticides-...
Radiation
Noise

Outlftvs
1974
actual

Obligations
1974
actual

1975
estimate

1976
estimate

1.825.6
444.6
328.4
34.3
198.4
142.9

2,965.0
499.8
490.1
40.4
190.6
146.7

4,495.9
638.3
636.0
46.4
359.1
194.6

5.411.5
643.5
531.3
70.3
393.4
256.7

2.974.2

4.332.6

6.370.3

7,306.7

252.5
55.6
118.8
32.3

109.4
64.2
121.4
60.8

130.2
72.9
160.5
57.0

119.7
83.0
192.5
69.9

* Funds for selected pollutants are included in "media" distribution above.

Air and water (other than construction grants) pollution programs
include research and development, grants to State and local government control agencies and direct Federal operations, such as monitoring, standard setting, enforcement, and reducing pollution from
Federal facilities.

SPECIAL ANALYSES

273

Activities relating to the abatement of pollution on land are for
research and other studies or demonstration projects concerned with
the effects of acid mine drainage, nutrients and pesticides and solid
waste disposal. Federal efforts for those selected pollutants shown in
table Q-2 are primarily directed toward research relating to effects,
control technology, standard setting, and enforcement.

Pollution control and abatement by agency.—Table Q-3, like

table Q-l, shows total Federal funding for pollution abatement and
control, but broken down by agency rather than by function. Sixteen
agencies reported budget authority and outlays for this category of
environmental expenditures for 1976.
Table Q-3. POLLUTION CONTROL AND ABATEMENT ACTIVITIES—BY
A G E N C Y (in millions of dollars)
Budget authority
A8ency

Environmental
Protection
Agency
Defense—Military
Energy Research and Development Administration
Transportation
Agriculture
Defense-Civil
Interior
Commerce
_
National Aeronautics and Space
Administration
National Science Foundation...
Housing and Urban Development
Tennessee Valley Authority....
Nuclear Regulatory Commission
Other agencies
Total

1974
actual

1975
estimate

Outlays

1976
estimate

1974
actual

1975
estimate

1976
estimate

5.962.6
308.1

4.245.8
325.6

1742.8
421.1

2,032.0
231.4

2,936.6
309.0

3,079.5
390.6

131.2
91.6
124.9
8.6
48.0
66.6

187.5
88.1
104.7
10.3
56.4
49.8

236.2
96.7
118.7
10.0
65.6
46.1

104.0
58.8
123.1
8.6
41.1
58.1

150.9
79.3
171.9
10.3
50.8
53.1

184.9
98.9
166.2
10.0
57.9
48.8

67.8
13.4

65.2
16.8

65.1
13.0

22.9
14.3

55.3
14.7

65.9
15.0

8.4
3.3
54.3
6.0

9.7
3.4
68.7
13.0

10.1
3.2
91.7
12.9

M54.8
»62.1
54.1
8.9

157.5
141.5
68.7
12.9

148.0
171.0
91.7
13.5

6,894.8

5,245.0

1,933.2

2,974.2

4,212.5

4,541.9

Main agency activities.—The Environmental Protection Agency
conducts and administers the major pollution control and abatement
activities of the Federal Government. Outlays by EPA will increase
from an estimated $2,936.6 million in 1975 to $3,079.5 million in 1976.
EPA has responsibility over the administration of funding for a major
portion of the largest single category of Federal spending for pollution
control and abatement, that being grants for constructing or improving municipally owned waste treatment plants.
Research and development will account for 40% of the estimated
outlays of EPA's operating programs in 1976. (Construction grants
are excluded from operating programs). These funds will be allocated
for the study of the processes and effects of pollutants including the

274

THE BUDGET FOR FISCAL YEAR 1976

health effects of pollutants, their ecological and other nonhealth
effects, the movement and transformation of pollutants in the environment, the measurement of pollution problems, and research on low
emission fuel-efficient vehicles.
EPA's abatement and control programs apply to a wide variety of
environmental problems—monitoring, establishment, and enforcement
of standards, issuing of permits, and providing technical assistance
regarding air, water, solid waste, noise, hazardous materials, and
pesticides pollution.
The Department of the Interior's Bureau of Mines conducts research
and development on procedures to prevent and abate pollution from
mining and is attempting to develop improved methods of removing
pollutants from mineral processing plants, and for recovering the
valuable constituents in mineral processing wastes. It will increase
research efforts for methods of converting coal to fuel gas with less
pollution.
The Department oj Defense is expanding its research program to
reduce pollution from its industrial production, military, and other
facilities. The Corps of Engineers administers a permit program under
the Federal Water Pollution Control Act which makes it illegal to
discharge dredged or fill material into a navigable water without a
permit. The Corps will continue to prepare studies regarding implementation of regional water quality management plans.
The National Aeronautics and Space Administration conducts a
continuing research and development program to reduce aircraft
noise and pollution. NASA is undertaking a major program to develop
spacecraft with the capability of detecting and monitoring atmospheric pollution.
The Department of Commerce conducts a number of pollution control
and abatement activities. Its Economic Development Administration
and the Kegional Action Planning Commissions provide grants and
loans for the construction of water and waste treatment facilities and
water and sewer lines where these items are needed to foster economic
development. Technical assistance is also provided to solve pollution
control and abatement problems. The National Oceanic and Atmospheric Administration is carrying on a broad scale program of equipment installation to further control water pollution resulting from its
ship operations. The National Bureau of Standards is engaging in
research and development for reference standards and measurement
systems for air, water, radiation, and noise pollution.
The Department of Transportation's major programs lie in the area
of noise pollution control. The Federal Highway Administration is
studying techniques to decrease the impact of highway noise, and to
control erosion from highway construction. The Federal Aviation
Administration is continuing its program to develop quieter aircraft
engines. It is also investigating sonic booms, and development of
design guidelines for airports so that they are consistent with neighboring land use policies. The Urban Mass Transportation Administration will continue support of programs to demonstrate advanced bus
and rail technology which reduce pollution and conserve energy. In
addition, the U.S. Coast Guard investigates coastal oil spills, and
initiates preventive and clean-up actions if the polluter cannot be
identified or is not capable of such actions.

SPECIAL ANALYSES

275

The Department of Agriculture conducts research on problems of
agriculturally related pollution. The Cooperative State Research
Service and the Extension Service are continuing to develop methods
of reducing pollution from the production and processing of agricultural products. The Forest Service investigates and applies methods
of controlling sediment pollution and the Animal and Plant Health
Inspection Service conducts programs to reduce the amount of pesticides used to control pests. The Farmers Home Administration makes
loans to local organizations to provide for the collection and disposal
of human, animal, agricultural, and other wastes in rural areas.
The Energy Research and Development Administration (ERDA) is
expanding its research relating to pollution sources and effects to
assure that rapidly expanding energy technologies currently under
development will be implemented with minimal impacts on the
environment. Research will also emphasize pilot plant projects for
converting coal to fuel gas with less pollution. Prevention and abatement of pollution from mining and the development of improved
methods of removing pollutants from mineral processing plants will
be continued. Projects aimed at the recovery of valuable constituents
in mineral processing wastes will be expanded.
UNDERSTANDING, DESCRIBING, AND PREDICTING THE ENVIRONMENT

Eleven Federal agencies will spend outlays of $1.4 billion in 1976 on
activities oriented toward describing the environment, predicting
environmental conditions and increasing man's understanding of his
role in the broad ecological cycle of which he is a part. Though these
activities may ultimately lead to the reduction of pollution, they are
not specifically intended for that purpose. Instead, their purpose is to
gain a broad understanding of ecological systems and environmental
interactions. As such they include efforts toward:
• Observing and predicting weather, ocean conditions, and shock
environmental disturbances such as earthquakes. This activity
would include the collection of oceanographic and meteorological
data, and activities which improve weather monitoring, predicting
and warning. Weather satellite programs which will provide enhanced environmental warning services (via an air quality observation network) are also included.
• Locating and describing natural resources. Programs such as the
earth resources technology satellite (ERTS) program are helping
to better understand existing natural resource systems and also
identify, evaluate, and monitor new and existing natural resources.
• Preparing physical environmental surveys of the environment for
mapping and charts and related research.
• Weather modification research—includes experiments on weather
modification.
• Understanding the impact of man on the environment, and
• Ecological and other basic environmental research—involving the
development of baseline data on the abundance and distribution
of plants and animals in relation to the modification of the
environment by man.

276

THE BUDGET FOR FISCAL YEAR

UNDERSTANDING,

DESCRIBING,

AND PREDICTING

1976
THE ENVIRONMENT

{In millions of dollars]

Budget authority.
Outlays
_

1974
actual

1975
estimate

1976
estimate

1,128.6
1,065.3

1,298.0
1,236.2

1,379.1
1,309.3

Table Q-4 shows the distribution of both budget authority and
outlays by the various functions listed above.
Table Q-4. UNDERSTANDING, DESCRIBING, AND PREDICTING THE
ENVIRONMENT—BY FUNCTION (in millions of dollart)
Budget authority
Activity

Observe and predict weather
ocean conditions, and disturbances:
Research and development...
Operations
Locating and describing natural
resources:
Research and development...
Operations
Physical environmental surveys:
Research and development...
Operations
Weather modification research..
Research on environmental impact on man
Ecological and other basic environmental research
Total....

1974
actual

?975
estimate

Outlays

1976
estimate

1974
actual

T975
estimate

1976
estimate

169.2
340.8

172.5
376.8

206.6
388.4

149.8
334.2

153.4
358.2

176.6
371.2

142.1
142.9

188.6
173.9

191.6
187.6

120.1
140.1

176.2
176.2

188.5
183.7

14.2
107.3
21.6

13.3
125.8
22.4

11.3
121.5
21.1

15.8
98.6
22.2

11.2
117.1
23.4

7.8
115.1
21.5

96.7

116.9

129.2

95.7

119.8

130.0

93.8

107.8

121.8

88.8

100.7

114.9

1,128.6

1,298.0

1,379.1

1,065.3

1,236.2

1,309.3

Table Q-5 shows the distribution of total budget authority and
outlays shown in table Q-4 by the major agencies involved in this
category of activity.
Table Q-5. UNDERSTANDING, DESCRIBING, AND PREDICTING THE
ENVIRONMENT—BY AGENCY (in millions of dollars)
Budget authority
Agency

Commerce
Defense—Military
National Science Foundation...
Interior
National Aeronautics and Space
Administration
Agriculture
Energy Research and Develop*
ment Administration
Health, Education, and Welfare
Transportation
Smithsonian Institution
Other agencies
Totals

1974
actual

1^75
estimate

Outlays

1976
estimate

1974
actual

1975
estimate

1976
estimate

330.9
151.1
112.4
162.2

369.8
163.5
120.4
233.9

383.9
165.8
139.9
246.7

329.9
135.4
105.9
151.2

354.3.
140.5
113.2
229.2

346.3
145.6
126.4
240.1

116.8
113.8

115.4
129.6

128.2
133.7

89.3
114.5

100.8
132.9

118.6
133.2

65.2
28.4
18.2
11.1
18.5

87.3
28.0
14.6
12.8
22.7

101.0
28.1
16.5
12.3
23.0

64.8
27.9
18.0
10.3
18.1

85.8
31.3
14.0
12.1
22.1

100.8
29.4
15.9
12.5
22.5

1,236.2

1,309.3

1,128.6

1,298.0

1,379.1

1,065.3

SPECIAL ANALYSES

277

Agencies involved.—Department 0/ Transportation research will
focus on making transportation facilities compatible with the environment, and on conserving energy through more efficient use of existing
transportation resources. The Coast Guard collects oceanographic and
meteorological data for the preparation of maps and charts to be used
in the development of ocean transportation. FAA activities are devoted
to an understanding of adverse environmental effects of aircraft noise,
pollution, and sonic booms. The agency will continue work on a
multiyear, multimillion dollar research program on the effects of
engine exhaust on the stratosphere.
Research by the Department of Housing and Urban Development
includes analyses to increase knowledge of the effects of urban and
nonurban change, particularly as it affects and is affected by the
natural environment.
The Smithsonian Institution develops environmental base line data
on the abundance and distribution of plants and animals in relation
to modification of the environment by man. It also identifies indicator
organisms that can be used in monitoring the environment.
In the Department oi Commerce, the National Oceanic and Atmospheric Administration conducts a wide range of environmental
monitoring and prediction activities, weather modification experiments, surveys for mapping and charting, data archiving and dissemination services, and related research. Continued emphasis will be
given to improving weather monitoring, prediction, and warning to
help further reduce the loss of life and property from natural disasters.
Increased outlays in 1976 will support improvement of weather
prediction and warnings through better basic observations. This
program will concentrate on procedures to modify FAA radar equipment in mountainous areas to insure continued availability of weather
data from these sites. The weather satellite program will provide
enhanced environmental warning services and will prepare for the next
generation of polar-orbiting satellites. Implementation of the air
quality observation network will be continued as will coastal zone
research.
The Department of Health, Education, and Welfare, through the
National Institute of Environmental Health Sciences, conducts research directed at the identification of chemical, physical, and biological environmental factors which affect human health.
The Department oj Defense conducts activities in environmental
observation and measurement to describe and predict weather, ocean
conditions, and disturbances important to military operations. Research is conducted in oceanographic instrumentation development
and operational systems for observing and forecasting the ocean
environment. The Corps of Engineers conducts hydrologic studies as
a background for future use in optimum design, construction, and
operation of water control structures. The Corps also examines the
effects of construction on coastal ecology in order to permit more
accurate assessment of the ecological effects of offshore construction
and dredging.
The National Science Foundation supports environmental research
with the objective of increasing the Nation's knowledge base in order
to improve environmental management. Studies are undertaken in all
aspects of the biosphere on an environmental systems basis. Efforts

278

THE BUDGET FOR FISCAL YEAR 1976

will continue to measure and assess the environmental effects of mining,
manufacturing, use, and disposal of metallic and synthetic organic
compounds.
In the Department of Agriculture, the Agriculture Research Service
conducts research by remote sensing to study animals in a natural
environment, crop conditions and insect infestations, and soil-waterplant conditions in order to improve both animal and crop production.
It is also increasing its efforts to monitor and understand the ecological
patterns of disease and insects in order to develop an integrated pest
management program which would reduce the use of pesticides.
The Forest Service studies forest ecosystems so that policy decisions
and management practices can lead to improved productivity while
maintaining the quality of the environment. The Soil Conservation
Service conducts soil and snow surveys, and makes water supply
forecasts.
The Department oj^ the Interior supports research conducted by the
Bureau of Reclamation on weather modification, water salinity problems, and the effects of water resource development projects on
ecology and limnology.
The National Park Service conducts natural science ecological
studies leading to improved resource management and proposals
relating to impact of development on the park environment while
the Office of Water Resources Research sponsors, and provides for
the conduct of research, investigations, and experiments in the water
resources field.
The National Aeronautics and Space Administration, through its use
of satellites, has developed a number of programs with the potential
of making accurate short-term (a few hours) weather predictions, and
accurate long-term (2 weeks) weather and climate predictions. In
addition to helping to better understand natural resources systems,
the ERTS program is used for identifying, evaluating, and monitoring animal and plant habitats and distributions, water and vegetation
distribution, surface mositure, and the effect of thermal and particulate pollution on the ecology and environment.
The Energy Research and Development Administration (ERDA)
will direct research toward the siting problems of powerplants in
fulfillment of the requirements of NEPA. Further information will
be gathered on the biological effects of thermal effluents on various
aquatic ecosystems; the effects (by nuclear powerplants) of various
attrition rates of larvae fishes on the ability of adult fishes to maintain
themselves; the overall effects of various alternative methods of
cooling water disposal; and the toxicity of various chemicals added
to cooling systems to prevent biological fouling.
ENVIRONMENTAL PROTECTION AND ENHANCEMENT

Activities within this category place emphasis on enabling man to
use and enjoy the outdoor environment through the provision of
recreational facilities, parks and open areas. In 1976, $1.1 billion will
be spent on this type of planning for conservation and management
of wildlife and fishery resources.
The achievement of these goals is accomplished by both direct
Federal expenditures and by grants to State and local governments.
Direct Federal programs are primarily directed toward providing for

SPECIAL ANALYSES

279

the acquisition of land in order to preserve nationally unique natural
areas and supporting sport fish and wildlife preservation. State and
local governments use grant funds to acquire and develop land for
recreational purposes and to preserve local fish and wildlife refuges.
Table Q-6 shows the distribution of Federal funding across the
major program areas within this category. It also shows the allocation
of total funds between direct Federal activities and grants to State
and local governments.
Table Q-6. ENVIRONMENTAL PROTECTION AND ENHANCEMENT—BY
FUNCTION (in millions of dollars)
Budget authority
Activity

Financial aid to State and local
governments:
Purchase, development and
operations:
City recreation
Preserve unique areas
Noncity general recreation.
Sport fish and wildlife
Historic preservation and
rehabilitation..
Other State and local aid___

J975

Outlays

1976

^974

wTb

I^T

35.6
.2
59.0
75.0

50.9
.2
141.5
85.0

49.8
2.5
147.0
89.4

^ 93.1
^5.0
120.8
67.8

106.5
23.5
123.4
82.7

92.4
25.8
135.9
85.8

11.6
12.1

20.1
13.4

20.1
22.0

11.4
14.9

16.9
29.7

20.0
50.1

193.5

311.1

3308

333.0

382.7

410.0

103.2

137.8

117.0

108.1

120.9

113.4

130.8
127.0
60.8

168.6
184.9
72.1

210.5
180.2
70.0

151.0
128.2
61.6

136.0
178.5
64.5

182.8
178.5
67.3

37.0
49.8

66.6
72.8

55.2
72.7

40.6
47.6

51.8
74.6

45.7
71.8

Subtotal

508.6

702.8

705.6

537.1

626.3

659.5

Total

702.1

1,013.9

1,036.4

870.1

1,009.0

1,069.5

Subtotal......
Direct Federal activities:
Purchase, Development and
operations:
City recreation
Preserve unique natural
areas
Noncity general recreation.
Sport fish and wildlife
Historic preservation and
rehabilitation..
Other direct activities

1974

See footnote at bottom of Table Q-7.

As indicated in table Q-6 the major environmental protection and
enhancement activities are:
• City recreation—including direct Federal involvement or
Federal financial assistance for projects which establish or
develop parks and recreational facilities in urban areas;
• Preservation of unique national areas which includes programs
related to national parks, monuments, scenic rivers, trails,
wildernesses, seashores, and wildlife refuges;
• Noncity general recreation program including those for recreation
in nonurban areas such as national forests and Federal water
projects;
• Sport fish and wildlife projects which create and manage wildlife
refuges, fish hatcheries, and protect rare and endangered species,
and

280

THE BUDGET FOR FISCAL YEAR 1976

• Historic preservations and rehabilitation of national historic sites
and military parks.
Table Q-7 illustrates the distribution of funds in this category by
agency.
Table Q-7. ENVIRONMENTAL PROTECTION AND ENHANCEMENT—BY
AGENCY (in millions of dollars)
Budget authority
Agency

Interior
Agriculture
Defense-Civil
Commerce
HUD.
Other agencies
Total
1

1974

498.0
88.2
54.5
35.5
(i)
25.9

1975

797.6
92.1
77.3
38.6
(i)
8.3

702.1 1,013.9

Outlays
1976

803.7
101.6
77.8
44.8
0) •
8.5
1,036.4

1974

606.4
84.0
54.5
24.0
92.7
8.5

1975

682.0
99.6
72.8
38.3
90.6
25.7

870.1 1,009.0

1976

733.0
97.2
82.0
38.4
110.6
8.3
1,069.5

Outlays are from budget authority prior to fiscal year 1974.

Agencies involved.—The Department of the Interior, through its
Bureau of Land Management, protects and manages over 450 million
acres in the Western States and Alaska, representing 20% of America's
land base. Legislation has been proposed that would establish as
national policy, that these resource lands be managed under principles
of multiple use and sustained yield in such a way as to protect the
quality of the environment.
The Bureau of Outdoor Recreation promotes the coordination of
outdoor recreation programs, and administers the Land and Water
Conservation Fund which provides grants for planning, acquisition,
and development of State and local recreation areas and Federal
purchases of nationally important lands.
The Fish and Wildlife Service provides assistance to State and
local governments for fish and wildlife restoration, management,
and research. The Service administers 95 hatcheries and 356 units
in the National Wildlife Refuge System containing 30.7 million
acres. Endangered species are protected on 82 of the national wildlife
refuges.
The National Park Service administers 308 areas comprising about
29 million acres located in 47 States, the District of Columbia, Puerto
Rico, and the Virgin Islands. These include national parks, monuments, historic sites, and other areas which have been established to
preserve the Nation's natural and historic heritage.
In the Department of Commerce, the National Oceanic and Atmospheric Administration is placing emphasis on improved management
of the Nation's coastal zone through federally assisted and coordinated
State programs. In 1976, NOAA will continue to provide grants to
States for the preparation of their coastal zone management plans
and the initial phases of administration of those plans. Other activities
in 1976 will provide for administration and enforcement of the Marine
Mammal Protection Act of 1972, research on the status of stocks of
whales, and research on fur seals. Research on aquaculture and grants
to States for the enhancement and restoration of the marine fishery
resources will be continued.

SPECIAL ANALYSES

281

The Department of Agriculture carries out a variety of enhancement
activities, particularly through the Forest Service. The 187 million
acres of national forest lands are managed in accordance with the
provisions of the Multiple Use-Sustained Yield Act to provide outdoor
recreation, range, timber, watershed, mineral, and wildlife values in
combinations that will best protect resources without impairing the
productivity of the land.
RESEARCH AND DEVELOPMENT

Significant funding of environment-related research and development will continue in 1976. Research and development programs exist
under both the pollution control and abatement and the understanding,
describing, and predicting categories.
Table Q-8. ENVIRONMENTAL RESEARCH AND DEVELOPMENT ACTIVITIES
(in millions of dollars)
Budget authority
Category

Pollution control and abatement 1
Understanding, describing, and
predicting
Total
1

1974
actual

506.2
537.6
1,043.8

Outlays

1975
estimate

1976
estimate

713.4

710.4

621.5
1,334.9

681.6
1,392.0

1974
actual

1975
estimate

1976
estimate

414.5

581.3

683.6

492.4

584.7

639.3

906.9

1,166.0

1,322.9

Includes both primary and secondary research and development.

U. S. GOVERNMENT PRINTING OFFICE

1975 O - 580-700

EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET

Full text of Budget of the United States Government, Special Analyses : Fiscal Year 1976

FRASER