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SPECIAL ANALYSIS A

CURRENT SERVICES ESTIMATES

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables and text of this booklet may not add to totals because of
rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Current Services Estimates
Federal Transactions in the National Income Accounts
Funds In the Budget
Investment, Operating, and Other Budget Outlays
Borrowing and Debt
Federal Credit Programs
Tax Expenditures
Federal Aid to State and Local Governments
Civilian Employment in the Executive Branch
Civil Rights Activities
Research and Development

Each special analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS A
CURRENT SERVICES ESTIMATES
The Congressional Budget Act of 1974 requires that the President submit to the Congress estimates of the outlays and budget
authority needed to maintain current Government services and
activity levels. The Act defines the current services levels as
. . . the estimated outlays and proposed budget authority which would be included in the Budget to be submitted
pursuant to section 201 of the Budget and Accounting Act,
1921, for the ensuing fiscal year if all programs and activities were carried on during such ensuing fiscal year at the
same level as the fiscal year in progress and without policy
changes in such programs and activities.
The Act further requires the President to submit the economic
and programmatic assumptions underlying the estimates and calls
for the Joint Economic Committee of the Congress to review and
evaluate the estimates.
Since current services estimates show what outlays, receipts, and
budget authority would be if no policy changes were made, they
provide a base with which the administration's budget proposals, or
other proposals, may be compared. Such comparisons are made in
various parts of the budget and serve to highlight the effects of
recommended policy changes.1
The current services estimates are based on the same economic
assumptions as the President's budget proposals. Changes in economic conditions significantly affect budget estimates because of
their effects on tax receipts, unemployment benefits, and other
programs under which spending varies with the unemployment,
interest, and inflation rates. As a result, if different economic
assumptions were used, it would be very difficult to separate the
effects of policy differences from the effects of differences in the
economic assumptions.
The economic assumptions assume that all the President's
budget proposals will be adopted. Continuation of all programs and
tax laws unchanged at current services levels would probably
result in somewhat different economic conditions than would occur
under the budget proposals. For the 1983 budget, however, the
1

Summary comparisons are in the Budget

of the United

States

Government

Fiscal

Year 1983

Part 3.

THE BUDGET FOR FISCAL YEAR 1983

differences are small compared to the uncertainties inherent in the
economic forecast.
The economic assumptions common to the budget and the current services estimates are summarized in table A-l. For further
details and discussion of these economic assumptions, see Part 2 in
the 1983 Budget
Table A - l . SUMMARY OF ECONOMIC ASSUMPTIONS
(Calendar years)

Gross national product (in billions of current dollars)
Change in constant dollar GNP (percent change, fourth quarter over fourth quarter)..
Unemployment rate (percent, fourth quarter)
GNP deflator (percent change, fourth quarter over fourth quarter)
Consumer Price Index (percent change, fourth quarter over fourth quarter)
Federal nondefense non-pay purchases deflator (percent change, fiscal year over
fiscal year)
State and local purchases deflator (percent change, fiscal year over fiscal year)
Interest rate, 91-day Treasury bills (percent)
Federal pay raise, October (percent):
Military
Civilian

1981

1982

1983

2,922
0.7
8.4
8.6
9.4

3,160
3.0
8.4
7.2
6.6

3,524
5.2
7.6
5.5
5.1

17.6
8.6
14.1

8.2
8.6
11.7

6.5
7.8
10.5

14.3
4.8

8.0
8.0

7.6
7.6

THE CURRENT SERVICES CONCEPT

The current services estimates are neither recommended
amounts nor forecasts as to what the budget for 1982 and 1983 will
actually be. Rather, they provide a base against which budgetary
alternatives may be assessed. This base embodies the cumulative
effects of all past congressional and Presidential budgetary choices.
Since the estimates indicate the near-term budgetary implications
of the current directions of Federal programs, they in effect answer
the question: "How would the budget come out if we simply left the
Federal Government on automatic pilot through next year?"
A guiding principle in establishing a conceptual basis for the
current services estimates was to make the results useful to the
Congress and the public. The current services concepts used in this
analysis, and in previous current services estimates submitted by
the executive branch, are not the only concepts possible. Different
concepts may be useful for different purposes. Under the current
concepts, the current services estimates for 1983 reflect the expected costs of continuing ongoing Federal programs at 1982 levels in
real terms, without policy change; that is, they omit all proposed
and pending new initiatives, Presidential or congressional, that are
not now enacted. In general, the 1982 level on which the current
services estimates are based is that which is authorized or implied
by enacted 1982 appropriations or continuing resolutions. The estimates allow for the future implications of current law, and for

SPECIAL ANALYSIS A

anticipated changes of a relatively uncontrollable nature (as distinct from policy changes)—such as increases in the number of
social security retirees.
The current services estimates reflect the effects of inflation on
virtually all budget accounts, including discretionary programs.
The current services estimates thus provide a "constant real program" base against which to measure the President's budget.
Specific guidelines for this year's detailed programmatic estimates are:
—For entitlement programs (such as social security), the current
services estimates take into account inflation adjustments that
are mandatory under current law, changes in the benefit base
(usually determined by past earnings), and changes in the anticipated numbers of beneficiaries.
—Individual grants to State and local governments in 1983 are
assumed to support the same program levels or to be funded at
the same real (constant-dollar) amounts as in 1982 unless the
grants are: (a) set by law at specified amounts; (b) tied by
legislation to cost-of-living increases or the unemployment
rate; (c) affected by changes in beneficiary populations or other
factors that affect benefit payments under entitlement programs; or (d) affected by spending from prior-year commitments (for example, highway grants).
—Entitlement programs that are not linked by law to the cost-ofliving (such as veterans compensation) are assumed to remain
level in real (constant-dollar) amounts except for changes in
the benefit base and in the number of people eligible.
—Procurement and construction activities are assumed to proceed in an orderly fashion, consistent with current law and
past appropriation levels. Outlays for these programs are
largely determined by prior-year contracts and obligations.
Some appropriations provide for anticipated inflation in the
cost of multiyear projects. In other cases, however, current
services estimates may reflect constraints on spending levels
imposed by available funding.
—Outlays for Federal pay are assumed to increase at rates comparable to private sector pay. The October 1982 pay raise is
projected to be 8.0% on this basis.
—Interest on the public debt is estimated on the basis of the
current services deficit and the same interest rate assumptions
as are used in computing the budget estimates for interest.
—Offsetting receipts are estimated on the basis of judgment as to
their most likely level, assuming no change in current law.
—Budget authority for certain major trust funds consists of trust
fund receipts. These are estimated using standard revenue estimating techniques.

THE BUDGET FOR FISCAL YEAR 1983

—Proposed rescissions of budget authority are not reflected.
—It is assumed that deferral actions continue in effect for the
period specified in the special message transmitted to the Congress under the Impoundment Control Act of 1974 (unless they
have been overturned by the Congress).
Many Federal programs are authorized for a limited number of
years, but are routinely renewed. If authority for such a program is
scheduled to expire before or during 1983, it is assumed for purposes of current services estimates that it will be renewed. Programs that are clearly temporary in nature, such as temporary
study commissions, are assumed to expire.
The estimates of receipts on a current services basis assume that
future tax changes will occur as scheduled under current law.
Provisions that are clearly temporary in nature are assumed to
expire.
Table A-2. CURRENT SERVICES TOTALS
(In billions of dollars)
1981
actual

Receipts
Outlays
Deficit ( - )
Budget authority

1982
estimate

1983
estimate

599.3
657.2

626.4
726.4

653.3
779.3

-57.9

-100.0

-126.0

718.4

775.1

833.9

CURRENT SERVICES TOTALS

Current services outlays are estimated to be $779.3 billion in
1983, 7.3% higher than in 1982, and budget authority is estimated
to be $833.9 billion, an increase of 7.6% over 1982. Receipts for
1983 are estimated to increase 4.3% on a current services basis,
from $626.4 billion in 1982 to $653.3 billion in 1983. The resulting
1983 current services deficit is $126.0 billion, $26.0 billion higher
than the $100.0 billion deficit for 1982.
Receipts.—Table A-3 shows receipts by major source on a current services basis. For purposes of comparison, receipts under the
administration's proposals for 1983 are also shown. Current services receipts are projected to increase by $26.9 billion from 1982 to
1983, largely due to assumed increases in incomes resulting from
both real economic growth and inflation. These estimates assume
that the temporary provisions of the Economic Recovery Tax Act of
1981 will expire as scheduled under current law.
Individual income taxes are estimated to increase by $2.5 billion
from 1982 to 1983 on a current services basis. This increase of 0.8%
is the effect of rising personal incomes, partially offset by the

SPECIAL ANALYSIS A

individual income tax reductions provided in the Economic Recovery Tax Act of 1981, which are estimated to rise from $28.2 billion
in 1982 to $75.4 billion in 1983. Corporation income taxes are
estimated to increase by $9.5 billion, or 20.4%, from 1982 to 1983
on a current services basis, largely as a result of higher corporate
profits.
Social insurance taxes are estimated to increase by $17.2 billion
on a current services basis. The estimate reflects assumed increases
in total wages and salaries paid, increases in the social security
taxable earnings base to $32,400 in calendar year 1982 and the
scheduled increase to $35,100 in 1983, and the increase in the
combined employer-employee social security tax rate to 13.4% on
January 1, 1982.
Table A-3. CURRENT SERVICES RECEIPTS BY SOURCE
(In billions of dollars)
Current services
1981
actual

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

1982
estimate

1983
estimate

1983
administration
estimates

285.9
61.1
182.7
40.8
28.7

298.5
46.7
206.5
42.9
31.9

301.0
56.2
223.6
40.4
32.1

304.5
65.3
222.5
41.7
32.1

599.3

626.4

653.3

666.1

On a current services basis, excise taxes are estimated to decrease by $2.4 billion, or 5.7%, from 1982 to 1983. This decrease is
due to a $2.9 billion decline in estimated windfall profit tax receipts that is only partially offset by a $0.4 billion rise in other
excise taxes.
Other receipts (estate and gift taxes, customs duties, and miscellaneous receipts) are projected to increase by $0.2 billion from 1982
to 1983 on a current services basis, largely as a result of increased
economic activity.
Outlays.—The level of outlays necessary to continue ongoing Federal programs and activities at 1982 levels without policy changes
is estimated at $779.3 billion in 1983. The increase in current
services outlays from 1982 to 1983 is $52.9 billion.
Table A-4 shows current services outlays by function. Estimates
by agency are presented in table A-5. The greatest dollar increases
from 1982 to 1983 occur in the income security, national defense,
interest, and health functions, largely due to increases in the
number of beneficiaries, cost-of-living adjustments, increases in the
prices of goods and services purchased or financed and, in the case
of interest, increased borrowing requirements.

THE BUDGET FOR FISCAL YEAR 1983
Table A-4. CURRENT SERVICES OUTLAYS BY FUNCTION
(In billions of dollars)
Current services
1981
actual

National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social services...
Health
Income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances:
Civilian agency pay raises
Reduction of fraud, waste and abuse
Undistributed debt collection
Undistributed offsetting receipts.Employer share, employee retirement
Interest received by trust funds
Rents and royalties on the Outer Continental Shelf.
Federal surplus property disposition
Total outlays.,

159.8
11.1
6.4
10.3
13.5
5.6
3.9
23.4
9.4
31.4
66.0
225.1
23.0
4.7
4.6
6.9
82.5

1982
estimate

186.2
11.1
6.9
6.4
12.6
8.6
3.3
21.1
8.4

28.2

74.0
251.5
24.2
4.6
4.9
6.4
99.1
0.4

1983
estimate

202.3
11.7
7.6
5.5
10.7
4.5
3.6
20.9
7.3
26.7
82.5
271.5
24.9
4.8
4.8

6.6

115.1
1.5

-6.4
-13.8
-10.1

-7.6

-7.7

-16.1

-7.9

-9.6

657.2

726.4

779.3

Table A-6 shows the major components of the changes in current
services outlays between 1982 and 1983. Outlays for income security programs are estimated to rise by $19.9 billion, from $251.5
billion in 1982 to $271.5 billion in 1983 due to automatic cost-ofliving increases in many benefit programs, increases in the number
of beneficiaries, and higher earnings records for new retirees. In
the case of social security, for example, about three-fourths of the
1982 to 1983 outlay increase is due to cost-of-living increases;
higher earnings records and net increases in beneficiaries account
for the remaining one-fourth. Table A-7 shows caseload projections
for major benefit programs and other selected programmatic
assumptions.
Current services outlays for the military functions of the Department of Defense are estimated to increase by $15.8 billion between
1982 and 1983. Increased outlays for retired military personnel
account for $1.6 billion of this increase. October 1982 pay raises of
8.0% for military and civilian personnel account for an additional
$4.9 billion of the increase. Current services outlays for other De-

SPECIAL ANALYSIS A
Table A-5. CURRENT SERVICES OUTLAYS BY AGENCY
(In billions of dollars)
Current services
lyol
actual

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

1982
estimate

1983
estimate

1983
administration
proposals

-30.3

1.5
.7
.1
6.4
29.7
11.7
181.5
3.0
253.9
14.7
3.1
2.6
32.1
2.2
20.4
109.8
5.4
5.8
24.1
13.7
19.9
15.1
0.4
-31.5

1.4
.8
.1
6.6
27.4
10.9
197.3
2.9
278.8
15.0
3.5
2.7
28.6
2.4
20.2
127.0
4.3
6.6
24.9
13.2
22.2
14.3
1.5
-33.4

1.4
.8
.1
6.9
23.5
9.9
215.9
2.3
274.2
13.1
3.3
2.7
26.5
2.4
19.0
124.5
4.6
6.6
24.4
11.4
21.7
7.1
-1.3
-43.5

657.2

726.4

779.3

757.6

1.2
.6
.1
7.0
26.0
11.5
156.1
3.1
228.1
14.0
6.8
2.8
30.1
1.9
22.5
93.4
5.2
5.4
22.9
13.1
18.1
17.6

partment of Defense purchases are estimated to increase by $9.3
billion, due to estimated price increases averaging 7.0% and to
spending from funds previously appropriated.
Current services outlays for the medicare and medicaid programs
are estimated to increase by $8.8 billion between 1982 and 1983,
largely as a result of increases in medical care prices.
Other major increases in current services outlays between 1982
and 1983 include an increase in net interest of $16.0 billion and
$1.5 billion for civilian agency pay raises.
The $4.0 billion decline in current services outlays for Agriculture between 1982 and 1983 results from a sharply lower estimate
of outlays required in 1983 for price supports and related Commodity
Credit Corporation programs.
Budget authority.—Current services budget authority is estimated to total $833.9 billion in 1983, $58.8 billion more than in 1982.
Increases in budget authority between 1982 and 1983 generally
reflect the higher funding levels that would be necessary to maintain 1982 services levels in real terms in 1983. In the case of most

THE BUDGET FOR FISCAL YEAR 1983
Table A-6. CHANGE IN CURRENT SERVICES BUDGET AUTHORITY AND OUTLAYS, 1982 TO 1983
(In billions of dollars)
Budget
authority

1982 current services estimate
1982-83 changes:
Income security:
Social security
Federal employee retirement and disability.
Unemployment compensation
Housing assistance
Food and nutrition assistance
Other income security programs
Subtotal, income security
National defense-.
Department of Defense—Military:
Military personnel
Procurement
Operation and maintenance
Military retired pay
Other defense military
Other national defense
Subtotal, National defense
International financial programs
General science, space, and technology
Energy programs
Natural resources and environment
Farm income stabilization
Mortgage credit and thrift insurance
Transportation programs
Community and regional development
Education
Training and Employment
Medicare and medicaid
Other health programs
Veterans programs
Net interest
Allowances for civilian agency pay raises
Rents and royalties, offshore oil lands
All other programs, net
1983 current services estimate

775.1
11.9
1.5
1.3
1.1
1.4
4.3

15.3
2.2
-2.5
1.4
1.4
2.1

21.5

19.9

5.5
4.4
3.8
1.6
1.2
0.4

5.3
3.4
4.0
1.6
1.6
0.3

16.8
-1.3
0.7
0.7
-0.1
-2.7
-0.7
0.2
0.9
1.0
1.0
1.4
0.6
1.4
16.0
1.6
-1.7
1.6

16.1
0.2
0.6
-1.0
-1.9
-4.1
0.2
-0.2
-1.1
-0.6
-0.5
8.3
0.2
0.7
16.0
1.5
-1.7
0.1

833.9

779.3

trust funds, however, the funds' receipts automatically become
budget authority; thus increases in budget authority for these
funds simply reflect year-to-year growth in expected receipts.
Budget authority for some programs display erratic year-to-year
changes due to sporadic funding patterns or advance funding.
Tables A-8 and A-9 show the estimates of current services
budget authority by function and by agency, respectively. The
major components of the changes in current services budget authority between 1982 and 1983 are shown in table A-6.

SPECIAL ANALYSIS A
Table A-7. CASELOADS AND PROGRAMMATIC ASSUMPTIONS
Fiscal years
1983

1982

Beneficiaries (annual average, in thousands):
Social security (OASDI)
Railroad retirement1
Federal civilian retirees
Military retirees
Veterans compensation
Veterans pensions
Gl bill
Disabled coal miners (including black lung)
Supplemental security income
Maintenance assistance (AFDC)
Food stamps
Housing subsidy recipients (section 8 housing)
Medicaid
Medicare:
Hospital insurance
Supplementary medical insurance
Automatic benefit increases (percent):
Social security and veterans pensions (July)
Federal employee retirement (March)
Food stamps (October)
Interest rate (91-day bills, percent, calendar years) 2
Budget deficit (current services, in billions of dollars)
Unemployment rate (percent, annual average, calendar years):
Total
Insured 3
Strategic petroleum reserves (millions of barrels) 1

36,312
988
1,357
1,384
2,638
1,846
970
464
3,654
10,955
23,000
3,859
21,908

36,868
974
1,408
1,427
2,644
1,763
812
440
3,630
10,980
21,380
4,292
22,418

28,450
28,228

28,927
28,773

8.1
8.9
11.7
100.0

6.5
6.6
10.7
10.5
126.0

8.9
4.9
267

7.9
4.3
343

1 End of year.
2 Average rate on new issues within period. These estimates assume, by convention, that interest rates decline with the rate of inflation. They
do not represent a forecast of interest rates.
This measures unemployment under State regular unemployment insurance as a percentage of covered employment under that program. It
does not include recipients of extended benefits under that program.

Increases in budget authority of $21.5 billion for income security
and $2.0 billion for health are primarily due to higher social security and medicare trust fund receipts and higher medicaid costs.
A $16.5 billion increase in budget authority for the Department
of Defense—Military largely reflects pay increases for military and
civilian personnel and increases in the costs of an equivalent level
of defense purchases.
Other major changes in current services budget authority include an increase in net interest of $16.0 billion; $1.6 billion for
allowances for civilian agency pay raises; a $1.0 billion increase in
education programs; a $1.0 billion increase in employment and
training programs; and a $1.4 billion increase for veterans programs.

THE BUDGET FOR FISCAL YEAR 1983
Table A-8. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION
(In billions of dollars)
Current services
1981
actual

National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and social servicesHealth
Income security
Veterans benefits and services
Administration of justice
General government
General purpose fiscal assistance
Interest
Allowances:
Civilian agency pay raises
Reduction of fraud, waste, and abuse
Undistributed debt collection
Undistributed offsetting receipts:
Employer share, employee retirement
Interest received by trust funds
Rents and royalties on the Outer Continental Shelf.
Federal surplus property disposition
Total budget authority..

182.4
24.8
6.5
6.8
11.1

6.6

6.5
24.9
8.1
30.5
68.9
249.9
23.2
4.3
5.1
6.3
82.5

1982
estimate

216.3
18.5
7.0
5.0
7.6
9.6
6.3
20.4

6.6

25.0
80.2
264.0
24.8
4.5
4.9
6.4
99.1
0.4

1983
estimate

233.1
18.0
7.7
5.7
7.5
7.0
5.8
20.6
7.5
27.3
82.1
285.5

26.2

4.8
5.1
6.6
115.1
1.6

-6.4
-13.8

-7.6

-7.7

-16.1

-10.1

-7.9

-9.6

718.4

775.1

833.9

DIFFERENCES BETWEEN CURRENT SERVICES ESTIMATES AND
BUDGET PROPOSALS

For 1982, the estimates of budget authority and outlays under
current services levels exceed the administration proposals by $9.7
billion and $1.1 billion, respectively. The 1982 receipts estimate
under administration proposals exceeds current services by $0.3
billion. The deficit under administration proposals is $1.4 billion
lower than that under current services.
For 1983, the administration's estimate of outlays is $21.6 billion
below the current services level, and budget authority is $32.0
billion below the current services level. The current services receipts level for 1983 is $12.8 billion below the administration's
estimate of $666.1 billion. The 1983 current services deficit of
$126.0 billion exceeds the administration's estimated deficit by
$34.5 billion.

SPECIAL ANALYSIS A
Table A-9. CURRENT SERVICES BUDGET AUTHORITY BY AGENCY
(In billions of dollars)

1981
actual

Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President
Department of Agriculture
Department of Commerce
Department of Defense-Military
Department of Defense-Civil
Department of Health and Human Services
Department of Housing and Urban DevelopmentDepartment of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Environmental Protection Agency
National Aeronautics and Space Administration....
Veterans Administration
Foundation for Education Assistance
Office of Personnel Management
Other independent agencies
Allowances
Undistributed offsetting receipts
Total budget authority ..

1.2
.7
.1
14.7
28.2
11.2
178.4
3.1
225.8
33.4
6.4
2.5
29.5
2.3
23.7
92.7
3.0
5.5
23.1
12.9
29.0
21.5

Current services
1982
estimate

1.4
.7
.1

11.0

30.5
10.3
211.5
2.9
252.7
24.2

1983
estimate

1.4
.8

11.0

28.8

11.0

-30.3

2.4
26.6
2.5
19.7
110.1
1.3
5.9
24.8
12.6
34.0
18.0
0.4
-31.5

227.9
2.9
270.2
25.3
3.6
2.7
28.3
2.6
19.9
127.4
1.4
6.6
26.2
13.5
35.6
18.5
1.6
-33.4

718.4

775.1

833.9

2.8

Receipts.—As shown in table A - l l , the administration's estimate
of receipts for 1982 is $0.3 billion higher than the current services
level of $626.4 billion. This difference is due primarily to proposed
improvements in tax collection and enforcement, and the proposed
increase in airport and airway user taxes, which increase receipts
by $0.2 billion and $0.1 billion, respectively.
The administration's proposals for 1983 are $12.8 billion above
the current services level. Proposed tax revisions, designed to eliminate unintended benefits and to remove obsolete incentives, account for $7.2 billion of the increase above the current services

THE BUDGET FOR FISCAL YEAR 1983
Table A-10. SUMMARY OF CURRENT SERVICES AND PROPOSED BUDGET TOTALS
(In billions of dollars)
1983 Estimate

1982 Estimate
1981
actual

Receipts
Outlays

Current
services

Administration
proposals

Current
services

599.3
657.2

626.4
726.4

626.8
725.3

653.3
779.3

666.1
757.6

Deficit ( — )

-57.9

-100.0

-98.6

-126.0

-91.5

Budget authority

718.4

775.1

765.5

833.9

801.9

level. Other proposed increases include improvements in tax collection and enforcement ($5.5 billion), airport and airway user taxes
($1.2 billion), passport and visa fees ($0.1 billion), and the requirement that Federal employees pay the employee portion of the
social security hospital insurance tax ($0.6 billion). These increases
are partially offset by the administration's proposal to convert the
rail industry's multi-employer pension system from a public to a
private system, which is estimated to reduce receipts by $1.7 billion.1
Table A - l l . ESTIMATED EFFECT OF PROPOSED LEGISLATION AND ADMINISTRATIVE ACTION ON
RECEIPTS
(In billions of dollars)
1982

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

626.4

Subtotal, tax revisions
Improved tax collection and enforcement..
Airport and airway trust fund
Passport and visa fees
Federal employee hospital insurance
Railroad retirement
Other

0.2
0.1

Subtotal, other receipts proposals.

0.3

Total proposed changes

0.3

Proposed receipts, President's budget..

626.8

* $ 5 0 million or less.

1 A more detailed discussion of the administration's receipts proposals is presented in the Budget of the United
States Government, Fiscal Year 1983, Part 4, "Budget Receipts."

SPECIAL ANALYSIS A

Outlays.—Table A-12 shows the major differences between the
administration's budget and the current services outlay level. In
1982, the major increase above current services outlays is $1.3
billion for the Department of Defense—Military. This increase and
several smaller increases are more than offset by proposed reductions in the guaranteed student loan program, medicare, food and
nutrition assistance, and legal services, and by the allowance for
reducing fraud, waste, and abuse. Proposed rescissions reduce 1982
outlays by $0.2 billion.
For 1983, proposed reductions result in a decrease in outlays of
$43.0 billion, which is partially offset by proposed increases in
defense and several other programs of $21.4 billion.
The administration proposals to modify entitlement programs
would reduce 1983 outlays by $12.8 billion. The major changes in
entitlement programs include:
• Guaranteed student loans.—Applying a needs test at all
income levels and increasing loan origination fees would
reduce 1983 outlays by $0.8 billion.
• Medicare.—Indexing the deductible amounts under the supplemental medical insurance (SMI) program to the consumer
price index, increasing the SMI premium, imposing a 2%
reduction in hospital reimbursement, and restraining the rate
of increase in physician fees would reduce 1983 outlays by
$2.5 billion.
• Medicaid.—Requiring a modest payment for medicaid services, reducing Federal matching payments for optional services, and eliminating Federal payment for cases that are in
error would reduce 1983 outlays by $2.0 billion.
• Railroad retirement.—Replacing a portion of the present pension for railroad retirees with a private rail industry pension
program would reduce 1983 outlays by $2.0 billion and reduce
1983 receipts by $1.7 billion.
• Federal civil service.—Requiring Federal employees to join
the hospital insurance program and limiting the cost-of-living
adjustments for civil service retirement annuities would increase 1983 payroll tax receipts by $0.6 billion and reduce
1983 outlays by $0.5 billion.
• Food stamps.—Increasing the benefit reduction from $0.30 to
$0.35 per dollar of additional income and eliminating the
deduction for earned income and the Federal payments for
cases that are in error would reduce 1983 outlays by $2.4
billion.
• Aid to families with dependent children (AFDC).—Strengthening the work requirement, eliminating the Federal payment
for cases that are in error, and redefining the method for
calculating individual benefits would reduce 1983 outlays by
$1.2 billion.

THE BUDGET FOR FISCAL YEAR 1983

• Supplemental security income.—Changing the disability criteria to a basis of long-term medical prognosis for recovery
would reduce 1983 outlays by $0.3 billion.
Changes proposed in other entitlement programs, including child
nutrition, Federal employee disability compensation, military retirement, trade adjustment assistance, and others, would reduce
1983 outlays by $1.3 billion.
Administration proposals to establish new or increase existing
user fees would increase offsetting collections and reduce 1983
outlays by $1.2 billion. These proposals would recover costs associated with aviation, navigation, and recreation programs; costs associated with the development of permanent disposal facilities for
high-level radioactive wastes, and costs associated with the provision of various other goods and services to special groups.
Administration initiatives in collection of delinquent debt, reduction of fraud, waste, and abuse, and disposition of Federal property
would reduce 1983 outlays by $3.0 billion below current services.
Accelerated leasing of outer continental shelf lands reduces 1983
outlays by $8.4 billion. The proposal to restrain civilian employee
pay, which limits the October 1982 pay raises to 5.0% for Federal
civilian employees rather than the 8.0% raise under comparability,
would reduce outlays by $1.4 billion below the current services
level. Improved asset sale management and other initiatives would
reduce 1983 outlays by $2.0 billion.
Net interest outlays are lower by $2.7 billion under the administration proposals. This reflects the lower Federal borrowing that
would be required if the administration's tax revisions and spending cuts are enacted.
Reductions proposed in discretionary and other nondefense programs would lower 1983 outlays by $11.1 billion. Proposed changes
in education, training, employment, and social services programs
would reduce 1983 outlays by $4.4 billion. Changes to other programs, such as energy, natural resources and environment, commerce and housing credit, transportation, health, income security,
and others would reduce 1983 outlays by $6.7 billion below the
current services estimate.
The largest outlay increase above the current services level for
1983 is the proposed $19.7 billion increase in defense programs for
higher purchases to carry out the administration's policy to maintain the deterrent capability of our conventional and strategic
forces as the Soviet Union and its allies increase their military
capabilities. Other major increases above current services for 1983
include $0.5 billion for sewage treatment construction grants; $0.3
billion for the economic support fund, $0.4 billion for the Internal
Revenue Service, and $0.5 billion for programs in the Federal
Aviation Administration.

SPECIAL ANALYSIS A

Table A-12. DIFFERENCES BETWEEN ADMINISTRATION BUDGET REQUEST AND CURRENT SERVICES
(Outlays; in billions of dollars)
1982

Current services estimates
Major Decreases:
National defense:
Entitlements (retired pay)
Management initiative (civilian employee pay raise).
Stockpile sales

726.4

Subtotal, national defense.
Nondefense:
Entitlements:
Guaranteed student loans
Medicare
Medicaid
Railroad retirement
Civil Service retirement and disability
Food stamps
Aid to families with dependent childrenSupplemental security income
Other entitlements
Subtotal, entitlements
Management initiatives:
Civilian agency pay raise
Other allowances
OCS receipts
Federal property disposition..
Other
Subtotal, management initiatives.
Net interest
Higher user fees
Other nondefense:
Energy programs
Natural resources and environment...
Transportation
Education
Employment and training (net)
Social services
Housing assistance
Other income security and health
All other (net)

-0.2

-0.3
-0.3

-0.3
-0.2
-0.1
-0.1

-1.4

-1.0

-0.1

-1.1

0.1*
-0.1
*
-0.1
_ *

_*
0.1

Subtotal, other nondefense..

-0.1

Subtotal, nondefense

-2.6

Total, decreases

360-700 0 - 8 2 - 2 (Pt. A)

-2.6

THE BUDGET FOR FISCAL YEAR 1983

Table A-12. DIFFERENCES BETWEEN ADMINISTRATION BUDGET REQUEST AND CURRENT SERVICES—
Continued
(Outlays; in billions of dollars)
1982

Major Increases:
National defense:
Department of Defense—military.
Other national defense
Subtotal, national defense.
Nondefense:
Foreign military sales credit
Economic support fund
Federal Aviation Administration
Sewage treatment construction grants..
Internal Revenue Service

1.3

0.1
0.1

Subtotal, nondefense.

0.2

Total, increases

1.5

Administration budget request ...
!

1.3

725.3

$50 million or less.

Budget authority.—For 1982, the largest increase in budget authority beyond current services is $2.6 billion for the Department
of Defense—Military. Supplemental appropriations requested for
sewage treatment construction grants account for an additional
$2.4 billion increase in budget authority beyond current services
levels. Increases totaling $0.7 billion are also proposed for the
Federal Aviation Administration and Internal Revenue Service.
Decreases totaling $10.7 billion result from rescissions of 1982
budget authority proposed by the administration. A supplemental
request to permit additional rescissions in the subsidized housing
program would reduce 1982 budget authority by a further $1.8
billion. Entitlement reforms would reduce 1982 budget authority by
$1.9 billion and reduction in fraud, waste, and abuse would reduce
budget authority by $1.0 billion.
The proposed reforms in entitlement programs would reduce
1983 budget authority by $9.4 billion below the current services
level. Proposed increases in user fees would reduce budget authority by a further $1.2 billion in 1983.
The administration's proposal to restrain civilian employee pay
decreases budget authority below the 1983 current services level by
$0.8 billion for civilian agencies and $0.8 billion for the Department
of Defense. The administration's proposal to reform the structure
of Federal housing assistance would reduce budget authority for
1983 by $22.5 billion below the current services level.

SPECIAL ANALYSIS A

Administration initiatives in collection of delinquent debt, reduction of fraud, waste, and abuse, and disposition of surplus Federal
property would reduce 1983 budget authority by $3.0 billion below
current services. Accelerated leasing of the Outer Continential
Shelf lands reduces budget authority by $8.4 billion in 1983. Proposed changes in education, training, employment, and social services programs would reduce 1983 budget authority by $7.6 billion.
Changes to other programs, such as energy, water resources, and
conservation, commerce and housing credit, transportation, community and regional development, and others would reduce 1983
budget authority by $9.8 billion below the current services estimate. The lower deficits under the administration proposals reduce
budget authority for net interest by $2.7 billion in 1983.
Budget authority increases proposed for defense programs are
$31.2 billion above the current services level for 1983. Other major
increases in budget authority above the current services level for
1983 include $1.1 billion for international security assistance; $2.4
billion for sewage treatment construction grants; $0.4 billion for
the Internal Revenue Service, and $1.2 billion for programs in the
Federal Aviation Administration.
Tables A-13 and A-14 provide a more detailed comparison (by
function, subfunction, and program) of the President's budget request for 1983 with the current services budget authority and
outlay estimates.

THE BUDGET FOR FISCAL YEAR 1983
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM
(In millions of dollars)
Current services
1981
actual

050 NATIONAL DEFENSE
051 Department of Defense—Military:
Military personnel
Retired military personnel
Proposed legislation
Operation and maintenance
Procurement
Research, development, test and evaluation
Military construction
Family housing
Revolving funds and other
Proposed legislation
Allowances for civilian and military pay raises..
Other legislation
Subtotal, Department of Defense—Military..
053

Atomic energy defense activities

054 Defense-related activities:
Existing law
Proposed legislation
Subtotal, Defense-related activities..
Deductions for offsetting receipts
Total budget authority
150 INTERNATIONAL AFFAIRS
151 Foreign economic and financial assistance:
Multilateral development banks
International fund for agricultural development
International organizations
Agency for International Development
Public Law 480—Food aid
Peace Corps
Refugee assistance
Offsetting receipts and other
Subtotal, Foreign economic and financial assistance.
152 International security assistance:
Foreign military sales credit
Economic support fund
Military assistance
International military education and training
Peacekeeping operations
Offsetting receipts and other
Proposed legislation

1982
estimate

1983
estimate

36,930
13,840

38,122
15,036

43,614
16,600

55,548
48,025
16,609
3,398
2,004
2,031

61,485
64,658
20,038
4,908
2,159
-315

65,285
69,072
21,178
5,160
2,287
-175

5,399

4,927

178,386

211,490

227,949

3,651

4,673

4,977

373

135

213

373

135

213

-4
182,405

-4
216,294

233,139

1,004

1,262

1,529

262
1,684
1,229
106
474
-259

215
1,782
1,000
105
503
-327

215
1,920
1,028
105
419
-372

4,499

4,540

4,845

500
2,100
110
34
-231

750
2,564
177
38
151
-194

799
2,731
188
41
43
-171

Subtotal, International security assistance..

2,543

3,486

3,631

153 Conduct of foreign affairs:
Administration of foreign affairs
International organizations and conferences....
Other
,

996
433
41

1,103
467
45

1,222

Subtotal, Conduct of foreign affairs..

1,471

1,615

1,780

508
50

SPECIAL ANALYSIS A
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

154

Foreign information and exchange activities

155 International financial programs:
Export-Import Bank
Foreign military sales trust fund (net)
International monetary programs
International commodity agreements
Other
Subtotal, International financial programs
Deductions for offsetting receipts
Total budget authority
250 GENERAL SCIENCE, SPACE, AND TECHNOLOGY
251 General science and basic research:
National Science Foundation programs
Department of Commerce general science programs
Smithsonian scientific information exchange activities
Subtotal, General science and basic research

726

746

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

3,986
4,446

3,557
3,622

2,701
3,622

-80

-82

15,844

8,352

7,097

6,241

-95

-97

24,812

18,483

17,982

18,126

1,036
504*

1,004
529*

1,058
564*

1,078
601*

1,541

1,533

1,621

1,679

253

Space flight
Space, science, applications, and technology

1,359

255

Supporting space activities

270 ENERGY
271 Energy supply:
Research and development
Proposed legislation
Uranium enrichment
Petroleum reserves
Power marketing
Incentives for non-conventional fuel production
Subtotal, Energy supply
272

Energy conservation

274

Emergency energy preparedness

276 Energy information, policy, and regulation:
Existing law
Proposed legislation
Subtotal, energy information, policy, and regulation
Deductions for offsetting receipts
Total budget authority
300 NATURAL RESOURCES AND ENVIRONMENT
301 Water resources:
Navigation fees (proposed)
Existing law

1983
administration
proposals

588

254

Total budget authority

1983
estimate

551

3,187

Deductions for offsetting receipts

1982
estimate

3,578

3,983

1,381

1,526

450

508

618

-5

6,533

6,995

7,743

7,800

3,808

2,755

2,935

2,010
185

442
-655
-96
-1,274

1
-908
1,841

109
-848
2,083

-848
2,071

2,224

3,689

4,279

3,418

728

369

440

2,791

191

204

242

1,089

869

850

772
-60

1,089

869

850

712

-62

-69

6,769

5,050

5,704

4,330

4,163

3,916

4,153

-448
3,824

THE BUDGET FOR FISCAL YEAR 1983

Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

1982
estimate

1983
estimate

1983
administration
proposals

4,163

3,916

4,153

3,376

2,054
496
178
579
-558

1,759
450
161
570
-964

1,765
462
170
604
-1,433

1,783
455
160
428
-1,433

2,749

1,976

1,569

1,393

319
27
942

176
33
1,014

139
33
1,063

1,287

1,224

1,235

1,156

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

1,281
28
68
1,605

1,045
5
189

1,114
6
200

934
3
229
2,400

Subtotal, Pollution control and abatement

2,981

1,239

1,320

3,566

1,500

1,548

1,622

1,457
13

Subtotal, Water resources
302 Conservation and land management:
Management of national forests, cooperative forestry, and
forestry research
Management of public lands
Mining reclamation and enforcement
Conservation of agricultural lands
Offsetting receipts and other
Subtotal, Conservation and land management
303 Recreational resources:
Federal land acquisition
Urban park grants and historic preservation fund
Operation of recreational resources
Proposed legislation
Subtotal, Recreational resources

306 Other natural resources:
Existing law
Proposed legislation
Subtotal, Other natural resources

1,092
-5

1,500

1,548

1,622

1,470

-1,553

-2,330

-2,409

-2,520

11,128

7,571

7,489

8,440

350 AGRICULTURE
351 Farm income stabilization:
Commodity price-support and related programs
Crop insurance
Agricultural credit
Other programs and administrative expenses

4,207
58
573
211

7,085
425
464
62

3,828
717
682
63

3,828
717
682
62

Subtotal, Farm income stabilization

5,049

8,037

5,290

5,289

630
304
80

657
316
119

698
335
124

291

283

301

703
312
117
-2
233*

156
176
-78

160
119
-77

178
130
-84

175
126
-84

1,559

1,578

1,682

1,580

-4

Deductions for offsetting receipts
Total budget authority

352 Agricultural research and services:
Research programs
Extension programs
Marketing programs
Proposed legislation
Animal and plant health programs
Proposed legislation
Economic intelligence
Other programs and administrative expenses
Offsetting receipts
Subtotal, Agricultural research and services
Deductions for offsetting receipts

SPECIAL ANALYSIS A
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

Total budget authority
370 COMMERCE AND HOUSING CREDIT
371 Mortgage credit and thrift insurance:
Mortgage purchase activities (GNMA)
Mortgage credit (FHA)
Housing for the elderly or handicapped
Rural housing programs (FmHA)
National Credit Union Administration
Subtotal, Mortgage credit and thrift insurance
372

Postal Service

376 Other advancement of commerce:
Small business assistance
National Consumer Cooperative Bank
Technology utilization
Proposed legislation
Economic and demographic statistics
Chrysler Corporation loan guarantee program
Other
Subtotal, Other advancement of commerce
Deductions for offsetting receipts
Total budget authority
400 TRANSPORTATION
401 Ground transportation:
Highway improvement and construction
Proposed legislation
Highway safety
Mass transit
Railroads
Regulation
Subtotal, Ground transportation
402 Air transportation:
Airways and airports (FAA)
Proposed legislation
Aeronautical research and technology
Air carrier subsidies
Regulation
Subtotal, Air transportation
403 Water transportation:
Marine safety and transportation (Coast Guard)
Coast Guard user fees (proposed)
Ocean shipping
Regulation
Subtotal, Water transportation
407

Other transportation

Deductions for offsetting receipts

1982
estimate

1983
estimate

1983
administration
proposals

6,646

9,611

6,968

6,865

1,358
412
797
596
15

1,252
252
745
1,583
230

1,207
212
677
1,112
121

2
134
277
1,112
121

3,178

4,061

3,329

1,646

1,343

619

808

500

875
105
242

570
52
260

636

379

237

270
1
529

185
1
525

207
1
561

233
-41
199
1
511

2,022

1,594

1,641

1,282

-7

-8

6,537

6,266

5,770

3,419

9,093

8,596

9,224

199
4,727
4,134
82

213
3,546
1,942
70

216
3,801
1,184
75

7,949
80
204
3,202
814
69

18,236

14,367

14,500

12,317

3,412

2,493

2,678

526
115
29

474
86
26

486
70
27

3,130
774
486
48
24

4,082

3,078

3,262

4,463

2,006

2,471

2,286

574
12

489
11

512
11

1,989
-200
480
10

2,592

2,971

2,809

2,279

109

113

-99

-97

-70

THE BUDGET FOR FISCAL YEAR 1983
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

Total budget authority
450 COMMUNITY AND REGIONAL DEVELOPMENT
451 Community development:
Community development block grants
Urban development action grants
Rental rehabilitation grants (proposed)
Neighborhood Reinvestment Corporation
Pennsylvania Avenue development
Other programs
Subtotal, Community development
452 Area and regional development:
Rural development
Economic development assistance
Coastal energy impact assistance
Indian programs
Proposed legislation
Regional commissions
Other programs
Proposed legislation
Offsetting receipts
Subtotal, Area and regional development
453 Disaster relief and insurance:
SBA disaster loans
Disaster relief
National flood insurance fund
Other
Subtotal, Disaster relief and insurance
Deductions for offsetting receipts
Total budget authority
EDUCATION, TRAINING, EMPLOYMENT, AND
SOCIAL SERVICES
501 Elementary, secondary, and vocational education:
Education for the disadvantaged
State education block grant
Indian education
Impact aid
Education for the handicapped
Proposed legislation
Vocational and adult education
Proposed legislation
Other

1982
estimate

1983
estimate

1983
administration
proposals

24,920

20,405

20,591

19,102

3,695
675

3,456
440

3,726
474

12
32
397

14
18
356

15
12
361

3,456
440
150
16
12
386

4,811

4,284

4,588

4,460

701
476

585
224

761
225

754
15

1,278

1,178

1,243

1,225
30

356
212

158
129

166
138

119
- 1

-397

-325

-343

2,626

1,949

2,191

1,801

302
93
63

650
62
68

325
62
66

737

458

779

452
-55

315
359

-30

-51

-55

8,143

6,640

7,503

6,658

3,112
614
352
662
1,025

2,893
537
332
453
1,042

3,081
572
342
483
1,110

1,942
433
308
289

782

740

788

166

143

152

500
99

6,713

6,139

6,528

4,417

3,802
2,535

3,353
3,061

3,576
3,397

340

321

341

1,800
3,397
-912
233

500

Subtotal, Elementary, secondary, and vocational education
502 Higher education:
Student financial assistance
Guaranteed student loan program
Proposed legislation
Higher and continuing education

846

SPECIAL ANALYSIS A
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

Other general institutional assistance
Special institutions
Subtotal, Higher education
503 Research and general education aids:
Educational research and statistics
Cultural activities
Other
Subtotal, Research and general education aids
504 Training and employment:
Employment and training assistance
Proposed legislation
Temporary employment assistance
Older workers
Work incentive program
Federal-State employment service
Other
Subtotal, Training and employment
505 Other labor services:
Existing law
Proposed legislation
Subtotal, Other labor services
506 Social services:
Social services block grant
Community service programs
Child welfare block grant
Proposed legislation
Services for children, youth, and families, the elderly and
other special groups
Proposed legislation
Domestic volunteer programs
Other social services
Subtotal, Social services
Deductions for offsetting receipts
Total budget authority
550 HEALTH
551 Health care services:
Medicare
Proposed legislation
Medicare premiums and collections
Proposed legislation
Medicaid
Proposed legislation
Health block grants
Other health care services
Proposed legislation
Subtotal, Health care services

1982
estimate

1983
estimate

1983
administration
proposals

32
204

78
215

49
226

49
222

6,913

7,028

7,589

4,789

75
673
539

62
639
525

67
643
535

62
562
436

1,286

1,226

1,245

1,060

7,143

3,023

3,787
2,387

431
277
365
799
94

67
246
547
74

266
244
554
85

487
81

9,109

3,956

4,936

2,955

606

574

615

639
-2

606

574

615

637

2,399
525
174

2,400
378
465

2,450
395
501

1,974
104
420
-40

2,599

2,645

2,851

153
87

129
63

129
68

2,338
-4
118
59

5,935

6,080

6,395

4,968

-13

-31

-32

30,550

24,973

27,276

18,794

45,292

55,846

62,293

-3,340

-3,862

-4,418

17,530

19,012

14,531

3,980

3,897

4,149

61,293
-1,910
-4,418
26
14,427
-1,432
516
3,225
741

63,462

74,893

76,555

72,468

THE BUDGET FOR FISCAL YEAR 1983
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)

1981
actual

552 Health research:
National Institutes of Health research
Other research programs

Current services
1982
estimate

1983
estimate

1983
administration
proposals

3,352
405

3,442
381

3,693
407

3,554
416

3,757

3,824

4,100

3,969

553 Education and training of health care work force:
Research training
Clinical training
Other

217
353
94

198
199
63

213
212
19

195
125
16

Subtotal, Education and training of health care workforce

665

460

444

337

708

668

708

369

344

343

712
-2
351
-9

1,077

1,012

1,051

1,052

-25

-16

-17

68,936

80,172

82,132

77,808

132,950

150,128

161,981

4,675

5,500

5,843

1,778
28

1,873
31

1,792
37

161,981
6,593
5,843
-5,493
1,780
37

139,431

157,531

169,653

170,741

28,498

33,222

34,664

279

345

398

34,664
-8
394
-58

28,777

33,567

35,062

34,992

19,048

21,006

22,330

22,392
-143

19,048

21,006

22,330

22,249

24,840
1,265

16,367
1,432

17,313
1,548

-5,221
1,367

26,105

17,799

18,861

-3,854

11,740

11,559

12,650

5,103

4,498

4,836

12,650
-2,294
3,747

Subtotal, Health research

554 Consumer and occupational health and safety:
Consumer safety
Proposed legislation
Occupational safety and health
Proposed legislation
Subtotal, Consumer and occupational health and safety...
Deductions for offsetting receipts
Total budget authority
600 INCOME SECURITY
601 General retirement and disability insurance:
Social security (OASDI)
Proposed legislation
Railroad retirement
Proposed legislation
Special'benefits for disabled coal miners
Other
Subtotal, General retirement and disability insurance
602 Federal employee retirement and disability:
Retirement and disability programs
Proposed legislation
Federal employee workers' compensation
Proposed legislation
Subtotal, Federal employee retirement and disability....
603 Unemployment compensation:
Existing law
Proposed legislation
Subtotal, Unemployment compensation
604 Housing assistance:
Subsidized housing
Other
Subtotal, Housing assistance
605 Food and nutrition assistance:
Food stamps and aid to Puerto Rico
Proposed legislation
Child and other nutrition programs

SPECIAL ANALYSIS A
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

1982
estimate

1983
estimate

-319

Proposed legislation
Subtotal, Food and nutrition assistance
609 Other income security:
Supplemental security income
Proposed legislation
AFDC and related assistance
Proposed legislation
Combined welfare administration
Proposed legislation
Earned income tax credit
Refugee assistance
Low income energy assistance
Other
Subtotal, Other income security
Total budget authority
700 VETERANS BENEFITS AND SERVICES
701 Income security for veterans:
Service-connected compensation
Proposed legislation
Non-service-connected pensions
Proposed legislation
Burial and other benefits
National service life insurance trust fund
U.S. Government life insurance trust fund
All other insurance programs
Insurance program receipts
Subtotal, Income security for veterans
702 Veterans education, training, and rehabilitation:
Existing law
Proposed legislation
Subtotal, Veterans education, training, and rehabilitation
703 Hospital and medical care for veterans:
Medical care and hospital services
Proposed legislation
Construction
Medical administration, research, and other
Subtotal, Hospital and medical care for veterans

16,573

16,058

17,486

13,784

7,227

7,878

9,177

8,485

6,303

7,163

9,177
-286
7,163
-1,300
1,914
-259
1,180
532
1,300
243

1,914
1,318
902
1,850
204

1,254
670
1,752
230

1,180
703
1,752
242

19,985

18,086

22,131

19,664

249,918

264,047 *

285,524

257,576

8,530

9,604

10,293

3,794

4,073

3,981

208
1,104
34
5
-465

147
1,162
32
8
-476

141
1,256
30
6
-470

9,522
624
3,981
-66
141
1,256
30
6
-470

13,210

14,550

15,238

15,024

2,351

1,945

1,691

1,691
-25

2,351

1,945

1,691

1,666

6,339

6,966

7,702

386
194

497
184

630
189

7,496
5
630
194

6,919

7,647

8,521

8,324

704 Veterans housing:
Housing program receipts (existing law)
Housing program receipts (proposed)

-95

Subtotal, Veterans housing
705 Other veterans benefits and services:
VA administrative expenses and other
Proposed legislation
Non-VA support programs

1983
administration
proposals

-95
656

648

707

704

THE BUDGET FOR FISCAL YEAR 1983

Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)

1981
actual

Subtotal, Other veterans benefits and services
Deductions for offsetting receipts
Total budget authority
750 ADMINISTRATION OF JUSTICE
751 Federal law enforcement activities:
General investigation (FBI)
Narcotics violation investigation (DEA)
Alcohol, tobacco, and firearms investigation (ATF)
Border enforcement activities (Customs and INS)
Protection activities (Secret Service)
Other enforcement
Subtotal, Federal law enforcement activities
752 Federal litigative and judicial activities:
Civil and criminal prosecution and representation
Federal judicial activities
Representation of indigents in civil cases
Subtotal, Federal litigative and judicial activities

690
-3

Current services
1982
estimate

682
-3

1983
estimate

745
-3

1983
administration
proposals

743
-3

23,167

24,821

26,191

25,660

675
215
150
864
186
259

740
231
79
938
232
260

799
249
79
1,049
237
266

799
247
1,055
303
266

2,350

2,479

2,679

2,671

506
658
321

517
747
241

573
806
260

576
850

1,485

1,504

1,639

1,427

753

Federal correctional activities

352

367

384

383

754

Criminal justice assistance

169

140

143

Deductions for offsetting receipts
Total budget authority
800 GENERAL GOVERNMENT
801 Legislative functions
802

Executive direction and management

803 Central fiscal operations:
Collection of taxes
Federal Financing Bank
Other fiscal operations
Subtotal, Central fiscal operations
804 General property and records management:
Real property
Personal property
Records management
Other
Subtotal, General property and records management
805 Central personnel management
806 Other general governmentTerritories
Indian affairs
Treasury claims

-13

-35

-23

4,343

4,455

4,823

4,525

1,031

1,188

1,189

1,217

108

104

2,480
-210
410

2,466
-158
342

2,510
-192
448

2,917
-192
428

2,679

2,650

2,767

3,154

175
89
313

20
75
273

23
85
239

38
85
239

577

369

347

362

162

132

139

172
145
504

163
11
506

175
12
506

134
14
506

SPECIAL ANALYSIS A
Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

Other
Subtotal, Other general government
Deductions for offsetting receipts
Total budget authority
850 GENERAL PURPOSE FISCAL ASSISTANCE
851 General revenue sharing:
General revenue sharing payments
Administration
Subtotal, General revenue sharing
852 Other general purpose fiscal assistance:
Payments and loans to the District of Columbia
New York City loan guarantee program
Payments to States from Forest Service receipts
Other payments to States and counties from Federal land
management activities
Payments in lieu of taxes
Proposed legislation
Payments to territories and Puerto Rico
Other

1983
administration
proposals

1983
estimate

1982
estimate

-58

763

683

699

660

-195

-200

-186

-377

5,125

4,912

5,059

5,259

4,567
7

4,567
6

4,567

4,573

489
1
241

489
1
242

551
*

242

342

453
103

606
96

763
96

763

385
5

407
5

416
6

45
416
6

Subtotal, Other general purpose fiscal assistance

1,678

1,846

2,073

2,123

Total budget authority

6,251

6,419

6,646

6,696

95,503

115,700

135,529

133,229
-329

95,503

115,700

135,529

132,900

1,046
-8,570
-5,442

1,712
-11,885
-6,432

1,937
-15,171
-7,146

1,937
-15,171
-7,146
16

-12,966

-16,606

-20,380

-20,364

82,537

99,094

115,149

112,536

392

1,581

900 INTEREST
901 Interest on the public debt:
Existing law
Proposed legislation
Subtotal, Interest on the public debt
902 Other interest:
Interest on refunds of tax collections
Interest on loans to the Federal Financing Bank
Other
Proposed legislation
Subtotal, Other interest
Total budget authority
920 ALLOWANCES
921 Civilian agency pay raises

757

922

Reduction of fraud, waste, and abuse

-1,000

924

Undistributed debt collection

-1,000

927 Contingencies for relatively uncontrollable programs
928

Contingencies for other requirements
Total budget authority

392

1,581

-1,243

THE BUDGET FOR FISCAL YEAR 1983

Table A-13. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)

1981
actual

Current services

1983
administration
proposals

1982
estimate

1983
estimate

-6,371

-7,560

-7,734

-7,734
-619

-6,371

-7,560

-7,734

-8,353

-13,810

-16,053

-16,062

-16,062
-59

-13,810

-16,053

-16,062

-16,122

-10,138

-7,861

-9,600

-18,000

-30,320

-31,745

-33,396

-43,474

718,400

775,124

833,874

801,910

950 UNDISTRIBUTED OFFSETTING RECEIPTS
951 Employer share, employee retirement:
Existing law
Proposed legislation
Subtotal, Employer share, employee retirement
952 Interest received by trust funds:
Existing law
Proposed legislation
Subtotal, Interest received by trust funds
953 Rents and royalties on the Outer Continental
Shelf
954

Federal surplus property disposition
Total budget authority
Total budget authority

-1,000

SPECIAL ANALYSIS A
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM
(In millions of dollars)
Current services
1981
actual

050 NATIONAL DEFENSE
051 Department of Defense—Military:
Military personnel
Retired military personnel
Proposed legislation
Operation and maintenance
Procurement
Research, development, test and evaluation
Military construction
Family housing
Revolving funds and other
Proposed legislation
Allowances for civilian and military pay raises
Other legislation
Subtotal, Department of Defense—Military
053

Atomic energy defense activities

054 Defense-related activities:
Existing law
Proposed legislation
Subtotal, Defense-related activities

1982
estimate

1983
estimate

1983
administration
proposals

44,534
16,560
-89
67,279
55,144
22,200
3,975
2,436
-625
63
4,285
137

36,409
13,729

37,927
15,000

43,263
16,570

51,920
35,191
15,278
2,463
1,721
-614

59,957
41,259
18,264
2,725
2,065
-782

63,912
44,629
19,498
2,914
2,263
-671

5,081

4,927

156,096

181,497

197,305

215,900

3,398

4,498

4,806

5,155

276

203

415
-402

276

203

-4

159,765

186,193

202,314

221,068

955
10
326
1,544
1,254
99
384
-357

1,109
30
220
1,608
1,141
105
465
-398

1,253
40
215
1,730
1,028
105
455
-453

1,253
40
184
1,720
1,028
98
455
-451

4,215

4,280

4,374

4,327

152 International security assistance:
Foreign military sales credit
Economic support fund
Military assistance
International military education and training
Peacekeeping operations
Offsetting receipts and other
Proposed legislation

507
2,053
228
22
29
292

755
2,307
317
40
164
-97

774
2,415
321
41
54
-71

913
2,683
203
50
54
-71
4

Subtotal, International security assistance

3,131

3,485

3,535

3,835

868
441
39

1,017
474
46

1,147
581
48

1,168
582
44

1,347

1,537

1,776

1,794

Deductions for offsetting receipts
Total outlays
150 INTERNATIONAL AFFAIRS
151 Foreign economic and financial assistance:
Multilateral development banks
International fund for agricultural development
International organizations
Agency for International Development
Public Law 480—Food aid
Peace Corps
Refugee assistance
Offsetting receipts and other
Subtotal, Foreign economic and financial assistance

153 Conduct of foreign affairs:
Administration of foreign affairs
International organizations and conferences
Other
Subtotal, Conduct of foreign affairs

THE BUDGET FOR FISCAL YEAR 1983
Tabie A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)

1981
actual

154

Foreign information and exchange activities

155 International financial programs:
Export-Import Bank
Special defense acquisition fund
Foreign military sales trust fund (net)
International monetary programs
International commodity agreements
Other
Subtotal, International financial programs
Deductions for offsetting receipts
Total outlays
250 GENERAL SCIENCE, SPACE, AND TECHNOLOGY
251 General science and basic research:
National Science Foundation programs
Department of Commerce general science programs
Smithsonian scientific information exchange activities
Subtotal, General science and basic research

Current services
1982
estimate

1983
estimate

1983
administration
proposals

525

599

642

655

2,066

1,855
-288
122

2,004
-305
247

1,918
-218
247

-880

29
-452

-493

2,007

1,265

1,454

1,455

-95

-97

11,130

11,070

11,684

11,968

981
501*

1,101
559*

982
552*

982
589*

456
365

1,483

1,660

1,535

1,572

Space flight

3,053

3,462

3,992

254

Space, science, applications, and technology

1,384

1,344

1,462

255

Supporting space activities

444

481

603

613

253

Deductions for offsetting receipts
Total outlays
270 ENERGY
271 Energy supply:
Research and development
Proposed legislation
Uranium enrichment
Petroleum reserves
Power marketing
Incentives for non-conventional fuel production
Subtotal, Energy supply
272

Energy conservation

274

Emergency energy preparedness

276 Energy information, policy, and regulation:
Existing law
Proposed legislation
Subtotal, Energy information, policy, and regulation
Deductions for offsetting receipts
Total outlays
300 NATURAL RESOURCES AND ENVIRONMENT
301 Water resources:
Navigation fees (proposed)

-5

6,359

6,942

7,586

7,633

3,893

3,615

2,840

341
-624
1,658
93

-271
-736
1,824
123

-31
-803
1,750
39

2,255
-115
-141
-803
1,730
39

5,362

4,554

3,795

2,965

757

748

660

326

3,280

227

262 I

302

940

967

819 '

750
-60

940

967

819

690

-62

-69

10,277

6,427

5,467

4,215

-448

SPECIAL ANALYSIS A
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

1982
estimate

1983
estimate

1983
administration
proposals

4,215

4,106

4,162

3,855

4,215

4,106

4,162

3,407

1,920
492
131
597
-565

1,968
429
137
572
-923

1,829
435
145
604
-1,412

1,834
429
146
540
-1,427

2,576

2,184

1,602

1,521

495
71
1,066

482
109
1,053

321
83
1,058

271
61
1,056
-5

1,632

1,644

1,462

1,383

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

1,264
1
23
3,881

1,207
117
11
4,050

1,165
173
7
2,886

1,070
187
6
3,350

Subtotal, Pollution control and abatement

5,169

5,384

4,231

4,613

1,485

1,568

1,619

1,494
13

Existing law
Subtotal, Water resources
302 Conservation and land management:
Management of national forests, cooperative forestry, and
forestry research
Management of public lands
Mining reclamation and enforcement
Conservation of agricultural lands
Offsetting receipts and other
Subtotal, Conservation and land management
303 Recreational resources:
Federal land acquisition
Urban park grants and historic preservation fund
Operation of recreational resources
Proposed legislation
Subtotal, Recreational resources

306 Other natural resources:
Existing law
Proposed legislation
Subtotal, Other natural resources

1,485

1,568

1,619

1,507

-1,553

-2,330

-2,409

-2,520

13,525

12,556

10,667

9,911

350 AGRICULTURE
351 Farm income stabilization:
Commodity price-support and related programs
Crop insurance
Agricultural credit
Other programs

4,036
1
-228
184

6,343
212
405
81

1,850
318
698
62

1,850
318
698
60

Subtotal, Farm income stabilization

3,993

7,041

2,928

2,926

624
301
87

667
312
125

699
335
124

282

289

306

694
308
117
-2
_238
*

147
177
-78

160
121
-77

178
131
—84

175
126
-84

1,540

1,598

1,688

1,572

Deductions for offsetting receipts
Total outlays

THE BUDGET FOR FISCAL YEAR 1983
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services

1981
actual

Deductions for offsetting receipts
Total outlays
370 COMMERCE AND HOUSING CREDIT
371 Mortgage credit and thrift insurance:
Mortgage purchase activities (GNMA)
Mortgage credit (FHA)
Housing for the elderly or handicapped
Rural housing programs (FmHA)
Federal Deposit Insurance Corporation
Federal Savings and Loan Insurance Corporation and other..
National Credit Union Administration
Subtotal, Mortgage credit and thrift insurance
372

Postal Service

376 Other advancement of commerce:
Small business assistance
National Consumer Cooperative Bank
Technology utilization
Proposed legislation
Economic and demographic statistics
Chrysler Corporation loan guarantee program
Other
Subtotal, Other advancement of commerce
Deductions for offsetting receipts
Total outlays
400 TRANSPORTATION
401 Ground transportation:
Highway improvement and construction
Proposed legislation
Highway safety
Mass transit
Railroads
Regulation
Subtotal, Ground transportation
402 Air transportation:
Airways and airports (FAA)
Proposed legislation
Aeronautical research and technology
Air carrier subsidies
Regulation
Subtotal, Air transportation
403 Water transportation:
Marine safety and transportation (Coast Guard)
Coast Guard user fees (proposed)
Ocean shipping
Regulation
Subtotal, Water transportation

1982
estimate

1983
estimate

1983
administration
proposals

-4

5,572

8,635

4,612

4,494

1,148
182
817
-129
-1,726
370
-10

1,032
-245
711
1,095
-1,800
38
93

1,080
-399
835
1,619
-2,000
-150
104

1,135
-1,179
286
1,619
-2,000
-150
104

651

925

1,090

-184

1,343

619

808

500

812
131
242

610
86
257

709
3
237

368

286
1
487

195
1
588

199
1
567

233
-45
192
1
535

1,959

1,738

1,716

1,284

-7

-8

3,946

3,275

3,306

1,591

9,068

8,264

8,752

336
3,917
3,703
75

307
3,817
2,271
70

264
4,023
1,449
74

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

17,100

14,728

14,562

13,045

3,158

2,953

2,893

544
119
29

544
88
25

516
73
27

3,209
166
516
52
25

3,850

3,610

3,509

3,968

1,829

2,083

2,235

580
12

653
11

559
11

2,238
-200
527
10

2,420

2,747

2,805

2,575

SPECIAL ANALYSIS A
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

407

Other transportation

Deductions for offsetting receipts
Total outlays
450 COMMUNITY AND REGIONAL DEVELOPMENT
451 Community development:
Community development block grants
Urban development action grants
Rental rehabilitation grants (proposed)
Neighborhood Reinvestment Corporation
Pennsylvania Avenue development
Other programs
Subtotal, Community development
452 Area and regional development:
Rural development
Economic development assistance
Local public works
Coastal energy impact assistance
Indian programs
Proposed legislation
Regional commissions
Other programs
Proposed legislation
Offsetting receipts
Subtotal, Area and regional development
453 Disaster relief and insurance:
SBA Disaster loans
Disaster relief
National flood insurance fund
Other programs
Subtotal, Disaster relief and insurance
Deductions for offsetting receipts
Total outlays
EDUCATION, TRAINING, EMPLOYMENT, AND
SOCIAL SERVICES
501 Elementary, secondary, and vocational education:
Education for the disadvantaged
State education block grant and related
Indian education
Impact aid
Education for the handicapped
Proposed legislation
Vocational and adult education
Proposed legislation
Other

110

1982
estimate

1983
estimate

1983
administration
proposals

111

-99

-97

-70

23,381

21,078

20,899

19,628

4,042
371

4.005
525

3,355
551

3,350
550

12
35
650

14
32
489

15
17
396

16
17
417

5,111

5,065

4,334

4,349

839
536
83
36
984

1,066
422
60
37
1,030

1,214
292
30
25
1,099

425
203

325
245

305
171

1,217
262
30
21
1,088
5
301
151

-397

-325

-343

2,708

2,860

2,795

2,732

1,101
401
54
48

-77
406
107
66

-290
351
84
72

-290
381
84
62

1,604

502

217

237

- 1

-30

-51

-55

9,394

8,376

7,291

7,263

3,354
735
316
697
1,035

3,007
671
327
580
1,273

2,962
630
335
513
1,075

728

1,157

795

178

157

153

2,553
578
314
359
839
38
474
170
142

7,043

7,171

6,464

5,467

500

Subtotal, Elementary, secondary, and vocational education

THE BUDGET FOR FISCAL YEAR 1983
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

502 Higher education:
Student financial assistance
Guaranteed student loan program
Proposed legislation
Higher and continuing education
Other general institutional assistance
Special institutions
Subtotal, Higher education
503 Research and general education aids:
Educational research and statistics
Cultural activities
Other
Subtotal, Research and general education aids
504 Training and employment:
Employment and training assistance
Proposed legislation
Temporary employment assistance
Older workers
Work incentive program
Federal-State employment service
Other
Subtotal, Training and employment
505 Other labor services:
Existing law
Proposed legislation
Subtotal, other labor services
506 Social services:
Social services block grants
Community service programs
Child welfare block grant
Proposed legislation
Services for children, youth, and families, the elderly, and
other special groups
Proposed legislation
Domestic volunteer programs
Other social services
Subtotal, Social services
Deductions for offsetting receipts
Total outlays
550 HEALTH
551 Health care services:
Medicare
Proposed legislation
Medicare Premiums and Collections
Proposed legislation
Medicaid
Proposed legislation
Health block grants

1982
estimate

1983
estimate

1983
administration
proposals

3,906
2,259

3,513
3,039

3,254
3,331

369
49
206

348
117
219

373
74
245

3,137
3,313
-762
342
74
241

6,790

7,236

7,276

6,346

61
663
500

91
663
556

108
644
592

106
623
544

1,223

1,310

1,344

1,273

6,848

4,210

3,788

778
1,400

852
263
381
804
93

55
268
269
547
82

266
242
554
84

6
11
487
81

9,241

5,431

4,936

2,764

587

574

611

635
-2

587

574

611

633

2,646
619
180

2,912
508
493

2,450
368
532

1,974
183
423
-40

2,838

2,351

2,534

150
97

133
80

129
85

2,376
-4
119
69

6,531

6,476

6,098

5,101

-13

-31

-32

31,402

28,167

26,697

21,552

42,489

49,872

57,823

-3,340

-3,862

-4,418

16,948

18,164

19,059

57,099
-1,747
-4,418
26
18,959
-1,883
387

SPECIAL ANALYSIS A
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

1982
estimate

1983
estimate

1983
administration
proposals

4,254

4,376

4,394

3,605
647

Subtotal, Health care services

60,351

68,550

76,858

72,675

552 Health research:
National Institutes of Health research
Other research programs

3,394
442

3,422
418

3,575
433

3,515
427

3,836

3,840

4,008

3,941

553 Education and training of health care work force:
Research training
Clinical training
Other

210
453
116

196
349
92

197
375
65

186
203
62

Subtotal, Education and training of health care workforce

779

637

451

668

677

717

353

339

343

716
-2
349
-8

1,042

1,017

1,060

Other health care services
Proposed legislation

Subtotal, Health research

554 Consumer and occupational health and safety:
Consumer safety
Proposed legislation
Occupational safety and health
Proposed legislation
Subtotal, Consumer and occupational health and safety...
Deductions for offsetting receipts
Total outlays
600 INCOME SECURITY
601 General retirement and disability insurance:
Social security (OASDI)
Proposed legislation
Railroad retirement
Proposed legislation
Special benefits for disabled coal miners
Other
Subtotal, General retirement and disability insurance
602 Federal employee retirement and disability:
Retirement and disability programs
Proposed legislation
Federal employee worker's compensation
Proposed legislation
Subtotal, Federal employee retirement and disability
603 Unemployment compensation:
Existing law
Proposed legislation
Subtotal, Unemployment compensation
604 Housing assistance:
Subsidized housing
Other housing assistance
Subtotal, Housing assistance

1,055

-25

-16

-17

65,982

74,027

82,546

78,105

137,970

154,643

169,928

5,294

5,707

6,072

1,773
-13

1,957
-39

1,793
-17

169,928
3,608
6,072
-5,722
1,781
-16

145,024

162,268

177,776

175,650

17,309

19,116

21,215

238

269

398

21,215
-489
394
-58

17,547

19,385

21,613

21,062

19,664

25,245

22,747

22,747
-149

19,664

25,245

22,747

22,598

5,747
1,195

6,775
1,521

7,852
1,803

7,352
1,532

6,942

8,296

9,655

8,884

THE BUDGET FOR FISCAL YEAR 1983
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)

1981
actual

605 Food and nutrition assistance:
Food stamps and aid to Puerto Rico
Proposed legislation
Child nutrition and other programs
Proposed legislation
Subtotal, Food and nutrition assistance
609 Other income security:
Supplemental security income
Proposed legislation
AFDC and related assistance
Proposed legislation
Combined welfare administration
Proposed legislation
Earned income tax credit
Refugee assistance
Low income energy assistance
Other
Subtotal, Other income security
Total outlays
700 VETERANS BENEFITS AND SERVICES
701 Income security for veterans:
Service-connected compensation
Proposed legislation
Non-service-connected pensions
Proposed legislation
Burial and other benefits
National service life insurance trust fund
U.S. Government life insurance trust fund
All other insurance programs
Insurance program receipts
Subtotal, Income security for veterans
702 Veterans education, training, and rehabilitation:
Existing law
Proposed legislation
Subtotal, Veterans education, training, and rehabilitation
703 Hospital and medical care for veterans:
Medical care and hospital services
Proposed legislation
Construction
Medical administration, research, and other
Subtotal, Hospital and medical care for veterans
704 Veterans housing:
Loan guaranty revolving fund
Direct loan revolving fund
Other (HUD participation trust fund)
Housing program receipts (existing law)
Housing program receipts (proposed)

Current services
1982
estimate

1983
estimate

1983
administration
proposals

11,253

11,517

12,600

4,949

4,325

4,634

16,202

15,842

17,234

13,772

7,192

8,000

9,188

8,504

8,322

7,163

9,188
-286
7,163
-1,300
1,914
-259
1,180
633
1,300
237

1,914
1,318
726
1,780
202

1,254
849
1,865
223

1,180
892
1,865
229

12,600
-2,258
3,695
-265

19,721

20,514

22,431

19,770

225,099

251,549

271,455

261,736

8,426

9,488

10,316

3,755

3,944

4,077

208
965
70
-50
-465

145
979
62
-67
-476

141
991
60
-63
-470

9,609
561
4,077
-62
141
991
60
-63
-470

12,909

14,075

15,051

14,843

2,254

1,883

1,582

1,582
-25

2,254

1,883

1,582

1,557

6,320

6,945

7,570

412
233

444
206

524
211

7,364
5
524
216

6,965

7,594

8,305

8,108

278
-128
51

13
-68
-14

-573
-183
-13

-573
-183
-13
-95

SPECIAL ANALYSIS A
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

Subtotal, Veterans housing
705 Other veterans benefits and services:
VA administrative expenses and other
Proposed legislation
Non-VA support programs
Subtotal, Other veterans benefits and services
Deductions for offsetting receipts
Total outlays
750 ADMINISTRATION OF JUSTICE
751 Federal law enforcement activities:
General investigation (FBI)
Narcotics violation investigation (DEA)
Alcohol, tobacco, and firearms investigation (ATF)
Border enforcement activities (Customs and INS)
Protection activities (Secret Service)
Other enforcement
Subtotal, Federal law enforcement activities
752 Federal litigative and judicial activities:
Civil and criminal prosecution and representation
Federal judicial activities
Representation of indigents in civil cases
Subtotal, Federal litigative and judicial activities

1982
estimate

1983
estimate

1983
administration
proposals

201

-68

-769

-863

629

645

700

_702*

662

679

738

741
-3

-3

22,988

24,159

24,905

24,383

691
217
147
890
189
251

739
227
82
924
230
266

798
245
77
1,036
234
277

798
242
1,041
298
265

2,384

2,468

2,666

2,643

517
651
324

498
743
259

567
795
260

570
840
13

1,493

1,501

1,622

1,423

753

Federal correctional activities

361

376

387

386

754

Criminal justice assistance

473

318

183

162

-13

-35

-23

4,698

4,628

4,836

4,592

1,036

1,194

1,174

1,204

101

2,429
-210
382

2,415
-158
343

2,460
-192
442

2,860
-192
424

2,600

2,599

2,711

3,092

-142
-33
84
260

1
65
73
288

-171
27
84
244

-171
35
84
244

169

428

184

192

159

131

140

197

184

186

169

Deductions for offsetting receipts
Total outlays
800 GENERAL GOVERNMENT
801 Legislative functions
802

Executive direction and management

Central personnel management

806 Other general government:
Territories

THE BUDGET FOR FISCAL YEAR 1983
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)

1981
actual

Indian affairs
Treasury claims
Other

12
506
-20

1983
estimate

11
506
-34

1983
administration
proposals

14
506
-33

745

682

669

656

-195

-200

-186

-377

4,614

4,928

4,793

5,008

5,134
7

4,570
6

4,567
6

5,140

4,576

4,573

492
1
241

479
1
242

541*

541
*

242

342

450
104

605
96

763
96

763

423
5

411
7

416
5

45
416
5

Subtotal, Other general purpose fiscal assistance

1,716

1,841

2,063

2,113

Total outlays

6,856

6,417

6,636

6,686

95,503

115,700

135,529

133,229
-329

95,503

115,700

135,529

132,900

1,046
-8,570
-5,443

1,712
-11,885
-6,431

1,937
-15,171
-7,146

1,937
-15,171
-7,146
16

-12,967

-16,605

-20,380

-20,364

82,537

99,095

115,149

112,536

376

1,534

Subtotal, Other general government
Deductions for offsetting receipts
Total outlays
850 GENERAL PURPOSE FISCAL ASSISTANCE
851 General revenue sharing:
General revenue sharing payments
Administration
Subtotal, General revenue sharing
852 Other general purpose fiscal assistance:
Payments and loans to the District of Columbia
New York City loan guarantees: administrative expenses,...
Payments to States from Forest Service receipts
Other payments to States and counties from Federal land
management activities
Payments in lieu of taxes
Proposed legislation
Payments to territories and Puerto Rico
Other

150
504
-105

Current services
1982
estimate

Total outlays

920 ALLOWANCES
921 Civilian agency pay raises

743

922

Reduction of fraud, waste, and abuse

-1,000

924

Undistributed debt collection

-1,000

927 Contingencies for relatively uncontrollable programs
928

Contingencies for other requirements
Total outlays

376

1,534

-1,257

SPECIAL ANALYSIS A
Table A-14. CURRENT SERVICES OUTLAYS BY FUNCTION AND PROGRAM—Continued
(In millions of dollars)
Current services
1981
actual

1983
estimate

-6,371

-7,560

-7,734

-7,734
-619

-6,371

-7,560

-7,734

-8,353

-13,810

-16,053

-16,062

-16,062
-59

-13,810

-16,053

-16,062

-16,122

-10,138

-7,861

-9,600

-18,000

Total outlays

-30,320

-31,475

-33,396

-43,474

Total outlays

657,204

726,423

779,280

757,638

1983
administration
proposals

1982
estimate

-1,000

Federal surplus property disposition

SPECIAL ANALYSIS B

FEDERAL TRANSACTIONS IN THE
NATIONAL INCOME ACCOUNTS

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

FFICE OF MANAGEMENT AND BUDGET
XECUTIVE OFFICE OF THE PRESIDENT
February 1982

SPECIAL ANALYSES
A. Current Services Estimates
B. Federal Transactions in the National Income Accounts
C. Funds in the Budget
D. Investment, Operating, and Other Budget Outlays
E. Borrowing and Debt
F. Federal Credit Programs
G. Tax Expenditures
H. Federal Aid to State and Local Governments
I. Civilian Employment in the Executive Branch
J. Civil Rights Activities
K. Research and Development
Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS B
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-of-payments position.
—It proposes an allocation of resources between the private and
public sectors and within the public sector. Through its impact
on consumption and investment decisions and the distribution
of income it also affects allocation decisions within the private
sector.
—It sets forth the President's request to the Congress for appropriations 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
and on the tax and spending programs proposed by the President.
For study of aggregate economic activity, however, the national
income and product accounts (NIA) of the United States provide
the most useful measures. This special analysis shows Federal finances as measured in the NIA. The analysis is divided into three
major sections. The first shows the size, composition, and trends in
Federal sector receipts and expenditures. Additional details will be
published in the March 1982 issue of the Department of Commerce
publication, Survey of Current Business. The second section of this
analysis shows quarterly estimates of Federal sector receipts and
expenditures, while the final section explains the major differences
between the budget and the NIA concepts. A discussion of fiscal
policy can be found in the Economic Report of the President
FEDERAL SECTOR RECEIPTS AND EXPENDITURES

Table B - l shows Federal sector NIA receipts, expenditures, and
deficits for 1981-83.

THE BUDGET FOR FISCAL YEAR 1983
Table B - l . FEDERAL RECEIPTS AND EXPENDITURES IN THE NIA
(In billions of dollars)
Description

1982 estimate

1981 actual

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

290.7
69.6
56.6
196.1

303.5
58.7
57.4
221.4

613.0

641.0

218.3
(147.1)
(71.2)
279.7
(273.9)
(5.8)
90.1
66.9
13.0
-.1

249.0
(174.1)
(74.9)
312.1
(306.0)
(6.1)
86.3
81.4
12.5
.1

667.9

741.4

-54.9

-100.4

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
Total expenditures..
Deficit ( - )

Note-. The estimates for 1982 and 1983 are preliminary; any revisions will be published in the March 1982 issue of the Survey of Current
Business.

Trends in Federal sector receipts.—Table B - l divides receipts into
four major categories, which are also illustrated in the chart on the
distribution of Federal sector receipts by category. Table B-2
shows, at 10-year intervals, 3-year averages of Federal sector receipts by category as a percent of the gross national product (GNP)
for the early 1950's, 1960's, and 1970's to provide a perspective
relative to the current levels of receipts. For the earlier periods, 3year averages were used in order to eliminate the impact of annual
fluctuations and to permit greater focus on trends. However, there
are now major changes in direction in the relative size of Federal
sector receipts. To better reflect these changes the table shows the
1981 actual percentages and 1983 estimated percentages separately.
Table B-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

1951-53
average
actual

1961-63
average
actual

1971-73
average
actual

1981
actual

1983
estimate

7.4
5.7
3.0
2.1

8.6
4.2
2.6
3.5

9.0
3.2
1.9
5.1

10.2
2.4
2.0
6.9

9.0
2.3
1.7
7.1

18.2

18.9

19.2

21.4

20.0

SPECIAL ANALYSIS A

Personal tax and nontax receipts.—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. Traditionally, increases in income, because
of both real growth and inflation, would automatically increase
these receipts. Indeed, since personal income taxes are progressive,
these receipts normally grow at a faster rate than personal income.
Periodically over the past three decades tax reductions were enacted that offset part of the increase in effective tax rates resulting
from the progressive tax structure. However, the Economic Recovery Tax Act of 1981 has drastically altered these circumstances.
That act provided for across-the-board tax reductions and—starting
in 1985—indexing of income tax brackets, the zero bracket amount,
and the personal exemption to inflation. As a result, personal tax
and nontax receipts will increase at a much slower rate in the
future than the increases that normally would have been called for
under existing tax law.

Distribution of Federal Sector Receipts by Category
Percent

1956

Fiscal Years

Percent

81 83
Estimate

Corporate profits tax accruals.—Corporate profits tax accruals
vary significantly from year to year because corporate profits are
highly volatile. The NIA corporate profits taxes differ from the
corresponding budget category primarily because: (1) the NIA includes the deposit of earnings by the Federal Reserve System as

THE BUDGET FOR FISCAL YEAR 1983

corporate profits taxes, whereas the budget treats these collections
as miscellaneous receipts; and (2) the NIA records corporate profits
taxes when the profits are earned (that is, accrued), while the
unified budget records the cash receipts.
The gradual decline in corporate profits tax receipts relative to
GNP and (as shown in the chart above) to total receipts results
mainly from three factors: (1) a long-term decline in corporate
profits relative to GNP; (2) a narrowing of the corporate profits tax
base resulting from changes in the definition of corporate profits
for tax purposes (largely increases in permissible depreciation allowances); and (3) reductions in effective tax rates on corporate
profits resulting from statutory rate reductions and tax credits.
Recently enacted tax changes designed to stimulate investment
further accelerated this trend toward a relative reduction in corporate profits taxes.
Indirect business tax and nontax accruals.—These receipts are
composed of excise taxes, customs duties, and various miscellaneous receipts such as the windfall profit tax, rents and royalties
on the Outer Continental Shelf lands, import fees on crude oil and
petroleum products, and coal-mining reclamation fees. Over time,
indirect business tax and nontax accruals have become a much less
important part of total Federal sector receipts, partly because they
normally do not rise in proportion to the growth in the economy
and partly because some of them, such as the automobile and
telephone excise taxes, have been reduced or repealed. Despite this
relative decline, the use of excise taxes as user charges to finance
Federal programs such as highways and airways makes this an
important source of financing certain specialized programs in the
budget.
Contributions for social insurance.—This is the second largest
category of Federal sector receipts. The increase 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 increases in the taxable wage base
and tax rates needed to finance liberalization of benefits. As a
result of the rapid rise in social insurance taxes (mainly social
security) and the passage of legislation reducing or eliminating
individual income taxes for many low- and moderate-income individuals and families, millions of Americans now pay significantly
higher social insurance taxes than income taxes. The combined
effect of the tax reductions provided by the Economic Recovery Tax
Act of 1981 and the social security tax increases under current
laws—plus the proposal to include Federal civilian employees
under hospital insurance taxes for the first time—dramatically

SPECIAL ANALYSIS A

reinforce this trend toward social insurance collections rising relative to total NIA receipts.
Major tax changes.—Last year the Congress enacted one of the
most sweeping sets of changes in tax law ever enacted: the Economic Recovery Tax Act of 1981. This budget proposes some relatively small additional tax changes—most of which will affect years
beyond 1983—but almost all of the changes in tax receipts reflected
herein due to legislation arise from the effects of the Economic
Recovery Tax Act of 1981 and from changes in the social security
tax rates and base that occur automatically under current law.
The Economic Recovery Tax Act of 1981:
—Marginal individual income tax rates were reduced by 5%
effective October 1, 1981. They will be reduced an additional
10% effective July 1, 1982 and an additional 8% effective July
1, 1983 from the levels called for under prior law.
—Other major changes affecting personal taxes include reducing
the maximum marginal income tax rate to 50%, reducing the
maximum effective tax rates on capital gains, allowing taxpayers who do not itemize deductions to deduct charitable contributions, permiting taxpayers who are covered by retirement
programs to open tax-exempt individual retirement accounts,
and significantly reducing tax liabilities under estate and gift
taxes.
—Corporation income taxes were reduced through imposition of
lower tax rates on the first $50,000 of corporate taxable
income, faster write-offs under depreciation allowances, and
liberalization in provisions permitting less profitable corporations to transfer tax benefits to more profitable ones.
Social insurance contributions:
—Under previously enacted legislation, the Federal social security taxable earnings base increased from $29,700 in calendar
year 1981 to $32,400 in 1982 and is estimated to increase to
$35,100 in 1983. The social security tax rate also rose in 1981
(to 13.3%) and in 1982 (to 13.4%). The next scheduled increase
is to 14.1% in 1985.
—Under the administration's proposals, the railroad retirement
trust fund is to be abolished at the end of 1982. The railroad
retirement covered population is proposed to be included under
social security and medicare in the same manner as if they
had always been under social security; the railroad retirement
program in excess of that provided by social security is proposed to be absorbed by a Government-created private insurance corporation.

THE BUDGET FOR FISCAL YEAR 1983

—Most Federal civilian employees are not covered by social security or medicare—they are generally covered by Federal employee staff pensions (such as the civil service retirement fund)
and medical insurance programs. The administration is recommending that Federal civilian employees be included in the
hospital insurance program; this will raise contributions for
social insurance by $1.2 billion in 1983.
Additional details about enacted and proposed tax changes can
be. found in Part 4 of the 1983 Budget on a unified budget basis;
additional detail on an NIA basis will be published in the March
1982 Survey of Current Business.
Trends in Federal sector expenditures.—Federal sector expenditures are also divided into several major NIA categories. The principal distinction is between purchases of goods and services (which
are divided between 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,
therefore, included in the GNP. The other expenditure categories
consist primarily of payments to individuals and grants to State
and local governments. These individuals and governments, in
turn, can use the income to finance their own consumption or
purchases of goods and services, to save, and—in the case of States
and localities—to hold down taxes or to make transfer payments.
The chart on the distribution of Federal sector expenditures
illustrates the trends starting with 1956. As can be seen, major
shifts in the composition of Federal sector expenditures occur over
time. For example, for most years since the Korean war, defense
purchases of goods and services have been a declining share of
Federal spending. This pattern was temporarily reversed for 3
years during the Vietnam period, but by 1970 the defense share
was well below the pre-Vietnam percentages. This budget reflects
the President's efforts to reverse the relative decline in our Nation's defense capability that accompanied these reductions. Defense purchases are expected to total 23.5% of Federal sector expenditures in 1982 and 25.8% in 1983; they were 22.0% in 1981,
and 21.8% in 1980.
As with table B-2, table B-3 shows historical data on 3-year
averages in order to reflect basic trends, but the 1981 and 1983
data show the major shifts from trend in the 1983 budget.
Defense purchases and foreign transfer payments are, of course,
largely devoted to the conduct of our national defense and foreign
affairs. In 1951-53 defense purchases were 10.9% of GNP; 1951 was
the first year of the Korean war. Foreign transfer payments in
1951-53 averaged 0.8% of GNP. The total of these—11.7%—reflects
roughly the cost of the conduct of external affairs. The years 196163, a post-Korean war peacetime period, reflected a significantly

SPECIAL ANALYSIS A

Fiscal Years

Estimate

Table B-3. FEDERAL SECTOR EXPENDITURES AS A PERCENT OF GNP
Description

Defense purchases
Nondefense purchases
Domestic transfer payments
Foreign transfer payments
Grants-in-aid to State and local governments
Net interest paid
Subsidies less current surplus of Government enterprises...
Total expenditures

1961-63
average
actual

1951-53
average
actual

1971-73
average
actual

1983
estimate

1981
actual

10.9

8.9

6.4

5.1

5.9

1.7

2.1

2.3

2.5

2.0

2.5

4.6

6.8

9.6

9.5

1.4

2.9

3.2

2.2

1.4

1.2

1.3

2.3

2.8

18.2

19.3

20.6

23.4

22.9

lower level of defense expenditures relative to the GNP than was
prevalent prior to the Korean war. In that period, defense purchases and foreign transfers combined were equal to 9.4% of GNP.
Even though the 1971-73 period included some spending for the
Vietnam war, defense purchases and foreign transfers were down
to 6.6% of GNP. In 1981, defense purchases plus foreign transfer
payments were equal to 5.3% of the GNP—well below the 1971-73
average—but by 1983 they are expected to total 6.1% of GNP.

THE BUDGET FOR FISCAL YEAR 1983

Over the past several decades, spending on most other expenditure categories—especially nondefense purchases, domestic transfer
payments, and grants-in-aid—has risen dramatically relative to
GNP. 1951-53 spending for everything except defense purchases
and foreign transfer payments was equal to 6.6% of GNP; in 197173 such spending is estimated to equal 14% of GNP. In 1981 all
other Federal spending was equal to 18.0% of GNP, while spending
on defense purchases and foreign transfer payments was equal to
5.3%. The current effort to strengthen our national defense capability and to simultaneously reduce the size of the Government
relative to the economy will begin to have a noticeable effect by
1983. In that year, defense purchases are estimated at 0.8% of GNP
higher than just 2 years earlier, while all other spending is estimated to decline by 1.3 percentage points relative to GNP from
1981.
Table B-4 displays purchases of goods and services (defense and
nondefense) with a split by character of expenditures between compensation of employees and all other purchases.
Table B-4. PURCHASES OF GOODS AND SERVICES BY CHARACTER OF EXPENDITURE
(In billions of dollars)
1978
actual

Defense purchases:
Compensation of employees
Other
Total defense purchases
Nondefense purchases:
Compensation of employees
Other
Total nondefense

1979
actual

1980
actual

1981
actual

1983
estimate

45.4
52.6

48.0
59.4

51.4
74.7

57.6
89.5

64.2
109.9

69.5
133.7

98.0

107.4

126.1

147.1

174.1

203.2

25.1
27.6

26.7
29.3

28.6
35.5

30.4
40.8

31.2
43.7

32.5
37.2

52.7

56.0

64.1

71.2

74.9

69.7

Defense purchases of goods and services.—Defense purchases consist of all purchases of goods and services under programs included
in the national defense function in the budget document. In addition, defense purchases include purchases of goods and services by
the military assistance programs that in earlier years had been
classified in the national defense function but are now classified in
the international affairs function in the budget. Normally about
95% of defense purchases are made by the Department of Defense,
Military. The bulk of the remainder is for international security
assistance, defense stockpiles, civil defense, and nuclear weapons
programs carried out by other agencies.
The budget calls for an increase in defense purchases of $29.1
billion in 1983 over 1982. This increase more than offsets the
impact of inflation, thus continuing the recent trend of rising

SPECIAL ANALYSIS A

defense purchases in real terms. The pattern of real defense spending has altered significantly over the past decade. From a Vietnam
peak in 1968, real defense purchases declined each year until 1976.
Between 1976 and 1978 they stayed remarkably stable, and starting
in 1979 began the rise that is continuing in this budget. While real
(i.e., price adjusted) defense spending has increased each year since
1979, the rate of increase was sufficiently slow that defense purchases continued to decline relative to GNP. However, in 1982 and
1983 the rate of increase is sufficiently high that defense purchases
are projected to rise relative to GNP for these years.
Constant price data for NIA defense purchases are available for
all years since 1972. While similar data are not available for years
prior to 1972, the budget includes constant price estimates of outlays in the national defense function. This category and defense
purchases in the NIA are sufficiently similar so that these figures
give a rough approximation of the same transactions. Table B-5
shows the budget estimates of outlays in constant prices for the
national defense function for selected years and defense purchases
by year since 1972.
Table B-5. DEFENSE OUTLAYS IN CONSTANT (FISCAL YEAR 1972) PRICES
(In billions of dollars)
National defense budget outlays

1945 1
1948 2
1950 3
1953 4
1956 s
1965 6
1968 7
1970-74 average
1975-78 average
1979-82 average estimate
1983 estimate
1
L'
:t
4
5
7
K
,J

Defense purchases of goods and services

255.5
20.5
29.7
96.6
74.1
69.3
101.7
77.3
68.2
75.7
90.4

1972
1973
1974
1975
1976
1977
1978 s
1979
1980
1981 9
1982 estimate
1983 estimate

72.2
68.1
64.4
64.1
63.1
63.3
62.8
64.0
67.6
70.0
76.1
83.1

World War II peak year.
Post-World War II low; includes large offsets from sale of assets acquired during the war.
Last year prior to Korean war.
Korean war peak year.
Post-Korean war low in the 1950's.
Post-Korean war low in the 1960's.
Peak of spending during Vietnam war.
Lowest point in post-Vietnam era.
Last year for which "actual" data are available.

Nondefense purchases of goods and services.—This category
covers the goods and services purchased by Federal nondefense
agencies. These include such programs as operation of 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, energy,
space, and other scientific research; the capital outlays of Govern-

THE BUDGET FOR FISCAL YEAR 1983

ment enterprises; Federal law enforcement; and operation of veterans hospitals. Table B-6 shows these purchases by agency for the
years 1975 to 1983. To the extent feasible the data base was reconstructed to show Departments of Education and Energy spending
in the successor agencies proposed in the 1983 budget.
Nondefense purchases consist mainly of the cost of operating the
various nondefense agencies. In the case of Government enterprises
(including the CCC and the Postal Service), however, the purchases
figures reflect net capital formation. The most volatile major segment of nondefense purchases is CCC purchases, because the Corporation buys and sells agricultural commodities. On occasion—as
in 1979 and in 1983—such sales may exceed new purchases.

Table B-6.—NONDEFENSE PURCHASES OF GOODS AND SERVICES BY AGENCY AND ACTIVITY
(In billions of dollars)
Estimate

Actual
1975

Legislative and judicial branches
Department of Agriculture
Commodity Credit Corporation
Forest Service
All other
Department of Commerce
Corps of Engineers, Civil
Department of Health and Human Services
Health
Income security and other
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Coast Guard
Federal Aviation Administration
Other
Department of the Treasury
Internal Revenue Service
Other
Environmental Protection Agency
National Aeronautics and Space Administration
Veterans Administration
Hospital and medical care
Administration and other
All other
Tennessee Valley Authority

1.0
2.6
(0.2)
(0.8)
(1.5)
2.3
2.1
4.8
(3.2)
(1.6)
0.7
2.2
1.3
0.7
0.7
2.9
(0.8)
(1.7)
(0.4)
2.5
(1.6)
(0.9)
0.5
3.2
4.1
(3.6)
(0.5)
6.1
(1.0)

1976

1.1
2.6
(0.2)
(0.9)
(1-5)
3.0
2.2
5.3
(3.6)
(1.7)
0.5
2.4
1.4
1.0
0.9
3.2
(0.9)
(1.8)
(0.4)
2.7
(1.7)
(1.0)
0.5
3.6
4.7
(3.9)
(0.7)
5.6
(1.1)

1977

1.4
5.4
(2.6)
(1.1)
(1.7)
4.0
2.3
5.7
(3.7)
(2.0)
0.5
2.9
1.6
1.1
1.0
3.6
(1.0)
(2.0)
(0.5)
2.9
(1.8)
(1.1)
0.6
3.9
5.2
(4.6)
(0.7)
6.3
(1.2)

1978

1.5
4.5
(0.9)
(1.2)
(2.3)
5.1
2.6
6.4
(4.4)
(2.0)
0.6
3.1
1.8
1.3
1.2
3.9
(1.1)
(2.2)
(0.6)
3.1
(1.9)
(1.2)
0.6
3.9
5.8
(5.1)
(0.7)
7.3
(1.5)

1979

1.6
2.8
(-0.9)
(1.5)
(2.2)
6.2
2.9
6.8
(4.6)
(2.3)
0.7
3.5
1.9
1.7
1.4
4.3
(1-3)
(2.3)
(0.8)
3.5
(2.1)
(1.4)
0.8
4.1
6.2
(5.4)
(0.7)
7.6
(2.0)

1980

1.8
5.5
(1.1)
(1.8)
(2.6)
6.6
3.3
7.9
(5.3)
(2.5)
0.5
2.7
2.1
1.9
1.5
4.8
(1-4)
(2.5)
(0.9)
4.0
(2.3)
(1.7)
0.9
4.8
7.1
(6.3)
(0.8)
8.7
(1.7)

1981

1.8
6.0
(1.4)
(1.9)
(2.7)
6.5
3.2
8.6
(5.9)
(2.6)
-0.1
7.0
2.4
1.9
1.5
5.0
(1.6)
(2.7)
(0.7)
4.0
(2.4)
(1.6)
1.0
5.3
7.6
(6.8)
(0.9)
9.5
(1-7)

1982

2.2
7.9
(3.3)
(1-9)
(2.6)
5.8
3.0
8.8
(5.6)
(3.3)
0.2
5.5
2.4
2.0
1.7
5.3
(1.9)
(2.6)
(0.9)
4.4
(2.5)
(1.9)
1.1
5.7
8.2
(7.4)
(0.8)
10.7
(2.2)

1983

2.3
2.7
(-1.4)
(1-8)
(2.3)
3.9
2.6
8.6
(5.4)
(3.2)
0.2
5.7
2.6
1.8
2.0
5.7
(1.9)
(3.0)
(0.8)
4.8
(2.9)
(1.9)
1.0
6.2
8.7
(7.9)
(0.7)
10.9
(2.2)

Table B-6—NONDEFENSE PURCHASES OF GOODS AND SERVICES BY AGENCY AND ACTIVITY—Continued
(In billions of dollars)
Actual
1975

OPM: Employee health benefits and imputed employee retirement contributions.
Postal Service
Imputed bank service charges
Foundation for Education Assistance
Other
Total

1976

1977

1978

Estimate
1979

1980

1981

1982

1983

(0.6)
(0.7)
(0.5)
(0.3)
(3.0)

(0.7)
(0.7)
(0.3)
(0.3)
(2.5)

(0.9)
(0.4)
(0.5)
(0.3)
(3.0)

(1.1)
(0.3)
(0.6)
(0.3)
(3.5)

(1.4)
(0.4)
(0.4)
(0.3)
(3.1)

(1.7)
(0.4)
(0.3)
(0.3)
(4.3)

(2.0)
(0.5)
(0.4)
(0.4)
(4.5)

(2.2)
(0.5)
(0.4)
(0.4)
(5.0)

(2.4)
(0.9)
(0.4)
(0.3)
(4.7)

37.7

40.7

48.4

52.7

56.0

64.1

71.2

74.9

69.7

SPECIAL ANALYSIS A

Normally the Department of Health and Human Services accounts for more nondefense purchases than any other agency, but
the decline estimated in 1983 combined with the rise in Veterans
Administration spending is projected to move it to second place. Its
nondefense purchases are estimated to total $8.8 billion in 1982
and $8.6 billion in 1983. Of the 1983 total, $5.4 billion is for health
programs—both for the administration of health care and for medical research—and $3.2 billion is for income security and related
programs, especially for the costs of administering the old-age,
survivors, and disability (social security) trust funds. The next largest agency in terms of nondefense purchases traditionally has been
the Veterans Administration, which is expected to surpass the
HHS total in 1983. The bulk of these purchases are for hospital and
medical care for veterans. Both the National Aeronautics and
Space Administration with $6.2 billion in 1983 nondefense purchases and the Department of Commerce with $3.9 billion in 1983
nondefense purchases conduct major research and development
programs, though the Commerce Department also has purchases
for a wide range of other activities. (The Commerce Department
spending shown herein also includes the bulk of nondefense purchases for energy.) The Transportation Department's $5.7 billion of
1983 nondefense purchases are mainly for the operation of the
Federal Aviation Agency and the Coast Guard. The Corps of Engineers has an estimated $2.6 billion in 1983 nondefense purchases
which, along with the Tennessee Valley Authority's $2.2 billion,
is primarily for public works for natural resources and power
activities.
Domestic transfer payments.—This is the largest category of Federal sector expenditures. Spending for domestic transfers has expanded rapidly in recent years, mainly because of more beneficiaries and higher benefit payments under social insurance programs. As table B-7 shows, spending on human resources programs—especially income security programs—dominates domestic
transfer payments. This spending is expected to continue to rise in
1983, largely due to demographic and economic conditions—increases in the covered population and adjustments to compensate
for inflation. Social security accounts for 51.8% of total domestic
transfer payments in 1983, while medicare accounts for another
16.6%, unemployment assistance for 6.4%, Federal employee's retirement and disability civilian and military for 11.1%, and veterans benefits for 5.2% of the total. Program trends (on a unified
budget basis) are discussed extensively in Part 5 of the Budget and
elsewhere in the budget documents. The great bulk of domestic
transfer payments is for income support and characterized by automatic eligibility of coverage and automatic benefit increases with
price changes. For these programs the demographic and economic

THE BUDGET FOR FISCAL YEAR 1983

conditions completely dominate the growth patterns, and the rate
of growth is quite substantial for all years shown herein. However,
for those programs that are less fully automatic—primarily in the
education, training, employment, and social services function in
the human resources grouping, and in the nonhuman resources
functions—the budget proposes significant restraint in the spending levels.
The table reflects the administration's proposal to include the
railroad retirement population under social security in 1983 and to
abolish the railroad retirement trust fund.

Table B-7 FUNCTIONAL COMPOSITION OF DOMESTIC TRANSFER PAYMENTS
(In billions of dollars)
Actual
Description

HUMAN RESOURCES PROGRAMS
Income security:
Social security (OASDI)
Railroad retirement
Civil service retirement
Unemployment benefits-.
Benefits for coal miners
Supplemental security income
Food and nutrition
Special payments, Treasury1
Workmen's compensation
Other
Subtotal, Income security
Health:
Medicare
Other
Subtotal, Health
Education,

social

training,

services:

employment,

1975

1976

Estimate
1977

1978

1979

1980

1982

1981

1983

70.3
3.4
8.2
18.3
1.0
4.6
4.7
.9
.5
.2

81.1
3.7
9.4
14.2
.9
4.7
4.4
.9
.5
.2

89.3
3.9
10.8
10.9
1.0
4.9
4.5
.9
.6
.2

99.4
4.2
12.3
9.9
1.6
5.2
5.7
.8
.7
.1

113.7
4.7
14.5
16.3
1.8
5.7
7.9
1.3
.8
.6

134.1
5.2
17.4
18.1
1.7
6.4
9.6
1.4
.9
.2

150.1
5.2
19.1
23.3
1.6
7.0
9.6
1.3
1.0
.8

168.1

.3
.1

61.5
3.0
6.9
12.5
.9
4.2
4.2
1.7
.4
.1

61.8

72.9

95.5

111.9

120.2

127.0

139.9

167.2

195.1

219.0

230.7

8.3
.4

9.0
.4

10.9
.4

14.1
.5

16.9
.6

20.7
.6

24.2
.6

28.1
.7

33.8
.8

41.1
.7

48.1
.7

53.9
.7

8.8

9.4

11.4

14.6

17.4

21.3

24.8

28.7

34.6

41.9

48.8

54.7

1.3

1.9

2.5

3.0

3.4

4.2

5.2

5.3

4.6

1.5

1.9

2.4

3.0

3.6

4.0

4.8

6.0

4.9

38.0
2.1
3.8
6.5
.4

46.6
2.4
4.5
4.9
.9

1.8

2.1

53.2
2.6
5.6
5.6
1.0
1.9
2.7

.2
.1

52.9

20.3
20.9
1.6
8.0
8.9
1.2
1.1
.7

and

Education
Training, employment, and social services
Subtotal, education, training, employment, and social services

1974

1973

1972

Table B-7 FUNCTIONAL COMPOSITION OF DOMESTIC TRANSFER PAYMENTS—Continued
(In billions of dollars)
Actual

Description
1972

Veterans benefits and services

1973

1974

1975

Estimate
1977

1976

1978

1979

1980

1981

1982

1983

8.8

9.7

10.4

12.8

14.3

13.3

13.5

14.0

14.4

15.5

16.4

16.9

71.9

82.5

96.3

124.8

146.0

157.8

168.9

186.7

220.9

258.4

290.3

307.2

3.8
.4

4.3
.4

5.0
.5

6.2
.4

7.2
.6

8.1
.7

9.0
.7

10.1
1.0

11.8
2.1

13.5
1.9

14.8
.9

16.2
1.2

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

4.2

4.7

5.6

6.6

7.8

8.8

9.8

11.1

13.8

15.5

15.7

17.4

Total domestic transfer payments

76.1

87.2

101.8

131.4

153.8

166.6

178.7

197.8

234.7

273.9

306.0

324.6

Total, human resources programs
ALL OTHER FUNCTIONS
National defense (military retired pay)
All other functions

Includes both $50 tax rebates and earned income tax credits in excess of tax liabilities.

Note.—Excludes the transition quarter.

H
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W
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o
Q

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H
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SPECIAL ANALYSIS A

Grants-in-aid.—These expenditures help State and local governments to provide general public services and to finance programs
for the needy. Table B-8 shows detail on grants-in-aid by budget
function and major activity. Grant expenditures are discussed in
greater detail in Special Analysis H. While the definition of Federal
aid used in that analysis differs somewhat from that used in the
NIA, the two sets of data largely overlap. Special Analysis H
explains the relationship between the series.
There is a substantial degree of substitutability between grantsin-aid and domestic transfer payments and—to a lesser degree—
nondefense purchases. For example, low-income veterans could be
eligible for free medical care under medicaid (Federal grants to
finance State and local purchases), in a veterans hospital (nondefense purchases), or, perhaps under medicare (transfer payments).
The supplemental security income transfer payments have substituted for the previous program of grants to States for public assistance for the elderly and handicapped. (The State and local spending of Federal grant money for public assistance programs is classified as State and local government transfer payments.) Most grants
in the income security function plus medicaid are grants to assist
States to provide income support; most other grants finance State
and local services to the public. (However, the income support may
be aid in-kind as is the case of medicaid where the State and local
spending is to purchase medical care for the poor.)
One of the major thrusts of this administration is to reduce both
the level and complexity of Federal grant programs, and to surrender to State and local governments tax sources that they may tap
to finance from their own revenues those portions of programs
currently financed by grants that they choose to retain. To some
extent the major tax reductions enacted last year and the grant
reductions proposed in this budget carry out that policy. But the
primary effect of this approach will be felt in the years beyond
1983, years that are beyond the scope of this analysis. Extensive
discussion of these basic policies can be found in the 1983 budget
document.

to
o

Table B-8. FUNCTIONAL COMPOSITION OF FEDERAL GRANTS-IN-AID
(In billions of dollars)
Estimate

Actual

Description
1972

1973

1974

1975

1977

1976

1978

1979

1980

1982

1981

1983

HUMAN RESOURCES PROGRAMS
Income security:
Public assistance cash 1
Child nutrition and other food programs..
Other
Subtotal, income security
Health:
Medicaid
Other (includes research, construction,
services, and medical training)
Subtotal, health
Education, training, employment,
social services:
Education
Training and employment
Social services

Veterans benefits and services
Total, human resources programs

5.9
1.1
.5

5.4
1.2
.5

5.1
1.7
.9

5.8
2.1
1.2

6.3
2.7
1.3

6.6
2.8
1.3

6.5
3.3
1.5

7.2
3.6
3.0

8.4
4.4
4.1

8.0
3.9
4.5

7.4
3.1
3.9

7.8

7.5

7.1

7.7

9.2

10.4

10.8

11.3

13.8

16.8

16.4

14.4

4.6

5.8

6.8

8.6

9.8

10.6

12.4

13.9

16.8

17.8

17.0

1.5

1.7

2.0

2.4

2.9

2.8

3.1

3.4

3.6

6.1

6.3

7.8

9.2

11.4

12.7

13.4

15.1

16.7

19.9

21.2

20.5

3.8
1.7
3.1

3.6
2.2
3.0

3.5
1.9
2.9

4.6
3.4
3.6

4.5
5.6
3.8

4.9
6.0
4.4

5.5
9.5
5.0

6.6
9.2
5.8

7.3
8.5
5.0

7.2
7.4
5.3

7.2
3.8
5.5

6.5
1.9
4.4

8.6

8.7

8.4

11.7

13.9

15.4

20.0

21.6

20.7

19.8

16.6

12.8

and

Subtotal, education, training, employment, and social services

Natural resources and environment

6.6
.9
.4

22.6

22.5

23.3

28.7

34.5

38.5

44.2

48.1

51.3

56.7

54.2

47.8

1.1

2.0

2.3

2.9

4.1

3.9

4.7

5.3

4.8

5.0

4.0

H
ffl
H
W

a
o
M
H
^

o
CO

o>
r
! ><
>W

OO
oo

Community and regional development:
Local public works
Block grants
Other
Subtotal, community and regional
development
Transportation.

2.9

1.6

1.0

2.0

2.4

3.1

4.0

4.3

4.4

3.8

1.5

1.7

1.9

1.6

1.3

1.0

6.4

6.3

6.0

5.8

4.9

8.1

9.5

11.8

12.2

11.4

6.8

5.1

4.6

1.1

1.2

1.3

CO
^
M
Q

>
>

2.2

2.6

2.7

2.8

2.4

1.8

2.2

2.6

2.7

2.8

3.4

4.4

5.1

5.3

5.8

7.5

7.7

6.6

6.1

6.2

General purpose fiscal assistance:
General revenue sharing
Anti-recession fiscal assistance..
Other

1.7

11.1

1.3

7.0

6.5

6.6

6.7

9.0

8.9

7.8

7.9

6.3

5.9

6.1

1.7

1.9

2.2

2.6

2.8

2.6

4.1

4.2

3.9

2.8

Total other functions..

10.0

17.9

18.4

19.7

23.0

27.7

30.4

31.0

35.4

33.4

32.1

29.0

Total grants-in-aid

32.6

40.4

48.4

57.5

66.3

74.7

79.1

86.7

86.3

76.8

Subtotal, general purpose fiscal
assistance
All other functions

' 5 0 million or less.
Note. -Excludes the transition quarter.
1 Including grants for combined welfare administration and for child support enforcement.

41.6

90.1

>
r

w
w

THE BUDGET FOR FISCAL YEAR 1983

Foreign transfer payments.—There are three major types of foreign transfer payments: expenditure of dollars to assist foreign
economic development, grants 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 declined to less than 0.2% of GNP. The
peak year for foreign transfer payments was 1949; in that year
they were equal to 1.9% of GNP.
Net interest paid.—Net interest depends on the size of Federal
debt, loans outstanding, and the interest rates on borrowing and
lending. In the early post-war years (1947-48), net interest paid
amounted to over 13% of total Federal sector NIA expenditures,
but it accounted for around 6-7% of the total each year from 1952
to 1977. Net interest paid rose from 6.9% of Federal sector expenditures in 1977 to 10.0% in 1981 and an estimated 12.2% in 1983.
In recent years foreign holdings of Federal debt have increased
significantly. This expansion, combined with higher interest rates,
pushed up the amount of interest paid abroad to over $16.0 billion
in 1981, five times the $3.2 billion total in 1973. These foreign
interest payments are partially offset by interest collections from
abroad; in 1973 such collections totaled $0.9 billion and in 1981
they totaled $2.2 billion. The increase in foreign holdings of Federal debt and in interest payments on that debt is discussed further
in Special Analysis E.
Subsidies less current surplus of Government enterprises.—Subsidies less current surplus of Government enterprises consist of two
elements: (1) subsidy payments to resident businesses (including
farms); and (2) the "current surplus" or "deficit" of Government
enterprises. In this context, a subsidy is a monetary grant to a unit
engaged in commercial activities. Examples are housing subsidies,
subsidies for railroads, and the construction and operating differential subsidies paid to operators of U.S.-flag merchant ships. As
table B-9 shows, roughly half of the subsidies are for housing
programs. These subsidies are designed mainly to reduce the cost of
housing to moderate- and low-income families.
"Government enterprise" is the term used in the NIA to designate certain business-type operations of the Government, which
usually appear 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
rather than from tax receipts. The difference between the sales and
the current operating expenses of a Government enterprise constitutes its surplus or deficit. As noted above, the capital formation of
Government enterprises is classified as nondefense purchases. The

SPECIAL ANALYSIS A

largest Government enterprises are the Commodity Credit Corporation, the Postal Service (which is not now included in the budget),
and the Tennessee Valley Authority.
Table B-9 shows the composition of this aggregation by major
category.

Table B - 9 . SUBSIDIES LESS CURRENT SURPLUS OF GOVERNMENT ENTERPRISES
(In billions of dollars)
Actual

Description
1972

Subsidies:
Commodity Credit Corporation
Rural housing insurance fund
Other Department of Agriculture
Maritime
Housing (HUD)
Railroad and mass transit
Other 1
Subtotal
Enterprise surpluses ( - ) or deficits:
Commodity Credit Corporation
Postal Service
Tennessee Valley Authority
Federal Housing Administration
Federal Deposit Insurance Corporation....
Federal Savings and Loan Insurance
Corporation
All other 2

1
2

1974

1975

2.9
.1
.4
.4
1.3
.1
.2

3.6
.1
.4
.4
1.7
.1
1.1

2.4

5.3
.6
1.7

1977

1976

1980

1979

1978

1981

0.3
.3
.3
.5
2.3
1.1
.1

0.6

.4
.3
.5
2.9
1.4
.3

2.3
.4
.4
.5
3.5
1.5
.2

2.0
.6
.3
.5
4.3
1.7
.4

0.5

.3
.4
1.9

0.6
.2
.4
.5
2.1
.5
.1

7.4

5.4

4.4

5.0

6.4

8.9

1.3
1.7

.3
2.5
-.3

.2
2.8
-.4

2.0

1.9

.3
.6
5.1
2.1
.4

1.4
.7
.3
.6
6.5
2.2
.1

1.5
.7
.3
.6
7.8
1.9

9.9

9.6

11.8

13.0

1.3
1.0

1.5
2.1

1.7
2.2

1.5
.9

- . 2

1.0
2.2
-.3

- . 6

- . 8

-1.1

-1.2

-1.8

-.3

- 1

- 2

- . 2

- . 1

- . 2

-.3

-.3
-.3

-.4
-.4

-.3
-.4

- . 1

- . 2

-.3

-.4

- . 6

-.4

-.3
-.5

- . 6

.4
-.9

Subtotal

1.2

1.8

2.2

1.5

1.2

Total subsidies less current
surplus

6.5

9.2

7.6

6.0

6.2

- . 1

7.0

9.6

9.8

1.1

1.2

-.5

10.8

13.0

12.5

Includes subsidies by the disaster loan fund of $0.7 billion in 1973. Includes proposed legislation for subsidies as part of the economic stimulas program and the 8 % sound security tax credit.
Includes wage disbursements less accruals.

Note.—Excludes the transition quarter.

1982

SPECIAL ANALYSIS A

Wage disbursements less accruals.—This is an adjustment item
occasionally made in the NIA when it is necessary 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
wages and salaries is counted in the GNP 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 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. The adjustment between national income and personal
income is then small or zero.
QUARTERLY

ESTIMATES

Table B-10 presents quarterly NIA receipts and expenditures (at
seasonally adjusted annual rates) for 1981 to 1983. The translation
of the budget into the NIA categories is inexact. When the annual
NIA estimates are converted into quarterly distributions that are
seasonally adjusted at annual rates, greater imprecision must be
expected. The data presented in table B-10 are the best available
estimates of the quarterly NIA receipts and expenditures consistent with the 1983 budget, but should be used with clear recognition
of their limitations.

Table B-10. FEDERAL RECEIPTS AND EXPENDITURES IN THE NIA, QUARTERLY, 1981-83
(In billions of dollars; seasonally adjusted at annual rates)
Estimated

Actual
Description

Oct.-Dec.
1980

Jan.-Mar.
1981

Apr-June
1981

July-Sept.
1981

Oct.-Dec.
1981

Jan.-Mar.
1982

Apr.-June
1982

July-Sept.
1982

Oct.-Dec.
1982

Jan-Mar.
1983

Apr-June
1983

July-Sept.
1983

272.9
72.6
49.1
178.6

283.3
74.6
60.6
198.9

293.2
64.8
62.6
200.4

306.4
66.4
61.8
203.7

301.9
57.2
59.0
206.9

304.1
58.2
56.5
221.2

315.6
57.4
56.5
225.8

295.0
62.0
57.7
230.2

302.0
63.9
57.5
230.7

310.9
80.4
57.2
242.4

319.0
83.1
57.5
247.0

298.5
84.9
58.1
251.8

573.2

617.4

621.0

638.3

625.0

640.0

655.3

644.9

654.1

690.9

706.6

693.3

212.0
(141.6)
(70.4)
269.0
(262.6)
(6.4)

221.6
(145.2)
(76.4)
271.9
(267.3)
(4.7)

219.5
(148.2)
(71.3)
274.8
(270.7)
(4.1)

226.4
(154.1)
(72.2)
293.6
(287.8)
(5.8)

246.7
(165.8)
(81.0)
297.5
(291.8)
(5.7)

249.5
(173.1)
(76.4)
308.4
(302.2)
(6.2)

247.1
(176.5)
(70.6)
316.0
(309.8)
(6.2)

252.4
(180.9)
(71.5)
326.7
(320.5)
(6.2)

262.2
(190.7)
(71.5)
325.5
(319.3)
(6.2)

269.1
(198.9)
(70.2)
327.9
(321.7)
(6.2)

276.3
(207.1)
(69.2)
329.4
(323.2)
(6.2)

283.8
(216.0)
(67.8)
340.7
(334.5)
(6.2)

91.8
55.2

90.2
67.7

89.6
70.4

85.4
75.6

82.9
79.4

84.5
80.0

88.4
82.6

89.2
83.6

81.7
84.5

77.7
93.5

75.5
101.0

72.3
104.7

13.1
0

12.6
0

13.9
0

13.3
-0.2

13.1
0.1

12.4
0.2

11.7

12.8

11.5

11.2

10.8

11.1

641.1

664.0

668.2

694.0

719.4

735.0

745.8

764.7

765.4

779.4

793.0

812.6

-67.9

-46.6

-47.2

-55.7

-94.4

-95.0

-90.5

-119.8

-111.3

-88.5

-86.4

-119.3

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
Total expenditures
Deficit ( - )

Note.—Because of the methods normally used seasonally adjusting NIA data, the average of seasonally adjusted data for the 4 quarters of a fiscal year may not be equal to the unadjusted, fiscal year total.

SPECIAL ANALYSIS A
RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR

NIA

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

1982
estimate

1983
estimate

1979
actual

1980
actual

1981
actual

463.3

517.1

599.3

626.8

666.1

7.5
6.5
4.5
-1.2
0.1

8.4
7.6
-4.4
-1.2
-0.1

9.4
9.4
-2.8
-1.3
— 1.0

10.8
10.2
-4.8
-1.5
-0.5

11.3
11.9
-1.8
-1.6
-0.3

480.7

527.3

613.0

641.0

685.7

491.0

576.7

657.2

725.3

757.6

-7.2
7.5
6.5
-0.6
1.9
-3.9
-0.4

-10.3
8.4
7.6
-0.6
2.2
-4.5
-1.3

-7.4
9.3
9.4
-1.4
7.9
-4.6
-2.6

-3.5
10.8
10.2
-0.3
4.9
-4.7
-1.3

-2.5
11.3
11.9
-3.3
14.7
-4.5
2.3

494.7

578.2

667.9

741.4

787.6

RECEIPTS
Total budget receipts
Government contributions for employee retirement (grossing)..
Other netting and grossing
Adjustment to accruals
Geographic exclusions
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
Geographic exclusions
Other
Federal sector, NIA expenditures

Lending and financial transactions.—Conceptually, the national
income and product accounts measure the Nation's current income
and production, and therefore do not include transactions, such as
loans, that are an exchange of existing 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 financial market framework, such as provided by the flow-of-funds data of the Federal
Reserve Board. Special Analysis E (Borrowing and Investment) and
Special Analysis F (Federal Credit Programs) both contain information on the financial market implications of the budget.
Most of the lending and financial transactions displayed in table
B - l l are shown in Special Analysis F. However, this total differs
from the total for direct loans shown in Special Analysis F because:
(a) the NIA records nonrecourse agricultural commodity loans as
purchases rather than loans; (b) capital contributions to international financial institutions are not loans, but are financial transactions excluded from the NIA; and (c) Special Analysis F includes

THE BUDGET FOR FISCAL YEAR 1983

lending by off-budget Federal entities; these loans do not require
reconciliation with the NIA because they are not included in the
budget outlay totals.
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 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. Contributions for employee retirement by Government
enterprises such as the Postal Service are recorded as an increase in
the current deficit of enterprises. Contributions by other accounts
are recorded as purchases of goods and services. The receipt of these
retirement contributions is treated in the NIA as contributions for
social insurance. Since receipts and expenditures are increased by
identical amounts, this treatment has no effect on the surplus or
deficit. Around 80% of these payments go to the civil service retirement fund, while most of the remainder is for 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 outlays. For instance,
receipts from social insurance programs operated by the Veterans
Administration (such as the National Service Life Insurance and
U.S. Government Life Insurance) are netted against outlays in the
budget since these programs are voluntary, commercial-type activities. However, in the NIA these insurance premiums are treated as
social insurance receipts just as are receipts from compulsory Government programs.
In previous budgets, noncompulsory insurance premiums under
the supplementary medical insurance program (totaling $3.3 billion
in 1981) and similar but much smaller noncompulsory hospital
insurance premiums were classified as receipts in the budget. In
the 1983 budget these have been reclassified (retroactively) , to be
offsetting collections (negative outlays) but they continue to be
classified as social insurance contributions in the NIA, therefore
significantly increasing the magnitude of the grossing adjustment.
Other netting and grossing includes some imputed contributions
for social insurance for Federal employees for unemployment compensation (which adds an equal amount to nondefense purchases)

SPECIAL ANALYSIS A

and workmen's compensation (which adds an equal amount to domestic transfer payments).
One major element of netting and grossing in recent years has
been due to budgetary collections arising from the Outer Continental Shelf leases. All such collections are recorded in the budget as
negative outlays. The rents and royalties component—but not the
bonuses—are recorded in the NIA as indirect business nontaxes;
this converts the money from an offset to outlays in the budget to a
receipt in the NIA.
Timing adjustments.—The budget records receipts at the time
the cash is collected regardless of when the income is earned, and
outlays (except interest paid to the public) 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 rather
than when the liability is accrued or the cash is received by
Treasury.
The principal timing adjustment to expenditures is for defense
purchases. The major defense timing adjustment normally involves
procurement items (such as missiles and airplanes) purchased
under most fixed-price contracts. These items are recorded in the
Federal sector NIA as defense purchases at the time of delivery to
the Federal Government, rather than when the payment is made
(as the budget does) or when they are fabricated. Work in progress
is counted as part of private business inventories until the goods
are completed and delivered to the Government. An additional
defense timing adjustment is made to convert foreign military
sales, which are recorded on a cash basis in the unified budget, to a
basis consistent with net exports in the NIA. In addition, some
accounting adjustments are included with the defense timing adjustment in this translation.
Since both the budget and the NIA record public debt interest to
the public when it accrues, no timing adjustment is needed for
most interest transactions.
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. As already noted, the budget records these bonuses as
proprietary receipts and, therefore, deducts them from budget outlays. The NIA excludes these transactions as being a transfer of
assets, because the payments are not included in calculating book
profits under current corporate accounting practice.

THE BUDGET FOR FISCAL YEAR 1983

Geographic exclusions.—Geographic exclusions arise because
Puerto Rico, the Virgin Islands, and other U.S. territories are not
included in the United States for purposes of computing the GNP
and related data series (such as social insurance taxes, domestic
transfer payments, and grants-in-aid) but also are not treated as
foreign for purposes of producing data on exports, imports, and
foreign transfer payments. Since the budget includes receipts from
and payments to persons and local governments in these territories
and the NIA excludes such transactions, this constitutes a major
reconciliation item between the two data series.
Other.—This category contains miscellaneous adjustments, such
as the NIA expenditures by off-budget Federal entities and foreign
currency transactions that are included in the NIA but not in the
budget.

Table B-12. FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS, 1972-83
(In billions of dollars)
Actual

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

national

Excess of receipts ( + ) or expenditures ( —), national income basis
•$50 million or less.

Estimate

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

100.5
34.2

107.4
41.2

122.7
43.4

127.5
41.8

137.2
52.5

166.4
58.8

186.4
67.2

223.1
75.8

249.7
70.6

290.7
69.6

303.5
58.7

307.7
78.1

19.9
58.9

20.7
71.5

21.4
84.2

22.2
91.9

24.4
101.0

24.5
116.2

27.2
133.4

29.1
152.7

35.7
171.3

56.6
196.1

57.4
221.4

57.5
242.4

213.4

240.7

271.6

283.4

314.9

365.9

414.2:

480.7

527.3

613.0

641.0

685.7

100.6
(72.2)
(28.4)
79.0
(76.1)
(2.8)

101.1
(72.8)
(28.4)
89.8
(87.2)
(2.7)

104.5
(73.6)
(30.9)
104.8
(101.8)
(3.0)

117.9
(80.2)
(37.7)
134.5
(131.4)
(3.1)

125.1
(84.4)
(40.7)
156.8
(153.8)
(3.0)

140.3
(91.9)
(48.4)
169.8
(166.6)
(3.2)

150.7
(98.0)
(52.7)
182.2
(178.7)
(3.5)

163.4
(107.4)
(56.0)
201.8
(197.8)
(4.0)

190.2
(126.1)
(64.1)
239.3
(234.7)
(4.6)

218.3
(147.1)
(71.2)
279.7
(273.9)
(5.8)

249.0
(174.1)
(74.9)
312.1
(306.0)
(6.1)

272.9
(203.2)
(69.7)
330.8
(324.6)
(6.2)

32.6
14.0

40.4
15.7

41.6
19.6

48.4
21.7

57.5
25.2

66.3
28.4

74.7
33.5

79.1
40.6

86.7
51.2

90.1
66.9

86.3
81.4

76.8
95.9

6.5

9.2
-.5

7.6
.2

6.0
.4

6.2

7.0

9.6

9.8

10.8

13.0
-.1

12.5
.1

11.2

232.7

255.7

278.2

328.8

370.7

411.7

450.5

494.7

578.2

667.9

741.4

787.6

-19.2

-14.9

-6.6

-45.4

-55.8

-45.8

-36.3

-14.0

-50.9

-54.9

-100.4

-101.9

Note.—-Excludes the transition quarter.

SPECIAL ANALYSIS C

FUNDS IN THE BUDGET

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Current Services Estimates
Federal Transactions in the National Income Accounts
Funds in the Budget
Investment, Operating, and Other Budget Outlays
Borrowing and Debt
Federal Credit Programs
Tax Expenditures
Federal Aid to State and Local Governments
Civilian Employment in the Executive Branch
Civil Rights Activities
Research and Development

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS C
FUNDS IN THE BUDGET
This analysis provides information on the two major fund groups,
Federal and trust, that together after deducting interfund transactions, as shown in table C-l, comprise the budget totals.
Table C - l . BUDGET RECEIPTS AND OUTLAYS, BY FUND GROUP
(In millions of dollars)
Description

1981
actual

1982
estimate

1983
estimate

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

441,350
-3,815
-18,283
-8,830

448,024
-4,689
-18,403
-12,115

483,425
-4,310
-30,006
-15,445

410,422

412,817

433,664

256,789
-1,631
-14,207
-1,537

295,081
-2,022
-16,162
-2,188

317,695
-472
-18,258
-2,315

239,413

274,710

296,650

-50,563

-60,774

-64,195

599,272

626,753

666,118

506,099
-3,815
-18,283
-8,830

559,142
-4,689
-18,403
-12,115

590,366
-4,310
-30,006
-15,445

475,171

523,936

540,604

249,972
-1,631
-14,207
-1,537

282,541
-2,022
-16,162
-2,188

302,274
-472
-18,258
-2,315

232,596

262,169

281,229

-50,563

-60,774

-64,195

657,204

725,331

757,638

-57,932

-98,578

-91,520

OUTLAYS
Federal funds:
Total in fund accounts
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal entities
Outlays, Federal funds
Trust funds:
Total in fund accounts
Intrafund transactions
Proprietaro receipts from the public
Receipts from off-budget Federal entities
Outlays, trust funds
Interfund transactions
Total budget outlays
Budget deficit

Note.—The 1983 Budget reflects the reclassification of the supplementary medical insurance and voluntary hospital insurance enrollee premiums.
These premiums, formerly classified as budget receipts, are now classified as proprietary receipts. Accordingly, budget totals have been adjusted
retroactively. The adjustment decreases budget receipts and outlays for each year since 1967 by the amount of the premiums collected for that
year.

THE BUDGET FOR FISCAL YEAR 1983

The Federal funds are derived mainly from taxes and borrowing
and are used for the general purposes of the Government. Most of
these funds are not restricted by law to any specific Government
program. The trust funds, on the other hand, collect certain taxes
and other receipts for specified purposes, such as payment of social
security benefits, in accordance with the terms of a trust agreement or statute.
Amounts collected by the funds are classified either as budget
receipts, also called governmental receipts, or as offsets to budget
outlays, known as offsetting collections, depending on the following
criteria.
Amounts collected by the Federal Government from the public
that arise from the exercise of governmental or sovereign powers
are treated as budget receipts. Gifts and contributions to the Government are also included in this category. In prior budgets, voluntary social insurance premiums of the Hospital and supplementary
medical insurance trust funds were classified as budget receipts
because of their close relationship with compulsory collections.
However, since these collections are voluntary, this classification
has been changed (retroactively) to record these as proprietary
receipts from the public.
Amounts collected from other Government accounts or from
transactions with the public that are of a business-type or marketoriented nature, such as the sale of services or goods are treated as
deductions from spending in arriving at budget outlays.1
FEDERAL FUNDS

The Federal fund group is comprised of the general fund, special
funds, public enterprise (revolving) funds, and intragovernmental
funds. Intragovernmental funds include intragovernmental revolving funds, management funds, and consolidated working funds.
Federal fund budget receipts and outlays.—In 1983, the Federal
fund budget receipts are estimated at $ 4 3 3 . 7 billion and outlays are
estimated at $ 5 4 0 . 6 billion. The following table, C - 2 , presents the
distribution of budget receipts by source and outlays by agency for
the Federal fund group.
The Federal fund budget receipts shown in the table are derived
mainly from taxes and borrowing. They are comprised of the
amounts collected by the general and special funds that are governmental in nature. Proprietary receipts from the public of the
general and special funds arise from market-oriented transactions
and thus are offsetting receipts rather than budget receipts.

1 Additional information on budget receipts and offsetting collections is provided in Part 7 of the Budget of
the United States Government, Fiscal Year 1983.

SPECIAL ANALYSIS

The Federal fund outlays shown are net of all collections credited to the public enterprise and intragovernmental funds and the
proprietary receipts of the general and special funds.
Table C-2. FEDERAL FUND RECEIPTS AND OUTLAYS
(In millions of dollars)
Description

1981
actual

1982
estimate

1983
estimate

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

285,917
61,137
34,128
6,787
8,023
14,431

298,578
46,752
35,283
7,162
8,810
16,232

304,533
65,269
31,066
5,948
9,360
17,487

410,422

412,817

433,644

1,207
637
96
6,548
26,069
11,469
156,098
3,127
61,279
14,033
7,005
2,752
13,081
1,999
12,029
92,920
5,2490
5,421
22,451
41,838

1,500
727
92
6,245
29,475
11,604
182,791
2,971
67,818
14,614
3,265
2,643
10,185
2,313
10,633
110,382
5,344
5,827
23,720
40,272
-624

1,448
822
99
6,687
23,533
9,853
215,889
2,197
66,405
13,130
3,379
2,727
7,356
2,584
7,933
124,814
4,500
6,577
23,936
36,991
-1,257

-10,138

-7,861

-18,000
-1,000

475,171

523,936

540,604

-64,749

-111,119

-106,940

OUTLAYS BY AGENCY
Legislative branch
The Judiciary
Executive Office of the President
Funds appropriated to the President
Agriculture
Commerce1
Defense—Military2 3
Defense—Civil
Health and Human Services3
Housing and Urban Development
Interior 1 3
Justice 1 3
Labor
State
Transportation4
Treasury 5
Environmental Protection Agency
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies 13
Allowances5
Undistributed offsetting receipts:
Rents and royalties on the Outer Continental Shelf
Federal surplus property disposition
Total outlays, Federal funds
Excess of outlays ( — )

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

Obligations— The obligations (net) for Federal funds are estimated at $565.6 billion for 1983, as set forth in table C-3. These
transactions flow largely from budget authority for Federal funds
of $565.5 billion for the year, although some flow from prior years'
budget authority.

THE BUDGET FOR FISCAL YEAR 1983
Table C-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
Commerce1
Defense—Military2 3
Defense—Civil
Health and Human Services3
Housing and Urban Development
Interior 1 3
Justice 1 3
Labor
State
Transportation4
Treasury 3
Environmental Protection Agency
National Aeronautics and Space Administration
Veterans Administration
Other independent agencies:
Export-Import Bank
Federal Home Loan Bank Board
Foundation for Education Assistance3
General Services Administration
Office of Personnel Management
U.S. Postal Service
Railroad Retirement Board
All other independent agencies 13
Allowances:
Civilian agency pay raises
Fraud, waste, and abuse
Undistributed debt collections
Undistributed offsetting receipts:
Rents and royalties on the Outer Continental Shelf...
Federal surplus property disposition
Total

1981
actual

1983
estimate

1982
estimate

1,239
648
102

1,541
736
90

1,476
833
102

2,545
2,432
3,880
27,294
11,439
174,852
3,128
61,411
37,671
6,849
2,400
12,402
2,131
12,663
92,899
5,226
5,673
22,601

3,224
2,728
508
28,449
13,772
206,118
3,075
64,962
12,798
2,972
2,520
9,488
2,492
11,144
110,449
4,582
6,412
23,904

4,583
2,902
431
22,821
9,401
248,196
2,344
61,620
13,461
3,064
2,651
7,563
2,551
7,486
124,721
3,437
6,622
24,419

5,780
446
13,767
391
14,454
1,343
342
9,789

2,635
199
11,547
281
15,499
619
379
7,588

1,892
30
9,218
-370
16,509
500
350
7,072

392
-1,000

757
-1,000
-1,000

-10,138

-7,861

-18,000
-1,000

525,660

542,243

565,643

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

Balances of Federal fund budget authority.—Table C-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 (obligated balances) may be carried over into the
next year. Unobligated balances may be carried forward in accordance with specific provisions of law, usually in order to permit
completion of major procurement or major construction programs

SPECIAL ANALYSIS A

that are fully funded, to provide funding for activities of a continuing nature (such as research and development), for financing loan
programs, for standby emergency purposes (such as backup financing for insurance of the Federal Deposit Insurance Corporation), or
for reserves for losses and debt redemption.
Public enterprise funds.—The public enterprise funds conduct a
cycle of business-type operations, primarily with the public, on
behalf of the Government. These funds are usually supplied with
capital from the general fund, and in a few cases they may borrow
from the public or from the Federal Financing Bank (FFB). These
funds also obtain capital by selling financial assets to the FFB.
Data on public enterprise funds are included net of collections in
tables C - l through C-4. Additional information on the gross outlays and applicable collections are shown in table C-5.
Collections of public enterprise funds are estimated at $54.0 billion in 1983, and gross outlays are planned to total $61.7 billion,
resulting in net outlays of $7.7 billion.
TRUST FUNDS

There are two types of trust funds—revolving and nonrevolving.
Trust revolving funds are similar to intragovernmental revolving
funds and public enterprise funds in that they conduct a cycle of
business-type operations and are normally stated net of collections.
Cash operations.—Trust fund receipts are estimated at $296.6
billion in 1983, with outlays planned at $281.2 billion, as shown in
tables C - l and C-6. The transactions of the Federal old-age and
survivors insurance and disability insurance funds are far larger
than any other trust fund.
In fiscal years 1981-83, trust funds have excesses of receipts of
the following amounts (in millions of dollars):
1981
actual

Total receipts, trust funds
Total outlays, trust funds.
Excess of receipts or outlays ( — ) , trust
funds

1982
estimate

1983
estimate

239,413
232,596

274,710
262,169

296,650
281,229

6,817

12,541

15,421

THE BUDGET FOR FISCAL YEAR 1983
Table C-4. FEDERAL FUND BALANCES OF BUDGET AUTHORITY
(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
Commerce1
Defense—Military2 3
Defense—Civil
Health and Human
Services3
Housing and Urban
Development
Interior 1 3
Justice 1 3
Labor
State
Transportation4
Treasury 3
Environmental Protection
Agency
National Aeronautics and
Space Administration
Veterans Administration
Other independent
agencies:
Export-Import Bank
Federal Deposit
Insurance
Corporation
Federal Home Loan
Bank Board
Foundation for
Education
Assistance3
General Services
Administration
Office of Personnel
Management
Railroad Retirement
Board
All other independent
agencies 13
Allowances5
Total

End 1982

Start 1981
Obligated

203
58

Unobligated

241
18

Obligated

216
56

End 1984

End 1983

Unobligated

237
8

Obligated

256
65

Unobligated

116
2

Obligated

284
76

4,716

5,544

Unobligated

104
2

5,490

123

4,916

7,351
11,362
11,444
7,636
67,942
736

13,117
3,510
4,170
6,983
24,125
385

7,439
11,944
12,628
7,538
86,265
734

13,108
6,642
1,267
6,294
26,431
336

7,809
11,981
11,568
9,732
109,592
838

13,089
6,062
1,942
189
33,728
160

8,229
11,953
10,856
9,285
141,899
985

13,142
5,962
2,436
520
42,999
19

12,914

939

12,986

683

10,130

161

5,345

101

244,150
5,171
833
3,207
459
9,834
614

11,980
1,953
133
617
62
1,502
25,829

260,454
4,895
471
2,397
568
10,533
575

12,655
759
151
1,142
108
1,818
25,796

247,981
2,726
348
1,530
748
11,042
642

22,623
259
84
351
38
1,165
28,262

235,365
2,398
272
1,301
714
10,595
549

21,095
202
399
40
628
28,685

12,772

3,050

12,414

1,107

11,651

10,588

1,212
2,391

705
2,387

1,457
2,507

550
2,123

2,042
2,690

74
2,216

2,087
3,174

60
2,564

5,737

184

8,877

9,026

8,336

3,000
73

9,686

149

9,240

309

9,041

490

9,011

9,616

2,402

10,253

1,466

8,436

1,152

6,253

699

474

428

633

766

656

590

815

600

5,497

21,364

5,236

2,977

4,509
16

2,598

4,586
30

2,918

427,252

138,902

466,187

115,668

471,140

123,945

482,112

132,275

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

SPECIAL ANALYSIS

Table C-5. PUBLIC ENTERPRISE FUND TRANSACTIONS
(In millions of dollars)
Gross outlays

Applicable collections
Description

Funds appropriated to the President:
Foreign assistance
Agriculture:
Commodity Credit Corporation
Farmers Home Administration:
Rural housing insurance fund
Agricultural credit insurance
fund
Rural development insurance
fund
Federal Grain Inspection Service
Federal Crop Insurance Corporation...
Commerce1
Defense: Military 2
Health and Human Services2
Housing and Urban Development:
Government National Mortgage Association
Urban renewal programs
Low-rent public housing
Federal Housing Administration
Fund
Other
Interior: 1 2
Bureau of Reclamation
Energy programs
Other
Transportation
Treasury2
Veterans Administration
Other independent agencies:
Export-Import Bank
Farm Credit Administration
Federal Emergency Management
Agency
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance Corporation
Revolving fund
National Consumer Cooperative
Bank
National Credit Union Administration
Pennsylvania Avenue Development
Corporation
Small Business Administration
Tennessee Valley Authority
All other not included above 1 2
Total
Offsetting collections from the public
Offsetting collections from other accounts

1982
estimate

1981
actual

1983
estimate

1981
actual

1982
estimate

1983
estimate

170

198

215

218

248

255

10,322

10,130

9,278

14,384

16,614

11,128

8,051

7,992

6,202

7,921

9,084

7,819

11,642

11,420

9,714

11,414

11,825

10,412

2,032
26
408
96
2
51

1,960
43
320
122
4
85

1,698
43
262
452
5
55

2,336
34
367
130
6
109

2,472
44
414
197
6
99

2,397
43
345
363
8
83

1,980
71
2,119

2,135
42
1,551

2,060
20
1,009

3,164
215
2,197

3,145
142
1,557

3,175
90
1,114

1,593
313

1,855
450

2,953
1,004

1,775
1,216

1,610
1,182

1,774
1,276

341
897
23
143
1,136
755

374
1,935
27
183
551
1,085

450
2,496
30
116
592
2,133

304
874
23
246
352
889

374
1,877
35
220
217
998

450
2,756
39
134
206
1,349

2,667
14

3,289
16

3,774
18

4,733
14

5,144
16

5,692
18

244

294

317

337

441

437

1,027
59

937
65

1,122
68

1,401
56

972
69

972
68

131

213

421

578

203

514

683

7
1,289
3,843
129

3
1,556
4,567
446

3
1,675
5,113
508

23
2,973
5,771
99

18
1,840
6,747
106

8
1,509
6,803
253

51,682

54,056

53,963

63,915

68,294

61,659

(32,645)

(37,161)

(43,108)

(19,037)

(16,895)

(10,855)

*$500 thousand or less.
1 The budget proposes dismantlement of the Department of Energy (DOE), effective October 1, 1982. Budget data for activities previously
performed by DOE are included in the agencies that are proposed to assume these activities.
2 The budget proposes dismantlement of the Department of Education (DEd), effective October 1, 1982. Budget data for activities previously
performed by DEd are included in the agencies that are proposed to assume these activities.

THE BUDGET FOR FISCAL YEAR 1983
Table C-6. OUTLAYS AND RECEIPTS OF TRUST FUNDS
(In millions of dollars)
Outlays
Description

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

1981
actual

Receipts

1982
estimate

1983
estimate

139,585
5,294
680
1,035
17,864
18,739
42,489
9,174
1,306

156,644
5,328
854
1,042
19,600
25,400
49,552
8,340
1,600

173,536

5,137
9,912
998
-2,241

4,570
10,951
1,090
-2,429

249,972
-1,631
-14,207

1982
estimate

1983
estimate

134,564
4,675
792
1,138
28,573
18,104
45,302
7,434
582

152,129
5,121
742
1,194
33,293
21,300
55,863
7,661
724

165,285

4,567
12,446
1,424
-2,780

4,570
9,454
1,601

4,567
10,827
1,661

4,567
12,197
1,920

282,541
-2,022
-16,162

302,274
-472
-18,258

256,789
-1,631
-14,207

295,081
-2,022
-16,162

317,695
-472
-18,258

-1,537

-2,188

-2,315

-1,537

-2,188

-2,315

232,596

262,169

281,229

239,413

274,710

296,650

674
1,051
21,262
23,694
55,352
8,237
2,810

1981
actual

674
1,286
34,728
23,400
62,672
7,893
3,073

Budget receipts by trust fund.—Table C-7 presents information
classifying the trust fund receipts by major fund, and by source for
each such fund.
Budget outlays by trust fund.—Corresponding information on
trust fund outlays, classifying the data for the larger funds, is
found in table C-8.
Balances of the trust funds.—Total balances of the trust funds
continue to increase, as shown in the following end-of-year figures
(in millions of dollars):

1980
actual

Open book balances
Investments in U.S. securities:
Public debt
Agency debt
Total

1981
actual

1982
estimate

1983
estimate

11,966

9,422

9,746

9,752

179,376
1,015

188,737
1,015

197,591
765

213,004
765

192,358

199,174

208,103

223,521

A summary of the balances by fund is presented in table C-9.
The amounts include both amounts on deposit with the Treasury
(open-book balances) and investments in U.S. securities. These bal-

SPECIAL ANALYSIS A

ances include both obligated and unobligated balances. The balances on a budget authority basis differ from the cash balances
because, for a few accounts, contract authority (a form of budget
authority) has been provided to a trust fund in advance of receiving moneys while unappropriated receipts are included in the cash
balances but are not a part of the balances of budget authority.
The note to Table C-9 lists these accounts and reconciles the balances on a budget authority basis with the cash balances.
For 1983, the largest net investments are expected to be those of
the Federal employees retirement fund.
Trust revolving funds.—The activities of the trust revolving fund
subgroup are shown in table C-10. The largest of these funds are
those used by the Office of Personnel Management to buy insurance for Government employees.
Table C-7. TRUST FUND RECEIPTS (in millions of dollars)
[Amounts under proposed legislation are shown separately]
Description

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
Subtotal, Federal old-age, survivors, and disability insurance trust funds
Railroad retirement account:
Social insurance taxes and contributions
Interest on Federal securities
Receipts from other trust funds
Other (mainly receipts of special Federal payments)
Proposed legislation
Subtotal, railroad retirement account
Black lung disability trust fund:
Excise taxes
Advances from general fund
Other receipts
Subtotal, black lung disability trust fund
Veterans life insurance trust funds:
Interest on Federal securities
Other receipts
Subtotal, veterans life insurance trust funds....
Federal employees retirement funds:
Social insurance taxes and contributions
Interest on Federal securities

1981
actual

1983
estimate

1982
estimate

130,176
2,286

147,664
1,976

159,444
1,458

1,430

1,645

1,771

672

844

1,308
1,304

134,564

152,129

165,285

2,457
275
1,614

2,982
158
2,001

3,178
122
2,218

328

-20

-25
-5,493

4,675

5,121

237
555*

507
235

612
62

792

742

674

673
465

717
476

816
470

1,138

1,194

1,286

3,978
6,086

4,486
8,599

4,504
9,208

THE BUDGET FOR FISCAL YEAR 1983
Table C-7. TRUST FUND RECEIPTS (in millions of dollars)—Continued
[Amounts under proposed legislation are shown separately]
Description

Federal payment as employer for employee retirement (including payment on prior year liabilities):
Entities included in budget
Entities excluded from budget
Other receipts
Proposed legislation
Supplemental now requested

1981
actual

1982
estimate

16,965
1,537
8

1983
estimate

17,708
2,188
3

18,828
2,192
3
-8

309
28,573

33,293

34,728

Unemployment trust fund:
Social insurance taxes and contributions
Interest on Federal securities
Advances from the general fund
Supplemental now requested

15,763
1,063
1,277

16,461
686
2,206
1,947

18,469
188
4,743

Subtotal, unemployment trust fund

18,104

21,300

23,400

30,340
3,340
1,681

34,881
3,862
2,331

38,033
4,418
3,001

332

397

427

9,609

14,375
17

15,632
1,161

45,302

55,863

62,672

6,305
1,127
2

6,582
1,079

6,957
936

7,434

7,661

7,893

440
284

254
2,819

582

724

3,073

State and local government fiscal assistance trust
fund: Deposits for general revenue sharing

4,570

4,567

Foreign military sales trust fund

9,454

10,827

12,197

Other trust funds (nonrevolving)

1,601

1,661

1,920

256,789
-1,631
-14,207
-1,537

295,081
-2,022
-16,162
-2,188

317,695
-472
-18,258
-2,315

239,413

274,710

296,650

Subtotal Federal employees retirement funds...

Health insurance trust funds:
Social insurance taxes and contributions
Premiums and other charges
Interest on Federal securities
Federal payment as employer for employee retirement
Other (mainly receipts of special Federal payments)
Proposed legislation
Subtotal, health insurance trust funds
Highway trust funds:
Excise taxes
Interest on Federal securities
Other receipts
Subtotal, highway trust funds
Airport and airway trust fund:
Excise taxes
Interest on Federal securities
Proposed legislation
Subtotal, airport and airway trust fund

Subtotal
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal entities
Total receipts
*$500 thousand or less.

21
561

SPECIAL ANALYSIS

Table C-8. TRUST FUND OUTLAYS (in millions of dollars)
[Amounts under proposed legislation are shown separately]
Description

Federal old-age, survivors, and disability insurance
trust funds:
Benefit payments
Payments to other trust funds
Administrative expenses and other
Proposed legislation

1981
actual

1983
estimate

1982
estimate

136,267
1,614
1,703

152,580
2,001
2,064

167,264
2,686
2,196
1,390

139,585

156,644

173,536

5,255
39

5,282
46

5,678
44
-5,722

5,294

5,328

644
36

549
36
270

463
35
176

680

854

674

1,035

1,042

1,051

17,401
433
30

19,095
495
34
-24

21,287
429
35
-489

17,864

19,600

21,262

16,006
600
2,133

21,284

21,038
500
2,162
-6

18,739

25,400

23,694

41,254
1,235

48,535
1,265
-248

55,854
1,245
-1,747

Subtotal, health insurance trust funds

42,489

49,552

55,352

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

9,174

8,340

8,233
4

9,174

8,340

8,237

1,306

1,592

2,637
166

Subtotal, Federal old-age, survivors, and disability insurance trust funds
Railroad retirement account:
Benefit payments and claims
Administrative expenses and other
Proposed legislation
Subtotal, railroad retirement account
Black lung disability trust fund:
Benefit payments
Federal administrative expenses
Interest on advances
Subtotal, black lung disability trust fund
Veterans life insurance trust funds
Federal employees retirement:
Benefit payments and claims
Refunds to former employees
Administrative expenses and other
Proposed legislation
Subtotal, Federal employees retirement
Unemployment trust fund:
Withdrawals for benefit payments
Repayment of advances from general fund
Administrative expenses and other
Proposed legislation
Supplemental now requested
Subtotal, unemployment trust fund
Health insurance trust funds:
Benefit payments
Administrative expenses and other
Proposed legislation

Subtotal, highway trust funds
Airport and airway trust fund:
Current
Proposed legislation

2,036
2,080

THE BUDGET FOR FISCAL YEAR 1983
Table C-8. TRUST FUND OUTLAYS (in millions of dollars)—Continued
[Amounts under proposed legislation are shown separately]
1981
actual

Description

1982
estimate

1983
estimate

Supplemental now requested

1,306

1,600

2,810

State and local government fiscal assistance trust
fund: Payments for general revenue sharing

5,137

4,570

4,567

Foreign military sales trust fund

9,912j

10,951

12,446

998
-2,241

1,090
-2,429

1,424
-2,780

249,972

282,541

302,274

-1,631
-14,207
-1,537

-2,022
-16,162
-2,188

-472
-18,258
-2,315

232,596

262,169

281,229

Subtotal, airport and airway trust funds

Other trust funds (nonrevolving)
Trust revolving funds
Subtotal
Intrafund transactions
Proprietary receipts from the public
Receipts from off-budget Federal entities
Total outlays

Table C-9. TRUST FUND BALANCES
(In millions of dollars)
Description

Federal old-age, survivors, and disability insurance
trust funds
Railroad retirement account
Black lung disability trust fund
Veterans life insurance funds
Federal employees retirement funds
Unemployment trust fund
Health insurance trust funds
Highway trust funds
Airport and airway trust fund
State and local government fiscal assistance trust
fund
Foreign military sales trust fund
Other trust funds (nonrevolving)
Trust revolving funds
Total

As of Sept. 30
1980 actual

1981 actual

32,259
2,719*

1982 estimate

8,509
74,317
14,886
19,029
10,999
5,442

8,764
98,719
10,282
28,528
8,581
3,843

1,822
5,204
1,703
15,468

1,255
4,746
2,305
17,708

1,252
4,622
2,870
20,137

192,358

199,174

208,103

*$500 thousand or less.
Note—The following table reconciles balances on a biidget authority basis with the cash balances shown above.
1980
1981
Balance available on an authorization basis
220,989
208,325
Unfinanced contract authority:
Airport and airway trust fund
-914
-760
Highway trust funds
-18,348
-18,487
Foreign military sales trust fund
-12,087
-15,653
- 1
- 1
Other
Unappropriated receipts:
Available as needed, on an indefinite basis
5
-49
Available for appropriation by Congress:
98
Soldiers' Home permanent fund
96
3,774
Airport and airway trust fund
4,716
9,034
10,610
Highway trust funds
78
Hazardous substance response trust fund
92
3
Other
.:
6
6
Retained as permanent endowment
Balance available on a cash basis

20,505

27,239
1,986
112
8,612
85,026
14,365
21,842
9,259
4,719

192,358

199,174

1982
235,760

1983
255,119

-739
-18,685
-20,099

-955
-18,260
-23,721

114
2,894
8,439
216
194
6

129
2,859
7,743
352
246
6

208,103

223,521

SPECIAL ANALYSIS A
Table 0-10. TRUST REVOLVING FUND TRANSACTIONS
(In millions of dollars)
Gross outlays

Offsetting collections
Description

1981
actual

1982
estimate

1983
estimate

1981
actual

1982
estimate

1983
estimate

Office of Personnel Management (employees'
life insurance and health benefits)
Federal Deposit Insurance Corporation
All other trust revolving funds

5,312
1,807
525

6,813
1,988
564

8,376
2,204
594

4,850
81
472

6,234
188
513

7,643
204
547

Total trust revolving funds

7,644

9,365

11,174

5,404

6,936

8,394

(3,287)
(4,357)

(4,096)
(5,269)

(4,776)
(6,397)

Receipts from the public
Receipts from other accounts
1

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

SPECIAL ANALYSIS D

INVESTMENT, OPERATING, AND OTHER
BUDGET OUTLAYS

The Budget of the United States Government, 1983

Note.—AM years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS D
INVESTMENT, OPERATING, AND OTHER BUDGET
OUTLAYS
This analysis divides outlays between those of an "investment"
or capital nature, and those devoted to "current" or operating
purposes.
Investment-type programs yield benefits in future years through
the acquisition of physical or financial assets, or through expenditures for less tangible long-term benefits such as education. They
include: the construction, rehabilitation, and acquisition of physical
assets; education, training, and vocational rehabilitation; research
and development; international development; and financial investments such as loans. Outlays for investment-type programs are
estimated to be $155.3 billion in 1983.
Current programs provide benefits primarily in the year in which
the outlays that finance them are made. They include: payments
for retirement, disability, and other income maintenance; social
services; payments (including subsidies) to agriculture, businesses,
transportation systems, and other institutions that are not directly
used by the institutions to purchase physical assets; payments for
the repair, maintenance, and operation of existing physical assets;
and regulatory, law enforcement, interest, and other operating costs
of the Federal Government. Outlays for current programs are
estimated to be $631.6 billion in 1983.
Outlays or offsetting receipts that cannot be identified as either
investment or current in nature are presented as unclassified.
INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In billions of dollars)
1981
actual

Investment-type programs
Current programs
Unclassified
Total

1982
estimate

1983
estimate

146.0
530.8
-19.6

148.0
597.0
— 19.6

155.3
631.6
— 29.3

657.2

725.3

757.6

The Federal Government has never had a capital budget in the
sense of financing capital or investment-type programs separately
from current expenditures. While the application of accounting
concepts for capital budgeting is difficult for private sector entities,

THE BUDGET FOR FISCAL YEAR 1983

it is much more so for the public sector. For example, the Federal
Government holds vast amounts of land and controls off-shore
areas; both have potential value as sources of either timber, oil,
or minerals. These assets do not have a known or easily estimated
market value. Defense procurement poses similar problems in
using capital accounting. A capital budget would pose formidable
accounting problems in the measurement of depreciation on Government property, especially weapons. Moreover, there would be
severe problems in the use of a capital budget. It would be misleading as a measure of the Government's effect on the demand for
economic resources. The deficit of a capital budget could not be used
as an indication of the demands that Federal borrowing requirements place on the credit market. It might also suggest that programs with intensive expenditures for physical assets, such as
construction, are better than those for which future benefits cannot
be accurately capitalized, such as education or defense research and
development. Likewise, physical assets might be favored relative to
current operations in any given program because deficit financing
for capital purposes could be easier to justify.
There are inevitable classification difficulties in preparing the
kind of analysis presented here. In the case of a few programs—
such as general revenue sharing—the recipients are free to utilize
the funds for either investment-type or current purposes. In such
cases, this analysis classifies the outlays in the category where
most of the outlays are expected to occur.
Some programs could logically be put in more than one subcategory within these broader categories. For example, grants for construction of education facilities not only finance the acquisition of
physical assets but also are an important element in the conduct of
education and training. In cases such as this, the outlays are
classified in the subcategory that is most "capital-like" and therefore appears first in the special analysis structure (the order goes
from loans to construction and rehabilitation, acquisition of major
equipment, conduct of research and development, etc.).
The classification structure used in compiling information for
this analysis is designed primarily to distinguish investment-type
outlays from current outlays. It does not provide a ready source of
information on total outlays or other forms of assistance affecting
particular sectors of the economy. For example, the category "aids
to agriculture, commerce, and transportation" reflects current
benefits, such as subsidies for operating expenses of air, water, and
rail transportation activity. It does not include related subsidies for
the construction of private merchant ships, which are investmenttype outlays included under "acquisition of major equipment", nor
does it include assistance provided by the Federal Government
through loan guarantees, tax expenditures, or other methods. Al

SPECIAL ANALYSIS A

though not measured in this analysis, guaranteed loans, tax expenditures, and other provisions of the tax code are methods by which
the Federal Government can affect the type and amount of public
and private investment. For example, federally guaranteed loans
are substitutes for outlays or direct loans and can result in the
creation of certain assets in place of others.1
The four tables presented in this analysis divide outlays between
investment-type and current uses according to the classification
categories described below. Table D - l divides outlays between national defense and civil programs. Table D-2 separates outlays by
grants-in-aid,2 loans, and other direct Federal programs. This table
does not distinguish between defense and civil outlays. Tables D-3
and D-4 correspond to tables D-l and D-2, respectively, and give
further detail. Most of the off-budget outlays (shown as addendum
items) are for loans and are, therefore, for investment-type activity.3
The remainder of the text discusses in greater detail the components and rationale for classifying the various types of budget
outlays. For each type of outlay classified in the investment category the manner is shown whereby that type yields benefits in the
future, in the form of either physical or financial assets or other
less tangible benefits. The remaining outlays (except for the allowances) are classified by definition as current.
Investment-type programs.—Total investment-type outlays are estimated to increase from $148.0 billion in 1982 to $155.3 billion in
1983. About $2.9 billion in 1983 outlays are for loans and financial
investments, $90.2 billion are for the acquisition, construction, or
rehabilitation of physical assets, and $62.2 billion are for the conduct of education, training, research and development, and other
investment-type programs. Defense investment-type outlays are
primarily for the acquisition of major equipment and other physical assets, and for research and development. Civil programs,
which account for 40% of total investment-type outlays, are primarily for construction and rehabilitation of physical assets and
the conduct of education, research, and development.
Loans and financial investments.—A loan creates a financial
asset; if made at competitive market rates, the value of the asset
equals to the outlay. For domestic loans, the Government's asset is
matched by the liability of the private sector. Most Federal domestic loans finance the acquisition or improvement of either physical
1 Additional
information on guaranteed loan programs and tax expenditures can be found in separate
publications entitled Special Analysis F, "Federal Credit Programs" and Special Analysis G, "Tax Expenditures", respectively.
2 Grants-in-aid are resources provided by the Federal Government in support of State and local programs of
governmental service to the public. A separate publication, Special Analysis H, "Federal Aid to State and Local
Governments," discusses grants-in-aid in greater detail.
3 See Part 6 of the Budget for a discussion of off-budget Federal entities.

THE BUDGET FOR FISCAL YEAR 1983
Table D - l . SUMMARY OF INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)
1981
actual

National defense:
Investment-type programs:
Construction and rehabilitation
Acquisition of major equipment and other physical assets
Conduct of research and development
Other investment-type programs

1983
estimate

1982
estimate

2,833

3,561

4,501

36,867
16,946
187

43,224
20,384
113

57,150
24,453
293

56,832

67,282

86,397

13,784

15,084

16,562

53,585
35,563

62,525
42,606

67,370
50,738

Subtotal, current programs

102,933

120,215

134,671

Total, national defense

159,765

187,497

221,068

Civil:
Investment-type programs:
Loans and financial investments
Construction and rehabilitation
Acquisition of physical assets
Conduct of research and development
Conduct of education and training
Other investment-type programs

5,678
28,944
7,495
17,231
26,124
3,650

5,433
28,510
3,561
17,470
22,419
3,301

2,931
25,747
2,788
16,846
17,298
3,280

Subtotal, investment-type programs

89,122

80,695

68,890

309,239
9,174

345,882
8,440

360,356
6,710

17,357

16,972

13,297

-711
7,092
7,823
68,556
9,372

-1,532
6,733
7,493
83,015
9,738

-2,967
7,015
7,138
96,414
8,979

427,903

476,740

496,942

-19,585

-19,602

-29,262

Subtotal, investment-type programs
Current programs:
Provision of benefits
Repair, maintenance, and operation of physical
assets
Other current programs

Current programs:
Provision of benefits
Social services and related programs
Aids to agriculture, commerce, and transportation
Repair, maintenance, and operation of'physical
assets
General purpose fiscal assistance
Regulation, control, and law enforcement
Net interest
Other current programs
Subtotal, current programs
Unclassified
Total, civil

497,439

537,833

536,570

Grand total

657,204

725,331

757,638

20,999
2

16,419
2,848

12,295
2,801

422

606

21,005

19,689

15,701

Addendum:
Off-budget Federal entities (civil):
Loans
Other investment-type outlays
Aids to agriculture, commerce, and transportation
Total, off-budget Federal entities

SPECIAL ANALYSIS A
Table D-2. SUMMARY OF BUDGET OUTLAYS FOR GRANTS-IN-AID, LOANS, AND DIRECT FEDERAL
PROGRAMS
(In millions of dollars)
1982
estimate

1981
actual

Grants-in-aid:
Investment-type programs:
Construction, rehabilitation, and acquisition of
physical assets
Conduct of education and training
Other investment-type programs

1983
estimate

22,219
14,445
354

21,659
10,919
276

19,468
7,477
217

37,018

32,853

27,163

39,421
8,059

41,355
7,425

39,211
5,966

1,458
7,133
684
990

1,225
6,777
583
1,002

904
7,074
441
660

Subtotal, current programs

57,744

58,367

54,255

Total, grants-in-aid

94,762

91,220

81,418

4,078

4,127

1,592

9,954
37,325

10,829
43,122

11,140
57,095.

6,640
33,926
11,688
5,325

3,247
37,635
11,508
4,656,

2,482
41,106
9,892
4,817

Subtotal, investment-type programs
Current programs:
Provision of benefits
Social services and related programs
Aids to agriculture, commerce, and transportation
General purpose fiscal assistance
Regulation, control, and law enforcement
Other current programs

Loans
Direct Federal programs:
Investment-type programs:
Construction and rehabilitation
Acquisition of major equipment
Acquisition of commodity inventories and other
physical assets
Conduct of research and development
Conduct of education and training
Other investment-type programs
Subtotal, investment-type programs
Current programs:
Provision of benefits
Social services and related programs
Aids to agriculture, commerce, and transportation
Repair, maintenance, and operation of physical
assets
Regulation, control, and law enforcement
Net interest
Other current programs
Subtotal, current programs
Total, direct Federal programs
Unclassified
Grand total
Addendum: (Direct Federal programs)
Off-budget Federal entities:
Loans
Other investment-type programs
Aids to agriculture, commerce, and transportation
Total, off-budget Federal entities

104,858

110,998

126,532

283,602
1,115

319,611
1,014

337,707
744

15,900

15,747

12,393

52,354
7,139
68,556
44,424

60,345
6,909
83,015
51,947

64,000
6,698
96,414
59,403

473,091

538,588

577,358

577,949

649,586

703,890

-19,585

-19,602

-29,262

657,204

725,331

757,638

20,999
2

16,419
2,848

12,295
2,801

422

606

21,005

19,689

15,701

THE BUDGET FOR FISCAL YEAR 1983

assets or human capital. This is especially true for loans in the
commerce and housing credit, education, and transportation functions. Loans to foreign borrowers are an increase in financial assets
held by the United States. Most foreign loans are for economic
development programs or the promotion of U.S. exports, including
military equipment and farm commodities.
Net loan outlays are estimated to total $1.6 billion in 1983. This
figure is less than the volume of new loans made in a given year
because outlays for new loans are offset by loan repayments, or by
sales of loans (so-called "loan asset sales") to the private sector or
to the Federal Financing Bank. Budget outlays for financial investments are estimated to be $1.3 billion in 1983 and almost entirely
go to international organizations. Off-budget loans are estimated to
be $12.3 billion in 1983. Federal direct and guaranteed loan programs are discussed in greater detail in Special Analysis F, "Federal Credit Programs."
Physical assets.—The benefits provided by the construction and
rehabilitation of physical assets, the acquisition of major equipment, and the establishment of commodity inventories are of a
long-term nature. Budget outlays designed specifically to purchase
such assets are treated as investment-type outlays regardless of
whether the asset is owned by the Federal Government, or by
State, local, or private entities. Total outlays for physical assets are
estimated at $90.2 billion in 1983; of this amount $61.6 billion is for
national defense. Most national defense outlays for physical assets
are for the procurement of military equipment. A large portion of
Federal outlays for nondefense physical assets is in the form of
grants-in-aid to State and local governments, especially for construction programs such as highways, mass transit, and pollution
control facilities. Outlays for the purchase of commodity inventories
in 1982 and 1983 are lower than in 1981 by approximately $2.8
billion. This decrease is caused by legislation which shifted the
purchases of oil for the strategic petroleum reserve to off-budget
status. Off-budget investment-type outlays reflect a corresponding
increase.
Conduct of research and development.—Outlays for research and
development increase our base of knowledge and apply that knowledge for its future benefit to the Nation. Total outlays for the
conduct of research and development are estimated at $41.3 billion
in 1983. Outlays for defense research and development are estimated to increase by approximately 20% over 1982 and are more than
one-half of research and development outlays. Outlays for
nondefense research and development are estimated to decrease by
approximately 4%. Outlays for health, energy, and space technology
research and development account for approximately one-half of
nondefense research and development outlays in 1983. Additional
information about Federal research and development programs is
contained in Special Analysis K, "Research and Development."

SPECIAL ANALYSIS A

Conduct of education and training.—Outlays classified in this
category are designed to add to the stock of human capital by
developing a more skilled and productive labor force. These outlays
are largely for direct payments to individuals, such as scholarships,
and grants to institutions and State and local governments. As
with physical assets, the benefits accrue over a considerable period
of time. Outlays are estimated at $17.4 billion in 1983, of which
$7.5 billion are in the form of grants to State and local governments.
Collection of information.—This category includes outlays for collection of information, censuses, topographic or other natural resource surveys, and programs that benefit both the present and
future by establishing a base of knowledge. Outlays are estimated at
$1.3 billion and $1.2 billion in 1982 and 1983, respectively.
International development.—Foreign assistance for general international economic development is included in this category. These
outlays, which are expected to benefit U.S. interests by enhancing
the economic development of friendly foreign nations, are estimated to be $2.3 billion in 1983.
Current programs.—Programs that provide benefits in the current year are divided into several subcategories briefly discussed
below. Outlays classified as current may in part be used by their
recipients for investment-type purposes. However, the principal
effect of these outlays is to provide short-term benefits—such as
unemployment compensation, and retirement and disability payments—rather than providing the means for future benefits. Total
outlays for current programs are estimated to increase from $597.0
billion in 1982 to $631.6 billion in 1983 and are more than threequarters of 1983 estimated budget outlays. About $134.7 billion of
current outlays in 1983 are for defense programs and $496.9 billion
for civil programs.
Outlays for "provision of benefits" is the largest category in the
budget. Total outlays are estimated to increase from $361.0 billion
in 1982 to $376.9 billion in 1983. Social security and other disability
and retirement benefits are estimated to be $222.1 billion of the
total in 1983. The decrease in 1983 railroad retirement and disability benefits is due to the administration's proposal to restore the
responsibility for railroad employee's pension benefits to the private sector. Other major outlays in this category are for medicaid,
medicare, unemployment, and food and nutrition programs.
Current outlays for "social services and related programs" fund
human development and child welfare services, and employment
programs. Outlays in 1983 are estimated to be $6.7 billion, of which
$6.0 billion are in the form of grants to State and local governments.

THE BUDGET FOR FISCAL YEAR 1983

"Aids to agriculture, commerce, and transportation" are primarily for direct Federal activities, including price support, small business and transportation programs. Outlays for these programs are
estimated to decrease from $17.4 billion in 1981 to $17.0 billion in
1982 and $13.3 billion in 1983. Outlays in 1981 include a one-time
payment of $2.1 billion to the Penn Central Corporation for properties transferred to Conrail in 1976.
Other current outlays are largely for operation of the Federal
Government, including: the repair, maintenance, and operation of
physical assets (primarily defense related); regulatory and law enforcement activities; net interest; and other administrative or operating expenses. Because proprietary receipts from the public—such
as receipts from the sale of power and other utilities, the sale of
publications and reproductions, and the sale of timber and other
natural land products—are offsets against the outlays to which they
most nearly apply, net outlays for the operation of the Federal
Government are negative in some cases.
Unclassified.—The unclassified category has been redefined to
encompass activity not previously included. It now includes the
undistributed offsetting receipts (except interest) and the allowances
for unallocated budget savings. In addition, most payments from the
government to itself and the associated offsetting collections have
been moved to this category. This has been done to reduce the
confusion involved in deriving the true program level in the categories discussed above. Outlays for this category in 1982 and 1983 are
estimated to be —$19.6 billion and —$29.3 billion, respectively.

SPECIAL ANALYSIS

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)
1982
estimate

1981
actual

1983
estimate

National defense investment-type programs
Construction and rehabilitation of physical assets:
Military construction
Family housing
Atomic energy defense activities

2,295
102
437

2,650
185
725

3,768
3
729

Subtotal, construction and rehabilitation of
physical assets

2,833

3,561

4,501

35,191
1,220

41,325
1,439

55,144
1,761

36,411

42,764

56,904

455

460

246

16,946

20,384

24,453

187

113

293

56,832

67,282

86,397

National defense current programs
Provision of benefits:
Retired military personnel
Other

13,729
55

15,000
85

16,471
91

Subtotal, provision of benefits

13,784

15,084

16,562

Repair, maintenance, and operation of physical
assets:
Department of Defense, Military
Other

53,379
206

62,282
243

67,106
264

53,585

62,525

67,370

35,831
-267

37,610
5,081
-85

43,856
4,285
2,598

35,563

42,606

50,738

Subtotal, current programs

102,933

120,215

134,671

Total, national defense

159,765

187,497

221,068

2,904
-1,808
292
385
169
1,100
141
404
501

2,583
948
-149
107
137
-144
46
536
72

3,289

Acquisition of major equipment:
Procurement
Atomic energy defense activities and other
Subtotal, acquisition of major equipment
Other physical assets
Conduct of research and development
Other investment-type programs
Subtotal, investment-type programs

Subtotal, repair, maintenance, and operation
of physical assets
Other current programs:
Military personnel
Allowance for civilian and military pay raises
Other national defense
Subtotal, other current programs

Civil investment-type programs
Loans:
International affairs
Agriculture
Mortgage credit and thrift insurance
Aids to commerce
Transportation
Disaster relief
Other community and regional development
Education
Other

-1,216
-75
114
-414
83
.639
-819

THE BUDGET FOR FISCAL YEAR 1983
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS—Continued
(In millions of dollars)
1981
actual

1983
estimate

1982
estimate

4,088

4,137

1,602

1,330
260

1,139
157

1,293
36

Subtotal, other financial investments

1,589

1,297

1,329

Construction and rehabilitation of physical assets:
Highways
Mass transportation
Air transportation
Other transportation
Community development block grants
Other community and regional development
Pollution control and abatement
Water resources
Other natural resources and environment
Energy
Veterans hospitals and other health facilities
Other

8,842
2,593
776
131
4,042
1,751
3,883
2,336
1,326
2,279
567
417

8,015
2,726
809
132
4,005
1,718
4,054
2,284
1,374
2,228
635
530

8,100
2,410
748
121
3,350
1,351
3,354
2,192
1,137
1,872
654
456

Subtotal, construction and rehabilitation of
physical assets

28,944

28,510

25,747

367
573

438
-59

286
-79

940

379

207

3,352
990

491
423
29

565

4,342

943

565

2,213

2,240

2,016

17,231

17,470

16,846

Conduct of education and training:
Foundation for Education Assistance:
Higher education
Elementary, secondary, and vocational educationOther

6,253
6,008
277

6,227
6,164
306

5,524
4,772
302

Subtotal, Foundation for Education Assistance..

12,538

12,693

10,597

2,304
7,755
1,123
2,404

1,959
4,343
986
2,437

1,647
2,248
908
1,898

26,124

22,419

17,298

248
1,218

158
1,099

153
1,017

Subtotal, loans
Other financial investments:
International development
Other

Acquisition of major equipment:
Transportation
Other
Subtotal, acquisition of major equipment
Commodity inventories:
Energy
Agriculture
Other
Subtotal, commodity inventories
Other physical assets
Conduct of research and development

Veterans readjustment benefits
Training and employment programs
Health training
Other education and training
Subtotal, conduct of education and training
Collection of information:
Census Bureau
Other

SPECIAL ANALYSIS

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS—Continued
(In millions of dollars)
1983
estimate

1982
estimate

1981
actual

1,466

1,257

1,170

2,184

2,044

2,110

89,122

80,695

68,890

Civil current programs
Provision of benefits:
Retirement, survivor, and disability benefits:
Social Security:
Retirement and survivor benefits
Disability benefits

119,413
16,853

134,918
17,662

150,238
18,415

Subtotal, Social Security

136,267

152,580

168,654

Civil Service:
Retirement and survivor benefits
Disability benefits

14,046
3,158

15,412
3,438

16,838
3,718

17,204

18,850

20,556

Railroad retirement and disability benefits

5,294

5,328

Veterans disability benefits

8,670

9,675

10,351

Other retirement and disability benefits

1,336

1,988

1,941

168,771

188,420

201,502

3,755
41,242
16,833
1,032
18,392
7,548
15,706
6,452
7,203
6,123

3,940
48,296
17,823
1,236
23,689
9,520
15,015
7,073
6,671
6,725

4,014
54,127
17,006
1,691
21,159
10,089
13,317
8,028
5,412
4,653

124,285

139,988

139,495

Direct provision of services:
Hospital and medical care for veterans
Other health services
Other

5,947
1,092
280

6,547
972
313

6,925
915
861

Subtotal, direct provision of services

7,319

7,831

8,702

Administrative expenses:
Social Security retirement and disability
Medicare
Unemployment compensation and other

1,689
1,247
5,929

1,899
1,255
6,489

2,161
1,225
7,272

8,865

9,643

10,657

309,239

345,882

360,356

Subtotal, collection of information
International development
Subtotal, investment-type programs

Subtotal, Civil Service

Subtotal, retirement, survivor, and disability
benefits
Other provisions of benefits:
Veterans pension benefits
„
Medicare
Medicaid
Other health benefits
Unemployment compensation
Housing programs
Food and nutrition programs
Supplemental security income
Assistance payments program
Other
Subtotal, other provisions of benefits

Subtotal, administrative expenses
Subtotal, provision of benefits

THE BUDGET FOR FISCAL YEAR 1983
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS—Continued
(In millions of dollars)
1981
actual

Social services and related programs:
Human development services
Employment programs
Social services and child welfare services
Other

1982
estimate

1983
estimate

2,350
508
1,974
1,878

Subtotal, social services and related programs

9,174

8,440

6,710

Aids to agriculture, commerce, and transportation:
Agriculture
Postal Service
Small business assistance
Mortgage credit and thrift insurance
Ground transportation
Air transportation
Water transportation and waterways
Other

4,650
1,343
492
1,111
4,705
2,270
1,584
1,202

5,551
619
540
1,538
3,211
2,137
1,750
1,624

2,714
500
595
1,785
1,881
2,411
1,558
1,854

Subtotal, aids to agriculture, commerce, and
transportation

17,357

16,972

13,297

Repair, maintenance, and operation of physical assets:
Natural resources:
Water resources
Conservation and land management
Recreation resources and other
Offsetting receipts

823
433
668
-1,458

782
422
783
-2,232

574
357
885
-3,219

467

-246

-1,403

-1,295

-1,609

-1,684

-315

-349

-372

Subtotal, natural resources
Energy (net of naval petroleum reserve and other
receipts)
Indian tribal receipts
Other

433
Subtotal, repair, maintenance, and operation
of physical assets

General purpose fiscal assistance:
General revenue sharing
Other general purpose grants-in-aid
Shared revenues
Subtotal, general purpose fiscal assistance
Regulation, control, and law enforcement:
Regulatory and inspection activities:
Natural resources and environment
Transportation
Health
Energy
Agriculture
Savings institutions
Tax collections
Other

2,247
1,085
2,912
2,197

2,793
1,476
2,571
2,334

492

-711

-1,532

-2,967

5,137
725
1,230

4,570
759
1,404

4,567
759
1,689

7,092

6,733

7,015

1,098
860
701
631
330
-1,738
568
832

1,010
868
682
638
308
-1,830
619
832

914
907
689
544
256
-2,015
765
632

SPECIAL ANALYSIS A
Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS—Continued
(In millions of dollars)
1983
estimate

1982
estimate

1981
actual

3,283

3,127

2,693

Law enforcement activities:
Federal law enforcement
Federal litigative and judicial activities
Federal correctional activities
Other law enforcement assistance

2,366
1,479
343
353

2,443
1,377
351
196

2,595
1,406
374
71

Subtotal, law enforcement activities

4,540

4,366

4,445

Subtotal, regulation, control, and law enforcement

7,823

7,493

7,138

95,333
-12,967
-13,810

115,700
-16,605
-16,080

132,900
-20,364
-16,122

68,556

83,015

96,414

1,176
1,058
2,946
1,047

1,829
1,235
3,163
807

2,107
1,262
3,079
615

6,228

7,034

7,063

2,880
265

3,081
376
-753

2,619
743
-1,446

3,144

2,704

1,916

Subtotal, current programs

427,903

476,740

496,942

Unclassified:
Fraud waste and abuse
Employer share, employee retirement
Offshore oil receipts
Non-compulsory medicare premiums
Other unclassified

-6,371
-10,138
-12,921
9,845

-1,000
-7,560
-7,861
-18,194
15,013

-1,000
-8,353
-18,000
-19,806
17,897

-19,585

-19,602

-29,262

Total, civil

497,439

537,833

536,570

Grand total

657,204

725,331

757,638

20,999

16,419
2,834
13

12,295
2,775
27

Subtotal, regulatory and inspection activities...

Net interest:
Interest on the public debt
Other interest
Interest received by trust funds
Subtotal, net interest
General Administration:
International affairs
Legislative branch
Other general government
Other
Subtotal, general administration
Other current programs:
International security assistance
Allowances for civilian agency pay raises
Other
Subtotal, other current programs

Subtotal, unclassified

Addendum:
Off-budget Federal entities (civil):
Investment-type programs:
Loans (see Table D - 4 )
Strategic petroleum reserve
Other investment-type programs

THE BUDGET FOR FISCAL YEAR 1982

Table D-3. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS—Continued
(In millions of dollars)
1981
actual

Subtotal, investment-type programs

1982
estimate

1983
estimate

21,001

19,267

15,096

Current:
Aids to agriculture, commerce, and transportation:
Postal Service
Railways
Other

86
-47
-36

540
12
-130

687
9
-90

Subtotal, aids to agriculture, commerce and transportation

422

606

Subtotal, current programs

422

606

21,005

19,689

15,701

Total, off-budget Federal entities
*$500 thousand or less.

SPECIAL ANALYSIS

Table D-4. BUDGET OUTLAYS FOR GRANTS-IN-AID, LOANS, AND DIRECT FEDERAL PROGRAMS
(In millions of dollars)
1983
estimate

1982
estimate

1981
actual

Grants-in-aid
Investment-type programs:
Construction and rehabilitation of physical
assets:
Highways
Mass transportation
Other transportation
Pollution control and abatement
Other natural resources and environment
Community development block grants
Other community and regional development
Other construction

8,835
2,593
469
3,881
277
4,042
1,531
194

8,000
2,726
475
4,050
305
4,005
1,433
248

8,099
2,410
374
3,350
196
3,350
1,153
176

21,823

21,242

19,107

Acquisition of equipment and other physical assets...

396

417

361

Conduct of research and development

251

220

193

6,778
5,877
1,790

3,322
6,031
1,566

1,531
4,694
1,253

14,445

10,919

7,477

103

37,018

32,853

27,163

16,833
4,581
7,203
4,015
3,509

17,823
4,103
6,671
4,754
4,268

17,006
3,961
5,412
4,884
3,652

3,281

3,737

4,296

39,421

41,355

39,211

1,201
2,707
2,571
1,579

832
2,168
2,912
1,514

470
2,270
1,974
1,252

Subtotal, social services and related programs

8,059

7,425

5,966

Aids to agriculture, commerce, and transportation:
Transportation
Other

1,453
4

1,220
5

902
2

Subtotal, aids to agriculture, commerce, and
transportation

1,458

1,225

904

Subtotal, construction and rehabilitation of
physical assets

Conduct of education and training:
Employment and training assistance
Elementary and secondary education
Other
Subtotal, conduct of education and training
Collection of information
Subtotal, investment-type programs
Current programs:
Provision of benefits:
Medicaid
Nutrition and food programs
Assistance payments
Housing payments and subsidies
Other
Administrative expenses:
Unemployment compensation and other
Subtotal, provision of benefits
Social services and related programs:
Employment programs
Human development services
Social services and child welfare services
Other

THE BUDGET FOR FISCAL YEAR 1982
Table D - 4 . BUDGET OUTLAYS FOR GRANTS-IN-AID, LOANS, AND DIRECT FEDERAL PROGRAMS—
Continued
(In millions of dollars)
1981
actual

Repair, maintenance, and operation of physical
assets

1982
estimate

1983
estimate

520

648

403

5,137
1,230
766

4,570
1,404
803

4,567
1,689
818

7,133

6,777

7,074

257
427

196
388

76
365

684

583

441

470

354

256

Subtotal, current programs

57,744

58,367

54,255

Total, grants-in-aid

94,762

91,220

81,418

2,904
100
-1,808
292
378
169
1,101
404
217
321

2,583
97
948
-149
99
137
-144
536
-41
-60

3,289
119
-1,216
-83
114
-414
639
-1,025
168

4,078

4,127

1,592

General purpose fiscal assistance:
General revenue sharing
Shared revenues
Other
Subtotal, general purpose fiscal assistance
Regulation, control, and law enforcement:
Law enforcement assistance
Other
Subtotal, regulation, control, and law enforcement
Other current programs

Loans
International affairs
Energy supply
Agriculture
Mortgage credit and thrift insurance
Commerce and housing credit
Transportation
Small Business Administration, disaster loans
Education
Veterans
Other
Total, loans
Direct Federal Programs
Investment-type programs:
Financial investments
Construction and rehabilitation of physical assets:
National defense
Water resource projects
Other natural resources and environment
Energy
Transportation
Veterans hospitals and other health facilities
Other construction

1,589

1,297

1,329

2,800
2,264
1,121
2,279
446
552
492

3,522
2,215
1,143
2,228
480
574
667

4,454
2,143
995
1,872
497
637
543

Subtotal, construction and rehabilitation of
physical assets

9,954

10,829

11,140

36,411
914

42,764
358

56,904
191

37,325

43,122

57,095

Acquisition of major equipment:
National defense
Other
Subtotal, acquisition of major equipment.

SPECIAL ANALYSIS

Table D-4. BUDGET OUTLAYS FOR GRANTS-IN-AID, LOANS, AND DIRECT FEDERAL PROGRAMS—
Continued
(In millions of dollars)
1981
actual

1983
estimate

1982
estimate

Commodity inventories

4.797

1.403

811

Other physical assets

1,843

1,844

1,671

Conduct of research and development

33,926

37,635

41,106

Conduct of education and training:
Assistance to veterans
Higher education
Elementary and secondary education
Employment and training assistance
Health training
Other

2,533
6,246
395
911
672
931

2,178
6,279
391
934
549
1,177

1,899
5,585
328
640
437
1,003

11,688

11,508

9,892

Collection of information

1,385

1,222

1,171

International development

2,351

2,138

2,317

104,858

110,998

126,532

136,267
50,043
41,242
5,947
1,126
18,392
10,841
3,590
6,407
1,318
2,846

152,580
54,864
48,296
6,547
1,023
23,689
10,493
4,805
7,050
1,254
3,103

168,654
53,425
54,127
6,925
938
21,159
8,990
6,034
8,012
1,180
1,900

1,689
1,247
2,648

1,899
1,255
2,752

2,161
1,225
2,976

5.584

5.907

6,362

283,602

319,611

337,707

Social services and related programs

1,115

1,014

744

4,650
1,343
492
1,109
3,255
2,270
1,035
1,746

5,551
619
540
1,536
1,994
2,137
1,176
2,194

2,714
500
595
1,785
981
2,411
1,057
2,350

Subtotal, conduct of education and training

Subtotal, investment-type programs
Current programs:
Provision of benefits:
Social Security retirement and disability
Other retirement and disability benefits
Medicare
Medical care for veterans
Other health
Unemployment compensation
Food and nutrition programs
Housing payments and subsidies
Supplemental security income
Earned income tax credit
Other
Administrative expenses:
Social Security retirement and disability
Medicare
Nutrition and food programs and other
Subtotal, administrative expenses
Subtotal, provision of benefits

THE BUDGET FOR FISCAL YEAR 1983

Table D-4. BUDGET OUTLAYS FOR GRANTS-IN-AID, LOANS, AND DIRECT FEDERAL PROGRAMS—
Continued
(In millions of dollars)
1981
actual

1983
estimate

1982
estimate

Subtotal, aids to agriculture, commerce, and
transportation

15,900

15,747

12,393

Repair, maintenance, and operation of physical
assets:
National defense
Other (includes offsetting collections)

53,585
-1,231

62,525
-2,180

67,370
-3,370

Subtotal, repair, maintenance, and operation
of physical assets

52,354

60,345

64,000

7,139

6,909

6,698

68,556

83,015

96,414

35,831

8,902

37,610
5,081
-128
376
9,008

43,856
4,285
2.539
743
7,980

44,424

51,947

59,403

Subtotal, current programs

473,091

538,588

577,358

Total, direct Federal programs

577,949

649,586

703,890

-6,371
-10,138
-12,921
9,845

-1,000
-7,560
-7,861
-18,194
15,013

-1,000
-8,353
-18,000
-19,806
17,897

-19,585

-19,602

-29,262

657,204

725,331

757,638

1,940
4,899
5,790
4,164
31
1,200
1,955
810
211

2,644
5,740
1,066
3,473
-42
1,307
700
1,224
286

3,709
5,919
-394
1,031
-2
947

20,999

16,419

12,295

2,834
13

2,775
27

Regulation, control, and law enforcement
Net interest
Other current programs:
Military personnel
Allowance for Department of Defense pay raises
Other national defense
Allowance for civilian agency pay raises
Other
Subtotal, other current programs

Unclassified:
Fraud, waste, abuse
Employer share, employee retirement
Offshore oil receipts
Non-compulsory medicare premiums
Other unclassified
Subtotal, unclassified
Grand total
Addendum (Direct Federal):
Off-budget Federal entities:
Investment-type programs:
Loans:
International
Energy
Agriculture
Mortgage credit and thrift insurance
Transportation
Community and regional development
Education
Income security
Other
Subtotal, loans
Other investment-type programs:
Strategic petroleum reserve
Other

-309

969
115

SPECIAL ANALYSIS D
Table D-4. BUDGET OUTLAYS FOR GRANTS-IN-AID, LOANS, AND DIRECT FEDERAL PROGRAMS—
Continued
(In millions of dollars)
1981
actual

1982
estimate

1983
estimate

2,848

2,801

21,001'

19,267

15,096

Current:
Aids to agriculture, commerce, and transportation:
Postal Service
Railways
Other

86
-47
-36

540
12
-130

687
9
-90

Subtotal, aids to agriculture, commerce,
& transportation
Subtotal, current

3
3

422
422

606
606

21,005

19,689

15,701

Subtotal, other investment type
Subtotal, investment

Total, off-budget Federal entities

SPECIAL ANALYSIS E

BORROWING AND DEBT

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS E
BORROWING AND DEBT
The major fiscal operations of the Federal Government include
not only taxation and expenditure but also:
• the borrowing of cash to meet current outlays 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 guarantees and other assistance for certain
private 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, the amount of U.S. Government debt held by foreign residents, agency borrowing, agency
investment in Federal securities, the statutory debt limitation,
Government-guaranteed borrowing, and borrowing by Governmentsponsored enterprises. The analysis concludes with a brief discussion of the trend in Federal and federally assisted borrowing and
the relationship of this trend to the total borrowing by the nonfinancial sector of the economy. Excluded from this analysis are
other types of Federal liabilities, which include accounts payable,
obligations for undelivered orders, long-term contracts, insurance
commitments, and the obligation for such future payments as
social security and employee retirement.1
Special Analysis F, "Federal Credit Programs," 2 examines the
related subject of Federal credit programs, which provide direct
loans, loan guarantees, and loans by Government-sponsored enterprises. The factors discussed in both Special Analyses E and F are
significant in appraising the impact on financial markets of the
programs contained in the 1983 Federal budget.
B O R R O W I N G A N D REPAYING

DEBT

The Federal Government sells debt for two principal reasons.
First, it sells debt to the public, largely in order to finance the
Federal deficit. Second, it sells debt to the Government agencies
that accumulate surpluses in separate funds, primarily trust funds,
1 Information on many of these liabilities is contained in "Statement of Liabilities and Other Financial
Commitments of the United States Government," an annual report prepared by the Bureau of Government
Financial Operations of the Department of the Treasury.
2 This publication is available from the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402.

THE BUDGET FOR FISCAL YEAR 1983

that are 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." 3
Borrowing from the public—whether by the Treasury or by an
agency—has a significant impact on financial markets and the rest
of the economy, and is consequently an important concern of Federal fiscal policy. Borrowing from the public includes borrowing
from the Federal Reserve System as well as borrowing from commercial banks, foreign central banks, other financial institutions
and businesses, and individuals. The term "borrowing from the
Federal Reserve System" does not imply that the Treasury sells
debt securities directly to the Federal Reserve. Instead, the Federal
Reserve normally buys securities in the open market. In the past
the Federal Reserve was able to buy securities directly from the
Treasury only under exceptional circumstances and in amounts
limited by statute. The statutory authority for even these exceptions expired in 1981.
For most purposes borrowing from the Federal Reserve System
should be distinguished from borrowing from the rest of the public.
Federal Reserve purchases of debt are undertaken to carry out
monetary policy, not to earn income, and affect the economy by
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 enters into investment portfolios of
businesses and individuals and by this means affects interest rates,
other financial conditions, and the size and composition of private
assets. Almost all interest received by the Federal Reserve System
is returned to the Treasury as receipts, called deposits of earnings,
so the Federal Reserve holdings of debt have only a small effect on
the budget surplus or deficit. The estimates in this analysis for the
current and future years do not divide the debt held by the public
between the Federal Reserve System and the rest of the public,
despite the significance of this distinction, because the Federal
Reserve's open market operations depend on future economic developments and on policy decisions not yet made.
Table E - l summarizes Federal borrowing from 1981 through
1985. In 1981 the total Federal borrowing (net of the refunding of
securities)—i.e., the rise in gross Federal debt—was $89.6 billion.
The sale of debt to Government agencies was $10.3 billion, and the
sale of debt to the public was $79.3 billion. Of the increase in debt
held by the public, $3.6 billion was purchased by the Federal Re3 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 E - 6 but also certain Governmentguaranteed securities and the debt of the Government-sponsored enterprises listed in table E-10.

SPECIAL ANALYSIS A

serve System and $75.7 billion by the rest of the public. As a result
of this borrowing, Federal debt held by the public increased to
$794.4 billion at the end of 1981. Gross Federal debt reached one
trillion dollars on the last day of the fiscal year, with the amount
being $1,003.9 billion.
Table E - l . FEDERAL BORROWING
(In millions of dollars)
Borrowing or repayment ( — ) of debt
Description

Gross Federal debt:
Treasury debt
Agency debt
Gross Federal debt
Less debt held by Gov. agencies:
Treasury debt
Agency debt
Debt held by Gov. agencies1
Total, debt held by public

1981
actual

1982 2
estimate

1983
estimate

90,153 131,259 124,306
-87
- 5 3 0 -1,014

1984
estimate

NA
NA

Debt outstanding, end of year
1985
estimate

1983
estimate

NA 1,253,420
NA
4,985

89,623 130,245 124,219 114,373 113,314

1985
estimate

NA
NA

1,258,405

1,486,092

10,313
-19

15,115
-264

16,230
-10

NA
NA

235,795
1,176

NA
NA

10,294

14,851

16,220

17,913

31,279

236,971

286,163

79,329 115,394 108,000

96,459

82,036

1,021,434

1,199,929

NA
NA

Composed of:
Debt held by the Federal Reserve
System
3,620
Debt held by others
75,709

NA
NA

NA=Not available.
1 Agency investment in 1984 and 1985 is estimated as equal to the total trust fund surplus.
2 Borrowing from the public in 1982 excludes the change in debt held by the public due to the proposed legislation under which the ownership
of an estimated $3,606 million of debt would be transferred from the railroad retirement account to a newly created private rail industry pension
corporation as of September 30, 1982. Agency investment excludes the corresponding change in debt held by Government agencies.

Borrowing from the public has fluctuated widely in recent years,
largely in response to fluctuations in the economy. It rose from $3.0
billion in 1974 to $82.9 billion in 1976 primarily because of the
1974-75 recession and its aftermath, and it declined to $33.6 billion
in 1979 as the economy recovered. The rise in borrowing to $70.5
billion in 1980 and $79.3 billion in 1981 was caused in considerable
part by economic slowdown and recession.
Borrowing from the public is estimated to increase to $115.4
billion in 1982 and then decline a little to $108.0 billion in 1983.
The economic assumptions underlying these estimates are displayed and discussed in Part 2 of the Budget The current recession
automatically reduces tax receipts and raises outlays for unemployment benefits and certain other programs; the current decrease in
the rate of inflation, which is estimated to continue throughout the
projection period, reduces tax receipts more quickly than it reduces
outlays. By the end of 1983 gross Federal debt is estimated to be
$1,258.4 billion, with $1,021.4 billion or 81% held by the public
(including the Federal Reserve System) and the remainder by the

THE BUDGET FOR FISCAL YEAR 1983

agencies. Almost all of the gross Federal debt will have been issued
by the Treasury.
Borrowing from the public for years beyond the budget year is
estimated as part of the Government's multi-year budget planning.
As explained in Part 2 of the Budget, the economic assumptions
underlying the receipts and outlay estimates for 1984 and 1985 are
not forecasts of the probable economic conditions in these years,
unlike the economic forecast underlying the 1982 and 1983 estimates. Instead, the 1984-85 assumptions are projections consistent
with the economic policy objectives of the administration that
assume steady progress in reducing unemployment, inflation, and
interest rates and in sustaining strong real growth. The receipts
and outlay estimates also assume that current tax laws are continued, as modified by the proposals in the budget, and that existing
and proposed programs are carried out in 1984 and 1985 at the
levels currently planned. Under these assumptions, the total Government deficit continues to decline, and borrowing from the public
decreases steadily to $82.0 billion in 1985.
BORROWING AND GOVERNMENT DEFICITS

Table E-2 shows the relationship between borrowing from the
public and the Federal deficit. Until several years ago the budget
deficit comprised practically the entire deficit of the Federal Government, but the deficit of the off-budget Federal entities is now
significant. These entities, such as the Federal Financing Bank and
the Postal Service, are parts of the Federal Government but have
been excluded from the budget under provisions of law.
The Government deficit is financed either by borrowing from the
public or by several other means. The other means of financing
are:
• a decrease in cash or other kinds of monetary assets;
• an increase in monetary liabilities for checks outstanding,
accrued interest payable to the public, etc.;
• an increase in deposit fund balances, which are discussed on
pages 21-22 together with their effect on the means of financing; and
• seigniorage, which is the face value of minted coins less the
cost of their production.
All of these other means of financing except seigniorage are
changes in Government asset or liability accounts and so may be
either positive or negative. In most years they add up to a positive
total amount, in which case they finance part of the deficit. Sometimes, however, they add up to a negative total amount, in which
case they, like the deficit, must themselves be financed by borrowing from the public. In 1981 the Government borrowed $79.3 billion
from the public. Almost all of this amount, $78.9 billion, was used

SPECIAL ANALYSIS A

to finance the Government deficit. The remainder was used to
finance the other means of financing, which had a small negative
total amount.
Table E-2. MEANS OF FINANCING THE FEDERAL DEFICIT 1
(In millions of dollars)
Description

Budget surplus or deficit ( - )
Deficit ( - ) of off-budget Federal entities2
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. 3
Deposit fund balances4
Seigniorage on coins
Total, means of financing other than
borrowing from the public
Total, requirements for borrowing from
the public
Transfer of debt holdings 5
Change in debt held by the public

1981 actual

1982 estimate

1983 estimate

1984 estimate

1985
estimate

-57,932
-21,005

-98,578
-19,689

-01,52.
-15,701

-92,019
-14,285

-81,993
-10,950

-78,936

-118,267

-107,221

-978,204

-82,833

-1,668

3.700

-1,301
2,125
450

329
-1,709
553

326
-1,621
516

744

797

-393

2,873

-779

744

797

-79,329

-115,394
-3,606

-108,000

-96,459

-82,036

79,329

119,000

108,000

96,459

82,036

Several amounts have been assumed to be zero during 1983-85 because they are usually small and cannot be estimated accurately.
The off-budget Federal entities consist of the Rural Electrification and Telephone revolving fund, Rural Telephone Bank, Federal Financing Bank,
Postal Service fund, one program of the U.S. Railway Association, Synthetic Fuels Corporation, and (beginning in 1982) the Strategic Petroleum
Reserve account.
3 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.
4 Does not include investment in Federal debt classified as debt held by the public.
5 As of September 30, 1982, $3,606 million of debt held by trust funds are estimated to be reclassified as debt held by the public, because
under proposed legislation the ownership of the assets of the railroad retirement account are to be transferred to a newly created private rail
industry pension corporation.
1
2

The other means of financing are normally small relative to
borrowing from the public. This is because they are limited by
their own nature. Decreases in cash balances, for example, are
necessarily limited by past accumulations, which themselves required financing when they were built up. Thus, the extent
to which means other than borrowing can finance a deficit are
limited in any 1 year and are still more limited over a longer period
of time. When the total Government deficit is sizable, it is necessarily the principal determinant of borrowing from the public.
The debt estimated to be held by the public at the end of 1982 is
increased by $3.6 billion due to proposed legislation that would
transfer the ownership of the assets of the railroad retirement
account as of September 30, 1982, to a newly created private corporation that was chartered to operate the rail industry pension. The
transfer of these debt securities is not defined as constituting an
outlay. This transaction therefore does not give rise to any financing requirement, and the transfer is a reclassification of debt hold-

THE BUDGET FOR FISCAL YEAR 1983

ings rather than a borrowing from the public. The change in debt
held by the public during 1982 is consequently $3.6 billion more
than the borrowing from the public. Correspondingly, the change
in debt held by Government agencies is $3.6 billion less than
agency investment. Gross Federal debt is not affected.
The structure of table E-2 demonstrates that, because of the offbudget Federal entities, balancing the budget is not enough to
prevent an increase in the Federal debt held by the public. Even if
the budget were balanced, the off-budget deficit would have to be
financed by borrowing. The budget and the off-budget entities combined must be in balance in order for the Government not to have
to borrow from the public (aside from the effects of the other
means of financing).
The amount of debt issued to Federal agencies depends largely
on the surpluses of the trust funds, which own 90% of the Federal
debt held by Government agencies. Agency investment in Federal
securities and the total trust fund surplus during 1980-83 are
compared in the table below (in billions of dollars):
1980
actual
Agency investment in Federal debt.
Total trust fund surplus

10.1
8.8

1981
actual
10.3
6.8

1982
estimate
14.9
12.5

1983
estimate
16.2
15.4

As the table shows, the agency investment in Federal securities
is similar in size to the total trust fund surplus throughout this
period. This relationship has historically been close, with the small
differences accounted for by two factors. Certain agencies other
than trust funds buy or sell Federal debt, as shown in table E-7,
and the trust funds may increase or decrease their cash assets not
currently invested.4
SIZE AND G R O W T H OF FEDERAL DEBT

Gross Federal debt has risen substantially over the past half
century, from $16.9 billion in 1929 to $1,003.9 billion at the end of
1981. Table E-3 compares the trends since 1954 in gross Federal
debt and the amounts of debt held by Government accounts, the
public (including the Federal Reserve System), and the Federal
Reserve System. During this period the gross Federal debt increased nearly four times, with over a fifth of the increase being
held in Federal Government accounts (primarily trust funds)
rather than being owed to the public. In the quarter century from
the end of 1956 to the end of 1981, gross Federal debt increased at
an average annual rate of 5.3% and debt held by the public in4 These "open book balances" are small relative to trust fund holdings of Federal debt, as shown in Special
Analysis C, "Funds in the Budget."

SPECIAL A N A L Y S I S A
Table E - 3 . COMPARISON OF TRENDS IN FEDERAL DEBT A N D GROSS NATIONAL PRODUCT
(Dollar amounts in billions)
Debt outstanding, end of year
Held by
Fiscal year

Gross
Federal
debt

Federal
Government
accounts

The public
Total

Federal
Reserve
System

GNP
Other

Debt held
by public
as
percent of
GNP

1954
1955
1956
1957
1958
1959

270.8
274.4
272.8
272.4
279.7
287.8

46.3
47.8
50.5
52.9
53.3
52.8

224.5
226.6
222.2
219.4
226.4
235.0

25.0
23.6
23.8
23.0
25.4
26.0

199.5
203.0
198.5
196.4
200.9
209.0

364.2
380.6
411.8
433.9
443.1
474.4

61.6
59.5
54.0
50.7
51.1
49.5

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969

290.9
292.9
303.3
310.8
316.8
323.2
329.5
341.3
369.8
367.1

53.7
54.3
54.9
56.3
59.2
61.5
64.8
73.8
79.1
87.7

237.2
238.6
248.4
254.5
257.6
261.6
264.7
267.5
290.6
279.5

26.5
27.3
29.7
32.0
34.8
39.1
42.2
46.7
52.2
54.1

210.7
211.4
218.7
222.4
222.8
222.5
222.5
220.8
238.4
225.4

497.9
509.3
548.2
578.0
618.2
659.5
724.1
777.3
831.3
910.6

47.6
46.8
45.3
44.0
41.7
39.7
36.6
34.4
35.0
30.7

382.6
409.5
437.3
468.4
486.2
544.1
631.9
646.4
709.1
780.4
833.8

97.7
105.1
113.6
125.4
140.2
147.2
151.6
148.1
157.3
169.5
189.2

284.9
304.3
323.8
343.0
346.1
396.9
480.3
498.3
551.8
610.9
644.6

57.7
65.5
71.4
75.2
80.6
85.0
94.7
96.7
105.0
115.5
115.6

227.2
238.8
252.3
267.9
265.4
311.9
385.6
401.6
446.8
495.5
529.0

968.8
1,031.5
1,128.8
1,252.0
1,379.4
1,479.9
1,640.1
1,723.3
1,864.1
2,083.8
2,353.3

29.4
29.5
28.7
27.4
25.1
26.8
29.3
28.9
29.6
29.3
27.4

914.3
1,003.9
1,134.2
1,258.4
1,372.8
1,486.1

199.2
209.5
220.8
237.0
254.9
286.2

715.1
794.4
913.4
1,021.4
1,117.9
1,199.9

120.8
124.5
NA
NA
NA
NA

594.3
670.0
NA
NA
NA
NA

2,567.5
2,858.6
3,082.9
3,433.6
3,791.9
4,163.5

27.9
27.8
29.6
29.7
29.5
28.8

1970 2
1971
1972
1973 3
1974
1975
1976 4
TQ
1977
1978
1979
1980
1981
1982
1983
1984
1985

estimate5
estimate
estimate
estimate

NA=Not available.
1 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.
2 Gross Federal debt and debt held by the public increased $1.6 billion due to a reclassification of the Commodity Credit Corporation certificates
of interest from loan assets to 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.
4 Gross Federal debt and debt held by the public increased $0.5 billion due to a retroactive reclassification of the Export-Import Bank
certificates of beneficial interest from loan assets to debt.
5 As of September 30, 1982, $3.6 billion of Federal debt held by Government accounts are estimated to be reclassified as debt held by the
public, because under proposed legislation the ownership of the assets of the railroad retirement account are to be transferred to a newly created
private rail industry pension corporation.

THE BUDGET FOR FISCAL YEAR 1983

creased at an average annual rate of 5.2%. Federal debt held by
the public apart from the Federal Reserve System rose a little
more slowly, at an average annual rate of 4.9%, 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 increasing the Nation's money stock.
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 chart above, as a proportion of the total credit market debt owed by nonfinancial sectors of
the economy: Federal, State and local, and private.5 Whereas Federal debt held by the public was only 13% of total debt at the end
of calendar year 1929, it had risen to 70% 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.

5 The estimates for 1946 to the present are from the Federal Reserve Board flow-of-funds accounts; the
estimates for earlier years are from the Bureau of Economic Analysis of the Department of Commerce and are
linked to the flow-of-funds estimates on the basis of their respective 1946 levels. The data are for calendar years
during 1929-51 and for fiscal years thereafter. The private sector debt includes debt of foreigners.

SPECIAL ANALYSIS A

From 1945 to 1974, however, private debt increased as a proportion of total credit market debt in every single year, and likewise
in every year the Federal debt held by the public (including the
Federal Reserve System) decreased as a proportion of the total.
This uninterrupted trend ended in 1975 because of the large Federal deficit caused by recession. Another large Federal deficit in 1976
caused Federal debt held by the public to rise as a percentage of
total debt again in that year, and the 1980-81 recessions led to
further increases in the percentage. As a result of these events,
Federal debt held by the public remained at about the same percentage of total debt during the past decade. The percentage was
18% at the end of 1981, which is the same as in 1973 and only a
little less than the 20% in 1971.
Over a longer period, however, the decrease in the relative importance of Federal debt is unmistakable in comparison with both
private debt and State and local government debt. During the
years from 1961 to 1981, for example, the average annual rate of
growth was 6.1% for Federal debt held by the public, 7.7% for State
and local debt, and 10.3% for private debt. As a result of these trends,
Federal debt, though still important, is a relatively smaller influence
in the financial market than it was twenty or thirty years ago. (As described in the final section of this special analysis, however, the relative influence of the combined total of Federal and federally assisted
borrowing has been rising in the last few years.)
During the same period Federal debt has decreased relative to
gross national product (GNP). As shown in table E-3, debt held by
the public equaled 61.6% of GNP at the end of 1954 but declined
steadily to 25.1% by the end of 1974. Since then, however, primarily due to recessions and economic slowdowns, debt held by the
public has fluctuated as a percentage of GNP, at the same time as
it has fluctuated as a percentage of total credit market debt. As a
result, Federal debt held by the public remained at about the same
percentage of GNP during the past decade. The percentage was
27.8% at the end of 1981, which is above the levels reached in
several years and only slightly less than the 29.5% in 1971. The
percentage is estimated to be 29-30% during 1982-85.
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. The
interest rate on 91-day Treasury bills, for example, averaged 14.1%
in calendar year 1981 and 11.5% in calendar year 1980 compared
to 6.3% in the 1970's, 4.0% in the 1960's, and 2.0% in the 1950's.
Consequently, whereas the Federal debt held by the public increased by almost 4 times between 1954 and 1981, table E-4 shows
that the interest paid on this debt increased by 15 times.

THE BUDGET FOR FISCAL YEAR 1983

Table E-4. COMPARISON OF TRENDS IN INTEREST ON FEDERAL DEBT
(Dollar amounts in billions)
Interest on debt
held by the public
as a percent of

Interest on the gross Federal debt
Paid to
Fiscal year

Total 1

Federal
Government
accounts

The public
Total

Federal
Reserve
System 2

Other

GNP

Budget
outlays3

6.4
6.4
6.8
7.3
7.8
7.8

1.3
1.2
1.3
1.4
1.4
1.4

5.2
5.2
5.6
5.9
6.3
6.4

0.5
.4
.5
.7
.7
.8

4.7
4.8
5.1
5.3
5.6
5.6

1.42
1.36
1.35
1.37
1.43
1.35

7.29
7.56
7.90
7.73
7.68
6.96

1968
1969

9.5
9.3
9.5
10.3
11.0
11.8
12.6
14.2
15.6
17.6

1.5
1.5
1.6
1.6
1.8
2.0
2.1
2.6
3.0
3.5

8.1
7.8
7.9
8.7
9.2
9.8
10.4
11.6
12.6
14.1

1.0
1.0
1.0
1.1
1.2
1.4
1.7
2.0
2.4
2.9

7.1
6.8
6.9
7.6
8.0
8.4
8.7
9.6
10.2
11.2

1.62
1.53
1.44
1.50
1.50
1.49
1.44
1.50
1.52
1.55

8.73
7.96
7.40
7.78
7.80
8.29
7.75
7.39
7.09
7.70

1970
1971
1972
1973
1974
1975
1976
TQ
1977
1978
1979

20.0
21.6
22.5
24.8
30.0
33.5
37.7
8.3
42.6
49.3
60.3

4.4
5.3
5.8
6.3
7.7
8.8
9.0
.6
9.6
10.2
12.1

15.6
16.3
16.6
18.5
22.4
24.7
28.7
7.6
33.0
39.2
48.3

3.5
3.7
3.7
4.3
5.5
6.1
6.3
NA
6.8
8.0
9.6

12.2
12.6
12.9
14.2
16.9
18.6
22.5
NA
26.2
31.2
38.6

1.61
1.58
1.47
1.48
1.62
1.67
1.75
1.77
1.77
1.88
2.05

7.99
7.78
7.20
7.54
8.35
7.60
7.89
8.11
8.24
8.73
9.83

75.2
96.0
116.0
133.2

14.8
17.1
19.6
19.9

60.4
78.9
96.4
113.4

12.5
13.6
NA
NA

47.9
65.3
NA
NA

2.35
2.76
3.13
3.30

10.48
12.00
13.29
14.96

1959
1960
1961

1980
1981
1982 estimate
1983 estimate

NA=Not available.
1 Total interest significantly exceeds the outlays for the interest function in the budget, because ttie interest function includes collections of
interest as an offset to outlays.
2 These figures are approximate. For most years they are estimated as the average of calendar year amounts. The 1981 estimate is tentative.
3 Budget outlays for all years are published in the Bud£et, Part 9, table 23.

As a result, interest payments to the public have tended to grow
faster than GNP over this entire period. In the late 1950's interest
was equal to 1.4% of GNP, whereas by 1971 it had risen to 1.6%
and by 1981 it had reached a record high of 2.8%. This percentage
is estimated to be higher still in 1982 and 1983, even though it is
assumed that market interest rates will decline with the estimated
decrease in the rate of inflation.
Interest paid to the public as a percentage of budget outlays does
not show the same sustained trend over the period as a whole. In
recent years, however, this percentage has also been rising stead-

SPECIAL ANALYSIS A

ily. In 1981 interest paid to the public was 12.0% of budget outlays,
which was much higher than the 7.8% just 10 years before and
was also above the percentage of any earlier year in the last
quarter century. In 1982 and 1983 this percentage is estimated to
be even higher, in part because of the slowdown in the rate of
growth of other budget outlays. Thus, by either measure the importance of interest on the debt is now relatively high and rising.
Since the end of World War II the composition of the Federal
debt has changed. Until a few years ago an increasingly large
proportion of marketable securities had a short maturity. One
contributing factor was the statutory ceiling of 4V4% that has been
maintained since 1918 on the interest rate for Treasury bonds.
Long-term market rates exceeded 4XA% after 1965, so after that
year the ceiling prevented the Treasury from selling long-term
obligations.
This restriction on Treasury borrowing has been relaxed in two
ways. One method has been to increase the maximum maturity of
notes, which are not subject to the interest rate ceiling. The maximum maturity was raised by law from 5 to 7 years in 1967 and to
10 years in 1976. As of December 31, 1981, the amount of notes
outstanding with an original maturity over 5 years was $149.9
billion, of which $71.7 billion had an original maturity over 7
years.
The other method of relaxing the restriction has been to allow
limited amounts of bonds to be sold at interest rates above the
ceiling. In 1971 the Treasury was allowed by law to issue up to $10
billion of bonds at interest rates above 4Vi%. In 1973 those bonds
held by Government accounts and the Federal Reserve System
were exempted from the interest rate limit, and since 1976 the
amount of the exception for other bonds has been raised in seven
steps to $70 billion. As of December 31, 1981, $90.4 billion of bonds
outstanding had been sold since the change of law in 1971, of which
$67.1 billion were held by the public exclusive of the Federal Reserve System. The effective interest rates have ranged from 6.1 to
15.8%.
Notwithstanding the initial relaxations of the interest rate ceiling, the average maturity of privately held, marketable Treasury
debt decreased steadily from 4 years at the end of 1967 to about 2Vfe
years at the end of 1976. Since then, however, as the restriction has
been relaxed further, the average maturity has gradually lengthened to about 4 years.
DEBT HELD BY FOREIGN RESIDENTS

During most of American history the debt of the Federal Government was held almost entirely by individuals and institutions
within the United States. In 1946, just after World War II, the debt
360-700 - 0 -

82 -

2 (Pt.

T H E B U D G E T FOR FISCAL Y E A R 1983

held in foreign official balances and international accounts was
about $2 billion, less than 1% of the total debt held by the public.
In the following years the debt held by foreign residents tended to
grow gradually, and, as shown in table E-5, rose to just over $10.0
billion by the late 1960's. This was still less than 5% of the total
Federal debt held by the public. Interest paid to foreign residents
was a correspondingly small proportion of the total interest paid on
debt held by the public.
Table E - 5 . FOREIGN HOLDINGS OF FEDERAL DEBT
(In billions of dollars)
Debt held by the public
Fiscal year

Total

Foreign1

Borrowinj ; from the
pul}lic
Total 2

Foreign

Interest on debt held
by the public
Total

Foreign3

0.3
.7
.2
.7
.4

11.6
12.6
14.1

0.5
.5
.6
.7
.7

3.8
19.4
19.4
19.3
3.0

3.8
17.8
17.3
10.3
-2.6

15.6
16.3
16.6
18.5
22.4

.8
1.3
2.4
3.2
4.1

66.0
69.8
74.6
95.5
121.0
125.1

50.9
82.9
18.0
53.5
59.1
33.6

9.2
3.8
4.9
20.9
25.5
4.1

24.7
28.7
7.6
33.0
39.2
48.3

4.5
4.4
1.2
5.0
7.9
10.7

126.4
135.5

70.5
79.3

1.3
9.1

60.4
78.9

11.9
16.0

1965
1966
1967
1968 .
1969

261.6
264.7
267.5
290.6
279.5

12.3
11.6
11.4
10.7
10.3

4.1
3.1
2.8
23.1
-1.0

1970
1971
1972
1973
1974

284.9
304.3
323.8
343.0
346.1

14.0
31.8
49.2
59.4
56.8

1975
1976
TQ
1977
1978
1979

396.9
480.3
498.3
551.8
610.9
644.6

1980
1981

715.1
794.4

9.8
10.4

Estimated by Treasury Department. These estimates exclude agency debt, the holdings of which are believed to be small.
Borrowing from the public is defined as equal to the change in debt held by the public from the beginning of the year to the end, except to
the extent that the amount of debt is changed by reclassification. Reclassifications are identified in the footnotes to table E-3.
3 Estimated by Bureau of Economic Analysis, Department of Commerce. These estimates include small amounts of interest on the debt of
Government-sponsored enterprises, which are not part of the Federal Government.
1

Foreign holdings began to grow much faster starting in 1970.
This change arose in part out of decisions by foreign monetary
institutions to intervene in foreign exchange markets. Because of
the role of the dollar as an international currency, large amounts
of the official reserves and other financial assets of foreign nations
are held in dollar denominated form. Thus, the exchange market
intervention by foreign monetary institutions often acted to increase their official reserves of dollars. U.S. Government securities
are the safest and one of the most liquid forms of holding dollar
assets. Consequently, as foreign countries acquired more dollar
denominated official reserves, they purchased a large amount of
U.S. Government securities.

SPECIAL ANALYSIS A

The second principal reason for the growth of foreign holdings
has been the massive current account surpluses of some countries,
particularly the OPEC nations, since 1974. The counterpart to
these surpluses has been the acquisition of financial assets, and the
financial assets acquired in the United States have largely taken
the form of U.S. Government securities.
The increase in foreign holdings of U.S. Government securities
during the past decade has therefore been primarily the product of
foreign decisions. By the end of 1981 foreign holdings of Treasury
debt had reached $135.5 billion, which was 17% of the total debt
held by the public. Because of the rising interest rates, the interest
paid on foreign holdings of debt grew much faster than did the
foreign holdings themselves. The proportion of total interest paid
to foreign residents grew in roughly the same way as did the
proportion of the total debt held by foreigners.
In the years before 1970, when debt held by foreign residents was
relatively small, borrowing from the public was approximately the
same as borrowing from the domestic public. Since 1970, though,
borrowing from the domestic public has in some years been quite
different from total borrowing. As table E-5 shows, borrowing from
foreign residents was nearly all or a major part of total borrowing
from the public during 1970-73 and 1977-78, although it was only
8% during the past 3 years, 1979-81. For the period as a whole,
borrowing from foreign residents was 24% of borrowing from the
public.
Most of the Federal debt held by foreign residents is owned by
foreign central banks or other official institutions and is denominated in dollars. Beginning in December 1978, however, the Treasury sold the equivalent of $6.4 billion of securities denominated in
Deutsche marks and Swiss francs to residents of Germany and
Switzerland, respectively. By selling these securities, the Treasury
acquired foreign currencies for use in intervention operations. No
securities of this kind have been sold since January 1980, and $4.1
billion of these securities are still outstanding.
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. The
authorization to borrow is budget authority, and the disbursement
of borrowed money is an outlay. Borrowing by the off-budget Federal entities is treated in the same manner as any other agency
borrowing.
Agency borrowing was shown in total in table E - l and is shown
by agency in table E-6. In all 3 years more debt is repaid than is
newly borrowed, and over the period as a whole total agency debt

THE BUDGET FOR FISCAL YEAR 1983

Table E-6. AGENCY BORROWING 3
(In millions of dollars)
Borrowing or repayment ( - ) of debt
Description

Borrowing from the public:
Agriculture: Farmers Home Administration2
Defense
Health and Human Services2
Housing and Urban Development:
Federal Housing Administration
Housing for elderly or handicapped2
Government National Mortgage Assoc.2
Revolving fund (liquidating programs)2
Transportation: Coast Guard
Treasury:
College housing loans 2
Higher education facilities2
Veterans Administration2
Export-Import Bank
National Credit Union Central Liquidity Facility..
Postal Service
Small Business Administration2
Tennessee Valley Authority
Total, borrowing from the public..
Borrowing from other funds:
Agriculture: Farmers Home Administration2..
Defense
Health and Human Services2
Housing and Urban Development:
Federal Housing Administration
Housing for elderly or handicapped2
Government National Mortgage Assoc.2....
Revolving fund (liquidating programs) 2 ..
Treasury:
College housing loans2
Higher education facilities2
Veterans Administration2
Small Business Administration2
Total, borrowing from other funds..
Total, agency borrowing included in gross Federal
debt

1981
actual

-47

1982

1983
estimate

-31
-137

-110

-32

-58

-115
-24
-7
-30

-215

-410
118

-17
109

-81

-511

-750

-77

-14

-28

-12

-104
-22
- 6

-27
-74
-19

-264

-530

-1,014

-87

2,342
11
-232
1,975
-267

2,234
-3
433
2,100
-94

1,965
-4
-87
1,675
-13

3,830

4,669

3,537

- 1 0

ADDENDUM
Borrowing from Federal Financing Bank:
Export-Import Bank
National Credit Union Central Liquidity Facility..
Postal Service
Tennessee Valley Authority
United States Railway Association
Total, agency borrowing from Federal Financing
Bank

* $500 thousand or less.
1 Excludes agency borrowing from Treasury.
, .
2 Certificates of participation in loans issued by the Government National Mortgage Association on behalf of several agencies.

SPECIAL ANALYSIS A

decreases by $1.6 billion or by one-quarter. The agency debt outstanding at the end of 1983 is less than 1% of gross Federal debt.
As shown in the addendum to table E-6, the amount of agency
borrowing has been profoundly affected by the Federal Financing
Bank (FFB).6 The FFB was created in December 1973 under the
Treasury Department as an off-budget Federal entity and began
financial operations in May 1974. Its purposes are to assist and
coordinate agency borrowing and guaranteed borrowing and to
reduce the cost to the Government of some of its borrowing operations. It has the authority to purchase agency debt and guaranteed obligations and, in turn, to finance these transactions by
borrowing from the Treasury. With the approval of the Secretary
of the Treasury, the FFB is authorized to borrow from the Treasury without a statutory limit on the amount.7 Since the FFB can
borrow from the Treasury at lower interest rates than other agencies would have to pay in the market, this practice reduces the cost
of agency borrowing. The FFB thus serves as a conduit for agency
borrowing, and Treasury securities replace the securities of other
agencies in the market. Agency borrowing from the FFB is not
included in gross Federal debt. It would be triple counting to add
together the agency borrowing from the FFB, 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.
As a result of the FFB, several agencies that would otherwise
borrow mostly in the market borrowed $3.8 billion from the FFB in
1981 and are estimated to borrow $4.7 billion in 1982 and $3.5
billion in 1983. Because these agencies now borrow almost entirely
from the FFB instead of the public, almost no new agency borrowing in the market took place in the last 7 years or is scheduled to
take place in the future. The change in agency debt outstanding is
therefore determined almost entirely by the repayment of maturing debt and consequently is negative each year. If the FFB had
not been created, the agency component of gross Federal debt
would be several times greater than it is now, though not by the
exact amount that agencies have borrowed from the FFB. The
Treasury component would be correspondingly less.
By the end of 1983, $2.0 billion of agency debt, or two-fifths of
the total, will be obligations of three of the five agencies listed in
table E-6 that in recent years have borrowed almost exclusively
from the FFB: the Export-Import Bank, Postal Service, and Tennessee Valley Authority. A total of $2.2 billion, or another two-fifths of
FFB purchases of guaranteed obligations are shown in table E - l l .
7 The FFB also is authorized to have outstanding up to $15 billion of publicly issued debt. Treasury classifies
this as public debt rather than agency debt. The FFB borrowed $1.5 billion in 8-month bills from the public in
July 1974. All of its other borrowing has been from Treasury, because Treasury can borrow from the public at
slightly lower interest rates than FFB would have to pay. No further FFB borrowing from the public is planned.
6

THE BUDGET FOR FISCAL YEAR 1983

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 E-6. These certificates have not been issued since 1968. A
further $265 million of agency debt will be family housing mortgages assumed by the Department of Defense (and Coast Guard)
under programs almost entirely terminated about two decades ago.
The remaining agency debt—$561 million, or 11% of the total—
will have been issued by two agencies, the Federal Housing Administration (FHA) and the National Credit Union Central Liquidity
Facility. The FHA conducts the only program that has normally
continued to borrow from the public. It issues debentures as payment for insurance claims on defaulted loans, so these securities
could not be sold to the FFB. The National Credit Union Central
Liquidity Facility has borrowed from the FFB in the past but is
scheduled to borrow from the public instead beginning during 1982.
The Treasury supplies capital to business-type Government enterprises in return for both capital stock and debt. The 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 the figures
on agency borrowing and debt and from the discussion of this
subject both in this special analysis and in all other parts of the
budget documents.
A G E N C Y 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. Since these are debt
transactions, purchases are not counted as budget outlays and redemptions are not counted as budget receipts.
Net investment by trust funds and other Federal agencies rose
steadily during the late 1970's from the relatively low level of $4.3
billion in the high unemployment year of 1976 to $19.7 billion in
1979. This was caused primarily by the rise in gross national
product, the growing payment from the general fund to the civil
service retirement and disability trust fund, and the tax increase
resulting from the Social Security Amendments of 1977. In 1980,
however, agency investment declined to $10.1 billion, and in 1981,
as shown in table E-7, it was $10.3 billion. Agency investment is
estimated to rise moderately in 1982 and reach $16.2 billion in
1983.

SPECIAL ANALYSIS A

Table E-7. AGENCY INVESTMENT IN FEDERAL SECURITIES
(In millions of dollars)
Description
Investment in Treasury debt:
Health and Human Services:
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Housing and Urban Development:
Federal Housing Administration
Government National Mortgage Association
Other
Interior: Outer Continental Shelf deposit funds
Labor: Unemployment trust fund
Transportation:
Highway trust fund
Airport and airway trust fund
Treasury:
Exchange stabilization fund 1
Federal Financing Bank2
Veterans Administration:
National service life insurance trust fund
Other trust funds
Veterans reopened insurance fund
Federal Deposit Insurance Corp.: Trust fund
Federal Home Loan Bank Board: FSLIC
Office of Personnel Management:
Civil Service retirement and disability trust fund
Other trust funds
Postal Service fund2
Railroad Retirement account: Trust fund 3
Other Federal funds
Other trust funds
Other off-budget Federal entities
Other deposit funds 4
Total, investment in Treasury debt 3
Investment in agency debt:
Agriculture: Commodity Credit Corp
Health and Human Services:
Federal old-age and survivors insurance trust fund
Federal hospital insurance trust fund
Housing and Urban Development:
Federal Housing Administration
Government National Mortgage Association
Veterans Administration: National service life insurance trust
fund
Federal Home Loan Bank Board: FSLIC
Office of Personnel Management: Civil Service retirement and
disability trust fund
Total, investment in agency debt

Investment or disinvestment ( - )
1981
actual

1982
estimate

1983
estimate

Holdings end
of 1983
estimate

-322
-4,282
3,535
-737

-10,331
3,525
4,480
2,083

125
-5,087
1,989
2,042

12,495
1,831
24,610
7,946

161
-20
48
1,993
815

390
-281
121
2,059
-4,116

1,000
133
150
-337
-300

3,582
1,247
534
5,804
9,111

-1,674
-711

-679
-881

-345
263

8,163
4,093

-414
-78

350

368

3,848

142
9
14
1,716
-373

183
28
13
1,810
-24

266
21
9
2,000
150

8,520
1,150
490
15,704
4,683

10,477
458
-545
-736
165
670

13,537
579
-182
1,663
208
578

13,201
733
-850

110,469
6,107
950

195
506

1,642
2,805
3
8

10,313

15,115

16,230

235,795

-6

-5

-100
-50
-4
-9

455

-10

169
175
135
67

-11
-100

175

-19

-264

-10

1,176

Total, investment in Federal debt 3

10,294

14,851

16,220

236,971

MEMORANDUM
Federal funds
trust funds 3
off-budget Federal entities
deposit funds4

-440
9,361
-623
1,996

763
12,210
-182
2,059

1,994
15,413
-850
-337

16,438
213,769
953
5,812

Investment
Investment
Investment
Investment

by
by
by
by

* $500 thousand or less.
1 Investment in 1982 and 1983 is estimated as equal to interest collections.
2 Off-budget Federal entity.
3 Investment in 1982 does not include the reclassification of an estimated $3,606 million of debt held by the railroad retirement account as
debt held by the public. Under proposed legislation this is scheduled to occur as of September 30, 1982, when the ownership assets of the
account is to be transferred to a newly created private rail industry pension corporation.
4 Only those deposit funds treated as Government accounts.

THE BUDGET FOR FISCAL YEAR 1983

Total agency holdings of Federal securities will reach an estimated $237.0 billion by the end of 1983. This will comprise 19% of the
gross Federal debt. One major trust fund—the civil service retirement and disability trust fund—will account for nearly half of total
agency holdings and will have accounted for almost nine-tenths of
total agency investment during 1981-83. All the trust funds together will account for 90% of the holdings at the end of 1983. Nearly
all of the holdings in Government accounts will be Treasury debt,
and the holdings of agency debt will continue to decline by small
amounts.
The trust funds financed by the social security tax—old age and
survivors insurance (OASI), disability insurance, and hospital insurance—disinvest as a whole each year during 1981-83 for a cumulative decrease in holdings of Government debt of $6.4 billion.
The short-term financial problems reflected in this disinvestment
have developed in spite of the very large increase in tax receipts
generated by the Social Security Amendments of 1977. Recessions
and slow economic expansion in recent years raised unemployment, which reduced payrolls and, thereby, payroll tax receipts
below what they would otherwise have been; inflation as measured
by the consumer price index exceeded the rate of wage increase, so
OASI benefit payments, which are fully indexed to changes in the
consumer price index, increased faster than the payroll tax receipts
used to finance the benefits.
The financial condition of these three funds differs markedly,
with OASI having the most severe short-term problem. Because of
the divergent conditions, legislation was enacted in 1980 to shift
some of the disability insurance tax receipts to OASI during 1981
and 1982. This has not been enough, however, to prevent estimated
OASI disinvestment of $10.3 billion during 1982, which will reduce
its holdings of Government securities to only $12.4 billion. Legislation was therefore enacted in 1981 to limit certain social security
benefits and to permit OASI to borrow from the disability insurance and hospital insurance trust funds through December 1982.
Borrowing of $15.1 billion is assumed during this period for the
calculations leading to the investment figures in table E-7, and
this is estimated to be large enough to finance the full benefit
payments of OASI through September 1983. Because of the temporary shift of tax receipts and the borrowing between funds, the
respective amounts of investment or disinvestment shown in table
E-7 do not reflect the underlying financial conditions of the respective funds. A National Commission on Social Security Reform has
been established to address the financial problems of the social
security system and to report its recommendations by January
1983.

SPECIAL ANALYSIS A

As stated previously in this special analysis, under proposed
legislation an estimated $3.6 billion of debt securities held by the
railroad retirement account will be transferred as of September 30,
1982, to a newly created private rail industry pension corporation.
This $3.6 billion comes from two sources: the holdings that the
railroad retirement account would normally have had at the end of
1982; and the net effect of transferring balances in 1982 equal to
the amount of payments that would otherwise have taken place in
1983 between this account and the old age and survivors insurance,
disability insurance, and hospital insurance trust funds. The transfer from the railroad retirement account to the private corporation
is treated as a reclassification of debt holdings, which does not
constitute disinvestment by a trust fund or borrowing from the
public. As a result, agency investment in 1982 is an estimated $3.6
billion more than the change in agency holdings of Federal debt.
A comparatively small amount of Federal debt is held by deposit
funds. Deposit funds are amounts held by the Federal Government
as an agent for others (such as State income taxes withheld from
Federal employees' salaries and not yet paid to the States); cash
collections awaiting determination as to their final disposition; and
other sums held temporarily before being refunded or paid into
some other fund. Deposit fund balances are thus not the property
of the Federal Government, and changes in balances are not included in the budget totals.
In most cases deposit funds consist of uninvested balances, but
some funds are invested in Treasury debt and collect interest on
their investments. Since a deposit fund is not Federal property, its
holding of Federal debt is normally treated as debt held by the
public rather than as debt held by a Government account. However, the investments of three deposit funds are treated as agency
investments rather than as debt held by the public. One of these is
a relatively small account that has the same characteristics as a
trust fund. The other two deposit funds contain receipts from rents
and royalties on the Outer Continental Shelf, the title to which is
in dispute between the Federal Government and the States. Until
title is settled, these amounts are being held in deposit funds. The
balances of these funds were first invested in Federal debt in 1980,
when they acquired $2.1 billion of Treasury securities. As shown in
table E-7, they acquired $2.0 billion more in 1981 and are estimated to hold $5.8 billion at the end of 1983. The Treasury concluded
that the Federal claim on these receipts is sufficiently strong that
it would be more accurate to classify them as Government holdings
of Federal debt rathern than as debt held by the public.
Because increases in uninvested deposit funds increase Treasury
cash balances without affecting the Government deficit or debt,

THE BUDGET FOR FISCAL YEAR 1983

they provide a means of financing the deficit without borrowing
from the public (decreases have the opposite effect). Such increases
appear as one of the "means of financing other than borrowing" in
tables E-2 and E-9. Under the normal rule, with the deposit funds
treated as part of the public, deposit fund investment in Federal
debt decreases the deposit fund balances available to finance the
deficit by means other than borrowing from the public. This is
because the debt issued by the Treasury to the deposit fund is itself
defined to be an increase in debt held by the public.
However, when deposit fund holdings are treated as holdings by
a Government account, the investment of deposit fund balances in
Federal debt does not reduce the amount of balances available to
finance the deficit by means other than borrowing from the public.
The debt issued by Treasury to the deposit fund is an increase in
agency investment, and borrowing from the public is therefore
unchanged. This transaction does, however, increase the gross Federal debt and the debt subject to statutory limit (as shown in table
E-9).
LIMITATIONS ON FEDERAL DEBT

Statutory limitations have normally been placed on Federal debt.
Until World War I, the Congress ordinarily authorized a specific
amount for each debt issue. Beginning with the Second Liberty
Bond Act of 1917, however, the nature of the limitation was modified in several steps until it developed into a ceiling on the total
amount of most Federal debt outstanding. The latter type of limitation has been in effect since 1941. The limit currently applies to
the total of:
• almost all public debt issued by the Treasury since September
1917, whether held by the public or by the Government;
• 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 that, according to explicit statute, is fully guaranteed as to principal and interest
by the United States.
The debt subject to statutory limit8 includes virtually all Treasury debt. The small amount of Treasury debt not subject to limit is
shown in table E-8. It consists almost entirely of currencies no

8 The statutory debt limit is sometimes called the public debt limit. However, as explained in the text, the
limit does not apply to all public debt and does apply to some debt other than public debt.

SPECIAL ANALYSIS A
Table E-8. DEBT SUBJECT TO STATUTORY LIMIT
(In millions of dollars)
End of year
Descriptions

Federal debt held by the public
Federal debt held by Government agencies
Total, gross Federal debt

1983
estimate

1982
estimate

1981
actual
794,434
209,507

913,434
220,752

1,021,434
236,971

1,003,941

1,134,186

1,258,405

607

517
446

265
18
227
250
1,725
1,030

Deduct:
Treasury debt not subject to limit
Agency debt not subject to the general limit:
Department of Defense
Export-Import Bank
National Credit Union Central Liquidity Facility
Postal Service
Tennessee Valley Authority
Participation certificates1
Coast Guard

250
1,725
1,580
1

389
35
118
250
1,725
1,030
1

Total, Federal debt not subject to limit

5,125

4,155

4,122

998,815
3

1,130,031
3

1,254,283
3

998,818

1,130,034

1,254,285

Gross Federal debt subject to statutory limit
Other debt subject to limit, and adjustments
Total, debt subject to statutory limit

*$500 thousand or less.
1 Certificates of participation in loans issued by the Government National Mortgage Association on behalf of several agencies (this excludes the
certificates issued during 1968, which are subject to the debt limit).

longer being issued, such as silver certificates and national bank
notes, which were generally reclassified as Federal debt some time
after being discontinued.
The major part of agency debt is not subject to the general
statutory limit. The only categories now included are the debentures issued by the Federal Housing Administration and the participation certificates sold in 1968. These securities comprise about
one-quarter of all agency debt. However, most other agency debt is
subject to special statutory limits. For example, the Tennessee
Valley Authority was first authorized to issue revenue bonds to
finance power facilities in 1959. The limit was $750 million. Subsequently, in order to enable TVA to finance additional facilities,
Congress raised the limit several times. It is now $30 billion. The
Postal Service is limited to $10 billion of securities outstanding and
$2 billion of annual borrowing. Proposed appropriation bill limitations would restrict its annual borrowing to $1 billion in 1983 and
would require that any borrowing for operating expenses during
1983 be limited to half this amount and repaid within 12 months.

THE BUDGET FOR FISCAL YEAR 1983

The only other debt subject to the general statutory limit is a
very small amount, less than a million dollars, of matured principal and interest. This is not defined as part of gross Federal debt.
To derive the debt subject to limit from the gross Federal debt also
requires a very small accounting adjustment.
The level of the statutory limit on the Federal debt has frequently been changed by Congress. During the 1960's Congress passed 13
separate acts to raise the limit or to extend the duration of a
temporary increase in the limit, and during the 1970's Congress
passed 18 such acts. Congress passed three more such acts in 1981.
These frequent changes have come about both because the Federal
debt has grown steadily and substantially and because of the
nature of the debt limit legislation. Since 1971 the statutory debt
limit has consisted of a permanent limit of $400 billion plus a
temporary increment that was usually scheduled to expire in a
year or less. Because the debt subject to limit has been more than
$400 billion, new legislation has been required no later than the
date when each temporary increment expired. Three times in
recent years the temporary increment expired without having been
extended, so for a few days on each occasion the Federal debt
exceeded the statutory limit. The validity of debt issued prior to
the expiration of the temporary ceiling was not affected, but the
Treasury Department had to suspend all auctions of new securities
and all sales of savings bonds. Such a situation creates uncertainty
in the securities market and forces the Treasury to take actions
that produce administrative costs.
The statutory debt limit was formerly raised only by normal
legislation. In September 1979, however, the method of enacting
statutory debt limits was altered by statute (Public Law 96-78).
The purpose of the change was for the House of Representatives to
vote on the debt limit as a part of the congressional budget process.
The first and second concurrent resolutions on the budget (scheduled to be adopted by May 15 and September 15, respectively, for
the forthcoming fiscal year) establish targets or ceilings for budget
outlays, receipts, and the budget deficit and also recommend an
appropriate level for the debt subject to limit. The recommendation
as to the appropriate level of debt had not previously had the effect
of law, nor had it been part of the direct process whereby the debt
limit was established.
However, beginning with the resolutions adopted in calendar
year 1980, the budget resolution that is adopted by the Congress
has been a part of the process that establishes a debt limit. The
vote in the House of Representatives is deemed to have been a vote
in favor of a joint resolution setting the statutory limit. The joint
resolution is thus deemed to have passed the House and is trans-

SPECIAL ANALYSIS A

mitted to the Senate for further legislative action. Upon final
passage, it is sent to the President for his signature. This new
procedure relates the decision on the debt limit to the congressional decision on the Federal deficit and the other factors, explained
in the following section, that determine the change in the debt
subject to limit. It is also intended to ensure that a new increase in
the debt limit will be enacted well before the previous increase is
scheduled to expire, thereby reducing the uncertainty about extension of the debt limit and eliminating the costs that occur when the
level of debt exceeds or is about to exceed the debt limit. The debt
limit may still be changed by a separate act as in the past.
This new procedure went into effect after the first budget resolution was passed on June 12, 1980. This resolution, which contained
revised totals for 1980 as well as the initial targets for 1981, had
two separate provisions for changing the debt limit. In the section
revising the second budget resolution for 1980, it declared that the
appropriate debt limit from the date of enactment through February 28, 1981, was $925 billion; and in the section on the 1981 totals,
it declared that the appropriate debt limit for the fiscal year beginning on October 1, 1980, was $935.1 billion. Both provisions were
deemed to have passed the House, as separate joint resolutions (as
well as being part of the concurrent resolution on the budget), and
were sent to the Senate. The Senate passed the former resolution,
and it was signed into law by the President on June 28. Thus, the
debt limit was set at $925 billion for the period from June 28, 1980,
to February 28, 1981.
The second budget resolution, which passed Congress on November 20, 1980, declared that the appropriate level of the debt limit
was $978.6 billion through the end of fiscal year 1981. A separate
joint resolution to this effect was deemed to have passed the House,
but the Senate did not concur. An increase in the debt limit was
needed, and the Senate instead went back to the joint resolution
(arising from the first budget resolution) that it had received from
the House in June but had not passed. The Senate passed this
resolution, which raised the debt limit to $935.1 billion through
September 30, 1981, and it was signed into law by the President on
December 19, 1980.
A further increase was needed soon thereafter, however. On
February 7, 1981, the debt limit was increased by ordinary legislation to $985 billion for the period ending September 30, 1981.
The first budget resolution for 1982 was adopted by the Congress
on May 20, 1981. The section revising the totals for 1981 declared
that the appropriate debt limit for the rest of the 1981 fiscal year
was $999.8 billion; the section on the 1982 totals declared that the
appropriate debt limit for the 1982 fiscal year was $1,079.8 billion.

THE BUDGET FOR FISCAL YEAR 1983

Two joint resolutions were thus deemed to have passed the House.
The Senate did not take action until September 29, 1981, when it
passed both resolutions. Because of uncertainty over when Congress would act, the Treasury had to briefly postpone one auction
of Treasury bills. The President signed the resolutions on September 30, so the debt limit was raised to $999.8 billion for September
30 and $1,079.8 billion for the period from October 1, 1981, through
September 30, 1982. However, a further increase will be necessary
before the end of the fiscal year in order for the Federal Government to meet its obligations.
The outstanding debt subject to limit is compared in table E-8
with the gross Federal debt and the Federal debt held by the
public. The debt subject to limit was $998.8 billion at the end of
1981 and is estimated to rise to $1,254.3 billion by the end of 1983.
These amounts are more than twice as large as the permanent
limit of $400 billion. As shown in table E-8, the debt subject to
limit is much larger than the debt held by the public and is almost
as large as the gross Federal debt. The debt subject to limit is so
much larger than the debt held by the public because it includes
Federal debt held by Government agencies. The small difference
between debt subject to limit and gross Federal debt is mostly
accounted for by agency debt not subject to the general limitation.
FEDERAL FUNDS F I N A N C I N G AND THE CHANGE IN DEBT SUBJECT
TO STATUTORY LIMIT

The year-to-year change in debt subject to limit, unlike the
change in debt held by the public, is not determined principally by
the size of the total Government deficit (that is, by the sum of the
budget deficit and the deficit of the off-budget Federal entities).
The trust fund surplus or deficit, which makes up part of the
budget surplus or deficit, has no essential effect on the amount of
debt that is subject to limit. This is explained below in a discussion
that is more technical than the rest of this special analysis.
The budget consists of two major groups of funds: Federal funds
and trust funds.9 The trust funds collect certain taxes and other
receipts to be used for specified purposes, such as paying social
security or unemployment insurance benefits. The Federal funds
comprise the rest of the budget. Their resources are derived mainly
from taxes and borrowing and are used for the general purposes of
the Government. The off-budget Federal entities make up a third
group of fiscal operations, analogous to the Federal funds and trust

Data for Federal funds and trust funds are presented in Special Analysis C, "Funds in the Budget.'

SPECIAL ANALYSIS A

funds groups. If the off-budget entities were included in the budget,
they would be classified as Federal funds.
When the Federal funds have a deficit, this deficit must generally be financed by borrowing. The borrowing is necessary regardless
of whether the trust funds have a surplus. This is because the trust
fund surpluses are mostly invested in securities issued by Federal
funds, the Federal funds securities held by trust funds are treated
as Federal debt, and therefore the trust fund surplus does not
reduce the need for the Federal funds to issue debt in order to
finance the Federal funds deficit. Federal funds borrowing consists
almost exclusively of the Treasury selling debt securities, and these
Treasury debt securities are all subject to the statutory limit. The
deficits of the off-budget Federal entities are generally financed in
the same way as the Federal funds deficit. Therefore, the Federal
funds deficit and the deficit of the off-budget Federal entities generally have to befinancedby selling debt securities that are subject
to the statutory limit; and these securities are sold to either the
public, the trust funds, or certain Federal revolving funds or deposit funds.
Table E-9. FEDERAL FUNDS FINANCING AND CHANGE IN DEBT SUBJECT TO STATUTORY L I M I T 1
(In millions of dollars)
Description
Federal funds surplus or deficit ( - )
Deficit ( - ) of off-budget Federal entities
Total, amount to be financed
Means of financing other than borrowing:
Decrease or increase ( - ) in cash and monetary assets
Increase or decrease ( - ) in liabilities for:
Checks outstanding etc
Deposit fund balances2
. .
Seigniorage on coins
Total, means of financing other than
borrowing
Decrease or increase ( - ) in investments in
Federal debt by Federal funds, off-budget entities, and deposit funds3
Increase or decrease ( - ) in Federal funds and
off-budget entity debt not subject to limit
Total, requirements for borrowing subject to debt limit
Change in debt subject to limit but not part of
Federal debt and adjustments
Change in debt subject to limit

1981
actual

1982
estimate

1983
estimate

1984
estimate

1985
estimate

-64,749 -111,119 -106,940 -100,832 -103,161
-21,005 -19,689 -15,701 -14,285 -10,950
-85,754 -130,808 -122,641 -115,117 -114,111

-1,668

3,700

-3,845
2,125
450

660
-1,709
553

334
-1,621
516

744

797

-2,938

3,204

-771

744

797

-933

-2,641

-807

-467

-971

-33

-90,092 -131,216 -124,251 -114,373 -113,314
3
90,095

131,216

124,251

114,373

113,314

'Several amounts have been assumed to be zero during 1983-85 because they are usually small and cannot be estimated accurately.
Does not include investment in Federal debt securities classified as debt held by the public.
Only those deposit funds treated as Government accounts.

2
3

THE BUDGET FOR FISCAL YEAR 1983

Table E-9 shows in detail the relationship of the change in debt
subject to limit to the Federal funds deficit and the deficit of the
off-budget Federal entities. The total of these deficits is an amount
that has to be financed. Some relatively small portion may be
financed by means other than borrowing, such as seigniorage and a
decrease in those cash assets held by Federal funds and off-budget
Federal entities (however, if the sum of these other means of
financing is negative, then these other means comprise a further
amount that has to be financed.)10 A small portion may be financed
by the Federal funds or off-budget entities (or certain deposit
funds11 ) selling their investments in Federal debt. Another small
portion may be financed by these funds or entitites issuing debt
that is not subject to the statutory limit. The remainder of the
amount to be financed can only be financed by selling debt subject
to the statutory limit. This ordinarily comprises most of the total.
Thus, the sum of the deficits of the Federal funds and the offbudget Federal entities approximately determines the increase in
debt subject to statutory limit.
In 1981, for example, the total Federal funds and off-budget
deficit to be financed was $85.8 billion. The means of financing
other than borrowing required an additional $2.9 billion of financing by debt subject to limit, because of such reasons as a decrease
in cash assets. The Federal funds, the off-budget entities, and certain deposit funds increased their holdings of Federal debt by $0.9
billion, which had to be financed by still further borrowing in the
same way as their deficits had to be financed; and they decreased
their debt outstanding that was not subject to limit by $0.5 billion,
which had to be replaced by an equal amount of debt that was
subject to limit. Therefore, a total of $90.1 billion had to be borrowed subject to the debt limit.
The trust fund surplus does not have an explicit effect in table
E-9. However, to the extent that trust fund surpluses are used to
increase the trust fund holdings of univested cash assets instead of
Federal debt securities, the debt subject to limit is reduced. This is
because the cash available from the trust funds surplus can be
used to finance Federal funds outlays without recording an increase in Federal debt. In table E-9 the increase in uninvested cash
assets of the trust funds is recorded as an increase in the liabilities
of Federal funds for checks outstanding, etc. (i.e., an increase in the
liabilities of Federal funds to trust funds). This increases the Federal funds means of financing other than borrowing, which in turn
reduces the requirement for borrowing subject to the statutory
10 The amounts for means of financing other than borrowing exclude the amounts attributable to trust funds.
It is not known how the trust fund open book balances are divided between cash and monetary assets and
liabilities for checks outstanding, etc. In table E - 9 they are all assumed to be in liabilities for checks outstanding, etc.
11 Only those deposit funds treated as Government accounts.

SPECIAL ANALYSIS A

limit. The trust fund uninvested cash assets do change from year to
year, but they do not usually change a great deal. By law the trust
fund surpluses must generally be invested in Federal debt, and
during 1972-81 the increase in trust fund holdings of Federal debt
equalled 97% of the cumulative trust fund surplus. Consequently,
the effect of the trust fund surplus on debt subject to limit is
minor.
Since the trust fund holdings of Federal debt are included almost
entirely in debt subject to limit, but not in debt held by the public,
the amount of debt held by the public is substantially less than the
amount of debt subject to limit. Since the trust funds as a group
almost always have a surplus, the change in debt held by the
public from one year to the next is almost always less than the
change in debt subject to limit. As can be calculated from table
E-8, during 1982 and 1983 the debt subject to limit is estimated to
increase by $255.5 billion, whereas the debt held by the public is
estimated to increase by $227.0 billion.
The present analysis helps to demonstrate the difficulty in preventing a continual rise in the Federal debt. The structure of table
E-2 showed that the Government would have to borrow from the
public even if the budget were exactly balanced, because it would
have to finance the deficit of the off-budget Federal entities. The
structure of table E-9 shows that the debt subject to statutory limit
would almost surely continue to rise even if the total Government
deficit were exactly zero and, as a result, the debt held by the
public remained constant (that is, even if the budget had a surplus
and this surplus was large enough so that the budget and the offbudget entities were together just in balance). In order for the debt
subject to limit to remain constant, the Federal funds portion of
the budget must (as an approximation) have a surplus and this
surplus must be large enough so that the Federal funds and the offbudget entities are together in balance. (The same condition must
be met in order for the gross Federal debt to remain constant, since
the gross Federal debt is approximately equal to debt subject to
limit.) It is more difficult to have a balance in the Federal funds
plus the deficit of the off-budget Federal entities than it is to have
a balance in the budget plus the off-budget Federal entities, because the trust funds almost always have a surplus.
This can be illustrated by comparing the borrowing from the
public in table E-2 with the borrowing subject to the debt limit in
table E-9. From 1982 to 1985, borrowing from the public decreases
by $33.4 billion, in line with the decline in the total Government
deficit. Table E-9 shows, however, that borrowing subject to the
debt limit decreases by only $17.9 billion. This difference is primarily because a large part of the reduction in the total Government
deficit is accounted for by an $18.7 billion increase in the trust

THE BUDGET FOR FISCAL YEAR 1983

fund surplus. This reduces borrowing from the public by an equal
amount but does not reduce the need to issue debt subject to the
statutory limit.
FEDERALLY ASSISTED BORROWING

The effect of the Government on borrowing in the credit market
arises not only from its own borrowing to finance Federal operations but also from its assistance to certain borrowing by the
public. Federally assisted borrowing is of two principal types: Government-guaranteed borrowing, and borrowing by Governmentsponsored enterprises.
Guaranteed borrowing consists of loans for which the Federal
Government guarantees (or insures) the payment of the principal
and/or interest in whole or in part. Guaranteed loans have diverse
characteristics. The loans may be made to individuals, businesses,
State and local governments, or foreign governments. The guaranteed obligation may be a loan made by a bank or other institutional lender, it may be a security sold in the capital market, or it may
be a security sold to the Federal Financing Bank (FFB). Guaranteed borrowing is another term for'guaranteed lending.
Guaranteed loans include most loan asset sales made by Federal
agencies. Loan asset sales occur when an agency makes a direct
loan and then sells it. A guarantee by the selling agency is usually
attached. Loan asset sales are offsets to the outlays of the agency
that sells them. Therefore, if the selling agency is in the budget,
the budget outlays caused by the direct loans are offset by the sale
of the loan assets.
In some cases the agency sells the direct loans themselves, and in
other cases the agency sells securities (sometimes called participation certificates or certificates of beneficial ownership) that are
backed by loans that the agency continues to hold and service. The
certificates of beneficial ownership sold by the Farmers Home Administration (a budget agency) and the Rural Electrification and
Telephone revolving fund (an off-budget Federal entity) would be
classified as Federal debt according to the recommendations of the
President's Commission on Budget Concepts.12 However, according
to statute these certificates are required to be treated as loan
assets instead of Federal debt. Since the certificates are guaranteed, they are classified as guaranteed loans. These certificates of
beneficial ownership are currently sold almost entirely to the FFB,
but some certificates sold by Farmers Home before FFB was established are outstanding and continue to mature. The net amount of
sales to the FFB less repayments (i.e., the increase in certificates

»Report of the President's Commission on Budget Concepts (Washington: U.S. Government Printing Office,
1967), pp. 8, 47-48, and 54-55.

SPECIAL ANALYSIS A

outstanding held by the FFB) is shown below for 1980-83 (in millions of dollars):
1980

actual

Farmers Home Administration
Rural Electrification and Telephone revolving fund

1981

actual

1982

estimate

1983

estimate

6,881

10,860

5,352

1,149

689

683

623

525

Loan guarantees are designed to allocate economic resources
toward particular uses by providing credit at more favorable terms
than would otherwise be available in the private market. The
major use of loan guarantees is to support housing, but in recent
years guarantees have increasingly been used for other purposes.
As shown subsequently in table E - l l , guaranteed borrowing net of
repayments (but including direct loans made by one Federal agency
and guaranteed by another) was $49.0 billion in 1981 and is estimated to be $59.7 billion in 1982 and $58.0 billion in 1983. Special
Analysis F presents detailed data on guaranteed loans and loan
asset sales.
The other type of federally assisted borrowing is borrowing by
Government-sponsored enterprises. They were established and
chartered by the Federal Government to perform specific credit
functions but are now entirely privately owned. The rule governing
the budget treatment of these enterprises was established in 1967
in accordance with a recommendation by the President's Commission on Budget Concepts. The Commission, whose report led to the
adoption of the unified budget, recommended that the budget exclude those Government-sponsored enterprises that are entirely
privately owned.13 Therefore the transactions of these enterprises
are not included within the Federal budget, and their debt is not
part of gross Federal debt.
The seven Government-sponsored credit enterprises are essentially financial intermediaries. They borrow in the securities market
and lend their borrowed funds for specifically authorized purposes
either directly or by purchasing loans originated by the private
groups that they were established to assist. The borrowing programs of these 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 Federal
National Mortgage Association and the Federal Home Loan Banks
are required to obtain Treasury approval of the terms and timing
of specific offerings. The Student Loan Marketing Association
(SLMA) borrowed exclusively from the Federal Financing Bank

13 Ibid.,

pp. 29-30.

THE BUDGET FOR FISCAL YEAR 1983

from the time of FFB's establishment until May 1981.14 Since then
SLMA has also sold notes to the public, without a guarantee, and
beginning in 1982 plans to finance all of its increases in debt
outstanding by borrowing from the public.
Government sponsorship of these enterprises has given them
various direct benefits. Their securities are legally eligible to be
held for specified uses by federally regulated financial institutions,
and they generally have certain tax exemptions. Furthermore, all
of these enterprises have a history of successful financial performance. Hence, despite the absence of Federal guarantees, the obligations of these enterprises are sold at interest rates only a little
higher than the rates on comparable Treasury issues.
The three enterprises regulated by the Farm Credit Administration—the Banks for Cooperatives, Federal Intermediate Credit
Banks, and Federal Land Banks—formerly borrowed on the market
separately under their own names. Since January 1979, however,
the Farm Credit banks have borrowed solely by issuing consolidated bonds.
The operations of the Government-sponsored enterprises are not
subject to the Federal budget review process; and the economic
assumptions on which their borrowing estimates are based for
1982-83 are not necessarily the same as the Administration's economic forecast, which is used for the budget. In order to show the
borrowing by this sector as a whole from the rest of the market,
the total borrowing figures in table E-10 are calculated net of the
borrowing by one Government-sponsored enterprise from another.
Most of this adjustment is accounted for by the Federal Home Loan
Mortgage Corporation borrowing from the Federal Home Loan
Banks or repaying its debt to them.
Borrowing by Government-sponsored enterprises has recently
risen to a much higher level than in earlier years. Until 1978 the
largest amount of borrowing had been $14.9 billion in 1974. Borrowing increased sharply to $24.1 billion in 1978, however, and
then grew further to $27.5 billion in 1980. Borrowing in 1981 expanded substantially to $38.7 billion, and the Government-sponsored enterprises estimate that it will increase substantially again
to $49.6 billion in 1982 and $53.4 billion in 1983. This will be double
the 1980 level.
Sharp shifts in borrowing, such as these, are typical of the Government-sponsored sector as a whole. They generally arise from the
operations of the three enterprises that borrow to support the
housing mortgage market: the Federal National Mortgage Association (FNMA), the Federal Home Loan Banks (FHLB), and the
14 SLMA is the only Government-sponsored enterprise whose new securities can be guaranteed by the Government and therefore bought by the FFB. The Secretary of Education has authority to guarantee S L M A securities
issued prior to October 1, 1984.

SPECIAL ANALYSIS A
Table E-10. BORROWING BY GOVERNMENT-SPONSORED ENTERPRISES
(In millions of dollars)
Borrowing or repayment ( - )
Description

1980
actual

Housing and Urban Development: Federal National
Mortgage Association
Farm Credit Administration:1
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
Federal Home Loan Bank Board:
Federal home loan banks
Federal Home Loan Mortgage Corporation
Foundation for Education Assistance: Student Loan
Marketing Association
Total
Less increase in holdings of debt issued by Government-sponsored enterprises
Total, borrowing by
sored enterprises
1

Government-spon-

1981
actual

1982
estimate

1983
estimate

Debt
outstanding
end 1983
estimate

6,347

4,342

11,646

11,657

79,991

1,542
3,536
7,076

737
1,921
6,819

1,093
2,882
6,842

1,136
3,502
7,494

11,351
27,666
55,411

6,454
3,141

21,029
1,847

3,662
20,948

4,075
23,460

65,365
67,752

1,070

2,223

1,603

1,543

7,713

29,165

38,917

48,676

52,867

315,249

1,691

230

-882

-500

3,170

27,473

38,687

49,558

53,367

312,079

The debt represented by consolidated bonds is attributed to the respective Farm Credit banks.

Federal Home Loan Mortgage Corporation (FHLMC). The degree of
tightness in the mortgage market sometimes varies a good deal,
and during periods of high and rising interest rates these enterprises usually increase their lending and borrowing substantially.
This condition has led to much of the rise in the level of Government-sponsored borrowing during recent years.
The $11.2 billion increase in sponsored borrowing in 1981 was
more than fully accounted for by the $14.6 billion rise in FHLB
borrowing. The FHLB increased its advances to member savings
institutions, primarily savings and loan associations, which lend
most of their funds for new mortgages. The $17.9 billion of higher
advances were offset by only $3.3 billion of higher repayments.
Except for SLMA, the other Government-sponsored enterprises reduced their borrowing in 1981.
In 1982 the $10.9 increase in estimated borrowing arises from a
$30.6 billion increase in mortgage purchases by the FHLMC and
FNMA. This more than offsets the $14.7 billion decrease in net
advances (new advances less repayments) by the FHLB. This decrease in net advances is due to an increase in repayments; new
advances to member savings institutions increase moderately. In
1983 the $3.8 billion increase in Government-sponsored borrowing
is led by a $5.2 billion further increase in mortgage purchases by
the FHLMC. The other sponsored enterprises, on balance, estimate
a small further increase in borrowing.

THE BUDGET FOR FISCAL YEAR 1983

During 1981-83 nearly three-quarters of the estimated borrowing
is done by the three Government-sponsored enterprises that primarily support the mortgage market. They account for a higher
percentage of sponsored borrowing in these years than they have
on average during the past.
The Federal Government provides a different kind of assistance
to State and local government borrowing than it does through loan
guarantees and Government-sponsored enterprises. It exempts the
interest on State and local debt from Federal income tax. This
reduces the interest rate these governments have to pay and encourages them to borrow larger amounts. Tax exemption has also
been extended to certain bonds nominally issued by a State or local
government to raise funds for private purposes. These private purpose bonds, such as industrial development bonds, now comprise
about half of all new long-term, tax-exempt issues. In 1981 the total
tax-exempt borrowing estimated in the Federal Reserve flow-offunds accounts was $25.6 billion, of which $1.1 billion was also
guaranteed by the Government. Tax-exempt borrowing is discussed
further in Special Analysis F, "Federal Credit Programs," and,
from a different perspective, in Special Analysis G, "Tax Expenditures/'
TOTAL FEDERAL AND FEDERALLY ASSISTED BORROWING

Table E - l l summarizes net Federal and federally assisted borrowing. Federal borrowing from the public is presented in total.
Guaranteed borrowing and borrowing by Government-sponsored
enterprises are presented both as total amounts for the sector as a
whole and as net amounts. The latter were adjusted in order to
remove double counting in the aggregation of total Federal and
federally assisted borrowing. Double counting would otherwise
occur when a Federal agency or a Government-sponsored enterprise bought (or sold) a Federal or federally assisted debt security.
This is because borrowing would occur both when the security was
initially sold and when the Federal agency or Government-sponsored enterprise borrowed in order to finance its purchase.
Almost one-half of Federal and federally assisted borrowing
during 1981-83 is made up of Federal borrowing to finance the
budget deficit. Federal borrowing also finances the off-budget deficit, most of which is accounted for by the Federal Financing Bank's
purchases of guaranteed obligations. As shown in table E - l l , the
FFB is estimated to buy over one-quarter of the total increase in
guaranteed obligations outstanding during these years. Since the
FFB finances these purchases by borrowing from the Treasury,
which in turn borrows from the public, these transactions substitute Federal borrowing in the market for guaranteed borrowing.
Federal borrowing for all purposes during 1981-83 comprises 55%

SPECIAL A N A L Y S I S A
Table E - l l . NET BORROWING BY GOVERNMENT, GOVERNMENT-GUARANTEED BORROWERS, AND
GOVERNMENT-SPONSORED ENTERPRISES
(In billions of dollars)

Debt
outstanding
end 1983
estimate

Borrowing or repayment ( - )
Description

Federal borrowing from the public

Guaranteed borrowing 2
Less increase in guaranteed loans held by Federal agencies:
Federal Financing Bank
Government National Mortgage Association
Net guaranteed borrowing
Borrowing by Government-sponsored enterprises3
Less increase in holdings of Federal debt
Less increase in Government-sponsored debt held by Federal
agencies:
Federal Financing Bank
Less increase in holdings of guaranteed loans:4
Federal National Mortgage Association
Federal Home Loan Banks
Federal Home Loan Mortgage Corporation
Farm Credit Banks
Student Loan Marketing Association
Net Government-sponsored borrowing
Total, Federal and federally assisted borrowing

1983
estimate

1982
estimate

1981
actual
79.3

115.4

108.0

1,021.4

49.0

59.7

58.0

513.6

16.2

12.1

111.2

- . 5

- . 6

3.1

28.0

44.0

46.6

399.3

38.7

49.6

53.4

312.1

- . 5

2.7

21.0
*

5.0

2.0

2.2

1.6

- . 1

42.3
.1
.8

1.5

2.7

34.8

46.6

50.1

258.5

142.1

206.0

204.7

1,679.2

>pju IMIIIIUM Ul ICOO.

1 See table E - l . Borrowing from the public in 1982 excludes the change in debt held by the public due to the proposed legislaiton under
which the ownership of an estimated $3.6 billion of debt would be transferred from the railroad retirement account to a newly created private rail
industry pension corporation as of September 30, 1982.
2 This line is the same as "guaranteed loans (net)" in table F-6 of Special Analysis F. To avoid double counting, it is calculated net of
guarantees of loan previously guaranteed and guarantees of Federal debt. "Net guaranteed borrowing" in this table is the same as "primary
guaranteed loans" in table F-6.
3 gee table E-10
4 The increase in holdings of guaranteed loans by the Student Loan Marketing Association is not subtracted out, because these loans are
ultimately financed by Federal borrowing (through the FFB) and therefore are classified as direct loans rather than as guaranteed loans.

of total Federal and federally assisted borrowing; Federal debt held
by the public at the end of 1983 is 61% of the total Federal and
federally assisted debt outstanding.
The following chart depicts the trends in Federal and federally
assisted borrowing from 1966 to 1983. The series are volatile, and
the fluctuations are dominated by Federal borrowing. These fluctuations are primarily driven by the Federal deficit. Total Federal
and federally assisted borrowing fell sharply in 1974 and, to a
lesser extent, in 1977 and 1979, because of the large drop in the
deficit in these years. Total borrowing rose markedly during recessions, increasing from $24.2 billion in 1974 to $98.1 billion in 1976
and increasing from $80.8 billion in 1979 to $123.5 billion in 1980
and $142.1 billion in 1981. Federal and federally assisted borrowing
is estimated to increase still further in 1982, with substantial increases spread across Federal borrowing, guaranteed borrowing,
and Government-sponsored borrowing. In 1983, however, all three

THE BUDGET FOR FISCAL YEAR 1983

types of Federal and federally assisted borrowing are estimated to
be further restrained, and the total is expected to level off.

As the chart shows, Federal and federally assisted borrowing is
now a great deal higher than a decade ago. Much of the increase
parallels the growth in the economy and in the total funds raised
by the non-financial sector through borrowing. However, total Federal and federally assisted borrowing has increased as a proportion
of the total funds raised. This proportion increased from 17%
during 1960-69 to 21% during the first half of the 1970's and 28%
during the second half. In 1980 and 1981 the proportion was higher
still, reaching 36% and 35% in these 2 years, respectively. Thus
Government programs have recently influenced the allocation of
funds raised in financial markets more than they did in the preceding years.

SPECIAL ANALYSIS A
BUDGET FINANCING AND OUTSTANDING DEBT
(In millions of dollars)
BUDGET FINANCING
1982
estimate

1981
actual
-57,932
-21,005

-98,578
-19,689

-78,936

-118,267

-1,668

3,700

-1,301
2,125
450

329
-1,709
553

Budget surplus or deficit ( - )
Deficit ( - ) , off-budget Federal entities..
Total deficit ( - )
Means of financing other than borrowing from the public:
Decrease or increase ( - ) in cash and other monetary assets..
Increase or decrease ( - ) in liabilities for:
Checks outstanding, etc.1
Deposit fund balances
Seigniorage on coins

-393

2,873

-79,329

-115,394
-3,606

79,329

119,000

Total, means of financing other than borrowing from the public..
Total requirements for borrowing from the public
Transfer of debt holdings2
Change in debt held by the public..

73,292
2,417
3,620

Nonbank investors
Commercial banks
Federal Reserve System..

OUTSTANDING DEBT, END OF YEAR
1980
actual
Gross Federal debt:
Debt issued by Treasury
Debt issued by other agencies

907,701
6,616

997,855
6,086

1,129,114
5,072

1,253,420
4,985

Total gross Federal debt
Held by:
Government agencies
The public

914,317

1,003,941

1,134,186

1,258,405

199,212
715,105

209,507
794,434

220,752
913,434

236,971
1,021,434

Federal Reserve System
Others

120,846
594,259

124,466
669,968

DEBT SUBJECT TO STATUTORY LIMITATION, END OF YEAR
Debt issued by Treasury
Treasury debt not subject to limitation
Agency debt subject to limitation
Total debt subject to statutory limitation 3 .

907,701
-608
1,629

997,855
-607
1,570

1,129,114
-607
1,527

1,253,420
-607
1,472

908,723

998,818

1,130,034

1,254,285

1 Includes military payment certificates, accrued interest (less unamortized discount) on Treasury debt, and as an offsetting change in assets,
certain collections in transit.
2 As of September 30, 1982, $3,606 million of Federal debt held by trust funds are estimated to be reclassified as debt held by the public,
because under proposed legislation the ownership of the assets of the railroad retirement account is to be transferred to a newly created private
rail industry pension corporation.
3 The statutory debt limit is permanently established at $400 billion. Public Law 97-49 temporarily increased the statutory debt limit to
$1,079.8 billion through September 30,1982. Legislation is required to change the limitation.

SPECIAL ANALYSISA146

FEDERAL CREDIT PROGRAMS

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

FOR REFERENCE
Do Not Take From This Room

SPECIAL ANALYSIS F
FEDERAL CREDIT PROGRAMS
Federal and federally assisted credit programs play a significant
role in the functioning of the Nation's economy and financial markets. This credit assistance is primarily in four forms: direct loans
from the Federal Government, Federal guarantees of private lending, lending by privately owned Government-sponsored enterprises,
and access to tax-exempt credit. Much like Federal expenditures on
goods and services or transfer payments, credit programs change
the allocation of resources and the distribution of income. But
these programs are not without cost. Recent experience has shown
that when used in excess these programs begin to preempt private
sector investment resources, and this absorption of much needed
capital has an inhibiting effect on productivity and economic
growth. Moreover, Federal credit distorts the market's assessment
of true risk and return.
An element of subsidy is involved in any Federal credit program,
since assistance is given on terms or conditions more favorable
than would have occurred in private capital markets. A subsidy is
provided, in general, because the Federal Government accepts risks
that lenders in private capital markets are unwilling to bear or
would bear only at higher interest rates than the Federal Government charges. Because interest subsidies reduce the cost of borrowing to the recipient, they are equivalent to cash grants to the
borrower. In a wide variety of instances, Federal assistance of
comparable value can be provided either with cash payments,
credit assistance, or tax incentives. The subsidy is most easily
recognized when Federal credit assistance provides an interest rate
lower than could be provided in private capital markets. The subsidy is less visible if the Federal credit assistance provides for longer
maturities, higher loan-to-value ratios, or greater liquidity than
would have been available in private capital markets.
Direct loans are payments of cash, secured by a promise to repay
the Government. The promise to repay may be in the form of a
mortgage, a bond, a debenture, or a promissory note. Loan guarantees occur when a Government agency enters into a firm commitment to use Government funds as necessary to repay a lender upon

M A K * W A b M i i N u i U H CULLfcl*
JUH
-

-roiNJtfl P S I B R A K >

THE BUDGET FOR FISCAL YEAR 1983

default by the borrower.1 The amount of the guarantee may be less
than the full principal of the loan and may include the guarantee
of interest. Loan insurance is a type of guarantee in which a
Government agency operates a program of pooled risks, pledging
the use of insurance premiums to secure a lender against default
on the part of a borrower.2 Tax-exempt bonds are obligations with
tax exemption on the interest income they produce, which allows
them to be sold at interest rates below those for taxable securities.
The subsidy is the difference between the tax-exempt and taxable
interest rates.
This special analysis compiles basic information on Government
credit programs and plans over the budget period. It summarizes
major trends in the credit activity of the Federal Government and
Government-sponsored enterprises and presents the estimates of
direct loans and guaranteed loans by major program groupings,
agencies, and enterprises from 1981 to 1983.
Reporting on Federal credit activities in the budget has expanded considerably in recent years. Part 3 of the Budget contains
aggregated data on the totals of the credit budget, covering all
direct loan and loan guarantee programs. Part 5 of the Budget
presents information about major credit programs in the context of
meeting national needs. Part 5 also shows the lending activities of
the Federal Financing Bank according to function. Part 6 examines
the debt transactions of the Federal Government, the outlays of offbudget Federal entities, loan guarantees, and Government-sponsored enterprises. Part 7 describes the credit budget and its place
in the budget process. The Budget Appendix shows details and
descriptions of the lending activities of individual budget accounts.
TRENDS AND DIRECTIONS

Table F-l summarizes data on Federal participation in domestic
credit markets during the last decade. It measures the volume of
Federal and federally assisted credit relative to total lending and
borrowing in U.S. credit markets by nonfinancial sectors.3 This
table uses two measures of Federal participation—lending (funds
advanced) and borrowing (funds raised).
The total amount of funds advanced under Federal auspices has
risen fourfold in the last decade, reaching $86.5 billion in 1981 and
1 A loan guarantee can be thought of as the action of attaching a Federal guarantee to a loan. A guaranteed
loan refers to the loan, usually contracted in the private sector, with a Federal guarantee attached. In some
cases, however, one Federal agency guarantees a loan, and another Federal agency makes the loan.
2 For the remainder of this analysis, the term loan guarantees will include insurance. The Federal Government is, in essence, the co-signer of a federally-guaranteed loan.
3 The Government-sponsored enterprises are financial intermediaries, whereas the data for total funds raised
are defined as only including nonfinancial sectors. Financial institutions are excluded to avoid double counting.
Nevertheless, the Government-sponsored enterprise borrowing, as well as Federal borrowing from the public and
guaranteed loans, is properly compared with total funds raised. This is because the Government-sponsored
enterprise borrowing stands as a proxy for the borrowing by nonfinancial sectors that is intermediated by the
sponsored enterprises. The Federal assistance to Government-sponsored enterprises assists the ultimate nonfinancial borrowers whose loans are purchased or otherwise financed by the sponsored enterprises.

SPECIAL ANALYSIS A

is estimated to reach $113.9 billion in 1983. The Federal participation rate for total funds advanced in U.S. credit markets reached a
high for this decade of 23.3% in 1980, falling only slightly, to
21.2%, in 1981.
The other measure of Federal participation is funds raised (borrowed) under Federal auspices, which includes funds raised for
Federal and Government-sponsored credit programs as well as
funds raised to finance the Federal deficit. This Federal participation rate is much more volatile, ranging from 13.0% to 40.6% of
total borrowing over the past decade. The volatility is due primarily to swings in the budget deficit. This participation rate peaked in
1976.

Table F - l . FEDERAL PARTICIPATION IN DOMESTIC CREDIT MARKETS
(Dollars in billions)
Actual

Total funds advanced in U.S. credit markets 1
Advanced under Federal auspices
Direct loans:
On-budget
Off-budget
Guaranteed loans
Government-sponsored enterprise loans
Federal participation rate (percent)
markets 1

Total funds raised in U.S. credit
Raised under Federal auspices
Federal borrowing from public
Borrowing for guaranteed loans
Government-sponsored enterprise borrowing
Federal participation rate (percent)
1
2

1972

1973

1974

1975

1976

151.9
22.0

198.5
26.1

186.7
25.5

174.4
27.0

3.0
18.9
0.1
14.5

0.9
0.1
16.6
8.5
13.1

3.3
0.8
10.3
11.2
13.7

151.9
39.1
19.4
18.9
0.7
25.7

198.5
46.5
19.3
16.6
10.6
23.4

186.7
24.2
3.0
10.3
10.9
13.0

Nonfinanciai sectors, excluding equities. Source: Federal Reserve Board Flow of Funds Accounts.
Not estimated.

Estimates

1977

1978

1979

1980

1981

1982

241.8
26.9

65.0
6.7

310.8
36.7

378.9
58.4

412.9
72.9

342.5
79.9

407.8
86.5

114.9

113.9

5.8
7.0
8.6
5.6
15.5

4.2
6.7
11.1
4.9
11.1

1.1
2.6
-0.1
3.1
10.3

2.6
9.0
13.5
11.7
11.8

8.6
11.2
13.4
25.2
15.4

6.0
13.6
25.2
28.1
17.7

9.5
14.7
31.6
24.1
23.3

5.2
20.9
28.0
32.4
21.2

4.5
16.4
44.0
50.1

1.9
12.3
46.6
53.1

174.4
64.8
50.9
8.6
5.3
37.2

241.5
98.1
82.9
11.1
4.1
40.6

65.0
19.3
18.0
-0.1
1.4
29.7

310.8
79.0
53.5
13.5
12.0
25.4

378.9
93.9
59.1
13.4
21.4
24.8

412.9
80.7
33.6
25.2
21.9
19.5

342.5
123.5
70.5
31.6
21.4
36.1

407.8
142.1
79.3
28.0
34.8
34.8

206.0
115.4
44.0
46.6

204.7
108.0
46.6
50.1

(2)

(2)
(2)

(2)

1983

(2)

(2)
(2)

(2)

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SPECIAL ANALYSIS A

Another form of Federal Government involvement in the credit
market is the granting of tax exemption for the interest income on
State and local government debt securities. This includes securities
that finance both general government and private purpose securities, such as industrial development bonds. Tax exempt status induces purchasers of these securities to accept lower yields than
they demand for taxable securities. In this way, State and local
governments receive an interest subsidy, and the Federal Government forgoes an amount of tax revenues. Because of the interest
subsidy and its effect on the allocation of credit towards State and
local borrowers, this tax exemption has many of the characteristics
of the forms of Federal participation in credit markets shown in
Table F-l. It differs, however, in that the choice of borrowers is not
governed by the regulations of a Federal or federally chartered
entity. The only means of Federal control over this lending is
revision of the U.S. tax code. Table F-la supplements Table F - l to
show the growth of tax exempt credit, and how the Federal participation rates would change if tax exempt credit were included.

Table F - l a — FEDERAL PARTICIPATION IN DOMESTIC CREDIT MARKETS, INCLUDING TAX EXEMPT CREDIT
(Dollars in billions)
1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

Tax exempt credit

13.7

12.2

16.5

11.4

20.9

3.8

20.5

23.5

20.5

20.4

24.5

t1)

Funds advanced under Federal auspices, plus tax exempt credit
Federal participation rate, including tax exempt credit (percent)

35.7
23.5

38.3
19.3

42.0
22.5

38.4
22.0

47.8
19.8

10.5
16.2

57.2
18.4

81.9
21.6

93.4
22.6

100.2
29.3

111.0
27.2

t )
t1)

0)
f1)

Funds raised under Federal auspices, plus tax exempt credit
Federal participation rate, including tax exempt credit (percent)

52.7
34.7

58.7
29.6

40.7
21.8

76.2
43.7

119.0
49.2

23.1
35.6

99.5
32.0

117.3
31.0

101.3
24.5

143.9
42.0

166.6
40.8

t1)

Not estimated.

i1)
t1)

SPECIAL ANALYSIS A

The net funds advanced in a given year are simply the difference
between the amount of loans outstanding at the beginning and at
the end of that year. The accompanying chart shows the growth of
Federal and federally-assisted credit outstanding in the last decade.
Since 1971, the total amount of loans outstanding has risen by $217
billion, to $676 billion in 1981, an increase of over 300%.

$ BMkms

$ Billions
1,000

1,000

Loans by
GovernmentSponsored
Enterprises

300

-800

-600

600
Guaranteed
Loans

400

200-

-400

-200

Direct Loans
(on and off budget)
1971 73 75 77 79 81
Fiscal Years

Blllf
•0

Estimate

T H E CREDIT BUDGET

Two years ago budgeting for Federal credit was significantly
improved through the initiation of the credit budget. This framework has enabled the annual activity of many loan programs to be
controlled for the first time, and has provided a means of making
decisions on credit programs in the context of all Federal credit
and other budget activity. The credit budget supplements the regular budget during the executive formulation and transmittal of the
President's program and during subsequent congressional action. It
achieves control over individual program levels through appropriation bill language limiting the gross amount of direct loan obligation and loan guarantee commitments to be extended.
The credit budget consists of all direct loan obligations and loan
guarantee commitments of Federal agencies. It is based on four
principal concepts, all of which are designed to present the total
360-700 0 - 8 2 - 2

( P a r t F)

THE BUDGET FOR FISCAL YEAR 1983

amount of credit activity clearly and to facilitate legislative and
administrative control.
First, the credit budget makes no distinction between on- and offbudget entities. All direct loan and loan guarantee programs of the
Government are included.
Second, the credit budget totals are based on gross levels of
credit activity, without offsets for repayments. By excluding repayments, the credit budget measures the current level of program
activity, and thereby enables control to be based on new activity,
over which the Government has discretion.
Third, the credit budget is based on direct loan obligations and
guaranteed loan commitments. Obligations for direct loans are contracts requiring that the Government disburse a loan immediately
or at some future time. Commitments for guaranteed loans are
agreements entered into by the Government to guarantee a loan
when the borrower or lender fulfills stipulated preconditions. Both
concepts define the point at which the Government becomes legally
bound to extend credit, which is the point most amenable to executive and legislative control. The relationship of obligations and
commitments to new direct loans and guaranteed loans is loosely
analogous to the relationship of budget authority to outlays.
Fourth, guaranteed loan totals are based on the full principal of
the loan, even if the contingent liablity (i.e., the amount covered by
the guarantee) is partial. In past budgets the guaranteed loan
totals only included the contingent liabilities. This revision allows
the credit budget to reflect the full impact of Federal credit on the
economy more accurately. There are only a few programs where
less than the full principal is guaranteed. The following table
shows the differences between the contingent liability and full
principal in loan guarantees outstanding.
DIFFERENCE BETWEEN CONTINGENT LIABILITY AND FULL PRINCIPAL FOR GUARANTEED LOANS
(In millions of dollars)
1982 estimate

1983 estimate

48,758
105,868

54,609
118,574

61,359
133,225

1981 actual
Veterans Administration mortgage insurance-.
Contingent liability
Full principal
Federal Housing Administration mortgage insurance:
Contingent liability
Full principal
All other loan guarantees programs-.
Contingent liability
Full principal'

131,989
135,445

148,208
152,210

168,131
172,840

262,249
264,092

317,600
319,732

368,749
370,989

Total outstanding:
Contingent liability
Full principal

442,996
505,405

520,417
590,516

598,239
677,054

SPECIAL ANALYSIS A

Some netting adjustments are required in calculating the credit
budget totals to eliminate double-counting of loans involved in
intragovernmental financing transactions. First, secondary guarantees, i.e. guarantees of loans that have a prior guarantee from
another agency, are deducted from the gross guaranteed loan total.
Second, guarantees by one agency of direct loans disbursed by
another agency, usually the Federal Financing Bank (FFB), are
deducted from the guaranteed loan total and shown only as direct
loans. Third loan assets sold by agencies to the FFB, and guarantees of those loan assets, are not included in credit budget totals,
because the original loans are already recorded as direct loans of
the originating agency.
Appropriation bill limitations.—Limitations on new direct loan
obligations and guaranteed loan commitments are proposed for
enactment in the appropriation language for the budget accounts
that support credit programs. Unlike appropriations of budget authority, appropriation bill limitations are not the source of authority to make obligations or commitments; rather, they place a ceiling
on that authority. Because authority is provided in authorizing
legislation, and, for direct loan programs, in appropriations of
budget authority, these programs can extend credit even if there is
no appropriation bill limitation. Without the appropriation bill
limitations the annual activity of many credit programs would not
be limited by annual congressional action and would in no case be
limited in the context of total credit activity.
Appropriation bill limitations are proposed for programs amounting to about three-fourths of the credit budget totals. The remainder are programs for which a limitation on annual activity is
deemed unsuitable. Several kinds of programs are exempt from
appropriation limitations. For these programs, control is generally
exercised through authorizing legislation.
The first type of exemption is for clear entitlements to qualified
applicants, such as veterans mortgage guarantees. The second are
programs that provide insurance against unforseen circumstance,
such as insurance of bank deposits against bank failure. These two
exemptions preclude the appearance of control where none can
exist without changing the basic nature of the programs. The programs in these two categories are similar to those budgetary activities considered relatively uncontrollable, many of which are also
not acted on in annual appropriations bills.
The third exemption is for intragovernmental financing transactions, such as guarantees of certificates of beneficial ownership
issued by the FmHA and all activity of the Federal Financing
Bank. Since the loans they finance are controlled through annual
appropriation bill limitations, they need not be limited at the financing stage.

THE BUDGET FOR FISCAL YEAR 1983

Fourth, direct loans to cover claims on defaulted guaranteed
loans are exempted for all credit programs. Payment of these default claims is mandatory.
Several other programs are exempted because of circumstances
unique to the program itself. Table F-2 provides a complete listing
of programs proposed to be exempt in the 1983 credit budget.

SPECIAL ANALYSIS A
Table F-2 —CREDIT BUDGET PROGRAMS EXEMPT FROM APPROPRIATION BILL LIMITATIONS
(In millions of dollars)

Guaranteed loan commitments

Direct loan obligations
1981
actual
Programs under appropriations control
Programs exempt from appropriations control:
Entitlement and mandatory programs:
CCC price supports
Public housing
Veterans mortgage insurance
Other veterans program
Guaranteed student loans
Insurance programs.Credit union share insurance
Pension Benefit Guaranty Corporation
Diplomatic emergencies
Other policy exemptions:
Public Law 480 export sales
CCC export credit
Federal Highway Administration
College housing loans
Tennessee Valley Authority
NASA satellite leases
Financing transactions:
Guarantees and repurchases of CBO's (FmHA)
Federal Financing Bank
Defaulting guaranteed loans:
Foreign military sales credit
FHA mortgage insurance
Small Business Administration
Guaranteed student loans
VA mortgage insurance
All other
Programs previously exempt from appropriations control.
Subtotal, exempt programs
Less: Deductions to eliminate double counting
Total, credit budget..

1982
estimate

1983
estimate

1981
actual

16,649 16,344 14,812 77,582

5,849
2,196

8,554
1,500

6,600

248

120

154

1,000

19,343
11,719
7,762

6
1

3
1

5
3
1

821

754

767

13
71
102

19
344
83

121

2,015

3,624

111

4,516 7,652 6,749 14,636
30,269 28,377 24,701
164
400
871
238
738
55
9,193

170
307
712
410
756

3,329

180

266

513
548
780
47
15,816

55,753 53,180 42,527 75,147
15,208 13,173 8,346 76,214
57,194 56,351 48,994 76,515

DIRECT L O A N S

Direct loans are made by both on-budget agencies and off-budget
Federal entities. They are financed from a variety of sources including taxation, borrowing, and loan repayments.4 (For a discussion of off-budget Federal entities, see Part 6 of the Budget) Table
F-3 shows loan activity by the headings "obligations" and "loans".
Obligations are firm written agreements by the Government to
extend direct loans. Obligations in a given year need not always
result in an equal volume of new direct loans since the conversion
of obligations to loans can take time, and some prospective borrow4 Taxation
and borrowing are in many cases indistinguishable sources of funds for a specific program.
However, the treatment of loan repayments can differ from program to program.

THE BUDGET FOR FISCAL YEAR 1983

ers to whom obligations are made do not convert the obligations
into borrowing.
Loans, in turn, are the loans actually made in the specified year.
New direct loans, shown in the top line of the right hand column
for each program, are the sum of disbursements to make new loans
and disbursements to pay guarantee claims.5 Net outlays are equal
to the sum of all transactions that alter the column of loans
outstanding, including new loans less repayments 6 of loans, liquidation of collateral, loan writeoffs, and sales of loan assets. Net
outlays of direct loans are also equal to the difference between the
volume of loans outstanding at the end of the year and the volume
outstanding at the beginning of the year.7
Net outlays of direct loans by on-budget Federal agencies are
counted as budget outlays. Net outlays of direct loans by off-budget
Federal entities, although similar to on-budget net outlays, are
excluded by law from the budget totals.
Net outlays of direct loans on-budget decreased by $4.3 billion
from 1980 to 1981 to $5.2 billion, and are expected to fall still
farther, to $1.9 billion by 1983. The decreases are the result of a
general reduction in lending activity, particularly by the Small
Business Administration, whose direct business loan program is
proposed to be ended, and by the Government National Mortgage
Association, whose mortgage purchase activities will end in 1982.
Another contribution to low net loan outlays in 1983 results from
the sale of a large amount of housing loan assets to the public by
the Veterans Administration and the Department of Housing and
Urban Development.

5 Upon default of a loan guarantee, the Government assumes ownership of the guaranteed loan. The lender is
reimbursed for the amount of the guarantee, while the borrower owes the Federal Government directly rather
than the original lender. Claims paid under insurance or guarantee programs are considered as direct loans
until the acquired loans or collateral are paid off or liquidated. Proceeds of liquidation are considered repayments and realized losses are writeoffs.
6 Loan repayments and receipts from the sale of loans are generally netted from gross loan disbursements in
determining net loan outlays, rather than being counted as budget receipts.
7 The volume of loans outstanding is a stock concept referring to the total of loans that have ever been made,
less principal repaid to date, loans written off and receipts from the sale of loans. Net loan outlays is a flow
concept, the difference in loans outstanding at the beginning and at the end of a particular year.

Table F - 6 .GUARANTEEDLOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)—Continued
Obligations
Agency or program

1981

actual

1982

estimate

Loans

1983

estimate

1981

1982

actual

estimate

ON-BUDGET AGENCIES
Funds Appropriated to the President:
International Security Assistance:
Economic Support Fund

New transactions..

274

Net outlays

216

895

Outstandings
Foreign Military Sales Credit

920

New transactions..

Net outlays

1,919

694

4,553

5,247

671

-130

925

-172
522

New transactions..

Net outlays

Outstandings
International development assistance

737

512

694

Outstandings 2 ...
Other programs

691

New transactions..

401

403

Net outlays
Outstandings

429
166
11,874

379

66
11,940

Agriculture:
Farmers Home Administration:
Agricultural Credit..

New transactions..

9,229

Net outlays

1,196

7,218

Outstandings
Rural Housing..

New transactions..

Net outlays
Outstandings 1...

6,079

6,369

3,895

9.035

-898

8,369
-800

1.036

236

5,906

6,304

825

401

-lOOO -424

Table F - 6 .GUARANTEEDLOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)—Continued
Obligations
Agency or program

Rural Development

1981
actual
New transactions..

Net outlays

1982
estimate

1,669

1,046

1983
estimate
948

New transactions..

5,872

6,600

Net outlays
Outstandings

Public Law 480 long-term export credits

New transactions..

821

754

Net outlays
Outstandings

Rural Electrification Administration

New transactions..

Net outlays

New transactions..

Net outlays
Outstandings

National Oceanic and Atmospheric Administration

New transactions..

Net outlays

Outstandings
Health and Human Services:
Health Resources Administration..

New transactions..

Net outlays
Outstandings 1...

1,678

767

1,560

-43

285

242

5,861

8,720

-920

1,709

6,160

7,869

781

754

544

533

7,718

8,250

Outstandings
Commerce:
Economic Development Administration

1982
estimate

-50

Outstandings
Commodity Credit Corporation

1981
actual

137

141

996

1,073

13
848

860

Other Health programs
Housing and Urban Development:
Low-rent public housing

Other HUD programs

Government National Mortgage Association

New transactions...

Other

Treasury:
Education programs

2,196

1,500

1,000

New transactions..

2,196

1,500

Outstandings

184

159

1,496

1,288

New transactions..

1,398

1,273

766

2,006

730

Outstandings

8,479

9,209

1,836

1,993

2,172

2,124

159
1,163

-643
8,565
2,023

-516

-642

4,333

3,817

3,175

123

Net outlays

101

Outstandings

442

485

586

New transactions..

123

143

112

Net outlays

143

112

Outstandings

514

626

702

New transactions..

144

Net outlays

Outstanding

403

473

523

109

114

New transactions..

138

344

100

Outstandings

-25

Net outlays

New transactions..

-17

Net outlays

Net outlays
Veterans Administration:
Housing loans and default claims

Outstandings

Transportation:
Railroad programs

Net outlays
Interior

Net outlays

New transactions..

Net outlays

Outstandings

738

757

781

3,415

3,433

3,450

742

124
1,846

758

-33
1,813

783

-1,048
764

co
hd
H
O

>
r
>
>r

in
h-H

Table F - 6 .GUARANTEEDLOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)—Continued
Obligations
Agency or program

1981

actual

Insurance policy and other loans.

New transactions..

248

1982

Loans

1983

estimate

120

Net outlays

155

Outstandings
District of Columbia.

New transactions..

Net outlays

214

225

145

Outstandings
Export-Import Bank..

New transactions..

5,431

Net outlays

4,400

3,830

Outstandings
Federal Deposit Insurance Corporation..

New transactions..

Net outlays

266

Outstandings
Foundation for Education Assistance.

New transactions..

421

589

Net outlays
Outstandings

National Consumer Cooperative Bank2

1982

actual

estimate

120

248
92
1,485

1,477

214

225

1,567

1,684

3,512

3,603

15,802

17,523

-45

-22

107

2,037

-8

117

1,721

New transactions..

Net outlays

Outstandings
Federal Home Loan Bank Board.,

1981

New transactions..

Net outlays
Outstandings 1 ...

130

548

431

409

266
187

— 74

844

770

484

397

621
537

5,688

6,225

43
32
59

11
-59 {

National Credit Union Administration

New transactions..

Net outlays

336

478

Outstandings
Small Business Administration:
Business and investment loans

New transactions..

Net outlays

871

712

554

New transactions..

Net outlays

1,522

640

440

Outstandings
Tennessee Valley Authority

New transactions..

Net outlays

102

478

116

239

358

789

706

2,703

2,861

123

158

119
601

— 74
2,787

1,100 -144

1,652

590

-414

6,444

6,300

5,886

102

Outstandings
United States Railway Association (Conrail)

336

349

Outstandings
Disaster loans

325

198

256

315

1,000

New transactions..

Net outlays

Outstandings
Other agencies and programs

New transactions..

Net outlays

Outstandings
Subtotal, on-budget agencies

New transactions..

40,857

39,861

31,754

145

5
-26
73

39,630

40,360

35,205

-14

-46

1,860

5,153

4,435

91,287

95,722

97,581

700

1,089

1,125

1,000

185

9,529
149

9,641
185

9,713
185

Net outlays
Outstandings
OFF-BUDGET FEDERAL ENTITIES
Rural electrification and telephone revolving fund

Rural Telephone Bank

New transactions..

Net outlays

Outstandings
New transactions..

1,100

160

1,100

185

112

72
<x>

Table F - 3 . DIRECT LOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)—Continued
Obligations
Agency or program

1981
actual

1982
estimate

Loans
1983
estimate

Net outlays
Outstandings..
Federal Financing Bank..

New transactions..

Net outlays

30,269

28,377

24,701

Outstandings
United States Railway Association-

Less loan asset purchases by the Federal Financing Bank 3 .

1982
estimate

140

175

173

1,071

1,246

1,419

30,269

28,377

24,701

20,956

16,217

82,911

99,127

17
-220
164

1
-106
58

31,523

29,688

Net outlays

20,920

16,397

Outstandings

93,675

110,072

New transactions..

Net outlays

Outstandings
Subtotal, off-budget Federal entities..

1981
actual

New transactions..

Net outlays

31,545

29,663

25,586

15,208

13,173

U46

15,208

13,173

57,194

56,351

48,994

55,945

56,875

26,073

20,832

184,962

205,794

12,071

111,198

Outstandings
Grand total, net direct loans..

New transactions..

Net outlays
Outstandings

Estimates of outstandings do not include deferred interest.
As of the Omnibus Budget Reconciliation Act of 1981, the National Consumer Cooperative Bank is a private organization. After 1982 it's new loans will no longer be assets of the Federal Government.
To avoid double counting, new loan assets purchased from agencies by the Federal Financing Bank are deducted. The amounts of the loan assets are already recorded as direct loans by the originating agency. This deduction affects new
transactions only.
1

SPECIAL ANALYSIS A

L O A N ASSET SALES AND OTHER L O A N OFFSETS

Loan asset sales are sales of direct loans to the public or the
FFB. In most cases, the agency selling the loan also guarantees it.
In the unified and credit budgets, loan asset sales are treated as
offsets to agency outlays, which is the same way that loan repayments are treated. Loan asset sales reduce the agency's outlay
totals, and if the agency is on-budget, reduce total budget outlays.
After the sale, the loan is held privately or by a Federal account
other than the original seller (usually an off-budget Federal entity),
but the Federal Government continues to bear the risk of default
of the borrower.
Traditionally, loan asset sales meant selling of title to the loans
to the public. However, since the creation of the FFB, most loan
assets are sold by on-budget accounts to the off-budget FFB, converting them from direct loans on-budget to loans off-budget.
The largest volume of loan assets are certificates of beneficial
ownership (CBO's) sold by the Farmers Home Administration and
Rural Electrification Administration to support their direct loan
programs. CBO's are backed by pools of direct loans, rather than
by an individual loan. When a CBO is sold, the ownership of the
specific loans is retained by the originating agency, and the agency
continues to incur the servicing costs and to fully assume the risk
of default on the loans. The President's Commission on Budget
Concepts recommended that the sale of such securities be treated
as borrowing, arguing that, as a means of financing outlays, there
is no difference in substance between an agency selling securities
labeled "certificates of beneficial ownership," the same agency selling securities labeled "debt" and the Treasury selling securities
labeled "debt." In certain cases, however, legislation requires that
it be treated instead as the sale of loan assets.
Another form of loan asset sale occurs when direct loans have
been acquired through payments on guarantee claims upon default,
or through sale of collateral and are subsequently sold to the
public, usually with guarantees attached.
The final form of loan asset transaction is the "tandem" plan of
the Government National Mortgage Association (GNMA). Under
this program designated types of mortgages are purchased at
below-market yields and then resold to the private market at prices
sufficiently low to afford a normal return to investors. This program is being phased out during 1982.
Table F-4 shows all loan offsets—repayments, other capital recoveries, asset sales, non-cash adjustments or other offsets that are
counted against the volume of new loans extended to derive net
loan outlays. Table F-3 displays new direct loan transactions and
net direct loan outlays; table F-4 provides a four-way distribution

THE BUDGET FOR FISCAL YEAR 1983

of those loan offsets that are the difference between these two
measures of direct lending. The four-way split is as follows:
—Loan asset sales to the public result in a flow of cash from the
public to the agency in exchange for title to direct loans. In
most cases this form of transaction converts direct loans into
privately held notes guaranteed by the Government.
—Loan asset sales to the FFB shift title to direct loans (or CBO's)
from the agency to the FFB. For an on-budget agency, this
reduces the recorded budget outlays by the amount of the sale
but raises the off-budget outlays of the FFB by an equal
amount. For an off-budget entity, sales to the FFB reduce the
recorded off-budget outlays of the selling entity and raises the
off-budget outlays of the FFB by an equal amount. All loans
purchased by the FFB are fully guaranteed by some other
Federal agency.
—Repayments, prepayments, and other capital recoveries are
cash paid to the Government, to draw down loan principal and
thereby reduce indebtedness. They are counted as a reduction
in direct loans outstanding.
—Non-cash adjustments are non-cash accounting entries to take
cognizance of losses, write-offs, or other adjustments in cases in
which the recorded value of the loans is greater than the
amount of money collected or collectable on the loans.

Table F - 4 . LOAN ASSETS SALES, LOAN REPAYMENTS, AND OTHER LOAN OFFSETS (in millions of dollars)
Loan assets sales

Agency or program

ON-BUDGET AGENCIES
Agriculture:
Commodity Credit Corportation
Agricultural credit insurance fund
Rural housing insurance fund
Rural development insurance fund
Health and Human Services:
Health maintenance organization loans
Housing and Urban Development:
Federal Housing Administration fund
Other housing programs
Veterans Administration:
Direct loan revolving fund
Loan guarantee revolving fund
Export-Import Bank
Foundation for Education Assistance
Small Business Administration
Other agencies and programs

Transactions with

the
the
the
the
the
the
the
the

Public..
FFB
Public..
FFB
Public..
FFB
Public.,
FFB

the Public..
the FFB
the
the
the
the

Public..
FFB
Public..
FFB

the
the
the
the
the
the
the
the
the
the
the

Public...
FFB
Public..
FFB
Public..
FFB
Public..
FFB
Public..
FFB
Public..

1981 actual

1982 est.

Repayments and adjustments
1983 est.

5,391
29
5,619

3,071
20
3,537

1,650

1,511

1,196

3
15

6,815
31
6,045

Repayments, etc.4
Non-cash adjustmentsRepayments, etc.4
Non-cash adjustmentsRepayments, etc.4
Non-cash adjustmentsRepayments, etc.4
Non-cash adjustments-

6,998
20
3,181
-62

996
-166

16 Non-cash adjustments..
124
544

1982 est.

7,196
35
3,824
-46
1,283
-203
93
-1

Repayments, etc.4

1981 actual

Repayments, etc 4
Non-cash adjustmentsRepayments, etc.4
Non-cash adjustments ..

57
-750
2,262
27

126
212
1,662
2

Repayments, etc.4
Non-cash adjustmentsRepayments, etc.4
Non-cash adjustments ..
Repayments, etc.4
Non-cash adjustments ..
Repayments, etc.4
Non-cash adjustmentsRepayments, etc.4
Non-cash adjustments ..
Repayments, etc.4

417
151
1,475

702
39
1,882

733
259
1,290

986
296
1,558

Table F-4. LOAN ASSETS SALES, LOAN REPAYMENTS, AND OTHER LOAN OFFSETS (in millions of dollars)—Continued
Transactions with

Agency or program

Loan assets sales
1981 actual

1982 est.

Repayments and adjustments
1983 est.

the FFB
Subtotal, excluding tandem plans 1

Subtotal, with tandem plan

Non-cash adjustments-

1982 est.

662

860

17,621

19,447

116

698

14,525

12,550

7,821

Non-cash adjustments..

143

1,193

the Public..
the FFB

1,170

1,401

1,413

Repayments, etc.4
Non-cash adjustments-

126
849

120
1,099

the Public..

1,216

1,517

2,111

Repayments, etc.4

17,747

19,567

14,525

12,550

7,821

Non-cash adjustments-

991

2,292

390

623

525

Repayments, etc.4
Non-cash adjustmentsRepayments, etc.4
Non-cash adjustments..

363

683

9,557

12,278

9,920

12,668

27,667

32,235

991

2,292

the Public.,
the FFB

Housing and Urban Development (GNMA):
Tandem plan sales—FHA/VA mortgages

1981 actual

the FFB

Repayments, etc.4

OFF-BUDGET FEDERAL ENTITIES
Rural electrification and telephone revolving fundOther
Subtotal, off-budget Federal entities

the
the
the
the

Public..
FFB
Public..
FFB

the Public..
the FFB

Grand Total

the

Public:

the FFB
1
2
3
4

Repayments, etc.4
683

623

525

1,216

[,517

2,111

Repayments, etc.4

15,208

13,173

U46

Non-cash adjustments..

All loans sold, except conventional tandem plan sales, are guaranteed upon sale, and reflected in the guaranteed loan totals in Table F-5.
The "Public" includes Government-sponsored enterprises such as FNMA and FHLMC, which are among the principal purchasers of HUD and VA mortgages.
See Table F - 4 for detail of FFB purchases.
Includes prepayments and other capital recoveries.

Non-cash adjustments..

SPECIAL ANALYSIS A
T H E FEDERAL FINANCING

BANK

The Federal Financing Bank began operations in May 1974 and
has been a significant factor in financing Federal credit activities.
The bank is administered by the Treasury Department. Its transactions are excluded by law from the budget totals. Hence, its lending
transactions are not counted as budget outlays, although it finances its operations through borrowing by the Treasury.
The FFB was designed to serve as a financial intermediary for
the efficient financing of obligations issued, sold or guaranteed by
Federal agencies. The FFB performs three functions, two of which
generate Federal outlays that are excluded from the budget. First,
most loan assets are now sold to the FFB rather than to the public.
This converts the loans from outlays of the original agencies to offbudget FFB outlays. Second, the FFB makes loans directly to borrowers whose obligations are guaranteed by a Federal agency.
These guaranteed loans are in effect converted into direct loans offbudget. The FFB assures the efficient financing of these guaranteed loans and reduces borrowing costs.
Third, with some exceptions, the Treasury generally requires
agencies authorized to borrow from the public to borrow from the
FFB instead. Borrowing by agencies from the FFB does not result
in FFB outlays just as borrowing by agencies from the Treasury
does not result in Treasury outlays. The use of the proceeds from
borrowing is counted as outlays of the borrowing agency. However,
the agency must pay interest to the FFB on these borrowings and
in turn the FFB pays interest to Treasury on its borrowing. The
Treasury can finance its lending to the FFB by borrowing at lower
interest rates than the agencies would have to pay.

360-700

O - 8 2 - 4

(Part

THE BUDGET FOR FISCAL YEAR 1983
Table F-5. FFB ACQUISITIONS (in millions of dollars)
Agency or program

Purchase of loan assets from:
Overseas Private Investment Corporation:
New acquisitions

Net outlays
Outstandings
Farmers Home Administration (USDA):
Agricultural credit insurance fund:
New acquisitions

Net outlays
Outstandings
Rural housing insurance fund:
New acquisitions

Net outlays
Outstandings
Rural development insurance fund:
New acquisitions

1981
actual

1983
estimate

1982
estimate

-5
28

6,815

-6
23

5,391

3,071

5,790

1,066

22,357

23,423

23,029

-394

3,537

6,045

5,619

4,045

3,249

852

21,121

24,370

25,223

1,511

1,196

1,650

Net outlays

1,025

1,036

Outstandings

5,343

6,379

Rural Electrification Administration (USDA):
New acquisitions

-6

691
7,070

683

623

525

683

623

525

2,595

3,219

3,743

Net outlays

-6

-5

Outstandings

158

154

149

Net outlays
Outstandings
Medical facilities guarantees (HHS):
New acquisitions

Health Maintenance Organizations (HHS):
New acquisitions

Net outlays
Outstandings

118

145

161

Small business development loans(SBA):
New acquisitions

Net outlays
Outstandings
Subtotal, purchase of loan assets:
New acquisitions

-12

15,208

13,173

8,346

11,534

Outstandings

51,797

2,505

Net outlays

1,945

Outstandings

9,148

-16

Net outlays

Direct loans (purchases of loans guaranteed by agencies):
Foreign military sales credit (FAP):
New acquisitions

-16

5,975
57,772

3,320

1,663
59,436

4,400

2,670

3,715

11,818

15,533

SPECIAL ANALYSIS A
Table F-5. FFB ACQUISITIONS (in millions of dollars)—Continued
Agency or program

Rural Electrification Administration (USDA):
New acquisitions

Net outlays
Outstandings
Guarantees of SLMA obligations (FEA):
New acquisitions

1981
actual

1982
estimate

1983
estimate

4,007

4,311

4,136

3,918

4,309

4,129

12,343

16,652

20,781

1,955

700

Net outlays

1,955

700

Outstandings

4,300

5,000

Alternative fuels and other energy (Commerce):
New acquisitions

5,000

498

Net outlays

915

498

915

Outstandings

516

1,431

1,026

Low-rent public housing (HUD):
New acquisitions

Net outlays

822

1,261

810

1,224

Outstandings

928

2,153

3,122

120

Community development grants (HUD):
New acquisitions

969

Net outlays

110

Outstandings

170

253

1,794

173
42
1,563

New Communities Administration (HUD):
New acquisitions

Net outlays
Outstandings
Loans to territories (Interior):
New acquisitions

Net outlays
Outstandings
Railroad programs (DOT):
New acquisitions

Net outlays
Outstandings

Public building CBI's 1 (GSA):
New acquisitions

Net outlays
Outstandings
Satellite leases (NASA):
New acquisitions

Net outlays
Outstandings
Small business investment companies and other SBA:
New acquisitions

250
1,521

19
1,583

-8

514

542

535

111

206

171

206

112

638

844

956

165

275
240
848

195

Net outlays

131

Outstandings

608 1

-1
95

240
1,043

THE BUDGET FOR FISCAL YEAR 1983
Table F-5. FFB ACQUISITIONS (in millions of dollars)—Continued
Agency or program

Seven States Energy Corporation (TVA):
New acquisitions

1981
actual

4,285

5,289

198

278

922

1,120

1,398

15,061

15,204

16,355

10,242

10,407

3,624

Net outlays

237

Outstandings
Subtotal, direct loans (purchase of loans
guaranteed by agencies):
New acquisitions

Net outlays

1983
estimate

1982
estimate

9,422

Outstandings

31,113

41,355

51,763

Subtotal, all direct loans and purchases of
agency loan assets:
New acquisitions

30,269

28,377

24,701

Net outlays

20,956

16,217

12,071

Outstandings

82,911

99,127

111,198

AGENCY BORROWING
ADDENDUM
By: on-budget agencies:
Export-Import Bank:

Net change
Outstandings

Tennessee Valley Authority:

Net change

Outstandings
National Credit Union Association:

2,342

2,234

1,965

12,409

14,643

16,608

1,939
10,874

Net change

Outstandings

101

By: off-budget Federal entities:
U.S. Railway Association:

Net change

Outstandings

-267
215

2,136

1,675

13,010

14,685

-3
98

-94
121

Postal Service:

-4
94

-13
108

Net change

-232

Outstandings

1,288

1,721

1,634

3,794

4,705

3,537

24,888

29,593

33,129

433

— 87

Total agency borrowing:

Net change
Outstandings
*$500.000 or less.
1 Certificates of beneficial interest.

Table F-5 lists the activities of the FFB for 1981-83 by agency
and account. The first set of entries lists FFB purchases of agency
loan assets. The second set of entries lists FFB direct loans, i.e.
disbursements of loans guaranteed by Federal agencies. The adden-

SPECIAL ANALYSIS A

dum lists borrowing (debt issues) by on-budget agencies and offbudget entities from the FFB.
The FFB's net outlays from lending are expected to fall from
$21.0 billion in 1981 to $16.2 billion in 1982, and to $12.1 billion in
1983, a decrease over the 2 years of $8.9 billion. This decrease can
be attributed to reduced purchases of CBO's issued by FmHA. Net
purchases of FmHA loan assets fall from $10.9 billion in 1981 to
$1.1 billion in 1983. Net FFB disbursements of loans guaranteed by
other agencies will remain stable in 1982 and 1983, as increases in
foreign military sales credit offset reductions in loans to the Student Loan Marketing Association.
LOAN

GUARANTEES

Loan guarantees are agreements in which a Government agency
pledges to use Government funds, as necessary, to secure a lender
against default on the part of the borrower. The loan guarantee is
the Federal Government's contingent liability, which may be less
than the full face value of the loan. A guaranteed loan is the
resulting loan, with a guarantee attached. Loan insurance is a type
of guarantee in which a Government agency operates a program of
pooled risks, pledging the use of accumulated insurance premiums
to secure a lender against default on the part of a borrower. The
major use of loan guarantees has been to support housing, but in
recent years guarantees have increasingly been used for other
purposes.
Loan guarantees are designed to allocate economic resources to
particular uses by providing credit at more favorable terms than
would otherwise be available in the private market. In cases where
the loan guarantee recipients are not sufficiently creditworthy to
borrow without Federal assistance, the guarantee reallocates credit
toward federally selected uses, increasing the total volume of credit
channeled into these uses. This leaves a smaller supply of credit to
be allocated to those potential borrowers who do not receive assistance. However, the guarantee does not always change the allocation of credit. Some beneficiaries of loan guarantee programs would
have been able to secure the funds privately, without Government
support. For example, guaranteed mortgage credit might be used to
finance, at a lower cost, a house that would have been purchased
anyway. In such a case, the guarantee does not alter the allocation
of credit resources.
The loan guarantee is used in widely varying programs. The
guaranteed loan may be made to individuals, businesses, State and
local governments, or foreign governments. The guaranteed obligation may be a loan made by a bank or other institutional lender, it
may be a security sold in the capital market, or it may be a
security sold to the FFB. In the case of fully guaranteed loans, the

THE BUDGET FOR FISCAL YEAR 1983

Government guarantees the repayment of all principal and interest. In the case of partially guaranteed loans, the Government
guarantees only partial repayment of principal and interest. Guaranteed loans also include loans on which the Government promises
to pay a share of the interest, though none of the principal. Credit
may be indirectly guaranteed without being explicitly labeled as a
loan guarantee program under various contractual agreements, including guarantees of private leases, contracts to make subsidy
payments over extended periods and debt service grants. Guaranteed loans include most loan assets sold by Federal agencies.
Guaranteed loans are not reflected in budget outlays when credit
is extended. Guaranteed loans generally result in budget outlays
only when there is a default, requiring the Government to pay the
lender's claims for losses. Losses from loan guarantee programs
have generally been small, partly because most of the loans were
protected with liens on marketable property. Some of the newer
loan guarantee programs, such as student loans, have greater
losses.
Data for guaranteed loans, for 1981-83, organized by agency or
program, are presented in table F-6. The table includes the full
amount of the principal of guaranteed loans, even though in some
cases the Government guarantees less than the total amount. The
structure of table F-6 is comparable to that for direct loans in
table F-3. Information on the amount of the Federal contingent
liability under these guarantees may be found in the Budget
Appendix.
Commitments for new guaranteed loans are agreements by the
Government to guarantee loans upon the prospective borrowers'
and lenders' fulfillment of specific conditions. Commitments in a
given year do not always result in new guaranteed loans in that
year, since conversion of a commitment to a guaranteed loan can
take time and some prospective borrowers to whom commitments
are made do not ever convert the commitments into borrowing.
The net change in loans guaranteed is equal to the amount of new
guaranteed loans less repayments and other adjustments. The net
change is also equal to the difference in guaranteed loans outstanding at the end and at the beginning of the year.

Table F - 3 .

DIRECT

LOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)—Continued
Commitments

Agency or program

1981

actual

Funds Appropriated to the President:
International security assistance...

New transactions..

Net change

2,546

1982

estimate

3,084

Loans guaranteed

1983

estimate

3,929

Outstandings
International development assistance..

New transactions..

Net change

229

250

Outstandings
Agriculture:
Farmers Home Administration

New transactions..

Net change

15,434

13,327

7,955

Outstandings
Commodity Credit Corporation export credit,

New transactions..

Net change

2,015

2,500

Outstandings
Rural Electrification Administration

New transactions..

Net change

5,134

4,245

Outstandings
Commerce:
Economic development assistance..

New transactions..

Net change

Outstandings

178

3,760

1981

1982

actual

estimate

2,505

3,320

2,038

2,775

9,425

12,200

105

275

241

964

1,205

15,329

13,375

54,879

60,137

10,555
1,516

5,257
2,500

1,298

1,739

2,005

3,744

4,793

5,039

4,704

5,037

15,543

20,581

178

113
702

-39

663

CO
to

Table F-6. GUARANTEED LOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)—Continued
Commitments
Agency or program

1981

1982

actual

National Oceanic and Atmospheric Administration.

New transactions

estimate
31

Loans guaranteed

1983

estimate
25

Net change
Outstandings

Energy Research and Technology..

Defense: military.

Health and Human Services:
Health programs

New transactions...

3,298

Community development

estimate
31

192

230

242

1,278

2,022

1,278

2,022

Outstandings

1,374

3,397

New transactions..

1
*

Outstandings

108

104

Net change

New transactions..

116

104

Net change

New transactions..

19,343

18,293

19,771

Net change
Outstandings

Federal Housing Administration

1982

actual

Net change

Outstandings
Housing and Urban DevelopmentSubsidized low-rent public housing-

1981

New transactions..

1,364

1,437

1,503

16,968

18,338

19,603

1,032

2,018

2,269

17,522

19,540

21,810

17,742

23,621

28,251

Net change

10,994

16,765

20,630

Outstandings

[35,445

152,210

172,840

110

120

New transactions..

23,635

156

28,609

125

35,000

outlays

Outstandings 1...

170

253

Net

GNMA: Mortgage-backed securities

Interior:
Indian programs

New transactions..
Net change
Outstandings

42,150

New transactions...
Net change
Outstandings

Transportation:
Rail programs

New transactions..
Net change
Outstandings

Washington M.T.A. bonds

48,000

38,400

16,853
15,185
104,637

28,500
24,963
129,600

32,000
28,700
158,300

1
-z7
119

63
58
178

24
14
191

62
427
1,285

58
557
1,304

997

928
635
6,568

750
427
6,995

700
557
7,552

429
371
605

209
134
740

- 71
669

300
211
938

300
207
1,144

-132
l f 012

400
400
1,200

1.20? !

135

New transactions....
Net change
Outstandings

Federal ship financing fund

New transactions....
Net change
Outstandings

1,047

675

Aircraft ioans

New transactions....
Net change
Outstandings..

408

New transactions....
Net change
Outstandings..

300

New transactions....
Net change
Outstandings

400

104
635
1,271

600

Treasury:

Guarantees of N e w York City notes......

Chrysler Corporation loan guarantee program

New transactions,
Biomass energy development. ....

300

700

Table F-6. GUARANTEED LOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)—Continued
Commitments
Agency or program

1982

1981

estimate

actual

NASA: Long term satellite leases.

Loans guaranteed

1983

estimate

700
700

New transactions..

Ill

206

171

New transactions..

Net change

11,719

19,542

22,451

Outstandings
New transactions..

Net change

7,416

New transactions..

Net change

1,955

700

New transactions..

7,762

9,500

Net change

Outstandings
General Services Administration

New transactions..

Net

outlays

Outstandings

206
206

638

844

10,354

6,434

10,300

17,377

12,707

105,868

118,574

4,899

5,625

6,984

7,404

1,955

4,300

700
700
5,000

7,762

9,500

17,715

24,821

1,222

1,233

1,955

Outstandings
Student loan insurance fund

111
111

766

Outstandings
Foundation for Education Assistance:
Guarantees of SLMA debt issues.

estimate

Outstandings..

Outstandings

Export-Import Bank.

1982

actual

Net change

Net change
Veterans Administration (housing).

1981

6,066

-15

420

7,105

National Credit Union Administration..

Small Business Administration:
Business loan guarantees

Net change

100
44

Outstandings

118

162

174

2,986

3,000

2,700

9,977

11,233

12,067

New transactions..

Net change

121

3,516

100

3,000

2,700

Outstandings

1,269

New transactions..

Disaster Loan fund

Net change

Outstandings
Pollution control bond guarantees

New transactions..

8
100

150

Other agencies and programs

Subtotal, guaranteed loans (gross).

150

-1
11
150

150

256

406

556

3,624

Net change

237

4,285

5,289

Outstandings

922

1,120

1,398

New transactions..

3,624

New transactions..

4,285

5,289

198

278

Net change

-144

-42

Outstandings

1,566

1,524

5
-77
1,447

111,480

140,413

146,451

New transactions..

152,729

166,130

161,454

65,721

Net change

505,405

Outstandings
Less secondary guaranteed
GNMA guarantees of FHA/VA/FmHA pools..

100

6
5
12

834

100

Net change

Outstandings
Tennessee Valley Authority

1,256

85,281
590,686

cn
TJ
M
O

r1
>

r
K!
GQ
GO

86,718
677,404

loans:1

New transactions..

38,400

42,150

Net change
Outstandings

Education Foundation guarantees of SLMA debt issues..

New transactions..

1,955

700

16,853

15,185

28,500

32,000

24,963

28,700

104,637

129,600

158,300

1,955

700

oo
05

Table F-6. GUARANTEED LOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT (in millions of dollars)-Continued
Loans guaranteed
Agency or program

DOT guarantees of USRA debt-

Subtotal, guaranteed loans (net).

1981
actual

1982
estimate

1983
estimate

1982
estimate

1983
estimate

1,955
4,300

700
5,000

5,000

New transactions...
Net change
Outstandings

-369
299

19
-101
198

— 17
181

New transactions...

108,616

117,430

123,054

Outstandings

92,604

111,194

114,443

48,950

59,719

58,035

396,170

455,888

513,923

t)d
a
a
0
M
H
1 ^
O
W

loans:2

By off-budget Federal Financing Bank-

Total, primary guaranteed loansJ

New transactions..
Net change
Outstandings

1,832

New transactions...
Net change
Outstandings

30,269

New transactions...

76,515

1,988

28,377

87,065

24,701

98,354

Net change
Outstandings
Memorandum:
Callable capital contributions to international financial organizations..

actual

Net change
Outstandings

Net change

Less guaranteed loans held as direct
By budget agency (GNMA)

1981

New transactions..
Net change

1,133

2,340

2,361

2,168

2,119

2,017

4,203

-501
3,702

-631
3,071

30,269

28,377

24,701

20,956
82,911

16,217
99,127

12,071
111,198

60,168

80,698

87,725

27,972

44,003

46,595

309,056

353,059

399,654

1,133

2,340

2,361

1,133

2,340

2,361

>
M
>

| Outstandings..

13,508

15,848

3,545

2,5(

18,209

ADDENDUM
Less guaranteed loans held as direct loans by Government sponsored enterprises:
Federal National Mortgage Association

New transactions..

2,244

2,575

Net change
Outstandings
Federal home loan banks..

Outstandings
Federal Home Loan Mortgage Corporation.

Student Loan Marketing Association..

Total Enterprise holdings..

40,650

42,291

4
86

i7
90

-119

Outstandings

989

923

808

575

1,166

2,000

New transactions..

575

Net change

1,166

New transactions.

-66

-115

855

1,421

866

2,307

Net change

Outstandings

4
28

4,139

3,678

3,964

1649_

2,953

New transactions..

2,400

3,422

Outstandings.
2

39,792

New transactions..

Net change

1,641

Net change

Outstandings
Farm Credit Administration..

858

New transactions..

Net change

1,950

2,234

4,589

J,219
40,922

42,551

w
M
O

>
>
r^

45,524

Secondary guarantees by the Export-Import Bank of the debt of the Private Export Finance Corporation have not been estimated and are excluded from the table.
When guaranteed loans are acquired by a budget account, they become direct loans, and are counted as such in Table F - 3 . This deduction eliminates the overlap with Table F - 3 .
Outstanding guaranteed loans exclude adjustments for deferred interest and transfers.

THE BUDGET FOR FISCAL YEAR 1983

The aggregation of loan guarantees for each program to derive a
gross total involves some double counting. Elimination of this
double counting requires two adjustments. The first adjustment
deducts loans previously guaranteed, or secondary guaranteed
loans. They occur, for example, in the case of the GNMA mortgagebacked securities program, which guarantees securities that are
backed by pools of federally guaranteed or insured loans held by
the seller. The second adjustment deducts guarantees of loans that
are also direct loans by the Government—by either on- or offbudget accounts. The total after these two deductions represents
what are defined as primary guaranteed loans. An addendum includes guaranteed loans purchased by a Government-sponsored
enterprise.
Net loans guaranteed are expected to increase significantly in
1982, from $30.0 billion in 1981 to $44.0 billion in 1982, a change of
$14.0 billion. The growth will continue at a much slower pace in
1983, rising by $2.6 billion to $46.6 billion. This increase is due
primarily to improved economic conditions for housing. As the
housing industry recovers from its depressed 1981 level, net guaranteed loans are expected to increase between 1981 and 1983 by
$9.6 billion in the FHA mortgage insurance program and $8.2
billion in the Veterans Administration mortgage insurance program. Net guaranteed loan levels for most other programs are
being held stable or decreasing during 1982 and 1983.
FUNCTIONAL A R E A S SUPPORTED BY FEDERAL CREDIT ASSISTANCE

The distributions of direct and guaranteed loans by function are
given in table F-7. Table F-7 records the levels of new direct loans
and new guaranteed loans. The largest Federal credit activity
occurs in commerce and housing credit, international affairs, and
veterans benefits. These three functions are expected to comprise
59% of new commitments and obligations in 1983. Part 5 of the
Budget discusses Federal credit activities by function together with
Federal outlays.

SPECIAL ANALYSIS A
Table F-7. DIRECT LOANS AND GUARANTEED LOANS BY FUNCTION
(In millions of dollars)
Guaranteed loan commitments

Direct loans obligations
Function

1981
actual

International affairs
General science, space and technology..
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development....
Education, training, employment, and
social services
Health
Income security
Veterans benefits and services
General government
General purpose fiscal assistance
Total credit

budget 2

1982
estimate

1983
estimate

1982
estimate

1983
estimate

7,687

8,014

7,779

3,722

-484

-1,816

2,158
25,843
-330
1,039

2,701
29,707
693
676

2,631
37,730
542
-104

648
40
2,031
936

5,807
52
18,520
11,719

8,800
88
17,032
19,542

10,300
88
18,745
22,451
8

145

300

48,994

76,516

87,068

10,097
111
8,855
25
15,101
10,714
1,886
3,601

10,014
206
10,317
27
16,796
10,913
362
2,096

12,215
171
11,182
39
13,818
5,938
117
1,715

2,514
57
3,020
987
14
214

1,633
54
2,766
878
65
225

57,194

56,351

GOVERNMENT-SPONSORED

1981
actual

98,354

ENTERPRISES

Government-sponsored enterprises have been established and
chartered by the Federal Government to perform specialized credit
functions. They are financial intermediaries, designed to facilitate
the financing of selected kinds of economic activity, by serving as
reserve facilities or performing secondary market functions. They
are all privately owned and most are independent of Federal control to a substantial degree. Since they are privately owned, their
activities are not included in the budget totals. They are all subject, however, to some form of Federal supervision, and by law or
by custom they consult with the Treasury Department in planning
the marketing of their debt. The enterprises included in this category are the Student Loan Marketing Association (SLMA), the
Federal National Mortgage Association (FNMA), three components
of the Farm Credit System, and the Federal Home Loan Bank
system (FHLBS) which includes the Federal Home Loan Mortgage
Corporation (FHLMC). Part 6 of the Budget discusses Governmentsponsored enterprises.
Government sponsorship has provided these enterprises with
characteristics that differentiate them in credit markets from completely private institutions. They have been given special preferences and certain tax exemptions, and their securities may be
offered as investments of federally regulated institutions. These
advantages give their security obligations a preferred position in
the securities markets, enabling them to borrow at rates only
slightly higher than those of the Treasury.

THE BUDGET FOR FISCAL YEAR 1983

Funds lent by Government-sponsored enterprises are generally
obrained from private bond markets. The sole exception, SLMA,
had until 1981, borrowed exclusively from the FFB, although beginning in 1988 it will raise all its additional funds in private
markets. Sale of capital stock and retained earnings provide only a
very small portion of the resources used for lending. The pattern of
bor towing and lending varies widely over time. For example, some
enterprises, such as FNMA, were created to establish secondary
markets, thereby increasing liquidity in mortgage markets; others,
such as the Federal home loan banks, are facilities advancing
reserves to member institutions, in this case savings and loan
associations.8 These enterprises provide liquidity to primary lenders in times of tight monetary conditions, by either purchasing
loans from the primary lenders or by making advances to the
primary lenders. These loans and advances are then paid back as
monetary and. financial conditions improve. In recent years, this
latter group of enterprises has expanded its role by seeking to draw
new funds into mortgage markets at all times. By borrowing additional funds themselves, they can provide more funds to the basic
mortgage lending institutions.
Table F -8 shows the lending and borrowing of Government-sponsored enterprises for 1981-83. The format of this table closely resembles that used in table F-3 for direct loans and F-6 for guaranteed loans. Total gross lending and borrowing are adjusted to avoid
the double counting that arises from loans between enterprises and
between enterprises and the Federal Government. The deductions
in the table remove this double counting.
Lending by Government-sponsored enterprises has been growing
rapidly in recent years. This trend will continue in 1982 and 1983,
iccording to the plans of FHLMC and FNMA. Both enterprises
expect to expand their new programs of conventional mortgagebacked securities greatly beginning in 1982. These securities are
packaged by mortgage lenders and guaranteed by FHLMC and
FNMA in much the same way as GNMA mortgage-backed securities ?ire issued and guaranteed. However, the FHLMC and FNMA
programs will guarantee conventional mortgages, insured by private mortgage insurers, rather than FHA and VA insured mortgages, For FHLMC the expansion shown in table F-7 is dependent

"
•:•: :
vka,;:

ran'; c-. G N M A (a tmdge-t entity in HUD) to guarantee mortgage-backed securities achieves a similar
'a"*, t^ijii ivu-rmeduxuon. G N M A guarantees securities issued against privately held pools of federally
j jt
.-u-od -n engages. Th* Federal Reserve Board flow-of-funds data include this G N M A program
aefminon : f Government-sponsored enterprises G N M A data for this activity appear as entries in

Table F-8. CREDIT ADVANCED AND RAISED BY GOVERNMENT-SPONSORED ENTERPRISES (in millions of dollars)
Obligations
Agency or program

1981
actual

1982
estimate

Loans made
1983
estimate

1981
actual

1982
estimate

1983
estimate

LENDING (FUNDS ADVANCED)
New transactions.

Student Loan Marketing Association

Net change

2,530

1,866

2,052

Outstandings
New transactions.

Federal National Mortgage Association

Net change

4,331

5,277

13,820

15,629

Outstandings

Farm Credit Administration:
Banks for cooperatives

New transactions.

Net change

24,938

28,550

33,192

Outstandings
New transactions.

Federal intermediate credit banks

Net change

17,637

21,034

23,932

Outstandings
New transactions.

Federal land banks

Net change

11,083

11,919

13,172

Outstandings

Federal home loan bank system:
Federal home loan banks

New transactions.

Net change

52,864

59,003

65,003

Outstandings

Federal Home Loan Mortgage Corporation:
Corporation accounts

New transactions.,

Net change

3,011

23,740

28,924

Outstandings

Participation certificate pools1

New transactions.

Net change

Outstandings

23,840

29,048

6,069

4,050

1,866

2,000

5,886

7,307

1,555
16,025

12,638

1,421

15,950

12,496

59,682

72,320

84,816

24,938
777
9,429

28,550

33,192

10,587

11,862

17,637

21,034

23,932

21,889

25,100

28,873

11,083

11,919

13,172

44,452

51,964

60,154

52,864

59,003

65,003

68,306

72,878

77,880

3,011

23,740

28,924

5,343

4,634

3,917

1,977

7,230

20,516

-876

1,884

1,215

17,985

1,157

3,212

'7,511

4,572

-710

23,840

21,592
39,576

1,276

3,773

8,190

5,002

-716

29,048

24,101
63,677

Table F-8. CREDIT ADVANCED AND RAISED BY GOVERNMENT-SPONSORED ENTERPRISES (in millions of dollars)—Continued

Obligations
Agency or program

Subtotal, lending (gross)

1981
actual

New transactions.

119,225

Loans made

1982
estimate

1983
estimate

183,772

210,899

Net change

Less secondary funds advanced from Federal sources:
SLMA from FFB
Less guaranteed loans held as direct loans by:
Federal National Mortgage Association

New transactions.

Net change

New transactions.

660

3,872
1,955

New transactions.

1,806

700

1,955

2,244

2,575

Outstandings

Federal home loan banks

New transactions.

New transaction..

Outstandings

Student Loan Marketing

Association 2

New transactions.

Net change

575

1,166

700

2,500

39,792

40,650

3
i7
88

-119

Outstandings

-882
2,990

3,545

2,234

Net change

282,945

5,000

Outstandings

Farm Credit Administration

51,528

4,300

New transactions.

Net change

Federal Home Loan Mortgage Corporation

185,977

660

326

Outstandings

Net change

120,017

231,417

Outstandings

Net change

1982
estimate

36,940

Outstandings
Less loans between sponsored enterprises:
Federal home loan banks to FHLMC

1981
actual

858

989

-66
923

575

1,166

855

31
Total credit advanced.

114,210

179,650

206,310

2,307

113,263

181,599

207,255

32,440

50,062

53,089

182,323

232,384

285,474

1,603

1,543

BORROWING (FUNDS RAISED)
Student Loan Marketing Association

2,223
4,568

Federal National Mortgage

Association3

Farm Credit Administration:
Banks for cooperatives

4,342

Federal land banks
Federal home loan bank system:
Federal home loan banks
Federal Home Loan Mortgage Corporation
Subtotal, borrowing (gross)

Less borrowing from other sponsored enterprises
Less borrowing from Federal
SLMA from FFB

11,657

68,334

79,991

737

1,093

1,136

hd
w
o

3,502

r
>

1,921

10,215

2,882

11,351

21,281

24,163

27,666

6,819

6,842

41,076

47,918

7,494

21,029

3,662

55,411

61.290

65,365

1,847

20,948

23,460

23,344

44.291

48,676

52,867

213,706

262,382

315,249

230

-882
3,670

1,955

r*<

67,752

38,917

4,300

4,075

57,628

4,552
sources: 2

11,646

7,713

56,688

9,122
Federal intermediate credit banks

6,171

-500
3,170

700

5,000

Table F-8. CREDIT ADVANCED AND RAISED BY GOVERNMENT-SPONSORED ENTERPRISES (in millions of dollars)—Continued
Loans made

Obligations
Agency or program

Total borrowing from the public and Government-

1981
actual

Net change

Outstandings ..

Less investments in Federal securities:
Investments in Federal securities

Federal home loan banks..
Federal Home Loan Mortgage Corporation..

Net change

Outstandings..

Student Loan Marketing
Total credit raised

Administration :

1981
actual

1982
estimate

36,732

204,854

253,712

1,898

2,464

2,234

Outstandings..

Net change
Net change

Outstandings.

Net change

Outstandings..

Net change
Outstandings..

566

858

39,792

40,650

i7
88

Net change

Outstandings..

Farm Credit Administration.

1983
estimate

Net change
Outstandings..

Less borrowings for guaranteed loans held as direct loans by:
Federal National Mortgage Association

1982
estimate

-119

-66

989

923

268
268

1,171

34,806
161,798

903

46,595
208,392

All new transactions are loans purchased from FHLMC corporation accounts.
-Until recently, all SLMA lending has been financed through the FFB, and therefore has been counted above (table F - 3 ) as direct loans. All SLMA loans are student loans guaranteed by the Federal Government. They have, therefore, been
counted above (table F - 6 ) as guaranteed loans. The first deduction eliminates the overlap of this table with the direct loan table. The second deduction removes the non-FFB financed remainder of SLMA, to eliminate overlap with the guaranteed
loan table.
Loans purchased at discount are recorded at their acquisition cost.
4 These deductions include those borrowings involved in double-counting to give the adjusted total that is carried over to table F - 7 .
1

SPECIAL ANALYSIS F

on passage of a reform of the FHLMC's charter, now pending in
Congress. For FNMA, the figures shown do not include this new
program; they do, however, reflect assumptions of expansion of
FNMA in purchases of conventional mortgages, based on recovery
in housing markets. Lending by the FHLB's is expected to fall
sharply during 1982 and rise only slightly during 1983; the change
results from improved access to funds by savings and loan institutions, which will reduce their need to borrow from the FHLB's. The
activity of the other Government-sponsored enterprises is expected
to remain relatively stable during 1982 and 1983. The FHLMC has
been shifting its portfolio to include conventional mortgages only,
leaving FNMA as the primary Government-sponsored enterprise
holder of FHA and VA insured loans.
The economic assumptions on which the estimates rest are not
necessarily the same as the administration's economic forecast,
which is used for the budget. Special Analysis E discusses the
borrowing of Government-sponsored enterprises in detail.
SUMMARY OF CREDIT ADVANCED AND RAISED U N D E R

FEDERAL

AUSPICES

The credit advanced and raised under Federal auspices is summarized in table F-9. Credit advanced by direct and guaranteed
loan programs reached $54.0 billion in 1981. This lending level is
estimated to increase to $64.8 billion in 1982, and fall to $60.8
billion in 1983. Loans by Government-sponsored enterprises will
increase by $17.7 and $2.0 billion in 1982 and 1983, respectively.
Outstanding credit advances to the public under Federal auspices
are expected to total $806.7 billion by the end of 1983.
Net credit raised under Federal auspices totaled $142.1 billion
net in 1981, and is expected to reach to $206.0 billion in 1982, and
$204.7 billion in 1983.
T A X EXEMPT CREDIT

Since the adoption of the Federal income tax in 1913, interest on
State and local government obligations generally has been exempt
from Federal income tax.8 The resulting subsidy to borrowers has
historically been a saving of 30 to 35% of the interest rate.
The large interest subsidies provided through tax-exempt credit
result in reallocation of credit resources to the assisted borrowers,
just as do Federal direct loan and loan guarantee programs. Borrowers aided by tax exemption gain a position of preferred access
to credit resources over competing taxable borrowers, just as do
borrowers with other forms of Federal credit assistance, although
in a different form.
8

Tax exempt interest is one type of tax expenditure, the subject of Special Analysis G.

THE BUDGET FOR FISCAL YEAR 1983

Table F-9. SUMMARY OF CREDIT ADVANCED AND CREDIT RAISED UNDER FEDERAL AUSPICES
(In billions of dollars)
Net Change
1981
actual

1982
estimate

Outstanding
1983
estimate

1981
actual

1982
estimate

1983
estimate

LENDING (Credit advanced)
Direct loans (from table F-3):
On-budget agencies
Off-budget entities
Guaranteed loans (primary, from table
F-6)
Total Federal Government
credit advanced
Loans by Government-sponsored enterprises (from table F-8)
Total, credit advanced to
the public under Federal
auspices

5.2
20.9

4.4
16.4

1.9
12.3

91.3
93.7

95.7
110.1

97.6
122.4

28.0

44.0

46.6

309.1

353.1

399.7

54.0

64.8

60.8

494.1

558.9

619.6

32.4

50.1

53.1

182.3

232.4

285.5

86.5

109.9

113.6

676.4

791.3

905.1

79.3

115.4

108.0

794.4

913.4

1,021.4

28.0

44.0

46.6

309.1

353.1

399.7

107.3

159.4

154.6

1,103.5

1,266.5

1,421.1

34.8

46.6

50.1

161.8

208.4

258.5

142.1

206.0

204.7

1,265.3

1,474.9

1,679.6

BORROWING (Credit raised)
Federal borrowing from the public
(from table E - l )
Guaranteed borrowing (same as guaranteed loans, above) 1
Total Federal Government
credit raised
Borrowing by Government-sponsored
enterprises (from table F-8)
Total, credit raised from
the public under Federal
auspices
1

Outstanding totals for direct and guaranteed loans exclude adjustments for deferred interest and transfers.

Table F-9 also shows the annual revenue loss to the Treasury
from all tax-exempt bonds issued each year, the value of the longterm subsidy received by the borrower, and the present value of
the tax loss from newly issued tax-exempt bonds. The annual tax
loss reflects the amount of reduction in receipts resulting from the
issuance of tax-exempt rather than taxable debt in that year. However, further tax losses and subsidies from tax-exempt financing
occurs over the entire life of the security. Therefore, the present
value of the total tax loss is substantially larger than the annual
tax loss. The cost to the Treasury in lost tax revenues exceeds the
financial benefits to the borrower, because the lender also shares in
the subsidy. (See Special Analysis G for a discussion of revenue
losses attributable to special provisions of the tax code, including
tax-exempt bonds.)
During the first half century of income tax, this tax exemption
was confined mainly to State and local governmental borrowing for
public purposes. During the 1960's, however, tax exempt financing

SPECIAL ANALYSIS F

was increasingly made available to certain private uses. These uses
were curtailed by the 1968 and 1969 tax acts, but a number of
exceptions were permitted that have allowed major growth of some
private uses.
As table F-9 shows, the sale of tax-exempt bonds used for private
purposes has increased greatly in recent years, while nominal State
and local government new issues (adjusted for advanced refunding)
for public purposes has remained relatively constant. Tax-exempt
bonds issued for private purposes in five activities—owner occupied
and rental housing, private nonprofit hospitals, pollution-control
facilities, student loans, and business financed with "small-issue''
IDB's—will reach an estimated $35.3 billion of new obligations in
calendar year 1982, accounting for over half (56%) of the total longterm tax-exempt market. This compares with $8.5 billion in new
issues and 24% of the long-term tax-exempt market just 6 years
earlier. The Omnibus Reconciliation Act of 1980 imposed major
restrictions on the use of tax-exempt credit for owner-occupied
housing, where the largest growth has occurred in recent years.
The "small-issue'' exemption on industrial development bonds
has the largest potential for growth. Forty States permit "smallissue" IDB's, and at least 23 States have virtually no limits on the
projects that they can finance. Industrial development bonds
(IDB's) are the principal form of obligations nominally issued by a
State or local government to raise funds for private purposes. In
almost all cases, a State or local authority that issues IDB's is a
conduit for providing tax-exempt financing to the private borrower.
The authority lends its tax exempt status to the private borrower's
debt obligations, but is not responsible for the payment of interest
and principal in the event of default.
The administration is proposing to reduce the use of private
purpose tax-exempt bonds through several changes in the tax code.
The administration proposes that assets financed with tax-exempt
bonds issued after 1982 must be depreciated using the straight-line
method over an extended recovery period. Tax-exempt financing
will be limited to bonds that are publicly approved by local governments and which, after 1985, receive a financial contribution, commitment, or obligation from the local government. Small issue
IDB's will not be allowed for large businesses.
While direct and guaranteed loan programs are included in the
credit budget, tax-exempt credit is not. Although tax-exempt financing has market effects and costs similar to other credit assistance, its current statutory structure gives it entitlement status and
its use is unilaterally elected by the borrower. Effective control can
only be achieved through legislated changes to the tax code.
Although tax-exempt credit is the most visible and direct form of
tax expenditure influencing credit allocations, others not treated

THE BUDGET FOR FISCAL YEAR 1983

here but described in Special Analysis G are also important. These
include: (1) investment tax credits, (2) personal deductions for mortgage interest and property taxes, and (3) the all-savers certificate.

Table F-10. TAX EXEMPT FINANCING; PRESENT VALUE OF TAX SUBSIDIES TO NEW ISSUES
(In billions of dollars)
Calendar years 1
Actual

Total new Issues, long-term tax exempts
State and local government uses 2
Private purpose tax-exempts
Housing bonds
Private hospitals
Student loans
Pollution control
Other private business (IDBs)
Subsidy estimates (new issues only): 3
All new issues-.
Annual tax loss, all new issues
Present value, tax loss
Present value, borrower benefit
Private purpose issues only:
Present value, private use tax loss

Estimated

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

24.9

23.6

23.9

24.2

30.5

34.9
26.4
8.5
3.0
1.9
0.1
2.1
1.4

46.8
34.4
12.4
3.8
3.3
0.1
3.0
2.2

49.1
34.2
14.9
5.9
2.2
0.3

48.1
23.3
24.8

53.7
25.6

3.5

2.4
0.6
2.5
7.1

53.7
28.0
25.7
6.9
3.5
1.0
3.8
10.5

63.1
27.8
35.3
13.2
3.9
1.4
4.2
12.6

1.6

0.8
7.6
5.3

0.7
7.1
5.1

0.7
7.3
5.7

0.9
7.8
5.9

I1)

5.04
7.21
160.7
176.5

4.99
7.44
175.1
191.2

5.86
8.57
188.9
207.7

1.1
10.0
6.5
(*)

1.2

2.8

12.2

28.1
13.5
2.8
0.5
2.5

11.2

14.8
12.4

1.8
16.1
14.1

1.9
16.3
15.0

2.7
19.6
16.0

3.2
20.5
11.5

3.7
23.9
16.5

2.7

3.9

4.9

8.4

10.3

9.8

13.4

5.66
8.43
225.0
239.5

5.20

5.52
8.73
275.4
287.5

5.92
9.63
296.4
309.3

7.85
11.94
320.4
336.2

10.83
14.17
341.5
363.2

9.78
13.78
368.3
395.4

MEMORANDUM
AAA State and local bond yields (Moodys), percent..
AAA corporate bond yields (Moodys), percent
Outstanding, long-term tax-exempt issues
Outstanding, all tax-exempt issues

5.22
7.39
146.1
161.8

6.42
8.83
205.3
223.8

8.02
249.8
261.4

1 9 7 6 - 8 0 estimates of tax-exempt volume and distribution and 1 9 8 1 - 8 3 projections are by the Department of the Treasury, Office of Tax Analysis. Estimates are unavailable for private purpose tax-exempts before 1976.
Includes some private purpose tax-exempt debt, and advance refunding, that could not be identified or classified.
Assumed: Average marginal tax rate = .42; taxable securities of comparable quality; average maturity = 18 years; discount rate = Aaa corporate bond yield.
Sources: Federal Reserve Board, Public Securities Association; subsidy estimates by Office of Management and Budget.
1

2
3

THE BUDGET FOR FISCAL YEAR 1983
INTEREST SUBSIDIES

Federal credit programs provide credit to selected groups on
more favorable terms than would otherwise be available in private
credit markets. The largest subsidy is usually in the form of a
lower interest rate, although other subsidies, such as longer maturities, are commonly offered as well. For direct loans the subsidy
arises through formulas in law setting interest rates at a fixed
ceiling or tying them to fluctuations in some other rate. While risk
is a crucial factor in determining private interest rates, it may be
largely ignored in setting rates for direct loan programs. For guaranteed loans, the subsidy usually occurs because the guarantee
removes all risk of default facing the lender; the lender is therefore
willing to lend to the guaranteed borrower at lower rates that do
not include a premium for risk.
This section presents estimates of the subsidies provided through
lower interest rates for Federal direct loan programs and one guaranteed loan program. The total interest subsidy is measured by
estimating the difference between the interest payments on a federally assisted loan and those the borrower would otherwise have
paid in the private market. The reduced interest rate lowers payments throughout the life of a loan. The measurement of the
interest subsidy therefore requires that the series of annual interest payment reductions be converted into a single discounted present value. This capitalizes all future payments and allows comparison of the value of the federally assisted and wholly private loan
through a single number.
There is no generally accepted method for quantifying the present value of interest subsidies in Federal credit programs. Measurement of the total subsidy depends on an accurate assessment of
what the wholly private interest rate would have been. For many
Federal credit programs this private rate is impossible to find,
either because the risk of a Government-assisted loan is unknown
or because comparable loans are not made in the private market.
Federally assisted borrowers and projects are frequently riskier
than the private market would accept under any terms. To make a
rough estimate of the subsidy without complete private rate information, two simplified approaches are used, reflecting, first, the
value of the subsidy to borrowers, and, second, the cost to the
Government.
The first approach compares Federal credit program rates
against aggregate data on private sector rates for the most comparable loans. It is intended to show the value of the subsidy to the
borrower. This approach relys on broad categories of loan types
rather than detailed analysis of individual program characteristics

SPECIAL ANALYSIS F

(see table 11a).11 For example, the subsidies on Rural Electrification
Administration loans are computed by comparing the average REA
interest rates against rates for Aaa utility bonds. The private rates
are proxies for the actual private rate because they are calculated
and compared at such a high level of aggregation. For some programs the rates shown here are better proxies than for others.
The second approach applies a single interest rate to all Federal
credit programs: the 10-year Treasury bond rate averaged over the
last 6 months (see table F-llb). This calculation, in contrast to the
calculations for table 11a, is intended to estimate the cost to the
Federal Government of the interest subsidies. The estimates in
table F - l l b are less than the estimates in table F - l l a in large part
because the Government can borrow to fund its lending more
cheaply than can private lending institutions. Thus, the value of
the subsidy to the borrower is larger than the cost of the loan to
the Government. Remaining costs of the subsidy fall on the economy at large in the form of upward interest rate pressure for
unsubsidized borrowers.
The subsidy estimates are intended to provide a picture of the
order of magnitude of interest subsidies, and to suggest the relative
distribution of subsidies among the programs. Each of the two
methods quantifies only part of the total subsidy provided in Federal credit programs.
The measurement of interest subsidies currently includes:
—the effect of the Federal Government making a direct loan at
an interest rate lower than a normal private borrower would
have to pay on a similar loan in the private market;
—the effect of the Federal Government paying part of the interest costs of a private loan.
The measurement of interest subsidies does not include:
—the value of the Government's assumption of risk on a direct
loan or the value of a loan guarantee;
—the effect of making credit available to unusually risky borrowers, under unusually risky terms (such as a higher loan to
value ratio or a long maturity), or for unusually risky ventures; i.e., the effect of not charging premiums that would be
adequate to cover probable losses on direct or guaranteed
loans;
—the effect of not charging fees or premiums that would cover
the administrative costs of the program.
Thus, the estimates of interest subsidies only measure part of the
total subsidy that is provided in Federal credit programs. Since the
amount of interest rate reduction resulting from the Government's
assumption of risk on guaranteed loans is not measured, interest
subsidies are calculated only for guaranteed student loans, where
11

Private sector rates are computed from data published in the Federal Reserve Bulletin.

THE BUDGET FOR FISCAL YEAR 1983

the Federal Government directly contributes all or part of the
interest payments on the loan.
The sensitivity of interest subsidy estimates to assumptions.—
Estimates of interest subsidy in tables F - l l a and F - l l b are highly
sensitive to changes in assumptions. A single percentage point
change in the assumed private sector interest rate can substantially change the present value of the interest subsidy. For instance, if
the rate on a $100 million direct loan is 10% and the average
private sector interest rate on loans in the same category is also
10% (assuming that the discount rate is the same as the private
market interest rate), then there is no explicit interest subsidy. If,
however, the private market interest rate is assumed to be 12%
then the present value of the interest subsidy is $15 million, and if
the interest rate is assumed to be 15% then the present value of
the interest subsidy increases to $31 million.
The present value will also change dramatically depending on
the maturity and amortization plan. For instance, the present
value of the subsidy on a 10%, $100 million loan over 30 years at a
15% discount rate is $31 million. This subsidy would be only $18
million if the maturity were 10 years. With a 30-year maturity and
a 5-year grace period the subsidy would be $66 million, more than
twice the subsidy of a nondeferred loan.
Since the estimates are so sensitive to the assumptions they are
likely to change considerably from year to year, regardless of policy
changes. Nevertheless, the estimates of the interest subsidies in
credit programs for 1983 can be used to indicate which programs
are more deeply subsidized than others, and the general magnitude
of the subsidies.

SPECIAL ANALYSIS F

Table F - l la. INTEREST SUBSIDY VALUES FOR NEWLY COMMITTED FEDERAL CREDIT ASSISTANCE
(In millions of dollars)
Average loan terms
Agency and programs

DIRECT LOANS
Funds Appropriated
to the
President:
Economic support
fund
Foreign military
sales credit ..,,
Functional
development
assistance ..
Agriculture:
Price support and
related
programs
Agricultural
credit
Rural housing
Farm export
creditsPublic Law
480
Rural
development
Rural telephone
bank
Rural electric and
telephone
,
Commerce
Health and Human
Services:
Health
maintenance
organizations....
Other health
programs
Housing and Urban
Development:
Federal Housing
Administration..
Government
National
Mortgage
Assn
Housing for
elderly and
handicapped
Housing
rehabilitation....
Low rent public
housing
Interior:
Water resources....
Indian loan funds..

Percent

Years

Market rate discount

Obligations or commitments
1981

1982

Market
rate

1983

Present value of subsidy stream
1983

1982

1981

2.8

33.2

274

216

895

16.8

199

157

651

12.0

8.0

664

920

1,919

16.8

133

278

2.5

36.5

387

389

392

16.8

291

292

295

13.1

0.7

5,872

8,600

6,600

19.5

270

395

303

9.0
3.6

7.0
37.2

9,229
6,079

8,196
6,371

7,218
3,895

18.9
15.1

2,329
4,126

2,069
4,324

1,822
2,644

2.3

30.0

821

754

767

16.8

597

548

558

7.8

40.0

1,669

1,046

948

20.3

999

626

567

12.3

30.0

160

185

17.1

4.7
11.2

35.0
25.3

1,117
132

1,100
44

700

17.1
16.8

736
40

725
13

461

12.0

20.0

20.6

6.9

13.4

18.0

10.0

20.0

414

383

311

15.1

112

104

7.5

20.0

1,836

1,993

15.1

718

779

9.0

40.0

873

819

453

15.1

339

318

176

3.0

20.0

15.1

12.3

0.3

2,196

1,500

1,000

15.1

9.4
14.5

35.0
30.0

25
11

27
17

39
22

11.6
20.6

4
3

5
5

7
6

THE BUDGET FOR FISCAL YEAR 1983

Table F - l l a . INTEREST SUBSIDY VALUES FOR NEWLY COMMITTED FEDERAL CREDIT ASSISTANCE—
Continued
(In millions of dollars)
Average loan terms
Agency and programs

Bonneville Power
Administration..
Transportation.Highway
programs 1
Rail programs
Treasury:
College housing ,
Veterans
Administration:
Housing
programs
Insurance policy
loans 1
Education loans
District of Columbia...
Education
Foundation:
Student financial
assistance
Student loan
insurance . .
Export-Import Bank...
NCUA
Small Business
Administration:
Business loans
Disaster loans
Tennessee Valley
Authority
Other agencies and
programs
Federal Financing
Bank:
Disbursement of
loans otherwise
guaranteed

Percent

Years

Grand
total

1982

19bl

Market rate discount

1983

Market

Present value of subsidy stream
1981

1983

1982

1.3

19.5

17.1

8.4
4.9

40.0
20.6

13
39

19
143

32
2

11.6
16.8

3
22

5
79

8
1

3.0

30.0

138

344

100

15.1

230

14.6

29.0

739

757

781

15.1

6.9
8.3
9.2

40.0
10.0
30.0

241
7
134

120
3
145

153
2
145

19.7
18.0
13.2

151
2
36'

75
1
39

96
1
39

1.7

13.0

183

179

18.0

104

102

9.0
10.5
14.0

12.0
11.0
2.0

238
5,431
76

410
4,400
390

548
3,830
478

18.0
20.6
19.7

79
1,808
4

15.0
10.5

8.5
9.0

871
1,522

712
640

554
440

20.6
20.6

144
452

117
190

91
131

3.7

0.9

102

17.1

11.0

5.1

497

16.8

15.1

4.8

15,060

15,204

16,355

16.8

531

536

576

57,194

56,351

48,994

14,502

13,670

10,499

7,762

9,500

10,300

2,563

3,137

3,401

64,956

65,851

59,294

17,065

16,807

13,990

TotalDirect
loan
subsidies 2
GUARANTEED
LOANS
Education
Foundation:
Student loan
insurance

Obligations or commitments

9.0

12.0

18.0

135
1,465 •
21

181
1,275
25

SPECIAL ANALYSIS F
1
2

There is no specified maturity period. Forty years is used as a proxy for an indefinite maturity.
Only explicit subsidies are represented; implicit arising from the Government's assumption of risks are not included.

(See text)

Table F - l l b . INTEREST SUBSIDY COSTS FOR NEWLY COMMITTED FEDERAL CREDIT ASSISTANCE
(In millions of dollars)
Average loan terms
Agency and programs

DIRECT LOANS
Funds Appropriated
to the
President:
Economic support
fund
Foreign military
sales credit
Functional
development
assistance
Agriculture:
Price support and
related
programs
Agricultural
credit
Rural housing
Farm export
creditsPublic Law
480
Rural
development
Rural telephone
bank
Rural electric and
telephone
Commerce
Health and Human
Services:
Health
maintenance
organizations....
Other health
programs
Housing and Urban
Development:
Federal Housing
Administration..
Government
National
Mortgage
Assn
Housing for
elderly and
handicapped
Housing
rehabilitation....
Low rent public
housing

Percent

Years

15,000 discount

Obligations or commitments
1981

1982

Annual
subsidy
per $100
million

1983

Present value of subsidy stream
1983

1982

1981

2.8

33.2

274

216

895

10.5

191

150

623

12.0

8.0

664

920

1,919

2.0

181

2.5

36.5

387

389

392

10.9

280

281

283

13.1

0.7

5,872

8,600

6,600

2.3

120

9.0
3.6

7.0
37.2

9,229
6,079

8,196
6,371

7,218
3,895

3.8
10.2

1,524
4,113

1,354
4,311

1,192
2,635

2.3

30.0

821

754

767

10.6

571

524

534

7.8

40.0

1,669

1,046

948

6.9

764

479

434

12.3

30.0

160

185

2.6

4.7
11.2

35.0
25.3

1,117
132

1,100
44

700

9.2
3.4

684
29

673
10

428

12.0

20.0

2.6

6.9

13.4

5.9

10.0

20.0

414

383

311

4.2

111

102

7.5

20.0

1,836

1,993

6.1

712

773

9.0

40.0

873

819

453

5.8

336

315

174

3.0

20.0

9.1

12.3

0.3

2,196

1,500

1.8

1,000

THE BUDGET FOR FISCAL YEAR 1983

Table F - l l b . INTEREST SUBSIDY COSTS FOR NEWLY COMMITTED FEDERAL CREDIT ASSISTANCEContinued
(In millions of dollars)
Average loan terms
/ and programs

Interior:
Water resourcesIndian loan funds.
Bonneville Power
Administration.
Transportation:
Highway
programs 1
Rail programs
Treasury:
College housing....
Veterans
Administration:
Housing
programs
Insurance policy
loans 1
Education loans....
District of Columbia..
Export-Import Bank..
Foundation for
Education
Assistance:
Student financial
assistance
Student loan
insurance
NCUA
Small Business
Administration:
Business loans
Disaster loans
Tennessee Valley
Authority
Other agencies and
programs
Federal Financing
Bank acquisitions
of loans
otherwise
guaranteed

Obligations or commitments
1982

1981

Percent

15,000 discount
Annual
subsidy
per $100
million

1983

Present value of subsidy stream
1981

9.4

35.0

5.3

14.5

30.0

0.5

1.3

19.5

10.1

8.4

40.0

6.4

4.9

20.6

143

8.0

3.0

30.0

138

344

100

10.1

14.6

29.0

739

757

781

0.4

6.9

40.0

241

120

153

4.6

7.6

18
123

8.3

10.0

9.2

30.0

134

145

5.3

10.5

11.0

5,431

4,400

3,830

3.2

947

1.7

13.0

183

179

9.0
14.0

12.0
2.0

15.0

8.5

10.5
3.7

11.0

15.1

9.0
0.9
5.1

4.8

Total—direct
loan
subsidies 2

8.9

238

410

548

4.4

390

478

0.5

871

712

554

1,522

640

440

102

497

3.1

231

6.3

2.4

15,060

15,204

16,355

57,194

56,351

48,994

7,762

9,500

10,300

11,255

GUARANTEED
LOANS
Education
Foundation:
Student loan
insurance

9.0

12.0

4.4

1,876

SPECIAL A N A L Y S I S

Table F - l l b . I N T E R E S T S U B S I D Y C O S T S FOR N E W L Y C O M M I T T E D F E D E R A L C R E D I T A S S I S T A N C E —
Continued
(In millions of dollars)
Average loan terms
Agency and programs

Grand total

Percent

Years

15,000 discount

Obligations or commitments
1981

1982

1983

64,956

65,851

59,294

Annual
subsidy
per $100
million

Present value of subsidy stream
1981

1982

1983

13,131

13,111

10,357

^here is no specified maturity period. Forty years is used as a proxy for an indefinite maturity.
explicit subsidies are represented; implicit subsidies arising from the Government's assumption of risks are not included. (See text).

2 Only

PROPOSED

LEGISLATION

The administration is seeking to reduce the amount of direct
loans and loan guarantees issued by the Federal Government. Its
primary method for accomplishing this goal is to reduce the appropriation bill limitations on credit programs, and in many cases to
terminate the programs. The proposed new levels of activity are
displayed in tables F-3 and F-6. For several programs expected to
continue operation, changes in authorizing law are being sought
that would reduce subsidies and Federal costs. This section outlines
the legislative proposals.
For the Guaranteed Student Loan program the administration is
submitting legislation to restrict eligibility for subsidized loans and
reduce the subsidy. The proposed changes include: raising the origination fee from 5 to 10%, extending the needs analysis to students
at all income levels, allowing graduate and professional students to
borrow only under the less subsidized auxiliary loan program (and
increasing their borrowing limits), and discontinuing special allowance interest subsidy payments in the third year following a student's graduation or withdrawal from school.
The Federal Housing Administration's (FHA) mortgage insurance programs are the subject of legislation proposed to keep the
FHA abreast of recent changes in housing finance and to reflect an
expanding role for private mortgage insurers. The legislation would
allow FHA to insure variable rate and shared appreciation mortgages for single family homes, and would expand the graduated
payment program to multi-family mortgages. At the same time, the
program would be targeted to home buyers not adequately served
by private insurers, such as first-time home buyers. An additional
set of provisions (such as eliminating ceilings on the interest rates
and points charged, and requiring that premiums be paid at the
time of purchase rather than throughout the life of the mortgage)
would assist FHA in achieving efficiency. A 0.5% origination fee is
proposed for the Veterans Administration mortgage insurance program and an increase in the commitment fee is proposed for the

THE BUDGET FOR FISCAL YEAR 1983

FNMA mortgage-backed securities program, which provides a secondary market for FHA and VA guaranteed mortgages.
The administration is also proposing changes in the eligibility
rules and loan terms of the Farmers Home Administration's disaster loan program, including discontinuing loans to creditworthy
borrowers, raising the interst rate on most of its loans from 8% to
the cost of Treasury borrowing, and lowering the maximum loan
size from $500,000 to $300,000.
The District of Columbia is preparing to turn fully to the private
market for all its borrowing. Legislation is now being proposed to
end the District's authority to borrow short term from the Federal
Government.
RECENTLY ENACTED LEGISLATION

This section summarizes legislation affecting Federal credit programs enacted during the first session of the 97th Congress.
The Omnibus Budget Reconciliation Act of 1981 was the single
most important piece of credit program legislation enacted in 1981.
The act set limits on the credit to be extended by the Farmers
Home Administration, the Export-Import Bank, and the Small
Business Administration, and for the food for peace program, the
District of Columbia and the GNMA tandem plan. It also changed
the operation of several credit programs.
The Farmers Home Administration program standards and loan
terms were revised as follows:
—Water and waste disposal and community facilities loan interest rates and maturities must be comparable to similar municipal securities, except that a 5% rate is allowed if the loan
enables health or sanitation standards to be met in certain
areas.
—Farm ownership and operating loans on prime farmland will
have interest rates increased by 2%. For limited resource borrowers, the interest rate is reduced by 3% below the FmHA
rates for comparable loans to other borrowers.
—Emergency loans to cover losses suffered will be at market
rates if the borrower is creditworthy and at 8% if the borrower
cannot obtain credit elsewhere.
Interest rates for Rural Electrification Administration direct
loans were set at 5%, except for utilities facing "extreme financial
hardship" a 2% rate was allowed. The Federal Financing Bank was
also directed to provide loans to any borrower receiving an REA
guarantee.
Steps were mandated to make the National Consumer Cooperative Bank a fully private lending institution, including redemption
of all Federal Government equity by December 31, 1981, and new
procedures for selecting the board of directors. After that date, new

SPECIAL ANALYSIS F

obligations of the Bank will not be backed in any way by the
Federal Government. The Bank will continue to serve the cooperative organizations it was originally designated to serve.
For the guaranteed student loan program a needs test was reinstituted for students with family incomes over $30,000, restricting
the amount of loan to remaining need after expected family contributions are estimated. Interest rates on the auxiliary loan program
for parents and graduate students were set at 12% or 14%, depending on Treasury bill interest rates. Finally, a 5% origination fee
was established to be paid through the lenders to the Federal
Government.
The act made changes in the business and disaster loan programs of the Small Business Administration. For disaster loans:
—Interest rates on loans to creditworthy businesses were raised
from the Government's cost of money to market levels.
—The maximum amount of loss coverage for a business was
reduced from 100 to 85%.
—Interest rates on loans to noncreditworthy businesses and
homeowners were raised from 5% and 3%, respectively, to 8%
and one-half of the Government's cost of money (but not to
exceed 8%).
—Authorization for nonphysical disaster loans was ended.
For business loans, interest rates on direct loans (except for a
rate of 3% on loans to the handicapped) have been raised to the
Government's cost of money.
Minor changes in the act included:
—Standards were set for federally insured health student loans,
including limits on annual loans of $20,000 and on total indebtedness of $80,000 for medical students. Repayment terms were
also set.
—CCC Farm Storage Facility Loans were given discretionary
rather than entitlement status.
—The authority of local public housing agencies to borrow from
the Federal Financing Bank with HUD backing was limited to
$400 million.
—The methods for Federal Housing Administration foreclosure
on defaulted mortgages were reformed to make the foreclosure
process shorter and less costly to FHA.
—The authority of the Student Loan Marketing Association to
provide a secondary market for all types of insured student
loans, including health profession loans, was expanded.
—The Rural Development Loan Fund was transferred to the
Department of Health and Human Services from the Community Services Administration.

THE BUDGET FOR FISCAL YEAR 1983

—The Health Maintenance Organization loan program was given
flexibility to adjust interest rates to keep them comparable to
Treasury interest rates.
Several other recently enacted bills affected credit programs.
The Overseas Private Investment Corporation Amendments Act
of 1981 extended OPIC's authority to issue investment insurance,
loans and loan guarantees through 1985. The act allows OPIC to
operate in countries with per capita incomes up to $2,950 in 1979
dollars. The previous maximum had been $1,000 in 1975 dollars.
The District of Columbia Bond Amendments of 1981 gave the
District of Columbia additional debt management powers and flexibility to allow it to begin borrowing in the private bond market,
rather than from the Federal Government. For example, the act
authorizes the District to secure general obligation bonds by creating a security interest in specified District revenues, such as certain tax receipts.
The Agriculture and Food Act of 1981 extended the Commodity
Credit Corporation (CCC) price support programs, the Public Law
480 food export program and the rural development programs of
the Farmers Home Administration for 4 years. The CCC was given
greater flexibility to raise loan interest rates and other terms
above minimum levels, in order to reduce subsidies. The act established an export credit revolving fund for use by CCC in carrying
out a wide variety of direct loan export activities. This fund, however, has not yet received an appropriation.
The International Security and Development Cooperation Act of
1981 extends through 1983 the authorization for the economic support fund, the foreign military sales credit program, the functional
development assistance programs of the Agency for International
Development, as well as several noncredit programs. The programs
are authorized without major changes in operations. A number of
provisions regulate the amount and type of aid to be provided to
specific countries.
The Mortgage Purchase Amendments of 1981 remove certain
limitations on the mortgage loan purchase authority of the Federal
Home Loan Mortgage Corporation (FHLMC) and the Federal National Mortgage Association (FNMA), allowing FHLMC and FNMA
to purchase a larger amount of existing conventional mortgages
from thrift institutions. The purchase activity is intended to enable
residential lenders to replace older mortgages, frequently carrying
relatively low interest yields, with more highly liquid and higher
yielding securities. The act also authorizes FHLMC to purchase
loans from the National Credit Union Administration (NCUA) and
the Federal Deposit Insurance Corporation (FDIC). This provision is
intended to assist the FDIC and the NCUA manage their loan
portfolios more efficiently.

SPECIAL ANALYSISF206

TAX EXPENDITURES

The Budget of the United States Government, 1983

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS G
TAX

EXPENDITURES

The Congressional Budget Act of 1974 (Public Law 93-344) requires a listing of "tax expenditures" in the budget. The act defines "tax expenditures" as "revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion,
exemption, or deduction from gross income or which provide a
special credit, a preferential rate of tax or a deferral of tax liability." The very term "tax expenditure" is misleading in several
respects, and there are formidable difficulties in trying to define
the underlying concept or to measure the effect of "special" tax
provisions.
Rarely, if ever, is it the case that a tax provision is actually
equivalent to direct outlays by the Government for purchase of
goods or services. These outlays involve a direct preemption of the
production inputs used to produce the goods or services the Government buys. "Tax expenditures" never involve such a direct impact
on the use of production inputs. Instead, the effect of most special
tax provisions is to subsidize a particular activity. Their operation
is therefore directly comparable only to those outlay programs,
such as milk price supports and rent subsidies, that also provide a
subsidy to particular activities. For this reason, the term "tax
subsidies" is more descriptive of these special tax provisions than is
"tax expenditures."
The term "tax expenditures" is also unfortunate in that it seems
to imply that Government has control over all resources. If revenues which are not collected due to "special" tax provisions represent Government "expenditures," why not consider all tax rates
below 100% "special," in which case all resources are effectively
Government-controlled? Previous budgets have indefensibly included such items as graduated corporate tax rates and the maximum
tax on earned income as if only the highest rates are "normal."
This year's analysis deals exclusively with "tax subsidies," and
uses the misleading term "tax expenditures," only where that term
is required by the Budget Act. The definition of tax subsidies relies
on the distinction between the "normal" or "reference" provisions
of the tax structure, which are necessary to make the tax operational, and the "special" provisions which are exceptions to the
reference tax provisions designed to further functional program
objectives, such as health care, export promotion, or employment of

THE BUDGET FOR FISCAL YEAR 1983

the handicapped. This distinction between the reference and special provisions is not essential for tax policy purposes. For certain
budget purposes, however, it is useful to distinguish between these
two kinds of provisions. For example, review of housing policy
would be incomplete without estimates of both direct outlays and
those tax subsidies that are directed to the housing function.
The reference tax provisions are those which deal with the basic
structural features of the income tax. These features include the
definition of income subject to tax and allowable deductions, including cost recovery for depreciable assets; taxable units and their
threshold levels of taxability; the relationship between the taxation
of corporations and their shareholders; the schedule of tax rates;
the basic tax accounting rules, including the accounting period for
taxation and whether income is taxed as it is realized or as it
accrues; the treatment of international transactions; and the
system of tax administration. All of these structural features must
be dealt with in some manner in order to have an operational
income tax. In contrast to these reference provisions, it would be
possible to have a full operational income tax which did not contain any of the special provisions which give rise to tax subsidies.
However, while the distinction between the reference and special
provisions of the Code may be clear as general concepts, there are
inevitable difficulties in applying these concepts to obtain a definitive list of tax subsidies. The inclusion of wages in the tax base is a
clear example of reference tax structure, just as the exclusion of
fringe benefits is due to special provisions, and therefore clearly
constitute tax subsidies. A less clear example is provided by the
capital gains provisions, which apply to a broad class of transactions and taxpayers, but which are exceptions to the general rules
governing taxation of income from other sources. As explained
more fully below, the capital gains provisions are considered to
involve a tax subsidy.
It should be noted that other analyses of tax subsidies in the
income tax have used standards quite different from the standard
of the reference tax structure used here. The standard of an
"ideal" income tax has often been suggested for delineating tax
subsidies. However, there is no common agreement on the details
of such a normative standard and many would regard such a
standard as an impractical tax base. In practice, previous tax subsidy lists have not used a clear standard. Instead, they have sometimes been simply a list of possible "tax reform" items. Both the
"ideal tax" and "menu of tax reforms" approaches lack the pragmatic advantage of the standard used here of identifying those
provisions of the Internal Revenue Code that deal with basic structural features of the income tax, and those that provide special
exceptions to those structural rules.

SPECIAL ANALYSIS G

Tax subsidies have objectives similar to those programs funded
through direct appropriations. There are numerous examples of
this. Direct expenditures and tax subsidies reduce the cost of ship
acquisition by shipping companies; direct interest subsidies and the
issuance of tax-exempt bonds result in lower financing costs for
eligible issuers of mortgage bonds or for eligible businesses. Similarly, State and local governments benefit both from direct grant
programs and from the ability to borrow funds at tax-exempt
rates; individuals benefit both from direct medicare payments and
from the deductibility of medical expenses for income tax purposes;
and individuals also benefit both from social security payments and
from the tax exemption of these payments.
This special analysis contains quantitative estimates of tax subsidies to be used in conjunction with the budget review. Like the
formal listing of comparable direct outlays, the listing of specific
tax subsidy items implies neither approval or disapproval of the
special provisions of the tax system that authorize them. Further,
distinguishing between the reference tax structure and exceptions
leading to tax subsidies does not imply that features of the reference tax system as enacted should be exempt from periodic analysis and review. Many features of what is now defined as the normal
tax structure, such as the rate structure, exemption levels and
basic accounting rules, have major effects upon the level and composition of economic activity and the distribution of income. Although the Internal Revenue Code contains individual income, corporate income, estate and gift, excise and employment taxes that
include special provisions that have expenditure program-like objectives, this analysis deals only with deviations from the reference
structure in the taxation of individual and corporate income.
DEFINING T A X SUBSIDIES

For a provision to involve a tax subsidy, two conditions are
necessary:
—The provision must be "special" in that it applies to a narrow
class of transactions or taxpayers; and
—There must be a "general" provision to which the "special"
provision is a clear exception.
If these two conditions are satisfied, the special tax provision
clearly has the characteristic of a direct outlay program: a program
objective and a method of reimbursing program costs. Some examples will illustrate the application of these conditions to specific
provisions of the Internal Revenue Code.
Under the general provisions of the income tax code, interest
received from any source is includable in income subject to tax.
However, a special provision allows interest on obligations of State
and local governments to be excluded from taxable income. The

THE BUDGET FOR FISCAL YEAR 1983

exclusion is therefore considered a tax subsidy. A second example
is the allowance of deductions for homeowners' mortgage interest
and property taxes paid. Under the general provisions of the Code,
no deductions are allowed for any expenses allocable to income
exempt from tax. The income from homeownership, that is, the
(imputed) rental value of owner-occupied housing, is exempt from
tax under the reference income tax rule requiring "realization."
The special provisions which allow homeowners to reduce their
housing costs by deducting mortgage interest and property taxes
are therefore considered tax subsidies.
Much more difficult definitional issues are raised by the capital
gains provisions. These provisions apply to a very broad class of
transactions and taxpayers, and they constitute the basic provisions governing the taxation of gains from the sale of capital assets
held more than one year. On these grounds it can be argued that
the capital gains provisions do not involve a tax subsidy. However,
under the capital gains provisions income from the sale of capital
assets held more than one year is taxed in a different manner than
income from any other source. Because the reference provisions for
taxing income without regard to source are more general than the
capital gains provisions, capital gains has been retained on the list
of tax subsidies.
While the preceding examples illustrate provisions that have
previously been considered tax subsidies, some items included on
previous lists should not be considered tax subsidies. As noted
above, graduated corporate rates and the maximum tax on earned
income clearly do not involve subsidies. Another example is provided by the exclusion from the tax base of Government transfer
payments, such as public assistance benefits, where there is little
or no relationship between the benefit payment to the recipient
and any user charge, or tax, previously paid or service performed
by the recipient. Under the general provisions of the Internal
Revenue Code, gifts and other receipts of payments for which no
value is exchanged are specifically excluded from taxable income.
Therefore, the exclusion of Government transfer payments should
not be considered a tax subsidy, because the exclusion is not a
special provision.
A further illustration of the definition of tax subsidies is provided by the Accelerated Cost Recovery System (ACRS) provisions
enacted in the Economic Recovery Tax Act of 1981. Any income tax
requires a set of rules for determining how the cost of depreciable
assets is recovered. The ACRS provisions now constitute the general income tax rules for that purpose. To see this, one need only ask:
If ACRS is "special," what is the "general" rule in the Internal
Revenue Code governing the recovery of cost of depreciable property to which ACRS is an exception? The treatment of ACRS may be

SPECIAL ANALYSIS G

contrasted with that of the investment tax credit, which has very
similar economic effects for machinery and equipment. The investment credit is considered a tax subsidy because, unlike ACRS, it
does not deal with one of the basic structural elements of an
income tax. Note further that the fact that the ACRS provisions
are clearly a divergence from any measure of economic income is
not relevant to the determination that they do not constitute a tax
subsidy.
Because they set forth general rules, the ACRS provisions are
part of the reference rules, not a tax subsidy, and therefore do not
appear in table G - l . They are, nevertheless, very important provisions of the reference tax structure, both because of their sizeable
revenue cost ($205 million in 1981, $7,250 million in 1982, and
$12,670 million in 1983), and because of their importance ^s investment incentives. Other items enacted in the Economic Recovery
Tax Act of 1981 which are properly considered tax subsidies, including the "safe harbor" leasing provision, are included in table
G - l under the appropriate budget classification.
Several issues relating to the distinction between the reference
structure of the income tax system and tax subsidy provisions are
discussed in the following paragraphs.
• Threshold income levels for tax liability.—The reference
structure includes those tax code provisions that determine
threshold levels of income below which no tax liability is
imposed for the different types and sizes of taxpaying units.
These threshold levels have been affected by legislated
changes in personal exemptions and standard deductions in
recent years. However, the additional personal exemptions for
taxpayers 65 and over and for the blind result in tax subsidies
because they are special provisions directed at groups in special circumstances.
• The progressive rate schedules.—The progressive rate schedules for the individual and corporate income taxes are a part
of the reference tax structure, as would be a proportional or
even a regressive rate schedule. Tax subsidies do not result
because some income from any source is taxed at lower rates
than other income. The income averaging provision of the
code for individuals is also considered to be part of the reference structure.
• Separate rate schedules for single and married taxpayers, married taxpayers filing separately, and heads of households.—
Existing provisions regarding the definition of taxpaying
units and separate rate schedules for different types of taxpayers are considered part of the reference tax structure. The
concept of tax subsidies is not characterized by any specific
set of rate schedules applicable to the particular tax filing

THE BUDGET FOR FISCAL YEAR 1983

units. Similarly, the deduction for secoiid earners enacted in
the Economic Recovery Tax Act of 1981 is part of the reference tax structure.
• Forms of business organization.—The tax law recognizes different forms of business organization including corporations,
partnerships and Subchapter S Corporations treated in a
manner somewhat similar to partnerships, cooperatives,
mutual insurance companies and individual proprietorships.
The provisions of the tax law that accommodate different
forms of business organization do not generally result in tax
subsidies so long as income is subject to tax at either the
corporate or the individual level.
• Treatment of individuals and corporations as separate taxpaying entities.—The separate taxation of individuals and regular
corporate entities is part of the reference tax structure.
• Deduction of business expenses.—The deduction of business
expenses is necessary to determine taxable income under the
reference rules of the tax code. Tax subsidies, therefore, do
not result when deductions for "ordinary and necessary" business expenses are taken. No attempt was made in this analysis to determine whether certain expenses such as those for
entertainment and meals should not only reduce the taxable
income of employers, but should also be excluded from the
taxable income of the employees receiving these in-kind benefits.
• Foreign tax credits.—The reference structure of the income
tax includes tax credits for foreign income taxes paid; this
prevents the double taxation of income earned abroad.
No estimates are made in this analysis for "negative tax subsidies" or tax penalties—that is, exceptions to the reference structure of income taxes that result in increased tax liabilities for
certain groups of taxpayers to discourage specified kinds of activities. At present there are only a few such exceptions. One example
is the nondeductibility of gambling losses in excess of gambling
gains where gambling is engaged in for profit. Also, under the Tax
Reform Act of 1976 deductions for the costs associated with the
demolition of certain historic buildings were disallowed, and crediting of foreign taxes paid was denied taxpayers who cooperate with,
or participate in, an international boycott. These are all Government receipts normally recorded as such in the budget, or as "offsetting receipts" netted against expenditures.
MEASURING T A X SUBSIDIES

Accounting for budget outlays on a functional or programmatic
basis, as in Part 5 of the Budget, provides measures of the extent to
which the Federal Government influences the allocation of re-

SPECIAL ANALYSIS G

sources, and for what purposes. The functional purposes may be
broadly divided into (1) the provision of "public goods and services"; (2) the provision of subsidies; and (3) the payment of transfers. Budget outlays for public goods and services, such as national
defense and administration of justice, are used to acquire labor and
capital services directly used in production of these goods. Subsidies, such as those for school lunches and to encourage the use of
U.S. flag shipping, are intended to reduce market prices below the
cost of resources used to produce them. Transfers, such as aid to
families with dependent children and revenue sharing are intended
to provide a level of income to recipients they otherwise could not
achieve.
Outlays are said to "reallocate resources" because they change
the composition of GNP. The decisions to provide public goods and
services, to subsidize certain prices (and hence outputs), and to
make transfers directly result in producing a menu of goods and
services that otherwise would not be produced because the resources to accomplish these purposes are either removed from the
private sector by taxation or by borrowing. Functional budget
outlay figures, then, provide a basis for evaluating programs and
their total may serve as an index of the size of Government. They
measure the resource cost of accomplishing the program objective,
that is, outlays represent the market value of resources rechanneled, or reallocated, by Government. Since GNP is a (gross) measure of the market value of goods and services, the ratio of total
budget outlays to GNP is often used as an indicator of the relative
size of Government.
Whether functional budget outlay figures are used to aid in
program evaluation or to provide an aggregate of outlays for evaluating the degree to which Government reallocates resources, it is
essential that the outlay figures be both consistent and comprehensive measures of resource costs. In this regard, the important characteristic of market prices, the measure of resource cost, is that
prices are gross of all taxes. Thus, the market value of all goods
and services summarized in GNP not only includes the effects of
indirect taxes (sales and property taxes) on market prices, but also
the before-tax incomes of suppliers of labor (wages) and capital
(rent, interest, and profit). Consistency of budget outlay figures
requires that they also be stated in pre-tax magnitudes. Generally,
budget outlays for the purchase of goods and services used in the
provision of public goods are gross of taxes; the payments to vendors and Government employees are gross incomes of the sellers
out of which taxes will be paid as determined by the reference tax
laws in effect. Similarly, subsidy outlays in the budget generally
enter the gross incomes of sellers of subsidized goods and services,
along with the remainder of the sales proceeds realized by sellers

THE BUDGET FOR FISCAL YEAR 1983

as payments by private purchasers of the subsidized goods. Budget
outlays that are transfer payments to individuals, being nontaxable
under the reference tax laws, are automatically in "pre-tax" magnitudes.
In some instances budget outlays for goods and services or subsidies are exempted from tax by a special tax provision. When this
occurs, the outlay figure understates the resource cost of the program of which it is a part and is, therefore, not strictly comparable
with other outlay amounts. For example, the budget outlays for
certain housing and meal allowances of military personnel are not
includable in their incomes and therefore understate the cost of
this National Defense budget element. If this form of compensation
of military personnel were treated by the generally applicable reference tax rule as income taxable to the employee, the Defense
Department would have to make larger cash payments to its military personnel to leave them as well-off after-tax and to continue
to attract and retain the same quantity and quality of personnel as
with nontaxable allowances. The exemption from tax of these allowances involves a tax subsidy. When the tax subsidy is added to
the tax-exempt budget outlay, this element of National Defense
expenditure becomes comparable with other defense outlays.
Resource reallocations in the nature of subsidies and transfers
may be accomplished as easily by special exceptions to reference
tax law rules as by the expenditure of appropriated funds. Just as
U.S. flag shipping is encouraged by outlays authorized by the Congress, U.S. flag shipping is encouraged by special income tax provisions designed to reduce shipowners' cost of acquiring ships. A
review of water transportation programs would therefore be incomplete if no accounting were made of these shipping subsidies implemented through the tax system. Similarly, a Federal budget accounting of aid provided State and local governments would be
incomplete if it did not include the aid provided through tax exemption of interest received by holders of bonds issued by State
and local governments. Nor is a total of Federal Government expenditures which omits these tax subsidies a comprehensive accounting of the resources reallocated by Federal Government fiscal
measures.
The estimates of tax subsidies in table G - l have been prepared
this year to conform them to the objectives of functional budget
accounting for outlays. Unlike the estimates of prior years, the
table G - l figures are estimated as outlay equivalents, the magnitudes of which are consistent with direct budget outlays. The methodology used assumes that the program objective served by the
special tax provision is to be achieved within all the constraints
that determine market prices, and, hence, resource costs, including
the rules of the reference tax structure and all other laws govern-

SPECIAL ANALYSIS G

ing market exchanges. The estimated tax subsidy is therefore equal
to the direct expenditure of funds that would be required to accomplish the same objective.
If a program is paid for with appropriated funds, the Government makes payments to individuals and corporations who perform
certain stipulated acts, or qualify for transfers by reason of their
characteristics, and the recipients compute their tax liability under
reference tax rules, and pay that amount to the Treasury. If a
program is paid for with a tax subsidy, the special tax provision in
effect permits recipients to compute their tax liability as if they
had received the payment, but to actually pay to the Treasury an
amount equal to their tax liability less the payment for which they
have qualified. If the program is paid for with appropriated funds,
the outlay is displayed in the budget, along with the full amount of
taxes actually paid; but if the program is paid for with a tax
subsidy, the budget effect is registered only as a reduction in
Federal tax receipts. Therefore, the entries in table G - l may be
viewed as amounts which should be both added to functional
budget outlays and restored to budget receipts-to provide a more
consistent and comprehensive display of the resource reallocations
implied by fiscal measures. Note that these adjustments leave the
budget balance unaltered.
The basic difference between the new and previous tax subsidy
estimates is that the new estimates account for the tax treatment
of the implicit payment provided by the special tax provision. That
is, the new estimates reflect the taxability of the payment under
the reference tax rules. The following examples will clarify the
difference in estimating technique for major classes of tax subsidies.
1. Government outlays that are exempt from tax.—Certain housing and meal allowances for military personnel are not included in
the pre-tax incomes of military personnel, as has been noted. The
former tax subsidy estimate for this item merely computed the tax
that would be paid by military personnel if these payments had
been taxable. The new estimates recognize that the intent of this
personnel policy is to attract and retain the existing military force
and that the pay equivalent taxable under reference tax law would
therefore have to be sufficient to yield the same personnel an aftertax (disposable) income large enough to permit them the same
housing and meal expenditure they now enjoy. Since virtually all
military personnel have otherwise taxable incomes, the present
estimate exceeds prior estimates which did not take account of this
fact. The new tax subsidy estimate is measured in a consistent
manner with other Defense Department outlays, whereas the previous estimate was not.

THE BUDGET FOR FISCAL YEAR 1983

2. Subsidies to reduce market prices.—The new incremental R. &
D. credit provides a subsidy for the performance of industrial R. &
D. The firm qualifying for the credit is not required to include the
credit in computing its taxable income, as it would were it to
receive the same subsidy for R. & D. as a cash payment from the
Government. Under the methodology used this year, the expenditure equivalent of the incremental R. & D. tax credit is estimated
as the amont of subsidy subject to reference tax rules that would
have to be paid firms for their qualified R. & D. expenditures and
which would reduce their R. & D. costs by as much as the tax
credit. This estimate of the R. & D. tax credit expenditure equivalent is larger than the amount that would have been estimated in
previous tax subsidy budgets.
Other tax subsidies that have the effect of reducing market
prices are paid by reducing the tax payments of the purchaser. For
example, the deduction allowed for medical insurance obviously
reduces the cost of medical insurance to the purchasers of medical
insurance. Under the reference tax rules, this deduction is unrelated to the computation of individuals' (purchasers') taxable income.
Further, the full expenditure of the insured taxpayer enters the
taxable incomes of medical practitioners and others whose fees are
thereby covered. The expenditure equivalent of this subsidy is
therefore simply the reduction in tax payments of purchasers resulting from the preferential deduction. The present tax subsidy
estimate for this item is therefore made in the same manner that
it was previously made.
3. Capital subsidies.—The Government may subsidize the acquisition of capital in the private sector in either of two ways. It might
provide capital grants with respect to the acquisition of specified
classes of assets, or it might provide preferential loans to entities
acquiring particular assets. The investment tax credit for machinery and equipment is an example of a capital grant, similar to
construction subsidies paid shipowners who have ships built in U.S.
shipyards, or to the furnishing of equipment to Government contractors.
In general, under the reference tax laws the beneficiary of a
capital grant is regarded as not having contributed to the cost of
the asset to the extent it is paid for by the Government. The asset
is shown in the beneficiary's books at its net private cost. Depreciation of only the cost net of subsidy is recovered. However, in the
case of the investment tax credit, the private firm is allowed cost
recovery deductions for the entire cost of credited assets. Under the
methodology used this year, this additional cost recovery is accounted for as an addition to the initial grant (tax credit) to derive
the expenditure equivalent. Previous tax subsidy estimates have
not accounted for this characteristic of the investment tax credit

SPECIAL ANALYSIS G

and are therefore less than the expenditure equivalent reported in
table G - l .
Tax deferrals resulting from special accelerated capital cost recovery allowances are a form of Government lending. For example,
under reference tax rules, investments for the discovery and development of mineral deposits would be capitalized when incurred and
recovered as depletion allowances as production from the deposit
ensues. Under special tax rules, however, these investment expenditures are recovered as deductions when made, reducing tax liability due and payable when the investment is made and increasing
tax liability due and payable in later years. The deferral of tax, as
compared with the tax stream that would have occurred under
reference tax rules, is in the nature of an interest-free loan. The
expenditure equivalent of tax deferrals shown in table G - l is comparable to the treatment of net lending in the outlay section of the
budget. Only net new lending (deferrals) is accounted for; the subsidy element attributable to a zero interest rate on the deferral is
not. Thus, the expenditure equivalents for deferral items shown in
table G - l are measured in the same way as they were in previous
tax subsidy budgets.
The tax subsidy estimates reported in table G - l have been prepared by the Treasury Department and are based upon tax law
enacted as of December 31, 1981. The estimates show the expenditure equivalent of each special tax provision by fiscal year. For
those tax subsidies resulting from the exclusion from taxable
income of Federal Government payments to individuals, the estimates of such payments upon which the tax subsidy estimates are
based are those shown elsewhere in the budget; hence they reflect
any proposed changes in these programs.
The tax subsidy estimating procedure uses the same implicit
assumption that governs estimates of out-year budget outlays,
namely that the existing tax structure and all other institutional
determinants of resource costs are given. It is also assumed that
aggregate output and incomes remain at the levels that underlie
the 1983 budget estimates.
The tax subsidy estimates presented in this Special Analysis,
including those computed on a "revenue loss" basis as shown in
table G-2, are not estimates of the increase in Federal receipts that
would accompany the repeal of the special provisions that give rise
to the tax subsidies. There are several reasons for these differences.
Tax subsidy estimates are based on the actual level of tax-subsidized activities; in some instances the level of these activities could
be expected to change dramatically if the tax subsidy were removed. Because of these behavioral changes, the repeal revenue
gain may be much lower than the tax subsidy figure. One example
is the realization of capital gains, which could be expected to be

THE BUDGET FOR FISCAL YEAR 1983

much lower if such gains were subject to tax at ordinary rates.
Another example would be the response to the taxation of a particular employee fringe benefit which is currently untaxed, such as
employer-paid medical insurance premiums. The expected response
would be a decrease in the amount of employer-paid medical insurance premiums, but an increase in the amount of other fringe
benefits, such as employers' pension contributions and educational
assistance. Note that there would be analogous behavioral responses if many direct outlay programs were eliminated or curtailed. For example, the removal of a price support for a particular
agricultural commodity could be expected to lead to somewhat
higher production of other price-supported commodities. In such
cases, the net reduction in budget outlays would be less than the
savings from the eliminated (or curtailed) program.
A second reason for the difference between repeal revenue gains
and tax subsidy estimates is the effect that repeal would have on
the aggregate level of income and economic growth. For example,
all receipts as well as expenditure figures in the budget are based
on projections of income and growth which assume the investment
tax credit, as currently enacted, will continue to operate. If, however, the investment credit were repealed (or curtailed) without being
replaced by a comparable investment incentive, the current projections of income and growth would have to be revised downward.
Consistent with these revisions, receipts and expenditure projections would also have to be revised. The estimated net effect of
repeal of the investment tax credit on receipts, therefore, would
not be equivalent to the tax subsidy shown here.
As is the case with estimates of proposed changes in tax law, tax
subsidy estimates are computed on a "cash-flow" basis. However,
for purposes of the present analysis, the estimates show the difference between tax subsidies under current law and tax subsidies
under the assumption that a law without the particular tax subsidy provision had always been in effect. These figures, therefore,
generally show larger amounts than would be saved in the first
years of transition to a tax law without the special provisions. This
is analogous to the "phase-out" likely to accompany reductions in
outlay programs as previously authorized and appropriated funds
are spent. The estimates take into account any changes scheduled
under existing law, such as the phasing in or out of specific provisions.
Tax subsidy estimates cannot simply be added together to obtain
totals for functional areas or a grand total. Simply adding tax
subsidies produces inaccurate totals because certain tax subsidies
affect the value of other tax subsidies. This interaction may be
demonstrated by comparing the result of deleting two tax subsidies
simultaneously to that of deleting them separately.

SPECIAL ANALYSIS G

In some cases, the reduction in tax subsidies from the deletion of
two tax subsidy items simultaneously would be greater than the
sum of the reductions from the deletion of the two items separately. For example, if interest income from State and local government bonds were made taxable and capital gains on home sales
were not deferred, more individuals would be pushed into higher
tax brackets than if just one of these sources of income were
treated under the normal rules of the tax code; the combined
reduction in tax subsidies would be greater than the sum of the
two separate effects.
In other cases, the reduction in tax subsidies from the deletion of
two items together would be smaller than the sum of the reductions considered separately. For example, if the deductibility of
mortgage interest payments and homeowner property taxes were
both repealed and the zero bracket amount (standard deduction)
were left unchanged, more individuals who now itemize their deductions would opt for the zero bracket amount than if only one
preference were repealed. The reduction in tax subsidies would
therefore be lower from repealing both preferences together than
the sum of the two estimates obtained from repealing each one
separately.
In general, elimination of several itemized deductions at one
time would reduce tax subsidies by less than the sum of the reductions measured by eliminating each item separately because more
taxpayers would use the zero bracket amount. Conversely, simultaneous elimination of multiple items that are exclusions from adjusted gross income would reduce tax subsidies by more than the
sum of the individual reductions because more taxpayers would be
pushed into higher tax brackets.
Aside from these interaction effects, resources allocated to public
purposes would not necessarily be reduced by the total amount of a
group of tax subsidies if all the tax subsidy provisions in that group
were removed together. Tax subsidies and other provisions of tax
law have frequently been changed together or viewed as substitutes
for one another. Furthermore, a direct outlay may be substituted
for a tax subsidy. Thus, an aggregation of tax subsidies that did
take interaction into account would simply indicate the total resources available for some combination of cutting tax rates, increasing outlays, and reducing the deficit. If a group of tax subsidy
provisions were removed, the overall effects on budget receipts and
on resource allocation and income distribution would therefore
depend on the particular decisions made as to which changes in tax
rates and outlays—out of a limitless number of alternatives—were
used to compensate for their removal.
Finally, although personal and corporation income tax returns
continue to be the basic sources of data from which tax subsidy

THE BUDGET FOR FISCAL YEAR 1983

estimates have been derived, the estimates are not reported separately for individuals and corporations. This is consistent with the
treatment of outlays which are reported by function (or by Agency
with fiscal responsibility), not by whether the payee is a person or
a corporation.
T A X SUBSIDIES BY FUNCTION

Estimates of tax subsidies for 1981-83 are grouped together by
functional category in table G - l . Each tax subsidy has been classified in the functional category used for budget outlays into which it
most closely fits.
National defense,—The housing and meals provided military personnel, either in cash or in kind, are excluded from income subject
to tax. Most of the disability related military pension income received by current retirees is also excluded.
International affairs.—A U.S. citizen or resident alien who is a
resident of a foreign country or who is present in one or more
foreign countries for a prescribed period is allowed special tax
relief on his foreign earnings. For years prior to 1982, the prescribed period for physical presence abroad was 17 out of 18
months. The Economic Recovery Tax Act of 1981 reduced the prescribed period to 11 out of 12 months beginning January 1, 1982.
For 1980 and 1981, eligible taxpayers could deduct certain additional expenses incurred in living abroad. The deductions were for
annual home leave travel, education of dependents through grade
12, a general cost of living allowance, and housing costs in excess of
one-sixth of foreign earned income less the other special deductions. Taxpayers living in certain hardship areas could deduct an
additional $5,000 per year. Taxpayers required to live in camps in
hardship areas and individuals performing charitable services in
less developed countries could elect to exclude $20,000 per year of
foreign earned income instead of claiming the special deductions.
These provisions did not apply to U.S. Government employees or
persons paid from U.S. Government funds.
Beginning in 1982, the deductions and exclusions described in the
preceding paragraph no longer apply. Under the Economic Recovery Tax Act, in 1982 eligible taxpayers may exclude $75,000 per
year of foreign earned income and may exclude or deduct reasonable housing costs in excess of one-sixth of the salary of a civil
servant at grade GS-14, step 1. The $75,000 exclusion increases by
increments of $5,000 per year until it reaches $95,000 in 1986.
These reliefs do not apply to persons who are employed by the U.S.
Government; however, they do apply to persons who are not U.S.
Government employees but who are paid from public funds. The
tax-exempt status of certain allowances received by Federal em-

SPECIAL ANALYSIS G

ployees working abroad has not changed. These exemptions also
result in tax subsidies.
The profits of a domestic international sales corporation (DISC)
are not taxed to the DISC but instead are taxed to the shareholders
(usually parent corporations) when distributed or deemed distributed to them. For DISC's with more than $150,000 in otherwise
taxable income, the deemed distribution equals all income attributable to base period exports plus 50% of income attributable to
exports in excess of the base period exports. Base period exports
equal 67% of average annual exports during an earlier 4-year base
period. For DISC's with less than $100,000 in otherwise taxable
income, the deemed distribution equals 50% of total income. The
base-period rule is phased in for DISC's with taxable income between $100,000 and $150,000.
General science, space, and technology.—Research and development expenditures are intended to result in new products or processes, cost reductions, or other effects whose benefits will in nearly
all cases continue into the future. Businesses may deduct all research and development expenditures in the year when they are
incurred rather than amortize them over several years. The Economic Recovery Tax Act of 1981 added a credit for increasing
research activities. The credit is equal to 15% of the increase in
research expenditures over average expenditures in a base period.
The base period for 1981 is 1980, for 1982 is 1980 and 1981, and for
1983 and subsequent years, the preceding 3 years. The credit expires in 1985.
Energy.—Certain capital costs necessary to discover and develop
certain fuel mineral properties may be deducted as current expenses rather than amortized over the useful life of the property.
Included in this category are the intangible drilling costs of oil
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. Intangible drilling costs for oil and gas wells
are a preference item for purposes of the individual's minimum tax
to the extent that such costs exceed either cost depletion or 10-year
amortization. However, they may exclude intangible drilling costs
from their minimum tax base to the extent that the deductions did
not exceed oil and gas income. The same rules apply to intangible
drilling costs of geothermal wells.
Extractive industries generally use percentage depletion rather
than cost depletion. Under cost depletion, actual outlays, to the
extent not immediately recovered through expensing of exploration
and discovery and development costs, may be deducted over the
productive life of the property, much as businesses may take deductions for the depreciation of other capital goods, the cost of which

THE BUDGET FOR FISCAL YEAR 1983

are capitalized when acquired. Percentage depletion is not likewise
limited to the cost of the investment. Under percentage depletion,
taxpayers may deduct a percentage of gross income from mineral
production at rates ranging from 22% for oil and gas and certain
other minerals to 5%; however, the deduction is limited to 50% of
net income from the property or 65% of taxable income in the case
of oil and gas. Percentage depletion for oil and natural gas is
available only to limited quantities of output of independent oil
and gas producers and royalty owners. In addition, the percentage
depletion rate for oil and gas is being phased out from 22%
through 1980 to 15% in 1984 and thereafter. Production from geothermal deposits is eligible for percentage depletion at the same
rate as for oil and gas, but with no limit on output and no limitation with respect to qualified producers. In lieu of percentage depletion, royalties from coal deposits are treated as capital gains rather
than ordinary income.
A variety of tax incentives stimulate energy conservation and
encourage conversion to energy sources other than oil or natural
gas. Individuals may take a 15% income tax credit for home insulation and other energy-conserving components up to a maximum
credit of $300. A credit of 40% of the first $10,000 of qualifying
expenditures is allowed for expenditures on solar and other renewable energy source property.
In addition to the 10% investment tax credit for machinery and
equipment, a credit is allowed for business investments in specified
energy property. A 10% additional credit is allowed for alternative
energy property (i.e., property using fuel other than oil or natural
gas, including biomass property); specially defined energy property
(i.e., property used in an existing industrial, agricultural or commercial facility to reduce the amount of energy consumed or heat
wasted); recycling equipment; shale oil equipment; cogeneration
equipment; alumina electrolytic cells; certain intercity buses; and
equipment for producing natural gas from geopressurized brine. An
11% additional credit is available for certain small-scale hydroelectric generating property, and a 15% additional credit is allowed for
solar, wind, ocean thermal and geothermal equipment.
A $3 per barrel of oil-equivalent production credit is provided for
several forms of alternative fuels, but, as a general rule, is not
available unless the price of oil drops below $29.50 (in 1979 dollars).
The credit is available without this price limitation for processed
wood fuel and steam produced from solid agricultural byproducts.
Gasohol is exempt from the 4 cents per gallon Federal excise tax
and there is a corresponding production income tax credit for
alcohol used as a fuel in applications where the excise tax is not
assessed. Certain small scale hydroelectric generating facilities
owned by a governmental unit and facilities which produce steam

SPECIAL ANALYSIS G

or alcohol from solid waste may be financed with tax-exempt industrial development bonds.
Natural resources and environment—As is true for fuel-minerals,
certain capital costs associated with exploration and development
of nonfuel-minerals may be expensed rather than capitalized and
depreciated over the life of the asset. Most nonfuel-mineral extractors also make use of percentage depletion rather than cost depletion.
Interest on State and local government debt issued to finance the
pollution control facilities of private firms is excluded from income
subject to tax.
Expenditures made before January 1, 1982 to preserve and restore certain historic structures were eligible for special accelerated depreciation under prior law. This provision did not apply to
owner-occupied housing.
The gains on the cutting of timber and royalties from iron ore
deposits are taxed at rates applicable to long-term capital gains
rather than ordinary income.
Up to $10,000 ($5,000 for a married taxpayer filing a separate
return) of direct costs incurred in a taxable year to forest or
reforest a site for the commercial production of timber may be
amortized over a 7-year period rather than capitalized and recovered when the timber is cut. The $10,000 of costs are also eligible
for the 10% investment tax credit notwithstanding the nondepreciability of investments in timber stands.
Agriculture.—Farmers, other than certain corporations and partnerships engaged in agriculture, are allowed to deduct certain costs
as current expenses even though these expenditures are for inventories held at the end of the year or for capital improvements that
are required to be capitalized under reference income accounting.
Capital gains treatment generally applies to the sale of livestock
and certain other agriculture products.
Commerce and housing credit.—This category includes a number
of tax subsidy provisions that also affect economic activity in other
functional categories. In general, provisions related to investment,
such as the investment tax credit, might alternatively have been
classified under the natural resources and environment, energy,
agriculture, or transportation categories.
An exclusion of $200 ($400 on a joint return) is allowed for most
dividend and interest income. Under the Economic Recovery Tax
Act of 1981, beginning in 1984 the exclusion is reduced to $100
($200 on a joint return) and is applicable only to dividend income.
The interest on industrial development bonds issued by State and
local governments is excluded from income subject to tax.

THE BUDGET FOR FISCAL YEAR 1983

Credit unions are exempt from Federal income taxes. Commercial banks, mutual savings banks, and savings and loan associations are permitted to deduct additions to bad debt reserves in
excess of actual loss experience and reasonable expectations as to
future losses. Mutual savings banks and savings and loan associations may deduct 40% of income provided they maintain stipulated fractions of their assets in "qualifying assets," primarily residential mortgages.
Life insurance policies other than term policies generally contain
a savings element. Savings in the form of policyholder reserves are
accumulated from premium payments and interest is earned on the
reserves. Such interest income is taxable neither as it accrues nor
when received by beneficiaries.
Interest paid on consumer credit is allowed as an itemized deduction for individuals.
Owner-occupants of homes may deduct mortgage interest and
property taxes (but not maintenance outlays or depreciation) as
itemized nonbusiness deductions.
Interest on State and local government debt issued to finance
below-market rate mortgages for owner-occupied housing is excluded from income subject to tax. The Omnibus Budget Reconciliation Act of 1980 restricts the use of mortgage subsidy bonds with
a State-by-State ceiling on the annual volume of such use for single
family housing equal to 9% of the average of all mortgages that
originated in the State during the preceding 3 years of $200 million, whichever is greater. A total ban on mortgage subsidy bonds
for single family housing becomes effective January 1, 1984.
Prior to the Tax Reform Act of 1976, taxpayers deducted interest
and property tax payments made while a building was under construction rather than following the general rule of the code which
requires that all costs of a depreciable asset be capitalized and be
recovered over its recovery period. The 1976 act reduced this tax
subsidy by requiring that construction period interest and taxes be
capitalized and recovered over a 10-year period for noncorporate
taxpayers. The provision is being phased in over a 7-year period
with more generous transition rules available for housing projects
receiving direct expenditure subsidies under Government housing
programs. However, the Economic Recovery Tax Act of 1981 excepted from the construction period phase-in, interest and taxes on
low-income housing, which can be expensed.
Sixty percent of net long-term gains from the sale of capital
assets may be excluded from income. The excluded 60% of net
long-term gains is no longer included as a preference item in
computing the minimum tax for individuals. However, the capital
gains exclusion is treated as a preference item in the "alternative
minimum tax." This tax is applicable only if the sum of a taxpay-

SPECIAL ANALYSIS G

er's regular income and minimum tax is less than his alternative
minimum tax. Half of net long-term capital losses and 100% of net
short-term capital losses may be offset against ordinary income up
to a maximum deduction of $3,000 per year with an unlimited
carryforward. Under the Economic Recovery Tax Act of 1981, net
capital gains from sales or exchanges occurring after June 9, 1981
are taxed at a maximum rate of 20%. This maximum rate is equal
to the 40% inclusion rate times the maximum individual rate that
will apply after 1981 of 50%.
Corporations may elect a 28% alternative tax rate on capital
gains. The tax subsidy is estimated on the assumption that these
gains would otherwise be taxed at ordinary rates.
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 2 years (increased from 18
months by the Economic Recovery Tax Act of 1981) before or after
the sale. If a new house is constructed, it must be occupied within 2
years after the sale. The "adjusted sales price" is the amount
realized (gross proceeds less selling expenses) minus qualified
"fixing up" expenses. To the extent that the gain on the sale of a
home is not recognized, the basis of the home purchased is reduced,
thereby resulting in a deferral of the gain. A loss on the sale of a
home is not deductible.
A taxpayer who is 55 years of age or older at the time of the sale
of his principal residence may elect to exclude up to $125,000
(increased from $100,000 by the Economic Recovery Tax Act of
1981) of gain from the sale. This is a once in a lifetime election.
The gain on the sale of capital assets acquired by inheritance is
computed as the excess of the sale price over their value at the
time of the original owner's death, rather than as the excess over
their value at the time of acquisition by the original owner. The
estimate assumes that the difference in the computed gain would
be taxed as part of the capital gain in the year of sale.
The 10% investment tax credit is applied to the cost of qualifying
property (generally, tangible, depreciable personal property used in
a trade or business) in the 5-, 10-, and 15-year recovery classes
under the Accelerated Cost Recovery System (ACRS). Assets in the
3-year recovery class are entitled to a 6% credit. Notwithstanding
the reduction in cost of acquiring qualified property provided by
the credit, taxpayers may recover the original cost gross of the
credit. As a general rule, the credit cannot be claimed for investments in land or buildings or for property used abroad. The investment tax credit may be claimed as progress payments are made on
property that takes 2 or more years to construct. Prior to the
Revenue Act of 1978, the maximum credit allowed against income
tax liability in a taxable year was generally limited to $25,000 plus

THE BUDGET FOR FISCAL YEAR 1983

50% of tax liability in excess of $25,000. The 1978 act raised the
excess liability percentage to 60% for 1979 and increases it through
annual increments of 10 percentage points to 90% by 1982. Before
enactment of the Economic Recovery Tax Act of 1981, excess credits could generally be carried back 3 taxable years and forward 7
taxable years, after which unused credits expired. The 1981 Act
extended the carry-forward period to 15 years.
The 1981 act also provided "safe harbors" for tax leases of
business machinery and equipment. Under these leases, depreciation and the investment tax credit are normally claimed by the
lessor, although the lessee is the actual user and owner of the
machinery or equipment.
The Economic Recovery Tax Act of 1981 allows financial institutions to issue special 1-year certificates until December 31, 1982,
that pay tax-exempt interest. The interest rate on the certificates
issued during any week is limited to 70% of the interest rate on
the last 52-week Treasury bills issued in a preceding week. The
total amount of interest that is exempt on these certificates for an
individual is limited to $1,000 ($2,000 on a joint return). Financial
institutions must invest at least 75% of the proceeds from these
certificates in housing or agricultural loans.
The Economic Recovery Tax Act of 1981 allows public utilities
between 1982 and 1985 to distribute stock in lieu of cash dividends
to shareholders who may then deduct up to $750 per year ($1,500
on a joint return) of the stock dividends.
Transportation.—Certain companies that operate U.S.-flag vessels receive an indefinite deferral of income taxes on that portion
of their income which is used for shipping purposes, primarily
construction, modernization and major repairs of ships. An investment credit of one-half the regular credit may be claimed on the
tax-deferred amounts withdrawn from capital construction funds.
The Economic Recovery Tax Act of 1981 allows State and local
governments to issue tax-exempt obligations to finance the purchase of mass commuting vehicles.
Community and regional development—Under certain conditions, taxpayers may elect to amortize rehabilitation expenditures
for low- and moderate-income rental housing over a 5-year period.
Rehabilitation expenditures may not exceed $20,000 per dwelling
unit and must exceed $3,000 to qualify. The Economic Recovery
Tax Act of 1981 increased the limit to $40,000 per dwelling unit if
the rehabilitation is on units which the tenants may purchase at a
price that limits the profit to the seller. This provision expires on
January 1, 1984.
The Economic Recovery Tax Act of 1981 also provides an investment tax credit for the rehabilitation of buildings that are used for

SPECIAL ANALYSIS G

business or productive activities (other than for residential purposes). The credit is 15% of rehabilitation expenditures for buildings at least 30 years old and 20% for buildings at least 40 years
old. The basis of the rehabilitation recoverable as depreciation
must be reduced by the amount of the credit. In addition, a 25%
credit for rehabilitation of historic structures, including rental residential properties, was added by the 1981 act. Under prior law, a
10% credit was allowed for buildings at least 20 years old, with no
reduction in basis.
Education, training; employment, and social services.—Interest
on State and local government debt issued to finance student loans
is excluded from income subject to tax.
Taxpayers may claim personal exemptions for dependent children 19 or over who receive income of $1,000 or more per year if
the children are full-time students. The student may also claim an
exemption on his own return, thus providing a double exemption.
The extra exemption for parents results in a tax subsidy.
Many employers provide employee benefits that are excluded
from employee income. The employers' costs for these benefits are
deductible business expenses. The exclusion from an employee's
income of the value of meals and lodgings provided by an employer
for his own convenience is a tax subsidy, as is the exclusion of
housing allowances and the rental value of parsonages from the
taxable income of ministers. An employer may set up an educational assistance program to provide educational benefits to his employees from January 1, 1979, through December 31, 1983. The
program can pay for tuition, fees, books, and supplies. Amounts
received under the program are excluded from an employee's gross
income. Employer contributions to prepaid legal services plans and
the value of legal services received under the plans are also excluded from employee income.
For qualifying investment made prior to January 1, 1983, a corporation may claim an additional 1% investment tax credit if an
equivalent amount of its common stock is set aside in a employee
stock ownership plan (ESOP). A further one-half of 1% investment
tax credit may be claimed to the extent that additional employer
contributions to an ESOP are matched by employee contributions.
Under the Economic Recovery Tax Act of 1981, the tax credit for
contributions to an ESOP is limited to a prescribed percentage of
total compensation paid to all employees under the plan. The percentage is one-half of 1% in 1983 and 1984, and three-quarters of
1% in 1985, 1986, and 1987. The ESOP credit expires in 1987.
Employees are generally prohibited from withdrawing their share
of an ESOP for 7 years.
Contributions to charitable, religious and certain other nonprofit
organizations are allowed as an itemized deduction for individuals,

THE BUDGET FOR FISCAL YEAR 1983

generally up to 50% of adjusted gross income. The Economic Recovery Tax Act of 1981 provides that nonitemizers may deduct a
portion of charitable contributions, beginning in 1982. Taxpayers
whose contributions to charitable or educational organizations are
in the form of capital assets, usually securities that 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. Corporations may deduct charitable contributions of up to 5% of their income. The deduction is increased to
10%, beginning in 1982, by the Economic Recovery Tax Act of 1981.
Tax subsidies resulting from the deductibility of contributions are
shown separately here for contributions to educational and other
institutions. Contributions to health institutions are reported under
the health function.
A 20% tax credit may be claimed by married couples for child
and dependent care expenses incurred when both spouses work full
time or when one spouse works part time or is a student. The
credit may also be claimed by divorced or separated parents who
have custody of children and by single parents. Expenditures up to
a maximum of $2,000 for one dependent and $4,000 for two or more
dependents are eligible for the 20% credit. The credit may be taken
for payments to relatives of the taxpayer even if their services are
not qualified for coverage under the social security laws. Under the
Economic Recovery Tax Act of 1981, beginning in 1982, the credit
is increased to 30% for taxpayers with incomes of $10,000 or less
with the credit reduced by one percentage point for each $2,000 of
income between $10,000 and $28,000, expenditures for out-of-home
noninstitutional care of a disabled spouse or dependent are eligible
for the credit, and the limits on eligible expenditures are raised to
$2,400 for one dependent and $4,800 for two or more. Note that in
the absence of the credit, expenses for child and dependent care
would be deductible as employee business expenses. Therefore, the
estimates reflect the excess of the value of the credit over the value
of a deduction.
The targeted jobs credit allows tax credits for qualified wages
paid to individuals certified as members of a targeted group. The
Economic Recovery Tax Act of 1981 eliminated the AFDC-WIN
credit, but made individuals who qualified under that credit—those
employed under the WIN (work incentive) program and other recipients of AFDC (Aid to Families with Dependent Children)—eligible
for the targeted jobs credit. A credit of 50% of first-year wages and
25% of second-year wages up to $6,000 of each employee's wages
(the wage base for unemployment taxes) can be taken by the employer to offset up to 90% of his tax liability. The provision that
the credit may not be taken for first-year wages in excess of 30% of
the employer's total unemployment tax wage base was removed by

SPECIAL ANALYSIS G

the Economic Recovery Tax Act of 1981. The employer's deduction
for wages is reduced by the amount of the credit.
Health.—Payments by employers for health insurance premiums
and other medical expenses are deducted as business expenses by
employers and excluded from employee income. The exclusion from
employee income gives rise to a tax subsidy.
Medical expenses in excess of 3% of adjusted gross income, including payments 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%
limit.
Interest on State and local government debt issued to finance
hospital construction is excluded from income subject to tax.
Expenditures up to $25,000 per year for removing architectural
and transportation barriers to the handicapped and the elderly in
any facility or public transportation vehicle used in a trade or
business that otherwise would have been treated as a capital outlay
can be treated as a current expense prior to January 1, 1983.
Contributions to nonprofit health institutions are allowed as a
deduction for individuals and corporations. Contributions to other
charitable institutions are discussed under the education, training,
employment, and social services function.
Income security.—Most Government transfer payments to individuals, such as social security benefits, are excluded from taxable
income. If the taxpayer had no other source of income, these payments, even if taxable, would not generally be large enough to
result in tax liability, given present levels of personal exemptions
and the zero bracket amount. However, because some recipients
have property income, receive earnings (in some instances for only
part of a year), or file jointly with working spouses, tax subsidies
result from these exclusions.
If the sum of a taxpayer's adjusted gross income, unemployment
compensation and excludable disability income is over $20,000
($25,000 for a joint return), the lesser of his unemployment benefits
or one-half of the amount over the $20,000 limit is taxable.
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 taxable income of persons under the age of 65,
who are permanently and totally disabled. For these individuals
the exclusion is reduced dollar for dollar by adjusted gross income
plus disability income in excess of $15,000.
Certain contributions to pension plans by employers and
amounts set aside by the self-employed and those not covered by an
employer's plan are excluded from the individual's adjusted gross

THE BUDGET FOR FISCAL YEAR 1983

income in the year of contribution. Self-employed persons could
make deductible contributions to their own retirement plans equal
to 15% of their income up to a maximum of $7,500 per year.
Employees not covered by an employer's plan could deduct annual
contributions of 15% of compensation up to a maximum of $1,500
or $1,750 if the retirement account was owned jointly by a husband
and wife. Under the Economic Recovery Tax Act of 1981, beginning
in 1982 the maximum deductible contribution for self-employed
persons is $15,000. For employees, the requirement that they not be
covered by an employer's plan was removed, and the maximum
was raised to $2,000 (or 100% of compensation, if less) for each
employee or $2,250 on a joint return if one spouse has no compensation. The investment income earned by pension funds is not
taxable when earned.
The exclusion from employee income of certain other employer
payments, including payments for premiums of group life insurance and accident and disability insurance, are listed here because
of their relationship to income security. The exclusion of certain
other fringe benefits is listed under the education, training, employment, and social services function.
Additional personal exemptions of $1,000 may be taken by taxpayers who are 65 years of age or older or blind. These additional
exemptions may not be claimed for a taxpayer's dependents.
The retirement credit for the elderly allows individuals who are
65 years of age or older to take a tax credit equal to 15% of earned
and retirement income up to $2,500 for single individuals and
married couples filing a joint return where only one spouse is 65
years of age or older, and up to $3,750 for joint returns where both
spouses are 65 years of age of older. The $2,500/$3,750 base is
reduced by one-half of the taxpayer's adjusted gross income over
$7,500 for single individuals and $10,000 for married couples filing
a joint return.
Taxpayers generally may take as an itemized nonbusiness deduction each loss due to fire, theft or other casualty in excess of $100
to the extent not compensated by insurance or other payments.
The earned income credit, which low-income workers with minor
dependents may claim, is 10% of earned income up to $5,000 with a
phase-out at the rate of 12.5% per dollar earned over $6,000. The
maximum annual credit is $500.
Earned income tax credits in excess of tax liabilities are paid to
individuals. This portion of the credit is included in outlays while
the amount that offsets tax liabilities is included as a tax subsidy.
Rental housing assistance is provided through State and local
housing authorities for eligible families. The Omnibus Budget Reconciliation Act of 1980 restricts the use of tax-exempt bonds for
multifamily rental housing projects to those that include a substan-

SPECIAL ANALYSIS G

tial number of units for low- and moderate-income individuals. The
restrictions apply to such bonds issued after April 25, 1979 with
exceptions allowed for bonds in process as of that date.
The Economic Recovery Tax Act of 1981 allows an itemized
deduction of up to $1,500 for expenses incurred in the adoption of
children with special needs. The act also allows a 5-year write-off
of the loss in value of motor carrier operating authorities due to
deregulation of the industry.
Veterans 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.—A 50% credit may be claimed on political
contributions up to $100 ($200 for joint returns).
General purpose fiscal assistance.—Interest on State and local
government debt is excluded from Federal taxation. Both corporations, mainly commercial banks, and individuals receive this tax
exempt income. As a result, these governments can sell debt obligations at a lower interest cost than would be possible if such interest
were subject to tax. The exclusion of interest on State and local
government securities issued to finance pollution control facilities,
other industrial development bonds, and housing bonds is classified
elsewhere. Only the effect of excluding interest on general purpose
obligations and revenue bonds for public purposes such as toll
roads is included in this function.
The deductibility of nonbusiness State and local taxes gives indirect assistance to these governments. The estimates shown here are
primarily for the deductibility of State and local income and sales
taxes. The deductibility of property taxes on owner-occupied homes
is classified under commerce and housing credit.
Under certain conditions, U.S. corporations receiving income
from sources in a U.S. possession can claim a special tax credit
equal to the U.S. tax, but only on income from such sources.
Interest.—The interest on U.S. savings bonds is not taxable until
the bonds are redeemed, thereby deferring tax liability.

THE BUDGET FOR FISCAL YEAR 1983
Table G - l . OUTLAY EQUIVALENT ESTIMATES FOR TAX SUBSIDIES BY FUNCTION
(In millions of dollars)
Description

National defense:
Exclusion of benefits and allowances to Armed Forces personnel
Exclusion of military disability pensions
Total (after interactions)
International affairs:
Exclusion of income earned abroad by United States citizens
Deferral of income of domestic international sales corporations (DISC)
Total (after interactions)
General science, space, and technology:
Expensing of research and development expenditures
Credit for increasing research activities
Total (after interactions)
Energy:
Expensing of exploration and development costs:
Oil and gas
Other fuels
Excess of percentage over cost depletion:
Oil and gas
Other fuels
Capital gains treatment of royalties on coal
Exclusion of interest on State and local government industrial development bonds for certain energy facilities
Residential energy credits:
Supply incentives
Conservation incentives
Alternative, conservation and new technology credits:
Supply incentives
Conservation incentives
Alternative fuel production credit
Alcohol fuel credit 1
Energy credit for intercity buses
Total (after interactions)
Natural resources and environment:
Expensing of exploration and development costs, nonfuel minerals
Excess of percentage over cost depletion, nonfuel minerals
Exclusion of interest on State and local government pollution control
bonds
Tax incentives for preservation of historic structures
Capital gains treatment of iron ore
Capital gains treatment of certain timber income
Investment credit and seven-year amortization for reforestation expenditures
Total (after interactions)
Agriculture:
Expensing of certain capital outlays
Capital gains treatment of certain income
Total (after interactions)
Commerce and housing credit:
Dividend and interest exclusion
Exclusion of interest on State and local industrial development bonds
Exemption of credit union income
Excess bad debt reserves of financial institutions
Exclusion of interest on life insurance savings
Deductibility of interest on consumer credit
Deductibility of mortgage interest on owner-occupied homes

Fiscal years
1981

1982

2,365
160
2,525

2,335
165
2,500

1,045
2,790
3,835

1,850
2,750
4,600

760
205
1,060

730
650
1,515

4,725
40

5,195
45

3,110
540
195

2,855
550
160

230
560

295
540

235
285
60
5
5
8,475

315
370
120
25
5
8,830

75
555

85
595

745
70
40
1,050

875
80
35
1,065

10
2,510

20
2,705

530
710
1,315

550
635
1,250

3,350
1,310
-50
420
6,255
8,790
20,595

1,570
1,785
25
550
6,625
9,325
23,275

SPECIAL ANALYSIS G
Table G - l . OUTLAY EQUIVALENT ESTIMATES FOR TAX SUBSIDIES BY FUNCTION—Continued
(In millions of dollars)

Description

Deductibility of property tax on owner-occupied homes
Exclusion of interest on State and local housing bonds for owner-occupied
housing
Expensing of construction period interest and taxes
Capital gains (other than agriculture, timber, iron ore and coal)
Deferral of capital gains on home sales
Exclusion of capital gains on home sales for persons age 55 and over
Carryover basis of capital gains at death
Investment credit, other than ESOP's, rehabilitation of structures, energy
property, and reforestation expenditures
Safe harbor leasing rules
Amortization of start-up costs
Exclusion of interest on certain savings certificates
Reinvestment of dividends in public utility stock
Total (after interactions)
Transportation:
Deferral of tax on shipping companies
Exclusion of interest on State and local government bonds for mass
transit
Total (after interactions)
Community and regional development:
Five-year amortization for housing rehabilitation
Investment credit for rehabilitation of structures
Total (after interactions)
Education, training, employment, and social services:
Exclusion of interest on State and local student loan bonds
Parental personal exemption for students age 19 or over
Exclusion of employee meals and lodging (other than military)
Employer educational assistance
Exclusion of contributions to prepaid legal services plans
Investment credit for ESOP's
Deductibility of charitable contributions (education)
Deductibility of charitable contributions, other than education and health
Credit for child and dependent care expenses
Credit for employment of AFDC recipients and public assistance recipients
under work incentive programs
General jobs credit
Targeted jobs credit
Total (after interactions)
Health:
Exclusion of employer contributions for medical insurance premiums and
medical care
Deductibility of medical expenses
Exclusion of interest on State and local hospital bonds
Deductibility of charitable contributions (health)
Total (after interactions)
Income security:
Exclusion of social security benefits:
Disability insurance benefits
OASI benefits for retired workers
Benefits for dependents and survivors
Exclusion of railroad retirement system benefits
Exclusion of workmen's compensation benefits
Exclusion of special benefits for disabled coal miners
Exclusion of untaxed unemployment insurance benefits

Fiscal years
1982

1981

9,270

9,945

730
775
33,240
1,550
600
3,355

1,020
710
25,060
1,640
635
3,220

24,640
1,510
70

117,470

24,250
3,065
135
1,660
400
114,355

35
240
275

45
390
435

70
1,025
695
45
30
1,730
910
8,550
1,390

115
1,020
730
55
30
1,910
900
8,295
1,755

115
200
250
15,370

30
30
385
15,620

19,215
3,670
590
1,395
25,110

20,615
3,950
715
1,355
26,895

9,105
1,785
370
2,755
95
2,010

920
10,130
1,935
375
3,165
90
2,565

THE BUDGET FOR FISCAL YEAR 1983

Table G - l . OUTLAY EQUIVALENT ESTIMATES FOR TAX SUBSIDIES BY FUNCTION—Continued
(In millions of dollars)

Description

Exclusion of disability pay
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 disability insurance
Income of trusts to finance supplementary unemployment benefits
Additional exemption for the blind
Additional exemption for elderly
Tax credit for the elderly
Deductibility of casualty losses
Earned income credit 2
Exclusion of interest on State and local housing bonds for rental housing....
Deduction for motor carrier operating rights
Deduction for certain adoption expenses
Total (after interactions)
Veterans benefits and services:
Exclusion of veterans disability compensation
Exclusion of veterans pensions
Exclusion of Gl bill benefits
Total (after interactions)
General government:
Credits and deductions for political contributions
General purpose fiscal assistance:
Exclusion of interest on general purpose State and local debt
Deductibility of nonbusiness State and local taxes other than on owneroccupied homes
Tax credit for corporations receiving income from doing business in United
States possessions
Total (after interactions)
Interest:
Deferral of interest on savings bonds

Fiscal years
1981

1983

1982

210

190

170

34,230
3,660

36,695
5,030

37,885
5,820

2,485
140
15
30
2,250
130
1,100
690
455
95
15
64,070

2,545
140
20
30
2,355
135
1,125
525
500
115
15
70,295

2,475
130
20
30
2,370
135
1,165
500
565
115
15
72,850

1,290
95
205
1,605

1,405
85
180
1,685

1,405
90
150
1,660

6,100

6,925

7,740

19,345

20,470

21,680

2,110
27,755

2,260
29,860

2,425
32,060

480

620

710

*$5 million or less. All estimates have been rounded to the nearest $5 million.
1 In addition, the exemption from the excise tax for alcohol fuels results in a reduction in excise tax receipts of $55 million in 1981, $55
million in 1982, and $55 million in 1983.
2 The figures in the table indicate the tax subsidies provided by the earned income tax credit. The effect on outlays is: 1981, $1,320 million;
1982, $1,255 million; 1983, $1,180 million.

SPECIAL ANALYSIS G

PROPOSED CHANGES IN T A X SUBSIDIES

The administration has proposed a number of tax revisions that
would remove or reduce the value of existing tax subsidies. The
revisions include the repeal of business energy tax credits, restrictions on tax-exempt bonds for private activities, capitalization of
construction period interest and taxes incurred by corporations,
and a new corporate minimum tax. These revisions are described
briefly below, including estimates of their impact on 1983 receipts.
Repeal Business Energy Tax Credits.—Under current law, businesses are allowed investment tax credits for energy property in
addition to the regular investment tax credit. Some energy tax
credits expire at the end of 1982, but others extend through 1985
and beyond. Current law also provides an excise tax exemption, or
an equivalent tax credit, for gasohol.
With decontrol of oil and some natural gas prices, businesses no
longer need additional investment incentives for energy conservation and development of alternative energy sources. Such subsidies
interfere with business decisions by preempting free market resource allocations.
Effective January 1, 1983, the administration proposes to repeal
all business energy tax subsidies and to repeal special provisions
allowing States and localities to issue tax-exempt industrial development bonds to finance low-head hydroelectric facilities and other
energy property. Transition rules will mitigate the effect of repeal
on taxpayers who have relied on existing law.
The repeal of these provisions will increase 1983 receipts by $0.1
billion.
Restrict Tax-Exempt Bonds for Private Activities.—Current law
permits States and localities to issue tax-exempt revenue bonds for
industrial development, housing, and other specific purposes. The
volume of tax-exempt bonds issued for use by private business has
grown rapidly over the past few years, raising the cost of financing
traditional public projects such as schools and roads. There is no
requirement under current law that industrial development bonds
serve a genuine public purpose. In addition, tax-exempt financing
combined with Accelerated Cost Recovery and the investment tax
credit can result in unintended tax benefits.
The administration proposes that assets financed with taxexempt bonds issued after 1982 must be depreciated using the
straight-line method over an extended recovery period. Tax-exempt
financing will be limited to bonds that are publicly approved by
local governments and which, after 1985, receive a financial contribution or commitment from the local government. Small issue

THE BUDGET FOR FISCAL YEAR 1983

industrial development bonds will not be allowed for large businesses.
These restrictions on tax-exempt bonds for private activities will
encourage anticipatory issues in 1982 and, therefore, reduce 1983
receipts by $0.2 billion. There will be an increase in receipts in
1984 and subsequent years.
Capitalization of Construction Period Interest and Taxes.—Individual taxpayers must capitalize interest and taxes incurred during
the construction of commercial buildings and deduct those costs
over 10 years. The write-off period for rental housing is 8 years, but
is scheduled to become 10 years by 1984. However, for corporations,
the law permits an immediate write-off of these costs. The substantial acceleration of cost recovery provided by the Economic Recovery Tax Act of 1981 makes it unnecessary to grant corporations an
immediate deduction for a portion of construction costs.
The administration proposes that construction period interest
and taxes incurred by corporations to develop real property after
December 31, 1982 be capitalized. Costs will be recovered over 10
years. Low-income housing will be exempted, as under present law.
This proposal will increase 1983 receipts by $0.5 billion.
Corporate Minimum Tax.—Corporations currently must pay a
minimum tax, in addition to regular income tax, equal to 15% of
certain tax preferences. This "add-on" minimum tax is not limited
to those corporations that pay very little or no regular income tax.
It may apply to any corporation that has reduced its tax liability
through the use of designated tax preferences.
The administration proposes to repeal the add-on minimum tax,
effective January 1, 1983, and to replace it with an alternative
minimum tax that would apply only to those corporations that pay
very low regular rates of tax. Corporations will be required to pay
the greater of their regular income tax or an alternative tax equal
to 15% of their alternative tax base in excess of $50,000. This
alternative tax base consists of regular taxable income plus certain
tax preferences. The investment tax credit will not be allowed
against the alternative tax.
This new corporate minimum tax will increase 1983 receipts by
$2.3 billion.
REVENUE LOSS ESTIMATES FOR " T A X

EXPENDITURES"

Table G-2, which follows, shows the estimated "revenue loss"
associated with each tax subsidy item for which an "outlay equivalent" estimate was provided in table G-l. As explained in the text
under the heading "Measuring Tax Subsidies," revenue loss estimates do not take into account the additional resources (if any)
that would be required to provide the same after-tax incentive if

SPECIAL ANALYSIS G

the expenditure program were administered as a direct outlay
rather than through the tax system. As was also previously explained, these "revenue loss" estimates, for several reasons, are not
equivalent to estimates of the increase in Federal receipts that
would accompany the repeal of tax subsidy provisions.

THE BUDGET FOR FISCAL YEAR 1983

Table G-2. REVENUE LOSS ESTIMATES FOR "TAX EXPENDITURES" BY FUNCTION
(In millions of dollars)
Description

National defense:
Exclusion of benefits and allowances to Armed Forces personnel
Exclusion of military disability pensions
International affairs:
Exclusion of income earned abroad by United States citizens
Deferral of income of domestic international sales corporations (DISC)
General science, space, and technology:
Expensing of research and development expenditures
Credit for increasing research activities
Energy:
Expensing of exploration and development costs:
Oil and gas
Other fuels
Excess of percentage over cost depletion:
Oil and gas
Other fuels
Capital gains treatment of royalties on coal
Exclusion of interest on State and local government industrial development bonds for certain energy facilities
Residential energy credits:
Supply incentives
Conservation incentives
Alternative, conservation and new technology credits-.
Supply incentives
Conservation incentives
Alternative fuel production credit
Alcohol fuel credit 1
Energy credit for intercity buses
Natural resources and environment:
Expensing of exploration and development costs, nonfuel minerals
Excess of percentage over cost depletion, nonfuel minerals
Exclusion of interest on State and local government pollution control
bonds
Tax incentives for preservation of historic structures
Capital gains treatment of iron ore
Capital gains treatment of certain timber income
Investment credit and seven-year amortization for reforestation expenditures
Agriculture:
Expensing of certain capital outlays
Capital gains treatment of certain income
Commerce and housing credit:
Dividend and interest exclusion
Exclusion of interest on State and local industrial development bonds
Exemption of credit union income
Excess bad debt reserves of financial institutions
Exclusion of interest on life insurance savings
Deductibility of interest on consumer credit
Deductibility of mortgage interest on owner-occupied homes
Deductibility of property tax on owner-occupied homes
Exclusion of interest on State and local housing bonds for owner-occupied
housing
Expensing of construction period interest and taxes
Capital gains (other than agriculture, timber, iron ore and coal)
Deferral of capital gains on home sales

Fiscal years
1981

1982

1,735
155

1,885
165

610
1,595

985
1,465

1,550
15

380
405

3,525
25

4,065
25

1,865
380
100

1,965
380
105
5

150
425

205
415

180
220
25
5
5

235
285
55

45
385

50
405

715
60
585

835
80
20
600

525
425

545
460

1,335
1,200
-25
325
4,060
8,675
20,145
9,125

2,185
1,650
5
250
4,535
9,285
23,030
10,065

685
755
17,965
1,160

920
745
18,315
1,070

20
5

SPECIAL ANALYSIS G
Table G-2. REVENUE LOSS ESTIMATES FOR "TAX EXPENDITURES" BY FUNCTION—Continued
(In millions of dollars)
Fiscal years
Description

Exclusion of capital gains on home sales for persons age 55 and over
Carryover basis of capital gains at death
Investment credit, other than ESOP's, rehabilitation of structures, energy
property, and reforestation expenditures
Safe harbor leasing rules
Amortization of start-up costs
Exclusion of interest on certain savings certificates
Reinvestment of dividends in public utility stock
Transportation:
Deferral of tax on shipping companies
Exclusion of interest on State and local government industrial development bonds for mass transit
Community and regional development:
Five-year amortization for housing rehabilitation
Investment credit for rehabilitation of structures
Education, training, employment, and social services:
Exclusion of interest on State and local student loan bonds
Parental personal exemption for students age 19 or over
Exclusion of employee meals and lodging (other than military)
Employer educational assistance
Exclusion of contributions to prepaid legal services plans
Investment credit for ESOP's
Deductibility of charitable contributions (education)
Deductibility of charitable contributions, other than education and health
Credit for child and dependent care expenses
Credit for employment of AFDC recipients and public assistance recipients
under work incentive programs
General jobs credit
Targeted jobs credit
Health:
Exclusion of employer contributions for medical insurance premiums and
medical care
Deductibility of medical expenses
Exclusion of interest on State and local hospital bonds
Deductibility of charitable contributions (health)
Income security:
Exclusion of social security benefits:
Disability insurance benefits
OASI benefits for retired workers
Benefits for dependents and survivors
Exclusion of railroad retirement system benefits
Exclusion of workmen's compensation benefits
Exclusion of special benefits for disabled coal miners
Exclusion of untaxed unemployment insurance benefits
Exclusion of disability pay
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 disability insurance
Income of trusts to finance supplementary unemployment benefits
Additional exemption for the blind
Additional exemption for elderly
Tax credit for the elderly

1983

1982

1981

450
2,070

415
2,190

465
2,135

19,445

20,035
3,560
75
515
130

20,150
3,945
120
2,820
365

30
220

45
255

55
300

60
1,045
620
35
20
975
925
8,485
935

100
995
655
40
20
1,005
895
8,345
1,120

155
900
680
40
25
1,095
925
8,085
1,465

70
300
305

45
65
235

5
75

14,050
3,615
560
1,390

15,330
3,925
680
1,360

16,380
4,175
810
1,345

860
8,845
1,735
365
2,730
90
1,985
170

915
9,980
1,915
380
3,100
95
2,060
155

910
10,525
1,970
370
3,495
90
2,710
145

23,390
2,170

25,765
2,560

27,500
3,760

1,840
100
15
30
2,250
130

1,900
100
20
30
2,355
135

1,895
100
20
30
2,370
135

20
•

THE BUDGET FOR FISCAL YEAR 1983
Table G-2. REVENUE LOSS ESTIMATES FOR "TAX EXPENDITURES" BY FUNCTION—Continued
(In millions of dollars)

Description

Deductibility of casualty losses
Earned income credit 2
Exclusion of interest on State and local housing bonds for rental housing....
Deduction for motor carrier operating rights
Deduction for certain adoption expenses
Veterans benefits and services:
Exclusion of veterans disability compensation
Exclusion of veterans pensions
Exclusion of Gl bill benefits
General government:
Credits and deductions for political contributions
General purpose fiscal assistance:
Exclusion of interest on general purpose State and local debt
Deductibility of nonbusiness State and local taxes other than on owneroccupied homes
Tax credit for corporations receiving income from doing business in United
States possessions
Interest:
Deferral of interest on savings bonds

Fiscal years
1981

1982

775
610
435

1983

800
555
485
140
10

850
495
535
75
10

1,255
95
200

1,360
85
175

1,380
90
145

100

5,855

6,685

7,505

19,085

20,395

21,530

1,120

1,200

1,285

-270

-80

*$5 million or less. All estimates have been rounded to the nearest $5 million.
1 In addition, the exemption from the excise tax for alcohol fuels results in a reduction in excise tax receipts of $55 million in 1981, $55
million in 1982, and $55 million in 1983.
2 The figures in the table indicate the effect of the earned income tax credit on receipts. The effect on outlays is: 1981, $1,320 million; 1982,
$1,255 million; 1983, $1,180 million.

SPECIAL ANALYSIS G
PROVISIONS PREVIOUSLY DESIGNATED " T A X

EXPENDITURES"

Table G-3, which follows, shows "revenue loss" estimates for
current provisions of the Internal Revenue Code that were designated as involving "tax expenditures" in last year's budget, but
which should be considered part of the reference tax structure
rather than as special exceptions to it.
Table G-3. REVENUE LOSS ESTIMATES OF PROVISIONS PREVIOUSLY DESIGNATED "TAX
EXPENDITURES"
(In millions of dollars)

Description

International affairs:
Deferral of income of controlled foreign corporations
Natural resources and environment:
Exclusion of payments in aid of construction of water, sewage, gas and
electric utilities
Agriculture:
Deductibility of noncash patronage dividends and certain other items of
cooperatives
Exclusion of certain cost-sharing payments
Commerce and housing credit:
Reduced rate? on the first $100,000 of corporate income
Education, training, employment, and social services:
Exclusion of scholarship and fellowship income
Income security:
Exclusion of public assistance benefits

Fiscal years
1981

1983

1982

480

520

560

525
70

545
60

560
50

6,555

5,680

6,280

450

465

415

450

445

430

SPECIAL ANALYSISF243

FEDERAL AID TO STATE AND LOCAL
GOVERNMENTS

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS H
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS 1
State and local governments have a vital constitutional role in
providing government services. The Federal Government contributes directly to that role by providing grants-in-aid and loans to
States and localities, and contributes indirectly through policies
designed to improve the economy.
In the last two decades, the Federal Government role in domestic
programs has become excessive. Grant-in-aid outlays grew by an
extraordinary annual rate of 11.0% from 1961 to 1981, with many
regulations and restrictions on what States and localities could and
could not do. As a result, the Federal Government imposed its
programs and priorities on States or localities. This growing Federal role has been reversed. Narrow categorical grants are being cut
back sharply. At the same time, there are significant increases in
broad-based Federal aid that allow States and localities to determine how funds should be spent.
The administration proposes grant-in-aid outlays that are estimated to be $81.4 billion in 1983, $9.8 billion below the 1982 estimate of $91.2 billion, and $13.3 billion lower than the 1981 total of
$94.8 billion. General purpose and broad-based aid is expected to
grow from $16.9 billion in 1981 to $20.7 billion in 1983. All other
grants decline from $77.9 billion in 1981 to $60.8 billion in 1983.
Many substantial successes have already been achieved in reducing the intrusion of the Federal Government. The Omnibus Budget
Reconciliation Act of 1981 established nine new block grants, consolidating 57 categorical grants. These consolidations were for: maternal and child health; preventive health and health services;
alcohol, drug abuse, and mental health; primary health care; social
services; low-income home energy assistance; community services;
State education block grant; and State community development for
small cities. This latter grant was a change to an existing block
grant—the community development block grant program—and allowed States, on an optional basis, to administer a portion of this
program. These block grants have been established with much
simpler administrative requirements than the predecessor pro1 Federal aid to State and local governments is defined as the provision of resources by the Federal Government to support a State or local program of governmental service to the public. The three primary forms of aid
are grants-in-aid (including shared revenues), loans, and tax expenditures. Unless specifically indicated to the
contrary, reference to "Federal aid" or "grants" in this analysis is confined only to grants-in-aid (including
shared revenues).

THE BUDGET FOR FISCAL YEAR 1983

grams. For example, for grants that are now covered by the seven
recently enacted block grants administered by the Department of
Health and Human Services, regulations have been reduced from
318 to 6 pages in the Federal Register. Paperwork requirements
associated with these programs are estimated to be reduced by an
estimated 5.2 million hours in 1982, or by 86%.
The major new proposals in this budget that further reduce the
Federal role in domestic programs are for:
• the federalism initiative, a major reshaping of the fiscal relationship between the Federal Government and State and local
governments, that would begin in 1984 and dramatically
reduce the Federal role in domestic programs; and
• proposals for 1983 for seven new consolidated grants and additions to three existing block grants.
THE FEDERALISM INITIATIVE

The federalism initiative has two major components:
• a Federal take-over of medicaid in return for State takeover
of food stamps and aid to families with dependent children
(AFDC)—a $20 billion exchange; and
• a turnback of more than 40 Federal education, transportation,
community development, and social service programs to
States, financed by existing excise taxes on gasoline, tobacco,
alcohol, and telephone services, and by the oil windfall profit
tax.
Swap component—In this component, the Federal Government
would assume the full cost of medicaid, which is estimated to cost
States and localities $19.1 billion in 1984. States and localities
would no longer be responsible for these expenses. In return they
would be responsible for the full costs of AFDC and food stamp
programs, estimated to be $16.5 billion in 1984. This exchange
would result in a clear distinction of governmental roles. The Federal Government would be responsible for health insurance and
medical assistance—including both medicaid and medicare—and
the States and localities would be responsible for cash assistance
for the non-elderly needy, through State and local substitutes for
existing food stamp and AFDC programs.
Turnback component—In this component, a separate allocation
would be established for each State beginning in 1984 and lasting
through 1987, which would receive receipts from the Federal taxes
on gasoline, tobacco, alcohol, telephone services, and the oil windfall tax. Outlays from the fund would depend on decisions made by
the States. For specified programs, States could continue to receive
grants controlled by the Federal Government or they could cancel
participation in the Federal grant program, and receive in place of

SPECIAL ANALYSIS G

the grants equal amounts of funds that could be used for any
purpose.
Beginning in 1988 the Federal Government would no longer fund
these grants. Federal taxes to finance these programs would be
reduced 25% each year and States would have the choice of taking
over these taxes themselves to assist in financing the programs they
choose to continue.
The swap and turnback components of the federalism initiative
would involve about $50 billion in 1984, more than 60% of estimated grant-in-aid outlays.
Further details of this initiative will be worked out in close
consultation with the Congress and State and local officials. Therefore, details are not yet available and the grants-in-aid data for
1984 in this Special Analysis do not take into consideration the
financial transactions of the federalism initiative. The initiative is
discussed further in Part 3 of the 1983 Budget of the United States
Government.
Federal lending to State and local governments and loan guarantees are another significant source of Federal aid. In 1983 the
Federal Government is expected to disburse $2.9 billion for new
loans to State and local governments. Loan outlays net of repay-

THE BUDGET FOR FISCAL YEAR 1983

ments and sales are expected to be $0.8 million. New guaranteed
loans to State and local governments are estimated to be $167
million in 1983.
The accompanying chart shows trends in major grant categories
since 1973. General purpose and broad-based aid are expected to
grow substantially in the next few years. Payments for individuals,
such as medicaid, are a large and growing part of grants-in-aid.
Grants for highways continue to be significant. All other grants are
expected to decline through 1985.
HIGHLIGHTS OF THE FEDERAL A I D

PROGRAM

Summary of changes.—When this administration took office a
dramatic change in Federal policy was necessary to revitalize the
economy and to devolve authority for certain government functions
to State and local governments. This new policy has resulted in a
reduction in grants and a shift away from categorical grants to
block grants.
The increased tax base available to State and local governments
due to the recently enacted Federal tax cuts, and the existing and
proposed block grants, allow the States the capacity to meet their
greatest priorities and needs.
Table H - l shows outlay changes from 1981 to 1982 and 1982 to
1983 divided into two categories: those grants that finance State or
local payments for individuals, and all other grants.
Grants that are subsequently paid as income support for individuals—such as medicaid, child nutrition, assistance payments, and
housing programs—are estimated to increase, on a net basis, $1.6
billion from 1981 and 1982 and decrease $3.9 billion from 1982 to
1983. These grants, which will amount to an estimated $37.6 billion
in 1983 outlays, take a substantial financial burden off State and
local governments and provide large supplements to the economies
of the area in which the beneficiaries live.
All other grants are expected to decrease by $5.1 billion from
1981 to 1982 and decrease $5.9 billion from 1982 to 1983.
Major proposals.—The major grant proposals in this budget are
designed to consolidate categorical grants, give States and localities
more discretion over the use of the funds, and decrease State and
local dependence on Federal financing. Grant consolidation proposals are for:
Vocational and adult education.—This proposal combines eight
smaller grants into one consolidated grant. The eight smaller
grants are: basic grants, program improvement and supportive
services, programs of national significance, special programs
for the disadvantaged, consumer and homemaker education,
State advisory councils, State planning, and adult education
grants to States.

SPECIAL ANALYSIS H

Table H - l . FEDERAL GRANT-IN-AID CHANGES, 1981-83
(Outlays in billions of dollars)
Outlays

Total grants, 1981 actual
Changes
Payments for individuals:
Medicaid
Child nutrition programs
Assistance payments (AFDC)
Housing programs
Other
Subtotal payments for individualsOther programs:
General revenue sharing
Federal aid highways (trust fund)
Training and employment
Other
Subtotal, other programs.
Total grants, 1982 estimate
Changes
Payments for individuals:
Medicaid 1
Nutrition assistance for Puerto Rico
Assistance payments program ( A F D C ) 1 . .
Other
Subtotal, payments for individuals 1
Other programs:
Sewage treatment plant construction
Elementary, seconday and vocational education..
Training and employment
Social services activities
Other
Subtotal, other programs
Total grants, 1983 estimate..

94.!

1.0
-0.7
-0.4
0.7
0.9

1.6
-0.6
-0.8
-3.8

0.1

-5.1
91.2

-0.8

0.8

-2.6
-1.3
-3.9
-0.7

-1.6
-2.2
-1.3

-0.2
-5.9

81.4

Decline is explained in part due to the proposed consolidation of State administration grants for medicaid, food stamps, and assistance
payments and their reclassification in 1983 as "other programs," not "payments for individuals.'
1

Education for the handicapped.—This proposal will consolidate
13 different education programs for the handicapped. Budget
authority of $836 million is proposed for 1983, roughly $50
million less than for the 13 programs in 1982.
Employment and training.—Four separate programs authorized
by the Comprehensive Employment and Training Act are proposed for consolidation to allow States more flexibility in responding to local needs. Proposed 1983 budget authority is $1.8
billion compared to $2.2 billion for the individual programs in
1982.
Rehabilitation services.—This proposal would combine basic
State grants together with several project grant authorities
into one consolidated grant for rehabilitation services. Proposed budget authority for 1983 for the consolidated grant is
$624 million, compared to $835 million for 1982 for the predecessor programs.
Child welfare grant.—This proposal would combine the four current programs for foster care, child welfare services, adoption

THE BUDGET FOR FISCAL YEAR 1983

assistance, and child welfare training into one grant. Budget
authority proposed for 1983 is $380 million, $185 million less
than in the four smaller programs in 1982.
Rental rehabilitation grants.—This proposal would combine the
rehabilitation loan fund and the Section 8 moderate rehabilitation program into one grant program to States and localities to
assist them in rehabilitating multi-family, rental properties,
principally for lower-income tenants. Budget authority of $150
million is proposed for 1983, compared to a level of $49 million in
new 1982 budget authority for the programs that this grant
would replace. It is estimated that this requested budget authority would assist in the rehabilitation of 30,000 housing
units. Outlays are expected to begin in 1984.
Combined welfare administration.—This consolidation would
combine grants for State administration of medicaid, AFDC,
and food stamps. Budget authority, in the Departments of Agriculture and Health and Human Services, of $2.2 billion is
proposed for 1983, compared to $2.3 billion for 1982. This consolidated grant will encourage more efficient and effective administration of these programs until the transfer of these programs under the federalism initiative.
In addition to these new grant consolidations, the administration
proposes to expand three block grants enacted in 1981:
Primary care.—The health grant for primary care would be expanded to cover the black lung clinics, migrant health, and
family planning programs. Budget authority for the proposal
would be $417 million for 1983, an increase of $166 million to
cover the three smaller programs. This increase is the same
amount of budget authority proposed for the three smaller
programs for 1982.
Services for women, infants, and children.—The maternal and
child health services block grant enacted in 1981 would be
expanded to include the nutrition program for women, infants,
and children (WIC). Proposed 1983 budget authority for the
block grant is $1.0 billion, an increase of $652 million from
1982. The requested 1983 budget authority is $0.3 billion less
than the 1982 level for the separate programs. This reflects
administrative economies and the strengthening of programs
resulting from consolidation.
Energy and emergency assistance.—This proposal would add the
emergency assistance program to the existing low-income home
energy assistance block grant, in order to increase flexibility
available to States in aiding low-income persons who need
special assistance for hardships, including aid to help pay fuel
bills. Budget authority of $1.2 billion is proposed for 1983,
compared to $1.6 billion for 1982.

SPECIAL ANALYSIS H

Other highlights.—Energy conservation grants for low income
home weatherization and for energy saving investments in schools
and hospitals and for other purposes are proposed to be phased out
by 1984. Termination of these programs will be administered by
the Department of Commerce beginning in 1983, as part of the
administration's proposal to dismantle the Department of Energy.
Realistic energy prices have eliminated the need for government
spending on these conservation subsidies.
Outlays for the Environmental Protection Agency's program for
construction of sewage treatment plants are expected to be $3.4
billion in 1983, a decrease of $0.7 billion from 1982. The administration requests budget authority of $2.4 billion for the program in
both 1982 and 1983. This program provides grants to both State
and local governments for 75% of the cost of planning, designing,
and constructing sewage treatment plants. Under the Federal
Water Pollution Control Act, as amended, more than $33 billion
has been provided to implement this program. With almost 12,000
projects currently underway, the administration is encouraging the
States to assume responsibility for program management and implementation. This program is proposed for inclusion in the federalism initiative discussed earlier.
Budget authority of $228 million in 1982 and $184 million in 1983
for grants to support State regulatory, enforcement, and administrative pollution control activities is requested. These grant programs include: air quality, water quality, public water supply, underground injection control, hazardous wastes, pesticides certification and training, and pesticides enforcement. Several other abatement, control, and compliance grants in EPA are proposed to
be phased out.
Grants through the land and water conservation fund, the urban
parks program, the historic preservation fund and other programs
assist States and localities in the management of natural resources.
No new budget authority is requested for these programs in 1983,
although grants awarded in prior years will have outlays in 1983
and 1984.
Grants from the abandoned mine fund allow States to reclaim
lands degraded by coal mining. Outlays are estimated to be $96
million in 1983, an increase of $20 million from $76 million in 1982.
Grants for State fish and wildlife restoration and management
projects, funded from federally collected excise taxes, are estimated
to be $133 million in 1983. This is an increase of $5 million from
the 1982 outlays of $128 million.
Grants in the agriculture function are made through the Commodity Credit Corporation, the extension service, and cooperative
State research service. Outlays for these programs are estimated to
be $896 million in 1982, and $859 million in 1983.

1 0

THE BUDGET FOR FISCAL YEAR 1983

Outlays for highways are estimated to be $8.4 billion in 1983 and
will focus on needs of the interstate and primary highway systems.
States and localities will be expected to assume greater responsibility for roads used mostly for intrastate traffic. The Federal-aid
highway programs, with the exception of the interstate system,
have been identified for inclusion in the new federalism initiative
and eventual turnback to the States.
Grant outlays for urban mass transportation, are estimated to be
$3.1 billion in 1983, $0.6 billion lower than the 1982 estimate.
Formula grants for operating subsidies will be phased out by 1985.
Construction grants will be directed primarily toward modernization and repair of existing, proven transit systems. Transit grant
programs have been identified for inclusion in the new federalism
initiative and eventual turnback to the States.
Funding for the planning and construction of new rail transit
systems will be postponed at least until the economy improves.
The administration proposes to eliminate the economic development assistance administered by the Economic Development Administration in 1983. As these programs are phased out, funds for
State and local community and economic development programs
will continue to be available under the more flexible grant programs administered by the Department of Housing and Urban
Development. Specialized assistance for rural areas will continue to
be available through the Farmers Home Administration.
Community development block grant funds will continue to provide assistance directly to local governments through either entitlement or discretionary grants. Recipients have considerable freedom
in selecting projects under this program, so long as they are within
the general guidelines of community and economic development
and mainly assist people with low and moderate incomes. Budget
authority proposed for 1983—the same as approved for 1982—is
$3,456 million. It is estimated that $2.5 billion of this amount
would be used for large cities and urban counties and $0.9 billion
would be used for nonentitlement small cities and rural communities. This $0.9 billion portion of the program that States may elect
to administer is the recently enacted State community development
block grant program for small cities.
The urban development action grant program provides discretionary grants to severely distressed cities and urban counties to supplement local government and private sector financing for major
economic development projects. They are designed to promote local
economic revitalization, generate new jobs, and increase local tax
bases. Budget authority proposed for 1983 for this program is $440
million, the same as in 1982.
Federal support for the Title V regional commissions was discontinued at the end of 1981. Continuation of the commissions was
unnecessary because nearly all of the commissions' projects dupli-

SPECIAL ANALYSIS H

1 1

cated activities that would normally be undertaken by State agencies without Federal support.
Grant outlays for elementary, secondary, and vocational education are estimated to be $5.1 billion in 1983, $1.6 billion less than
in 1982. The largest of these grants go to State and local education
agencies as grants for disadvantaged students.
State education block grants enacted in 1981 combined 40 categorical programs, only 27 of which have been funded in recent
years. This consolidation will give States considerably more flexibility in the use of these funds. Outlays for the block grant and
related programs are estimated to be $527 million in 1983, $56
million less than in 1982.
The budget also includes a substantial reduction in the impact
aid program. This program is intended to compensate school districts for the burdens imposed by federally related activities. Much
of the aid now goes to school districts where the Federal activity
does not place a special burden on the local community. The
budget request would limit impact aid to only those districts that
serve pupils who live on and whose parents work on Federal property.
Grant programs that provided for temporary federally subsidized
jobs in State and local governments have been phased out. Legislation creating a new block grant to the States for training activities
is proposed to replace four grants now authorized by CETA. This
proposal will include provisions to encourage increased coordination between State education and training programs and would, by
eliminating stipends, prevent overlap with income maintenance
programs. Total outlays are expected to be $1.5 billion in 1983, $900
million of which is from the new block grant.
During 1981 a new social services block grant was created, combining a number of social services and related activities. Outlays
for this block grant are expected to be $2.0 billion in 1983, $0.9
billion less than 1982. A new community services block grant was
also enacted in 1981. Outlays in 1983 will be $100 million, $248
million less than in 1982.
The medicaid program continues to be a large grant-in-aid with
estimated outlays of $17.0 billion in 1983. This program supports
State efforts to provide health services to low-income residents. The
administration is proposing reforms to medicaid that would save an
estimated $1.9 billion in outlays in 1983. The largest of these
reforms would reduce the Federal matching share for optional
services and beneficiaries by 3%, and require beneficiary copayments. State administrative costs of $0.9 billion in 1982 are proposed
to be transferred to a combined welfare administration consolidation
grant, which is described above. The medicaid program is a major
part of the federalism initiative described earlier.

1 2

THE BUDGET FOR FISCAL YEAR 1983

Four health block grants were enacted in 1981 to provide States
more flexibility in the use of these funds. They were for maternal
and child health; preventive health and health services; alcohol,
drug abuse and mental health, and primary care. Outlays for these
four programs are estimated to be $1.7 billion in 1983.
Outlays for assistance payments (aid to families with dependent
children) and child support enforcement are expected to be $8.1
billion in 1982, and $5.4 billion in 1983. Legislation is proposed for
1983 that would save an estimated $1.3 billion of Federal outlays
and about an equal amount for States and localities. Some of the
major items would require those who are able to work to do so as a
condition of AFDC eligibility, and would include income and other
resources that have not previously been counted in determining
AFDC benefits. An additional $0.9 billion of the decline is explained
by the transfer of State administrative costs from this program to a
combined welfare administration grant consolidation, which is described above. The assistance payments program is a major part of
the federalism initiative described earlier.
Proposed budget authority for grants to State and local housing
authorities declines sharply in 1982 and 1983, to $0.6 billion in 1982
and —$3.7 billion in 1983. These figures result from the administration's proposal to discontinue new construction of subsidized
housing under the section 8 and public housing programs with the
exception of housing for the elderly and handicapped. A modified
version of the section 8 existing rental housing program—to be
called the modified section 8 certificate program—is proposed for
1983. This program will place much greater reliance upon existing
rental markets to meet the housing needs of low-income households. In addition, a portion of prior year commitments for unstarted new units is expected to be cancelled.
Law enforcement assistance grants in the Office of Juvenile Justice and Delinquency Prevention will be eliminated. These programs, if needed, could be financed directly by States and localities.
Payments in lieu of taxes are made to some jurisdictions that
contain Federal open space lands. Outlays for this program are
estimated to be $96 million in 1982, and $45 million in 1983.
Reforms are proposed to make the distribution of funds more equitable. Revenues are also shared with State and local governments
from receipts received from timber and mineral sales on Federal
lands. These payments are estimated to increase from $594 million
in 1982 to $756 million in 1983.
One of the largest grants is general revenue sharing, which
provides grants to local governments with virtually no restrictions
on the use of funds. Outlays are estimated to be $4.6 billion in
1983. This program is part of the federalism initiative described
earlier.

SPECIAL ANALYSIS H

1 3

Additional information on many of these grant programs is in
Part 5 of the Budget
Loans.—Another form of Federal aid to State and local governments is assistance in obtaining credit, either directly or through
loan guarantees. Direct loan disbursements (excluding repayments)
are estimated to be $2.9 billion in 1983, and $167 million of new
guaranteed loans are estimated in 1983.
One of the large guarantee loan programs was enacted by Congress in 1978 to assist New York City. The legislation allows for the
guarantee of principal and interest for $1,650 million. The remaining guarantee authority is $300 million. The authority to make
new guaranteed loans ends June 30, 1982. (More information on
Federal credit activities is available in Special Analysis F.)
Tax Expenditures.—Federal aid is also provided through tax expenditures. (More information on tax expenditures is provided in
Special Analysis G and, on the assistance from tax-exempt financing, in Special Analysis F.) The method of measuring tax expenditures has been modified in this year's budget to make them more
comparable with direct budget outlays. In previous budgets tax
expenditures were estimates of revenue losses. In this year's
budget, tax expenditures are measured as the amount of outlays
that would be required to provide an equal after-tax income to
taxpayers.
The two major tax expenditures are the deductibility of many
State and local taxes and the exclusion of interest on State and
local securities from Federal taxation.
Individuals can claim nonbusiness sales, income, and property
tax payments to State and local governments (other than payments
already taken as business deductions) as itemized deductions on
their Federal tax returns. This permits States and localities to
raise a dollar of revenue with less than a dollar of net cost to their
citizens. The 1983 outlay equivalent tax expenditure for property
taxes on owner-occupied homes is estimated to be $10.5 billion and
the outlay equivalent tax expenditure for other nonbusiness State
and local taxes—primarily income and sales taxes—is estimated to
be $21.9 billion.
Interest on virtually all State and local government securities is
tax exempt. This permits State and local jurisdictions to borrow at
reduced interest rates. The outlay equivalent tax expenditure for
the exclusion of interest on State and local general purpose debt is
estimated to be $7.7 billion in 1983.
Interest on State and local industrial revenue bonds is also tax
exempt. These bonds finance industrial and transportation projects,
pollution control facilities and public and, more recently, selected
360-700

2 -

(H)

THE BUDGET FOR FISCAL YEAR 1983

1 4

private housing. Tax expenditures in 1983 equivalent to outlays are
estimated to be $2.3 billion for industrial facilities, $1.0 billion for
pollution control facilities, and $565 million for State and local
rental housing bonds.
State and local governments have been using the proceeds of taxexempt borrowing to provide mortgage funds for private housing.
The tax exemption of interest on State and local securities makes
it possible to provide such funds at interest rates well below the
rates for private mortgages. At first, tax-exempt housing bonds
were used mainly to assist low-income, multifamily housing; recently, there has been a dramatic increase in the use of such bonds
for owner-occupied housing, including housing purchased by middle
and upper income families. The 1983 outlay equivalent tax expenditure is estimated to be $1.3 billion.
Expensive, direct Federal involvement to encourage the redevelopment of distressed urban areas has not solved the most pressing
problems of the Nation's cities. The administration, therefore, is
proposing the establishment of enterprise zones as an experimental, free-market approach to these problems. By reducing tax and
regulatory burdens in clearly delineated geographic areas, the enterprise zone proposal would place greater reliance on the ability of
the private sector to create new jobs and new investment in distressed urban areas.
FEDERAL GRANTS-IN-AID BY FUNCTION, A G E N C Y , A N D REGION

Under the Congressional Budget Act of 1974, the Congress reviews the budget and sets targets by function. Consequently, the
functional classification of the budget has become important not
only for analysis but also for congressional control. Part 5 of the
budget discusses the entire Federal budget by function, and the
associated national needs met by these programs.
In recent years the budget has included data for two years
beyond the budget year to provide an improved means of planning
for the longer term. Consequently, the discussions and data in
many parts of this budget include the 1983-85 planning period.
Consistent with that approach, this Special Analysis shows estimates through 1985 in many of the tables and the chart on a
previous page.
Because many of the programs discussed are involved in the
federalism initiative, the actual amounts in 1984 and 1985 will
depend upon their relation to the initiative or on State's decisions
about continuing the programs.
Table H-2 shows a functional distribution of Federal grant-in-aid
outlays. Major trends in 1983 are discussed above.
The functional composition of the grant programs has changed
significantly over the years, as shown in table H-3. The most

SPECIAL ANALYSIS H

1 5

Table H - 2 . FEDERAL GRANT-IN-AID OUTLAYS BY FUNCTION
(In millions of dollars)
Estimate

Actual
1981

Function

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

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

1985

1982

1983

1984

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

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

72
100
3,554
860
2
11,654
4,441
11,853
20,799
21,411
70
55
182
6,798

72
3,389
876
2
11,899
4,551
10,737
22,544
22,076
72
33
160
7,104

94,762 91,220 81,418 81,853 83,517

Total outlays.

Data for 1984 and 1985 are included here to be consistent with the multi-year planning system. They have not received as much review as
the estimates for 1982 and 1983.
1

dramatic growth has occurred in the health function, which has
increased from 3% of Federal aid in 1960 to an estimated 24% in
1983 and in the education, training, employment and social services function, which increased from 7% in 1960 to 27% in 1970 and
has now decreased to an estimated 15% in 1983. Other changes are
the addition of general revenue sharing, increases in outlays for
environmental protection, and the relative decline in grants for
highways and income security. The latter is primarily due to the
assumption by the Federal Government of the food stamp program
and the public assistance programs for the aged, blind, and disabled.
Table H - 3 . PERCENTAGE DISTRIBUTION OF FEDERAL GRANT-IN-AID OUTLAYS BY FUNCTION
Actual

Energy
Natural resources and environment
Agriculture
Transportation
Community and regional development
Education, training, employment, and social services....
Health
Income security
General purpose fiscal assistance
Other
Total

Estimate

1970

1
5
1
14
6
22
20
23
7
1

1
6
1
14
7
19
22
24
7
1

1
5
1
15
6
15
24
25
8
1

2
3
19
7
27
16
24
2
1

1
6
1
14
7
24
17
20
9
1

2
3
43
2
7
3
39
2

4
1
14
5
14
25
26
8

4
1
14
5
13
27
26
9

100

1980

1981

1982

1983

1984

1960

1985

* 0 . 5 % or less.
1 Data for 1984 and 1985 are included here to be consistent with the new multi-year planning system. They have not received as much
review as the estimates for 1982 and 1983.

THE BUDGET FOR FISCAL YEAR 1983

1 6

Table H - 4 . FEDERAL GRANT-IN-AID OUTLAYS BY AGENCY
(In millions of dollars)

Agency

Funds appropriated to the President
Department of Agriculture
Department of Commerce
Department of Health and Human Services
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
Community Services Administration
Foundation for Education Assistance
Other
Total outlays

Actual
1981

Estimate
1982

597
6,700
1,180
35,536
8,664
1,477
317
8,972
13,401
6,118
4,181
622
6,047
951

562
6,449
1,027
36,719
9,459
1,663
233
5,492
12,458
5,465
4,291
183
6,195
1,024

94,762

91,220

Table H-4 shows grant outlays by agency. The Department of
Health and Human Services will provide 41% of total estimated
grant-in-aid outlays in 1983, far more than any other agency.
Distribution of grants by region.—Table H-5 shows that Federal
aid on a per capita basis varies widely among regions. 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.
This effect has diminished in recent years, however, as human
resource programs have grown relative to physical resource 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 27% above the national average in
1971, now has grants only 5% over the average, while Region V
has risen from 26% below the average to only 2% below. Grants per
capita to Region V have grown the most during the period, averaging
13.8% per year.
HISTORICAL PERSPECTIVES

In recent decades, Federal aid to States and local governments
has become a major factor in the financing of certain government
functions. The rudiments of the present system date back to the Civil
War. The Morrill Act, passed in 1862, established the land grant
colleges and instituted certain federally required standards, characteristic of the present grant-in-aid system. Federal aid was later
initiated for agriculture, highways, vocational education and reha-

SPECIAL ANALYSIS H

1 7

Table H - 5 . DISTRIBUTION OF GRANTS BY REGION, SELECTED FISCAL YEARS
Dollars per capita
19811
total
grants

Federal Region

1. 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

1971

1981

Average
annual
percent
increase,
1971-81

5.7
14.7

144
160

455
521

11.9
12.2

11.3

148

456

11.6

13.9
18.2
8.5
3.9
3.1
11.9
3.7
94.8

145
106
148
118
182
170
174
143

350
398
330
331
429
413
454
408

9.0
13.8
8.1
10.6
8.7
9.0
9.8
10.8

1 Preliminary estimate, in billions of dollars.
See "Federal Aid to States," Department of the Treasury, for additional information concerning State distribution of Federal grants.

bilitation, forestry, and public health. In the depression years,
Federal aid was extended to meet income security and other social
welfare needs.
However, Federal grants did not become a significant factor in
Table H - 6 . HISTORICAL TREND OF FEDERAL GRANT-IN-AID OUTLAYS
(Fiscal years; dollar amounts in millions)
Composition of grantsin-aid
Total
grants-inaid

Five-year intervals:
1950
1955
1960
1965
1970
1975
Annually:
1976
1977
1978
1979
1980
1981
1982 estimate
1983 estimate
1984 estimate 4
1985 estimate 4

Federal grants as a percent of
Budget outlays

Grants for
payments
to
individuals 1

Other

Total

Domestic2

State and
local
expenditures 3

$2,253
3,207
7,020
10,904
24,014
49,834

$1,257
1,623
2,479
3,931
9,023
17,441

$996
1,584
4,541
6,972
14,991
32,392

5.3%
4.7
7.6
9.2
12.3
15.4

8.8%
12.1
15.9
16.5
21.3
21.5

10.4%
10.1
14.7
15.3
19.2
23.0

59,093
68,414
77,889
82,858
91,472
94,762
91,220
81,418
81,853
83,517

21,023
23,860
25,981
28,765
34,174
39,934
41,500
37,563
39,951
42,310

38,070
44,555
51,908
54,093
57,298
54,828
49,720
43,855
41.902
40,207

16.2
17.1
17.4
16.9
15.9
14.4
12.6
10.7
10.2
9.6

21.9
22.9
23.1
22.5
21.2
19.5
17.3
15.5
15.1
14.8

24.2
25.9
26.8
26.1
26.3
25.3
NA
NA
NA
NA

For an identification of accounts in this category, see Table H—11 and footnotes.
Excludes outlays for the national defense ana international affairs functions.
As defined in the national income and product accounts.
4 Data for 1984 and 1985 are included to be consistent with the multi-year planning system. They have not received as much review as the
estimates for 1982 and 1983.
N A = N o t available.
1

2
3

1 8

THE BUDGET FOR FISCAL YEAR 1983

Government expenditures until after World War II. In 1950, Federal grants to State and local governments were $2 billion, and by
1965 they had risen to $11 billion. In 1978, partially because of the
economic stimulus grants, they were $77.9 billion, an average
annual increase of 16% since 1965. In 1983 Federal grants are
expected to be 10.7% of total Federal outlays and 15.5% of domestic Federal outlays. Table H-6 shows historical data for grant
outlays since 1950.
Almost half of estimated 1983 grants are to States and localities as
payments for individuals.2 Most such grants are accompanied by
State or local matching payments. Among the larger of these programs are medicaid, assistance payments, housing assistance, and
nutrition programs for children. Supplemental security income became a direct Federal program in January 1974, as did the food
stamps program in 1971. Almost all of the outlays for these programs
were included as grants through the year prior to their assumption
by the Federal Government, but not since then.
Table H-6 also shows grants-in-aid as a percent of State and
2 Payments for individuals are defined as Federal budget outlays providing benefits in cash or in-kind that
constitute income transfers to individuals or families.

SPECIAL ANALYSIS H

Fiscal

1 9

Years

local expenditures. This percent increased from 15.3% in 1965 to
26.8% in 1978, and declined to 25.3% in 1981.
The charts show the growth of total governmental expenditures
since 1950, and these expenditures as a percent of gross national
product. Federal expenditures including grants have increased as a
percent of GNP from 16% in 1950 to 24% in 1981, while State and
local expenditures including grants have increased from 8% in
1950 to 12% in 1981.
GRANTS

ADMINISTRATION

The increase in grant expenditures since World War II was
accompanied by an increase in the number of grants designated for
specific purposes. This increase took place especially in the 1960's
and 1970's. These grants usually contained Federal legislative and
regulatory mandates, required matching funds from the recipient
governments, and gave little discretion in their use to State and
local officials. They came to be known as categorical grants, with
complex administrative requirements to ensure that their purposes
were met.
To combat this trend and to devolve authority, general-purpose
and broad-based grants have been emphasized in recent years.
Table H-7 shows the estimated effect of grants enacted in 1981
and proposed for consolidation in 1983. Outlays for these grants are

THE BUDGET FOR FISCAL YEAR 1983

Table H-7. BROAD-BASED AID ENACTED IN 1981 OR PROPOSED FOR 1983
(Outlays in millions of dollars)
Estimates
1982

Enacted in 1981:
State community development block grant for
small cities 1
State education block grant
Community services
Social services
Preventive health and health services
Alcohol, drug abuse, and mental health
Subtotal
Block grants enacted in 1981 and proposed for
change in 1983:
Services for women, infants, and children 2
Primary health care
Energy and emergency assistance 3
Subtotal

2
3

1985

(200)
578
100
1,974
80
409

(500)
441
100
1,974
81
432

(650)
335
100
1,974
81
432

3,862

3,141

3,028

2,922

313
1,574

900
313
1,168

1,000
417
1,168

1,887

2,381

2,585

162
37
900
516
380
2,181

392
643
2,250
603
380
75
2,181

441
836
1,800
633
380
150
2,181

4,176

6,524

6,421

9,698

12,137

11,928

Subtotal
Total

1984

(10)
666
348
2,400
72
376

Proposed consolidations:
Vocational and adult education
Education for the handicapped
Training and employment
Rehabilitation services
Child welfare grant
Rental rehabilitation grants
Combined welfare administration

1983

5,749

Outlays are based on estimated State participation and are included in community development block grants shown in table H - 8 .
Formerly maternal and child health block grant.
Formerly low-income energy assistance program.

estimated to be $9.7 billion in 1983. Table H-8 shows the much
greater importance of general-purpose and broad-based grants since
1972. General-purpose grants give State and local governments
almost complete discretion in determining their use; broad-based
grants give State and local governments considerable discretion
within a broadly defined program area, such as health or community development. In 1972 there were virtually no general-purpose or
block grants. For 1983, these grants are estimated to be one-fourth
of total grants-in-aid. Their share of the total declined somewhat
after the economic stimulus program reached its peak in 1978.
Despite the elimination of States from general revenue sharing,
this percentage remains about one-fourth through 1985.
Most general-purpose and broad-based grants reduce or eliminate
the requirement that recipients match Federal funds with their
own. Despite the increase in these grants, matching requirements
for all grants as a whole have not changed significantly. In 1981,
State and local governments were estimated to provide approximately $1 of matching funds for $2.39 of Federal aid; this ratio

SPECIAL ANALYSIS H

2 1

Table H-8. OUTLAYS FOR GENERAL-PURPOSE, BROAD-BASED, AND OTHER GRANTS
(Dollar amounts in millions)
Estimate

Actual

Subtotal, generalpurpose grants
Broad-based:
Enacted before 1981:
Community development
block grants
Comprehensive health
grants
Employment and training 2
Social services
Criminal justice assistance....
School aid in federally
affected areas
Local public works
Enacted in 1981 or proposed
for 1983 3
Subtotal, broad-based
grants
Other grants
Total
ADDENDUM: PERCENT OF
TOTAL
General-purpose grants
Broad-based grants
Other grants
Total

1985

1980

1981

1982

$6,243

$6,829

$5,137

$4,570

$4,567

$516

907

1,765

1,711

1,913

2,162

2,232

2,537

516

7,150

8,594

6,848

6,483

6,729

6,798

7,104

983

3,902

4,042

4,005

3,350

3,200

3,456

83
2,144
2,763
372

23
2,231
2,646
316

11
1,695

6
396

1,930
233

128
1,698
2,251
674

233

602

558

622
416

693
83

576
60

354
30

302
30

286
5

5,749

9,698

12,137

11,928

1972

General-purpose grants:
General revenue sharing
Other general purpose fiscal
assistance and T V A 1

1984

1976

1983

2,855
31,001

6,292
45,651

10,302
72,576

10,034
77,880

12,329
72,408

13,929
60,760

15,705
59,350

15,686
60,727

34,372

59,093

91,472

94,762

91,220

81,418

81,853

83,517

1.5%
8.3%
90.2%

12.1%
10.6%
77.3%

9.4%
11.3%
79.3%

7.2%
10.6%
82.2%

7.1%
13.5%
79.4%

8.3%
17.1%
74.6%

8.3%
19.2%
72.5%

8.5%
18.8%
72.7%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

For detail, see grants in the general purpose fiscal assistance function, Table, H—11. Amounts in Table H - 8 above include shared revenues
from the Tennessee Valley Authority, shown in the energy function.
2 Comprehensive Employment and Training Act (CETA), Title II A, B, and C. An additional $1.6 billion of CETA grant-in-aid outlays are
estimated for 1982, but they are limited to particular types of clientele (e.g. youth) and therefore are included in other grants, not broad-based
grants.
3 For detail, see table H-7.
1

declines slightly in 1983. The decrease in matching requirements for
general-purpose and broad-based aid has been partially offset by the
significant growth in programs such as medicaid that require a
larger than average matching share.
The chart shows that of all the grants to State and local governments in 1982 almost 90% is concentrated in only 20 programs.
Nevertheless, there are hundreds of categorical grants with different
matching requirements, timing difficulties, application procedures,
duplication of programs, and other administrative problems.
The chart also shows that there were 362 grants in 1980 and 221
in 1982, a reduction of 141, or about 40%. Most of the decline is the
direct result of the 9 new block grants enacted in 1981 and the

2 2

THE BUDGET FOR FISCAL YEAR 1983

elimination of many small programs. In view of the rapid growth
of the number of grant programs since the mid-1960's, this decline
is a major improvement. This simplification of Federal aid is expected to save a significant number of hours for State and local
governments.

In addition to the reduction in the number of programs, one
aspect of the administration's efforts at regulatory reform has been
a demonstration project aimed at identifying, evaluating, and simplifying or eliminating the mandatory administrative or procedural
requirements associated with Federal assistance. The project is
oriented toward program specific mandates that contribute to the
overhead cost of conducting and administering assistance programs. Mandates are those individual requirements contained in
an agency regulation or instruction. An average of 500 mandates
have been identified for each program. This intensive review was
applied on a test basis by four agencies (the Departments of Housing and Urban Development, Transportation, Education, and the
Environmental Protection Agency) for six major programs. Results
to date are significant:
—The Environmental Protection Agency has reviewed all the
mandates required by the construction grant program. As a
result, it has published a proposed rule in the Federal Register to

SPECIAL ANALYSIS H

2 3

eliminate 75% of the individually listed mandates. A review is
underway of those remaining agency-wide mandates governing
such activities as those to citizen participation, and the National
Environmental Policy Act. Further major reductions are anticipated.
—The Department of Transportation, in both proposed and final
rules recently published by the Federal Highway Administration, has achieved appreciable reductions in mandates in eight
highway program regulations, and in two guidance documents
prescribing requirements for the Urban Mass Transit Administration's mass transit capital grant program. For example, the
Federal Highway Administration published in December 1981,
a proposed rule revising noise abatement procedures for highway traffic and construction. It eliminates 65% of the mandates in the existing regulation.
—Proposed rules governing Federal assistance for educating
handicapped children of preschool and school age, to be published soon in the Federal Register by the Department of Education, will eliminate or amend 85% of the administrative and
procedural requirements on which the mandate review demonstrations project focused. The proposed rule will also significantly alleviate programmatic requirements related to how the
assistance is to be provided. A mandate review of the vocational rehabilitation program will be completed by the Department
of Education in March 1982; initial indications are that administrative and procedural burdens will be eased significantly.
—The Department of Housing and Urban Development community development block grant entitlement program will soon
publish for public comment in the Federal Register a proposed
rule reflecting a reduction of over 50% of the volume of the
current regulations.
The four agencies will complete the mandate reviews in these
programs within the next year.
Additional mandate reviews will be conducted in 1982, particularly where major simplification and elimination seems to be warranted, and where reductions in the mandate burden will benefit State
and local governments.
Additional efforts undertaken recently or in the last few years to
review and improve the system of intergovernmental aid include:
—Executive Order 12291, establishing for the first time a centralized mechanism for executive management of agency regulatory activities. For example, Federal agencies are required to
submit a cost-benefit analysis for any regulation having an
impact of more than $100 million.
—Establishment of the Presidential Advisory Committee on Federalism, which includes Cabinet members, state legislators,

2 4

THE BUDGET FOR FISCAL YEAR 1983

governors, mayors, county officials, members of Congress, and
private citizens. The Committee is advising the President with
respect to the objectives and conduct of the overall federalism
policy of the United States.
—Regional briefings sponsored by the White House, OMB, and
those Federal agencies with responsibility for administering
the block grants.
—Restructuring of 10 Federal Regional Councils to assist in implementing the new block grants, and to improve management
and coordination of Federal programs.
—Active Executive Branch participation in the Advisory Commission on Intergovernmental Relations (ACIR).
—Improvements in the Catalog of Federal Domestic Assistance,
the reference document used by communities and individuals
applying for Federal assistance.
—Improvements in the Federal Assistance Programs Retrieval
System (FAPRS). FAPRS uses computer terminals to permit
matching the needs of a community with the requirements of
Federal programs, and automatically identifies those programs
from the Catalog for which a community might apply. Changes
include more functional categories for program selection, and
more information advisory bulletins for users.
—Revised procurement standards. OMB Circular A-102, "Uniform administrative requirements for grants to State and local
governments," now includes streamlined procurement standards that place greater reliance on State and local purchasing
systems. The new standards permit governments with good
systems to have them certified in advance, keeping Federal
involvement in procurement under grants to a minimum.
—Establishment of the Federal Assistance Award Data System
(FAADS), to provide better information about current grant
funding to States. Data on all direct assistance awards are
being provided quarterly to the States and to the Congress.
In addition, a number of steps have been taken this year to
improve the financial management of Federal aid:
—Deregulation. Block grant programs were stripped of all but
essential requirements of law, and categorical programs had
regulations cut back significantly.
—Single audit. A single audit system was implemented for aid to
State and local governments that relies on their network of
audit and investigative resources.
—Cash management. The flow of assistance funds was streamlined by expanded use of electronic funds transfer and delayed
drawdown procedures.

SPECIAL ANALYSIS H

2 5

—Internal control. New administration guidelines require agencies to tighten up control systems associated with assistance
programs.
—Inspectors General. A reinvigorated Inspector General program in the grant-making agencies has come down hard on
fraud, abuse, and waste in assisted programs.
—Audit followup. The President has directed that new procedures be put in place to assure that audit findings are resolved
within 6 months.
OTHER SOURCES OF FEDERAL A I D

INFORMATION

The grant-in-aid series in the budget provides a comprehensive
picture of Federal grants-in-aid, which are programs financed but
not directly administered by the Federal Government. The Census
series (published in Governmental Finances) and the national
income and product accounts (NIA) series (published in Special
Analysis B and in the Survey of Current Business) are parts of a
broader statistical concept encompassing the entire economy, and
as a consequence grants-in-aid are defined somewhat differently
than in the budget. They both omit the following items that the
budget 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; and
—payments to private, nonprofit entities (such as nonprofit hospitals) that operate under State auspices or within a State
plan.
One major group of payments excluded in the budget definition
of grants but included in the Census and NIA series is payments
for research conducted by public universities. The budget series
excludes these payments because they are considered to be a purchase of services for the Federal Government rather than aid for
State or local programs. Since both Census and the NIA series
focus on total cash payments to State and local governments, they
count these as grants. A major item included only in the Census
definition is unemployment compensation for Federal employees,
ex-servicemen, and temporary extended benefits. These items were
either new or became large in 1976, when they were first included
in the Census data. One major kind of outlay included in the
budget and Census definitions but excluded from the NIA series is
grants to subsidize the operation of public enterprises, mainly
housing and transportation facilities. These are counted as subsidies by the Federal Government in the NIA rather than as grants.
Table H-9 shows these and other minor differences among the

THE BUDGET FOR FISCAL YEAR 1983

2 6

three series, but the differences are largely offsetting and, thus,
these three series exhibit similar patterns.
Table H-9. THREE MEASURES OF FEDERAL GRANTS-IN-AID TO STATE AND LOCAL GOVERNMENTS,
1975-80
(In billions of dollars)
1975

Budget (Special Analysis H)
Less principal exclusions:
Agricultural commodities
Geographical exclusions
Plus payments for research
Federal unemployment benefits and related
All other (net)
Federal payments (Census)
Less.Low-rent public housing
Federal unemployment benefits and related
All other (net)
Grants-in-aid (national income and product accounts)

1976

1977

1978

1979

1980

49.7

59.0

68.4

77.9

82.9

91.5

-0.5
-0.9
1.5
-0.2

-0.5
-1.0
1.8
10.6
-0.8

-0.6
-1.2
1.8
5.2
-0.6

-0.6
-1.6
2.2
1.2
0.1

-0.7
-1.8
2.4
0.8
1.6

-1.1
-2.0
2.9
1.3
-1.8

49.6

69.1

73.0

79.2

85.2

90.8

-1.3

-1.6

-1.8

-2.3

-2.8

-3.3

-10.6
0.6

-5.2
0.2

-1.2
-1.0

-0.8
-2.5

-1.3
0.5

57.5

66.3

74.7

79.1

86.7

48.4

In addition to these data sources, Federal Aid to States, published by the Department of the Treasury, lists grant outlays for
the most recently completed year by State for more than 100
programs, using the budget definition of grants. The Catalog of
Federal Domestic Assistance, prepared by the Office of Management and Budget and available from the Government Printing
Office, contains a detailed listing of grant-in-aid and other assistance programs; discussions of eligibility criteria, application procedures, and estimated obligations; and related information. This is a
primary reference source for communities wishing to apply for
grants-in-aid. The Federal Register is published daily by the Government Printing Office and has current information on agencies
that are accepting applications for specific programs. This source
also provides information on eligibility criteria and application
procedures.
THE STATE AND LOCAL GOVERNMENT SECTOR OF THE NATIONAL
INCOME AND PRODUCT ACCOUNTS 3

The national income and product accounts (NIA) provide a comprehensive statistical description of the U.S. economy that includes
State and local government receipts and expenditures. These data
measure the relationship between the State and local governments
as a sector of the economy and other sectors. The State and local
3 Special Analysis B provides general information on the Federal sector of the national income and product
accounts.

SPECIAL ANALYSIS H

2 7

data are presented here to provide a context in which to compare
the grants-in-aid.
There are three major differences between NIA data and a government's own budgetary accounting for receipts and expenditures.
First, financial transactions and the purchase and sale of land and
other existing assets are excluded from NIA data but are generally
included in budgetary data. Second, a large number of transactions
in the NIA accounts are recorded on an accrual basis, while many
governments show transactions on a cash basis. Third, NIA data
aggregate total State and local transactions, whereas many governments separate their general fund from special funds. As a result
of these differences, NIA totals are not the same as an aggregate of
these governments' financial budgets. However, the NIA data do
provide timely estimates of total State and local fiscal transactions
not otherwise available and, with care, can be used as financial
indicators.
Table H-10. NATIONAL INCOME AND PRODUCT ACCOUNTS, STATE AND LOCAL SECTOR
(Calendar years; in billions of dollars)
Surplus or deficit ( - )
Receipts

Five-year intervals:
1950
1955
1960
1965
1970
1975
Annually:
1976
1977
1978
1979
1980
1981 1

Expenditures

Social
insurance
funds

Total
sector

Operating
account

1.9
5.5

0.7
1.3
2.3
3.4
6.9
13.1

-1.9
-2.6
-2.2
-3.4
-5.1
-7.6

16.6
28.1
29.0
26.7
29.1
36.5

15.6
17.9
20.0
23.9
26.9
32.1

0.9
10.1
9.0
2.9
2.1
4.4

21.3
31.7
49.9
75.1
135.4
237.7

22.5
32.9
49.8
75.1
133.5
232.2

-1.2
-1.3
0.1

267.8
298.0
327.4
351.2
384.0
416.8

251.2
270.0
298.4
324.4
355.0
380.3

SEASONALLY ADJUSTED, ANNUAL RATES
1980:
1
II
Ill
IV
1981:
1
II
Ill

372.1
373.9
386.8
403.4

345.4
350.0
358.2
366.3

26.6
23.9
28.6
37.1

25.3
25.7
27.7
29.0

1.3
-1.7
0.9
8.1

411.7
413.6
419.4

374.8
377.5
382.1

36.9
36.1
37.2

30.4
31.7
32.7

6.6
4.3
4.6

* $50 million or less.
1 Preliminary.

NIA State and local sector.—Table H-10 is a historical tabulation
of State and local data with the surplus or deficit divided between

2 8

THE BUDGET FOR FISCAL YEAR 1983

two components, social insurance funds and the operating account.4 The social insurance funds, primarily retirement programs,
have been in surplus since before 1950. The funds accumulate
assets to pay for their future liabilities. Because these social insurance fund surpluses are not generally available to pay for deficits
in operating accounts, the operating account is generally thought
to be a better measure of State and local fiscal condition than the
surplus or deficit for the sector as a whole.
It is reasonable for the operating account to be in deficit since it
includes capital expenditures, often financed through borrowing,
and the account was in deficit in the 1950's and 1960's.
In the 1970's however, the account was in surplus several years.
Surpluses in 1972 and 1973 resulted from the first general revenue
sharing distributions and higher tax receipts generated by tax rate
increases and the rapidly expanding economy. In 1974, the operating account returned to a deficit. In part, this reflected a return to
previous patterns, as State and local expenditure increases absorbed the increased revenues. It also reflected the recession, with
State and local governments choosing to draw down balances accumulated during 1972-73 rather than enact new tax increases. Their
fiscal position improved substantially in 1976 compared with 1975,
and surpluses have continued into 1979. The operating account had
a surplus of $2.9 billion in 1979, and $2.1 billion in 1980. The surplus
is expected to increase in 1981.
DETAILED FEDERAL A I D TABLES

The following two tables present detailed Federal aid data for
the three budget years. Table H - l l , "Federal Grants to State and
Local Governments—Outlays and Budget Authority/' provides detailed budget authority and outlay data for grants and shared
revenues. Table H-12, "Credit Assistance to State and Local Governments," provides information on direct and guaranteed loans to
State and local governments.

4 The operating account contains all transactions except those of social insurance funds, including expenditures for capital investment.

Table H - l l .

FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—OUTLAYS AND BUDGET AUTHORITY—Continued
(In millions of dollars)

1982
estimate

1981
actual

OUTLAYS
30
45

30
52

1983
estimate

Function, agency and program

National defense:
Department of Defense—Military:
National Guard centers construction
34
Federal Emergency Management Agency
72
106

Total, national defense

480
137

515
163

Energy:
Department of Commerce: Energy conservation grants
229
Tennessee Valley Authority
180

617

679

409

17
6
28

13
4
37

50
6
6
2
27

50
47

39
45

13
3

4
64
276
8
128

38
179
2
133

16
292
141

Total, energy
Natural resources and environment:
Department of Agriculture:
Watershed and flood prevention operations
Soil and water conservation grants
Resource conservation and development
Forest research
State and private forestry
Department of Commerce:
NOAA—Coastal zone management
NOAA—Operations research and facilities
Department of the Interior:
National recreation and preservation
Urban park and recreation fund
Land and water conservation fund
Land acquisition
Fish and Wildlife grants

Functional
code 1

1981
actual

1982
estimate

1983
estimate

BUDGET AUTHORITY
051
054

050

272
271

420

270

420

301
302
302
302
302

14
6
42

11
5
35

30
9

302
306

45
50

-9
44

1
171

303
303
303
303
303

i32

10
145

*8
H
O
HH

>
r
>

>
CO
i—i
CO
K

3
26
2
3

159

Table H - l l .

FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—OUTLAYS AND BUDGET AUTHORITY—Continued
(In millions of dollars)

1981
actual

1982
estimate

1983
estimate

Function, agency and program

OUTLAYS
44

26
1
11

76
5
6

96
5

300
3,881

229
4,050
12

210
3,350
25

5,110

4,166

7
4,944

22
*

Historic preservation fund
Miscellaneous permanent appropriations
Office of Surface Mining, Reclamation, and Enforcement.
Bureau of Mines
Youth conservation corps
Environmental Protection Agency:
Abatement, control, and compliance
Construction grants
Hazardous substance response trust fund
Water Resources Council
Total, natural resources and environment.

Functional
code 1

303
303
302
306
302

1981
actual

1982
estimate

1983
estimate

BUDGET AUTHORITY
24
25
*

71
18

84
9

115

241
2,400
23

184
2,400
33

304
304
304
301

297
1,605

300

2,534

3,082

2,963

352
352
351
352

117
304
409
2

129
314
458
1

136
312

350

831

902

448

117
301
409
2

127
310
458
1

Agriculture:
Department of Agriculture:
Cooperative State research service.,
133
Extension service
308
418
Commodity Credit Corporation
Agricultural Marketing Service

829

896

859

2
2

Commerce and housing credit:
Department of Agriculture: Rural housing supervisory assistance grants..
2
Department of Commerce: Minority business development

371
376

1
2

370

401

Total, agriculture..

Total, commerce and housing credit

Transportation:
Department of Transportation:
14
Highway beautification

Interstate transfer grants—highways
Federal aid highways (trust fund)
Highway related safety grants
Appalachian highway system
Other highway aid
National Highway Traffic Safety Administration
Federal Railroad Administration
Urban Mass Transportation Administration
Airport and airway trust fund
State boating safety assistance
National recreational boating safety
Research and special programs
Washington Metropolitan Area Transit Authority
Total, transportation
Community and regional development:
Funds appropriated to the President:
Appalachian regional development programs
Appalachian housing fund
Disaster relief
Public works acceleration
Department of Agriculture:
Rural development planning grants
Rural water and waste disposal grants
Rural development grants
Rural community fire protection grants
Department of Commerce:
Economic development assistance programs
Local public works program
Drought assistance program
Regional development programs
Regional development commissions
NOAA: Coastal energy impact fund
Energy conservation grants

401
401
401
401
401
401
401
401
402
403
403
407
401
400

8,869
-16

288
8,101

150
7,632

57
106
77
4,585
570

43
102
60
3,432
450

102
20
3,089
450

3
66

2
52

5
2
52

14,323

12,531

11,581

co
M
O
HH

>
f

>
452
452
453
452

292

144

158

202

452
452
452
452

5
200
5
4

452
452
453
452
452
452
452

365
19
25
10

>
218

55
ffi
i25

120

3
198

-7
-14

Table H - l l .

FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—OUTLAYS AND BUDGET AUTHORITY—Continued

CO
K>

(In millions of dollars)
1981
actual

1982
estimate

1983
estimate

Function, agency and program

OUTLAYS
4,042
371

4,005
525

3,350
550

39
9
156
10
1
18
12

20
5
112
8
1
17
14

6,124

5,933

70
8
*

19
16
5,010

6
25

5
368
2,646
2,707
54
180

5
255
2,912
2,168
46
493
286

5
11
1,974
2,270
39
383
136

5
52
9

5
68
25

4
64
18

Department of Housing and Urban Development:
Community development grants
Urban development action grants
Rental rehabilitation grants
Planning assistance
Neighborhood self-help development program
Urban renewal programs
Other categorical programs replaced by block grants
New Community Development Corporation
Department of the Interior: Bureau of Indian Affairs
Neighborhood Reinvestment Corporation
Total, community and regional development
Education, training, employment, and social services:
Department of Commerce:
Job opportunities program
Public telecommunications facilities, planning and construction
Department of Health and Human Services:
Services to selected groups
Work incentives
Social services block grant
Services to selected groups
Research and demonstration projects
Child welfare block grants
Community services
Department of the Interior:
Operation of Indian programs
Indian education assistance
Impact aid construction

Functional
code 1

1981
actual

1982
estimate

1983
estimate

BUDGET AUTHORITY
451
451
451
451
451
451
451
451
452
451

3,695
675

-4
18
12

17
14

19
16

450

5,495

4,578

4,419

3
GO
o
>

504
503

501
504
506
506
506
506
506

5
351
2,399
2,470
47
174

5
232
2,400
2,447
39
465
336

501
501
501

5
77
22

5
67
8

3,456
440

16
1

3,456
440
150

H
ffi
M
W
d
U
O
M
H

M
>

5
1,974
2,231
26
380
91
4
47

W
h-*
00
CO

5,926
52
852
51
730
683
576
162

3,266
53
55
-7
532
551
183
172

1,531
1

723
3,345
627
1,023
160
78
11
80
20

1,111
2,944
583
1,255
138
75
1
87
19

632
2,537
527
871
127
55

21,146

17,310

12,281

14
444
336
33
137

92
16

968
114
664
240

1,148
151
684
233

16,833

17,823

1,627
92
147
125
385
17,006

40
5

48
5

49
4

18,895

20,122

19,469

See footnotes at end of table.

Department of Labor:
Employment and training assistance
Community service employment for older Americans
Temporary employment assistance
Grants to States for unemployment insurance and employment
Unemployment trust fund: Training and employment
Department of Treasury: Impact aid
Community Services Administration
Corporation for Public Broadcasting
Foundation for Education Assistance:
Vocational and adult education
Compensatory education for the disadvantaged
Special programs and populations
Education for the handicapped
Bilingual education
Student financial assistance 2
Higher and continuing education
Libraries
National Foundation on the Arts and the Humanities
Total, education, training, employment, and social services.
Health:
Special Action Office for Drug Abuse Prevention
Department of Agriculture-. Food Safety and Inspection Service
Department of Health and Human Services:
Health Services Administration 2
Centers for Disease Control
Alcohol, Drug Abuse, and Mental Health Administration 2
Health Resources Administration
Office of Assistant Secretary for Health: health block g r a n t s 2
Medicaid 2
Department of Labor:
Occupational Safety and Health Administration
Mine Safety and Health Administration
Total, health

504
504
504
504
504
501
506
503

6,070
67
431
24
751
635
480
162

2,373
16

1,800

19
505
440

14
444
284

172

137

501
501
501
501
501
502
502
503
503

775
3,098
530
1,015
147
77
5
84
24

629
2,469
452
778
118
74

450
1,937
416
836
89

58
21

500

19,946

14,147

11,178

§
>
r
>

$
co
I—I

554
554

32
1,422
62

551
551
551
551
551
551

968
115
549
195

859
138
432
149

17,440

17,968

39
514
12,925

554
554

44
6

47
3

51
5

550

19,348

19,627

15,051

U1
ffi

CO
00

Table H - l l .

FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—OUTLAYS AND BUDGET AUTHORITY—Continued
(In millions of dollars)

1981
actual

1982
estimate

1983
estimate

Function, agency and program

OUTLAYS
17
7
285
489

20
8
418
774

100
3,259
928
104

33
2,581
914
137

45
8,462

23
8,070

1,608
641
1

1,687
736
1

3,105
929
1
1,315
46

3,493
1,278
4
1,541

3,789
1,110
6
1,605

21,341

21,718

20,331

21
5
365
578
780
42
2
2,561
127
96
15
5,422
387
1,655
1,168
597
*

Income security:
Department of Agriculture:
Rural housing for domestic farm labor 2
Mutual and self-help housing 2
Agricultural Marketing Service 2
Food stamp program 2
Nutrition assistance for Puerto R i c o 2
Nutrition assistance for the territories 2
Special milk program 2
Child nutrition programs 2
Special supplemental food programs (WIC) 2
Food donations program 2
Department of Health and Human Services:
Supplemental security income program 2
Assistance payments programs 2
Child support enforcement
Combined welfare administration
Emergency and energy assistance 2
Refugee and entrant assistance 2
Payments to States from receipts for child support
Department of Housing and Urban Development:
Subsidized housing programs 2
Operation of housing projects 2
Congregate services program 2
Department of Labor: Unemployment trust fund (training and employment)
Community Services Administration 2
Total, income security

Functional
code 1

1982
estimate

1981
actual

1983
estimate

BUDGET AUTHORITY

377
507

14
4
457
809

114
3,272
924
129

27
2,693
931
141

609
609
609
609
609
609
609

35
8,440

22
6,051

1,714
745

1,574
628

604
604
604
603
609

17,785
1,071

568
1,293

-3,731
1,075

1,252

1,408

1,605

600

36,392

16,621

12,675

604
604
605
605
605
605
605
605
605
605

12
405
546
825
44
2,673

H
ffi
M
W
CI
d
O
M
H
^
O
W

65
15
5,422
387
1,655
1,168
509
*

Cfl
O
>
r
Kj
M
>
w
00
00

41
1
9
23
1

43
4
9
7
3

8
307
1

8
225

10
6
5

Veterans benefits and services:
Veterans Administration:
Medical c a r e 2
Medical administration and miscellaneous operating expenses
Grants for construction of State extended care facilities 2
Assistance for health manpower training institutions
Grants for the construction of State veterans cemeteries
Total, veterans benefits and services

Administration of justice:
Department of Housing and Urban Development: Fair housing assistance....
Department of Justice:
National Institute of Corrections
11
Law enforcement assistance
84
Research and statistics
*
Revolving fund
Equal Employment Opportunity Commission
17
6

333

257

118

73
117
18

81
101
9

General government:
Department of the Interior:
62
Administration of territories
101
Trust Territory of the Pacific Islands
Office of Personnel Management (intergovernmental personnel assistance)

208

190

163

241
5

242
5

342
5

104
436
12
113

96
594
9
57

45
756
4
54

See footnotes at end of table.

Total, administration of justice

Total, general government
General purpose fiscal assistance:
Department of Agriculture: Forest Service permanent appropriations
Department of Defense—Civil: Water resources permanent appropriationsDepartment of the Interior:
Payments in lieu of taxes
Bureau of Land Management permanent appropriations
Fish and Wildlife Service
Payments to U.S. territories
Internal revenue collections for the Virgin Islands

703
703
703
703
705

700

43
4
16

751

754
754
754
754
751

8
82

9
61

750

113

806
806
806

73
95
14

85
97

52
76

800

182

128

852
852

241
5

242
5

342
6

852
852
852
852
852

103
436
14
66

96
594
10
54

45
756
4
54

15
5

18
2

U1
w
o
>
t-1
>

>
5
w
HH
GO

CO
cn

Table H - l l .

FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS—OUTLAYS AND BUDGET AUTHORITY—Continued
(In millions of dollars)

1981
actual

1982
estimate

1983
estimate

Function, agency and program

Functional
code 1

58
240
365
*

4,570
2
77
265
402
*

4,567
81
270
425
*

6,710

6,319

6,549

94,762

91,220

81,418

Department of the Treasury:
State and local government fiscal assistance trust fund
Antirecession financial assistance fund
U.S. Customs Service
Internal revenue collections for Puerto Rico
Federal payment to the District of Columbia
Federal Energy Regulatory Commission: Payments to States under Federal Power Act
Total, general purpose fiscal assistance
Total, grants-in-aid

* $500 thousand or less.
1 For a description of these codes, see Table 13 in the Budget of the United States Government, 1983.
2 Programs included in the "Grants for payments to individuals" category shown in Table H-6.

1982
estimate

1983
estimate

BUDGET AUTHORITY

OUTLAYS
5,137

1981
actual

851
852
852
852
852
852

4,570

4,567

71
236
365

77
265
402

81
270
425

850

6,109

6,311

6,549

105,802

78,259

65,176

H
ffi
M
ttf

a
o
w
H

o
S3

Cfl
o
>
r
KJ

>m
w

Table H - 1 2 .

CREDIT ASSISTANCE TO STATE AND LOCAL GOVERNMENTS 1
(In millions of dollars)
Direct loans

Function, agency and program

Natural resources and environment:
Department of the Interior: Drought emergency loan fund..
Agriculture:
Department of Agriculture:
Agriculture credit insurance fund..
Commerce and housing credit:
Department of Agriculture:
Rural housing insurance fundTransportation:
Department of Commerce:
Federal ship financing fund ( M A R A D ) .
Department of Transportation:
Federal aid highways (trust fund)..

Right-of-way revolving fund.

Urban mass transportation fund..

See footnotes at end of table.

1981
actual

New loans
Net loans
Outstandings.

1982
estimate

-5
25

Guaranteed loans
1983
estimate

- 2

- i

1981
actual

1982
estimate

1983
estimate

New loans
Net loans
Outstandings.
New loans
Net loans
Outstandings.

1
*

New loans
Net loans
Outstandings..

31
21
192

New loans
Net loans
Outstandings..

12
12
15

19
19
34

New loans
Net loans
Outstandings..

7
7
195

45
45
240

240

New loans
Net loans
Outstandings.

50
38
230

25
12
242

Table H - 1 2 .

CREDIT ASSISTANCE TO STATE AND LOCAL GOVERNMENTS ^Continued

CO
00

(In millions of dollars)
Direct
Function, agency and program

Total, transportation

Community and regional development:
Department of Agriculture.Rural development insurance fund
Department of Commerce:
Drought assistance program

Coastal energy impact fund
Department of the Interior:
Emergency fund
Department of Housing and Urban Development:
Urban renewal programs

Revolving fund (liquidating programs)

1981
actual

New loans
Net loans
Outstandings

loans

1982
estimate

19
19
257

Guaranteed
1983
estimate

64
64
321

32
32
353

1981
actual

31
21
192

loans

1982
estimate

50
38
230

1983
estimate

25
12
242

S3
M

New loans
Net loans
Outstandings

867
10
242

New loans
Net loans
Outstandings

1
-6
91

-8
83

-8
75

New loans
Net loans
Outstandings

34
34
67

30
29
96

15
13
109

866
-36
206

a
a
o

668
1
207

M
H
^

O
W

o
>
f
M
>
W

New loans
Net loans
Outstandings

-5
25

-2
22

New loans
Net loans
Outstandings

61
-9
12

30
-12

— 17
416

-18
399

1 New loans
1 Net loans
1 Outstandings

...

-2
20
13
-94
181
38
661
1,060

5
-45
136

5
-45
91

Community development loans.,

Total, community and regional development.,

Education, training, employment and social services:
Foundation for Education Assistance:
Student loan insurance fund

Student financial assistance-

Department of the Treasury:
Higher education facilities loan fund..

New loans
Net loans
Outstandings
New loans
Net loans
Outstandings..

Income security:
Department of Housing and Urban Development:
Low-rent public housing
See footnotes at end of table.

926
-46

New loans
Net loans
Outstandings.
New loans
Net loans
Outstandings.

720
666
1,471

120
106
180

135
98
278

59
255

125
61
316

140
53
369

-66

2
2
97

New loans
Net loans
Outstandings.

20
1

- 6

153

147

— 17
945

-19
926

-20

159
4
—3
271

4
—3
268

3
-4
264

-17
945

-19
926

-20

New loans
Net loans
Outstandings.

- 6

-5
175

- 6

180

New loans
Net loans
Outstandings.

4,392
180
368

3,000
-50
318

Total education, training, employment, and social New loans
Net loans
services.
Outstandings.
Health:
Department of Health and Human Services:
Medical facilities guarantee and loan fund..

962
7
852

45
28
74

170
2,000
318

906

Table H - 1 2 .

CREDIT ASSISTANCE TO STATE AND LOCAL GOVERNMENTS

^Continued

(In millions of dollars)
Direct loans
Function, agency and program

General GovernmentDepartment of the Interior:
Administration of territories
General purpose fiscal assistance.Department of the Treasury:
New York City loan guarantees
Other independent agencies:
Loans to the District of Columbia

Total, general purpose fiscal assistance

1982
estimate

1981
* actual

New loans
Net loans
Outstandings

Guaranteed loans
1983
estimate

1981
actual

1982
estimate

30
30
96

300
211
938

300
207
1,144

1
18

-18

New loans
Net loans
Outstandings
New loans
Net loans
Outstandings

214
107
1,567

225
117
1,684

145
116
1,799

New loans
Net loans
Outstandings

214
107
1,567

225
117
1,684

145
116
1,799'

1983
estimate

-1

3
M

W
C

a
o
w
H

-132
1,012

o
»
Cfl
o
>
r

300
211
938

300
207
1,144

K!
w
>

-132
1,012

w
oo
oo

Grand total

New loans
Net loans
Outstandings

5,598
293
3,699

4,220
48
3,747

2,901
795
4,542

398
148
2,428

508
316
2,744

167
-87
2,656

1 Only direct loans are included in budget outlays. New direct loans less loan repayments, sales, etc., are net loans, which are counted in the budget as outlays. Guaranteed loans are non-Federal loans guaranteed by the Federal government.
For a discussion of credit in the budget, see Special Analysis, F, "Federal Credit Programs"

SPECIAL ANALYSIS I

CIVILIAN EMPLOYMENT IN THE
EXECUTIVE BRANCH

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

SPECIAL ANALYSIS I
CIVILIAN

EMPLOYMENT

IN T H E

EXECUTIVE

BRANCH

This Administration is committed to reducing Federal civilian
employment.
• As the first official act after inauguration, the President instituted a freeze on Federal civilian hiring.
• Subsequently, in the March 1981 revision of the 1982 Budget,
significant reductions in nondefense agency employment were
proposed.
• In September, the President announced the goal of a further
reduction of 75,000 workyears in nondefense agency employment, during the period 1982-1984.
F U L L - T I M E EQUIVALENT OF TOTAL FEDERAL CIVILIAN
IN THE EXECUTIVE

EMPLOYMENT

BRANCH

Control of Federal agency civilian employment was shifted to a
full-time equivalent (FTE) or workyear basis for the executive
branch beginning with fiscal year 1982. (Section 904 of the 19,82
Defense Authorization Act (Public Law 97-86) exempts the Department of Defense from full-time equivalent employment controls.
Postal Service employment, which by law is not subject to Presidential control, is also excluded.)
The estimated workyears for the executive branch, excluding
employment exempt from ceilings (but including the Department of
Defense) are:

Fiscal year
1981

Full-time equivalent employment:
Full-time permanent
Other than full-time permanent
Total

1982

1983

1,867,600
243,100

1,891,300
189,100

1,874,600
179,100

2,110,700

2,080,300

2,053,700

Full-time permanent employment is expected to account for 91
percent of the total workforce in 1983. The remainder is made up
of part-time employees, intermittent employees (those employed on
an irregular basis), and full-time temporary employees (generally,
in positions occupied for less than 1 year).

THE BUDGET FOR FISCAL YEAR 1983

Table 1-1 is a tabulation of full-time equivalent employment
estimates for the major departments and agencies of the executive
branch.
Table 1-1. FULL-TIME EQUIVALENT OF TOTAL FEDERAL CIVILIAN EMPLOYMENT IN THE EXECUTIVE
BRANCH 1
(Excluding the Postal Service)
Fiscal year
1981
estimate 2

Agriculture
Commerce 4 5
Defense—civil functions
Health and Human Services 6
Housing and Urban Development
Interior 5 6
Justice56
Labor
State
Transportation 4
Treasury 6
Environmental Protection Agency
National Aeronautics and Space Administration
Veterans Administration
Other:
Foundation for Education Assistance 6
General Services Administration
International Communication A g e n c y 6
International Development Cooperation
Agency
Nuclear Regulatory Commission
Office of Personnel Management
Panama Canal Commission
Small Business Administration
Tennessee Valley Authority
Miscellaneous 5 6
Undistributed reduction
Subtotal
Defense—military functions 6
Subtotal
Contingencies 8
Total

1982 revised
Budget
estimate 3

1982 current
estimate

1983 estimate

1984 estimate

117,300
52,600
34,400
148,400
16,100
85,900
56,900
22,600
23,400
58,800
123,900
12,700

121,000
45,500
32,300
154,400
15,700
87,400
55,100
21,600
22,900
69,300
124,400
12,900

117,000
45,600
32,300
147,600
14,900
85,000
56,400
19,200
23,000
60,100
122,200
12,200

111,000
40,500
30,700
141,400
14,400
81,600
55,800
18,600
23,300
61,900
123,000
10,500

108,900
38,200
29,100
137,600
14,100
79,300
54,400
18,400
23,500
62,500
122,200
10,500

22,600
214,100

22,700
209,600

22,500
215,900

22,000
216,800

22,000
218,900

6,200
34,000
7,900

5,300
32,800
7,600

5,400
32,300
7,900

4,800
31,000
7,900

4,800
29,500
7,900

5,800
3,400
7,200
8,900
5,000
50,100
45,500

5,800
3,400
6,600
9,100
4,700
44,800
47,200

5,700
3,400
6,400
9,000
4,500
42,500
43,100

5,600
3,400
5,900
9,000
4,200
41,400
40,700

5,400
3,300
5,800
9,000
4,100
40,300
39,900
-2,500

1,163,700 1,162,100
947,000
937,700

1,134,100
945,200

1,105,400
947,300

1,087,100
947,000

2,110,700 2,099,800
1,000

2,079,300
1,000

2,052,700
1,000

2,034,100
1,000

2,110,700 2,100,800

2,080,300

2,053,700

2,035,100

Excludes developmental positions under the worker-trainee opportunity program (WTOP) as well as certain statutory exemptions.
Data are estimated because most executive branch agencies were not reporting full-time equivalent (FTE) information prior to October 1981.
As contained in the revised 1982 Budget, transmitted to the Congress in March 1981.
4 Reflects the transfer, during 1981, of the Maritime Administration from the Department of Commerce to the Department of Transportation.
5 The budget proposes dismantlement of the Department of Energy (DOE), effective October 1, 1982. Employment data for activities previously
performed by DOE are included in the agencies that are proposed to assume these activities.
6 The budget proposes dismantlement of the Department of Education (DEd), effective October 1, 1982. Employment data for activities
previously performed by DEd are included in the agencies that are proposed to assume these responsibilities.
7 Section 904 of the 1982 Defense Authorization Act (Public Law 9 7 - 8 6 )
exempts the Department of Defense from full-time equivalent
employment controls.
8 Subject to later distribution.
1

Table 1-1 allocates to the agencies a 72,500 full-time equivalent
(workyear) nondefense reduction from the 1982 revised estimates to
the 1984 estimates. This accounts for 97 percent of the 75,000

SPECIAL ANALYSIS H

reduction goal set by the President. An increase of 9,300 full-time
equivalents was required for Veterans Administration medical care
after the 75,000 reduction was announced. Employment in the
remaining nondefense agencies was reduced by 81,800.
SIGNIFICANT CHANGES IN FULL-TIME EQUIVALENT

EMPLOYMENT

Realignment of the Education and Energy functions will result
in a savings of 4,700 workyears from the revised 1982 Budget to
1984. Actions taken to reduce or eliminate energy programs, together with dismantling the Department of Energy, will save 4,100
workyears from 1982 levels. Overhead activities alone will account
for almost 2,300 workyears of these savings. Actions taken to
reduce or eliminate education programs, the transfer of certain
programs to other agencies, and the replacement of the Department of Education with a smaller, more efficient Foundation for
Education Assistance will result in savings of 600 workyears.
Most agencies show decreases, in table 1-1, from the 1982 estimates in the revised 1982 Budget to the corresponding estimates
for 1984.
• Department of Agriculture (-12,100)—Programmatic reductions and increased efficiencies are planned in: the Forest
Service (about one-half of the total reduction), the Animal and
Plant Health Inspection Service, the Farmers Home Administration, the Soil Conservation Service, and in science and
education programs.
• Department of Commerce (—7,300)—A net decrease will
result from completion of the Decennial, Economic and Agricultural Censuses, the termination of the Economic Development Administration, the phasedown or elimination of National Oceanic and Atmospheric Administration weather and
marine related services and research activities. Additional
reductions are associated with the energy functions being
transferred to the department. A planned increase of about
400 workyears is intended to reduce the backlogs in the
Patent and Trademark Office and to expand the Foreign Commercial Service overseas for export development.
• Department of Defense—civil functions (—3,200)—Reductions
are the result of declining budget and program levels, changing State and private sector capabilities, and administrative
streamlining (e.g., consolidation of finance and accounting
centers). Reductions due to declining program levels are cutbacks in real estate and construction management personnel
and the completion of 20-25 projects per year. Private sector
dredging capability is increasing, with correspondingly less
need for dredges operated by Federal employees.

THE BUDGET FOR FISCAL YEAR 1983

• Department of Health and Human Services ( — 16,800)—The
Department will reduce employment by: converting categorical grants to block grants for health, social and community
services programs; decreasing regulatory requirements for
health and social services programs and eliminating overhead
functions, closing (or returning to community control) Public
Health Service Hospitals; contracting out services to be performed by the private sector where it is cost effective in
accordance with reviews required under OMB Circular No. A 76; and eliminating excessive overhead functions.
• Department of Housing and Urban Development ( — 1,600)—
This decrease is due to reductions in departmental decisionmaking and oversight in favor of State and local discretion in
those programs that directly affect them.
• Department of the Interior (—8,100)—Declining staff levels
will be achieved through reductions in overhead (particularly
in the Bureau of the Indian Affairs), closing some facilities,
streamlining regulatory processes, and use of less labor intensive methods of natural resource management.
• Department of Labor ( — 3,200)—Some reductions will occur in
virtually all activities, reflecting both reductions in less essential programs and increased operating efficiencies. Major reductions will occur in the Employment and Training Administration ( — 1,000), where reduction and consolidation of training and employment programs will result in greatly simplified new programs, and in the Mine Safety and Health Administration (—1,000), where legislation will be proposed to
eliminate thousands of redundant and wasteful visits to mines
that have not been found to be hazardous.
• Department of Transportation (—6,800)—Major components of
the net decrease include a reduction in workyears for air
traffic controllers as a result of a reevaluation of needs after
the air controllers strike; a reduction due to the planned
transfer of the Alaskan railroad; and overall staffing reductions throughout the department.
• Department of the Treasury ( — 2,200)—Reductions will occur
in selected activities with staffing held relatively constant in
direct law enforcement and revenue collection functions. Decreases will be achieved through the streamlining of current
operations, increased efficiencies, and a major reorganization
and termination of the Bureau of Alcohol, Tobacco and Firearms as a separate entity.
• Environmental Protection Agency (—2,400)—Reductions are
due to elimination of duplicative activities, reduction of Federal oversight and control of State activities and major gains

SPECIAL ANALYSIS H

in efficiency from reorienting and streamlining the agency's
management structure.
• General Services Administration ( — 3,300)—Lower staff levels
will result primarily from contracting out those functions
that can be more economically performed by the private
sector under the guidelines of OMB Circular No. A-76.
A few agencies show increases.
• Department of Defense—military functions ( + 9,300)—This increase is for improved readiness, and for increased workloads
in defense industrial activities.
• Veterans Administration ( + 9,300)—Additional staffing is required to meet the needs of the Veterans Administration
Medical Care System.
• State Department ( + 600)—Additional personnel resources are
needed for augmented political and economic reporting and
analysis from key countries, additional security and communications capabilities, and enhanced administrative support for
U.S. agencies operating in diplomatic missions.
END-OF-YEAR EMPLOYMENT LEVELS

Another way to look at Federal employment is on the basis of
the number of employees expected to be on the rolls at the end of a
fiscal year.
Full-time permanent employment in the executive branch at the
end of 1983 is estimated to be 1,873,600, excluding 542,600 Postal
Service employees. (Postal Service employees are not under the
President's jurisdiction.) Actual full-time permanent employment
as of September 30, 1981, was 1,851,045, a reduction of about 21,800
full-time permanent employees since January 1981, when this administration came into office.
Total Federal civilian employment in the executive branch is
estimated to be 2,077,900 by the end of 1983, excluding 635,600
Postal Service employees.
The estimates shown in table 1-2 for total executive branch
employment reflect the fractional counting of part-time permanent
positions (based on the number of hours per regularly scheduled
workweek) as required by the Federal Employees Part-Time Career
Employment Act of 1978 (Public Law 95-437).
Table 1-2 shows Government-wide Federal civilian employment,
i.e., the number of persons employed as of the end of each fiscal
year displayed. Information on Postal Service employment (including that of the Postal Rate Commission) is also shown, together
with data for the legislative and judicial branches and for active
duty military personnel.

THE BUDGET FOR FISCAL YEAR 1983

The Department of Defense, in its military functions, is expected
to increase from 44.7% of Executive Branch civilian employment in
1981 to 45.6% in 1983.
Table 1-2. TOTAL FEDERAL EMPLOYMENT END-OF-YEAR
September 30
Description

Civilian employment in the executive branch:
Full-time permanent
Other than full-time permanent 1
DOD-military functions
Non-DOD
Subtotal
Postal Service:
Full-time permanent
Other than full-time permanent
Subtotal
Special

categories 2
Subtotal, executive branch civilian employment

Military personnel on active
Department of Defense
Department of Transportation (Coast Guard)

1981 actual

1982 estimate

1983 estimate

1,851,045
246,087
(937,819)
(1,159,313)

1,888,000
214,400
(947,000)
(1,155,400)

1,873,600
204,300
(947,000)
(1,130,900)

2,097,132

2,102,400

2,077,900

543,504
119,664

543,000
98,300

542,600
93,000

663,168

641,300

635,600

26,963

26,500

2,787,263

2,770,200

2,740,000

2,082,183
39,819

2,110,300
36,900

2,147,600
37,100

2,122,002

2,147,200

2,184,700

4,909,265

4,917,400

4,924,700

duty: 3

Subtotal, military personnel
Total, executive branch employment
Legislative and judicial personnel: 4
Full-time permanent
Other than full-time permanent
Subtotal, legislative and judicial branches
Grand total

32,844
21,423
54,267
4,963,532

Reflects fractional counting of part-time permanent positions, pursuant to the provisions of Public Law 9 5 - 4 3 7 .
2 Developmental positions under the worker-trainee opportunity program; disadvantaged summer and part-time workers under such Office of
Personnel Management programs as Summer Aids, stay in school, and Junior Fellowship; and certain statutory exemptions.
3 Excludes reserve components.
4 1982 and 1983 estimates are not available for the legislative and judicial branches. Also, excludes members and officers of the Congress.
1

PERSONNEL COMPENSATION A N D BENEFITS

Direct compensation of the Federal work force includes base pay,
merit pay, cash incentive and performance awards, meritorious and
distinguished executive awards, premium pay for overtime, Sunday
and holiday pay, differentials for night work and overseas duty,
and flight and other hazardous duty pay. Related compensation in
the form of personnel benefits consist primarily of the Government's share (as employer) of health insurance, term life insurance,
and Federal retirement and old-age survivors' disability insurance.
Also included are personnel costs for uniform allowances (when
paid in cash), cost-of-living and overseas quarters allowances, and,
in the case of uniformed military personnel, reenlistment bonuses.

SPECIAL ANALYSIS H

The Administration plans to withdraw the legislative proposal
for a comprehensive reform of Federal pay setting that it made last
year in order to consider Congressional objections that were raised
and other proposals that have been made since. A new review of
Federal civilian compensation will be initiated. This review will
have the objective of recommending revised Federal civilian employee pay setting and benefit structures designed to serve the
Government's long-term needs. It is anticipated that the review's
recommendations will be available in time to permit a new legislative proposal to be submitted to the Congress with the 1984 Budget.
As part of the overall effort to reduce Government spending in
support of the President's economic recovery program, the budget
assumes an October 1982 pay increase for the white collar workforce of 5.0 percent, and a blue collar pay increase of the same
amount. The budget assumes an October 1982 pay increase for
military personnel of 8 percent.
Obligations for civilian personnel compensation and benefits in
1983 are projected to reach $62.5 billion, excluding the Postal Service.

THE BUDGET FOR FISCAL YEAR 1983

1 0

Table 1-3. PERSONNEL COMPENSATION AND BENEFITS
[In millions of dollars]
Description

Civilian personnel costs:
Executive branch: 1
Direct compensation
%
Personnel benefits 2
DOD-military functions, civilian personnel:
Direct compensation
Personnel benefits
Subtotal
Legislative and judiciary: 3
Direct compensation
Personnel benefits
Subtotal

1981 actual

Military personnel costs:5
Direct compensation
Personnel benefits 6
Subtotal

1983 estimate

47,547
8,608

48,220
9,205

50,134
9,456

(19,956)
(2,064)

(20,528)
(2,205)

(21,728)
(2,329)

56,155

57,425

59,590

856
82

936
93

982
99

938

1,029

1,081

1,274

1,839

57,093

59,728

62,510

31,414
2,738

38,060
2,851

42,208
3,417

34,152

40,911

45,625

4,516

3,007

Allowance for civilian pay raise 4
Total, civilian personnel costs

1982 estimate

Allowance for military pay raise
Total, military pay costs

34,152

45,427

48,632

Grand total, personnel costs

91,245

105,155

111,142

1 Excludes the Postal Service, reflecting conversion to independent status, consistent with the Postal Service Reorganization Act of 1970.
2 In addition to the employing agency's contributions for the costs of life and health insurance, and retirement, this amount includes transfers
from general revenues to amortize the effects of general pay increases on Federal retirement systems, for employees in the legislative and judicial
branches as well as employees (nonpostal) in the executive branch. The transfers amounted to $3,298 million in 1981 and are estimated'to be
$3,298 million in 1982 and $3,599 million in 1983.
3 Excludes members and officers of Congress.
4 This allowance assumes some absorption.
5 Excludes reserve components.
6 Excludes payments to current military retirees which amounted to $13,729 million in 1981 and are estimated to be $15,000 million in 1982
and $16,472 million in 1983.

SPECIAL ANALYSIS H

1 1

GOVERNMENT EMPLOYMENT A N D L A B O R FORCE COMPARISONS

As shown on the following chart, Government employment—
Federal, State, and local—will comprise about 15% of the total
employed civilian labor force in 1983.
Within this segment, Federal civilian employment in the executive branch accounts for 2.7% of the total employed civilian labor
force in 1983, down from a high of 3.8% in 1968.
The percentage of the total employed civilian labor force attributable to State and local government has grown from 9.9% in 1963
to 12.4% in 1983.
Q a m m m A C ^ m

liwotowi^

THE BUDGET FOR FISCAL YEAR 1983

1 2

GOVERNMENT EMPLOYMENT AND POPULATION

COMPARISONS

As illustrated in the following chart and in table 1-4, the Federal
share of total government employment has declined significantly
over the last three decades, from 37.2% in 1953 to an estimated
17.7% in 1983. Employment for all government rose steadily
through 1980 due to increases in State and local government employment, but has been declining since then.

The ratio of Federal civilian employment to the total U.S. population is expected to be 11.7 per thousand in 1983, the lowest this
ratio has been during the thirty year span shown.

SPECIAL ANALYSIS

Table 1-4. GOVERNMENT EMPLOYMENT AND POPULATION, 1953-83
Government employment
Fiscal year

1953
1954
1955
1956
1957
1958
1959
1960 2
1961 2
1962
1963 3
1964 3
1965
1966
1967
1968
1969 4
1970 2
19712
1972
1973
1974
1975
1976
1977 5
1978
1979
1980 2
1981 2
1982 (est.)
1983 (est.)

Federal
executive
branch 1
(thousands)

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
2,944
2,883
2,823
2,775
2,847
2,848
2,832
2,789
2,820
2,823
2,821
7 2,787
2,770
2,740

Population

State and
local
governments
(thousands)

All
governmental
units
(thousands)

Federal as
percent of all
governmental
units

Total United
States
(thousands)

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
10,372
10,896
11,286
11,713
12,114
12,282
12,704
13,050
13,359
13,557
13,281

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
12,813
13,255
13,719
14,061
14,560
14,962
15,114
15,493
15,870
16,182
16,378
16,068

37.2
34.4
33.4
31.9
30.8
29.5
28.8
28.1
27.7
27.6
26.7
25.4
24.5
24.4
24.8
24.4
23.9
23.0
21.8
20.6
19.7
19.6
19.0
18.7
18.0
17.8
17.4
17.2
6 17.4
6 17.5
17.7

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
205,052
207,661
209,896
211,909
213,854
215,973
218,035
220,904
223,278
225,779
228,297
230,477
232,474
234,645

8
8
8
8

Federal
employment
per 1,000
population

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
14.4
13.9
13.4
13.1
13.3
13.2
13.0
12.6
12.6
12.5
12.4
12.1
11.9
11.7

1 Covers total end-of-year employment of full-time permanent, temporary, part-time, and intermittent employees in the executive branch, including
the Postal Service, and, beginning in 1970, includes various disadvantaged youth and worker-trainee programs.
2 Includes temporary employees for the decennial census.
3 Excludes
7,411 project employees in 1963 and 406 project employees in 1964 for the public works acceleration program.
4 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 starting with 1969.
5 Data for 1952 through 1976 are as of June 30; for 1977 through 1981, as of Sept. 30.
6 The percentages shown for these years are consistent with reasonable estimates based on recent trends in State and local government.
7 Reflects fractional counting of part-time permanent positions, pursuant to the provisions of Public Law 95-437.
8 U.S. population data for 1980-1983 are the latest available from the Census Bureau. Revised estimates, based on the 1980 Census, were
not available in time for publication in this analysis.

SPECIAL ANALYSIS I

CIVIL RIGHTS ACTIVITIES

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 2 0 4 0 2 .

FOR REFERENCE
Do N o t T a k e F r o m T h i s Room

SPECIAL ANALYSIS J
CIVIL

RIGHTS

ACTIVITIES

" . . . Let us talk today about the needs of the future, not the misunderstandings of the past; about new ideas, not old ones . . . and while our communication should always deal with current issues of importance, it must never stray
far from our national commitment to battle against discrimination and increase our knowledge of each other. . . —RONALD REAGAN, June 29, 1981 1

TO ADDRESS THE NEEDS OF THE FUTURE
Coverage and scope.—As the President emphasized, the American
ideal of equality of individual rights and opportunity has long since
become a national commitment. In addition to the basic guarantees
and protections embodied in the Constitution, this commitment is
now expressed in more than 100 Federal statutes. These
laws prohibit discrimination based on race, color, religion, sex,
national origin, age, or handicap in such basic areas as employment, housing, voting, education, public accommodations, access to
credit, and jury service. Implementation of these statutes is spread
among all Federal agencies. Each of the 107 separate Federal agencies is responsible for assuring nondiscrimination in its own actions. In addition, 37 agencies have some civil rights enforcement
responsibilities.
In combination with the voluntary efforts of individuals, private
institutions, States and municipalities, much of this Federal involvement has facilitated progress toward realizing our national
commitment. However, this proliferation of statutes and authorities has not been without problems endemic to the rapid, frequently uncoordinated and poorly planned, expansion of the Federal
presence in recent years. These problems went unaddressed. As a
result, the promises of progress implicit in past expenditures for
civil rights programs too often proved hollow.
The President's determination to continue America's civil rights
progress is, therefore, reflected in more than his proposed expenditures for those activities in 1983. More fundamentally, it is demonstrated by his administration's efforts to improve the effectiveness
of those expenditures, and to assure that the national commitment
to civil rights and equal opportunity is not only pursued, but
realized.
1 This and other quotations throughout the text are excerpted from the President's remarks before the 1981
N A A C P National Convention held in St. Louis, Missouri.

THE BUDGET FOR FISCAL YEAR 1983

This Special Analysis begins with an overview of the obstacles to
effective implementation of Federal civil rights guarantees, and the
administration's efforts to overcome them. This is followed by more
detailed discussions of accomplishments, challenges, and projected
1983 outlays in Federal activities to protect constitutional rights;
eliminate discrimination by Government and activities supported
by Government funds; implement Federal guarantees of equality of
treatment; and help States, localities, and the private sector develop new solutions to civil rights problems.
Overview.—The administration found that the rapid growth of
Federal efforts to assure civil rights had frequently interfered with
their success:
—Many of the 130 Federal civil rights statutes duplicated each
other, creating overlapping agency enforcement. State and local
governments, businesses, and other organizations experienced
contradictory requirements and duplicate reviews, investigations, and reporting requirements. This did not multiply protections for individuals. Because several agencies investigated some
discrimination complaints, other citizens' complaints were never
investigated at all.
—The costs and effectiveness of programs were frequently unrelated. Too many agency programs had been funded at ever
increasing levels based on their intentions rather than their

SPECIAL ANALYSIS J

results. Indeed, because they were unable to measure effectiveness, some agencies gauged the progress of these programs
solely in terms of increased expenditures. Far from furthering
civil rights objectives, such inattention to cost effectiveness
more often subordinated those objectives to organizational selfinterest. The suspicion that some who "came to do good" in
these programs had simply "stayed to do well" was, therefore,
widespread.
—Just as each dollar spent did not advance civil rights objectives, neither did each rule promulgated. The reasons were
myriad. Inflexible and unduly prescriptive regulations precluded alternative approaches more likely to attain regulatory
objectives. Reporting requirements exceeded not only agencies'
need for data but their capacity to process it, and serious
violations went unresolved while agencies processed paper.
Failure to differentiate between compliance requirements appropriate to large and small organizations imposed burdens
that exceeded benefits. Essential regulatory objectives were
lost in disputes over such minutiae as the placement of posters
or wording of policy statements. Some regulations simply substituted new problems and inequities for those they were intended to eliminate. Others had provisions so convoluted that
they could be, and were, cited to justify lack of progress toward
nondiscrimination.
—Not all programs evolved as needs and circumstances changed.
Some programs were devoting the resources of the 1980's to
the problems of the 1960's (paradoxically failing to acknowledge their own successes). Others, betraying similar regulatory
inertia, failed to modify approaches that had proven unsuccessful. Locked into the confrontational style of the 1960's, programs built neither on the willingness of most businesses and
institutions in the 1980's to voluntarily comply with civil rights
laws nor on State and local capabilities to resolve problems
without Federal interference. Because they viewed civil rights
problems exclusively as enforcement problems, programs failed
to coordinate with related public and private activities (such as
job training programs) that could have helped businesses and
others meet civil rights objectives. Thus, both opportunities
and dollars were wasted.
—In its efforts to do many things, the Federal Government did
not always devote sufficient attention and resources to its most
important and basic role in civil rights: protecting the fundamental civil rights guaranteed individual citizens by the Constitution. Worse, in its concentration on the problems of other
institutions, government at all levels had failed to address its
own role in creating or perpetuating civil rights problems:

THE BUDGET FOR FISCAL YEAR 1983

either directly, through overtly discriminatory laws, or indirectly, through laws unnecessarily restricting access to occupational or other opportunities.
These and other problems led many who dealt with civil rights
regulations to conclude that, all too often, a dream bureaucratized
is a dream deferred. While few of these problems were peculiar to
agency civil rights activities, they were of particular concern in
programs intended to protect individuals against discrimination.
Moreover, ineffective programs and inflexible regulations compounded civil rights problems by imposing unproductive costs, contributing to economic stagnation. Periods of economic stagnation
and decline are historically characterized by increased racial and
religious prejudice. And, in addition to limiting opportunities for
all persons, a static economy generates a "zero sum" psychology
that especially harms such traditional victims of discrimination as
minorities, women, older workers, and the handicapped.
The administration therefore initiated a program to correct these
problems in all Federal activities. At the most basic level, the
President's Program for Economic Recovery is creating a basis for
the single most effective guarantee of individual opportunities and
civil rights, economic growth, by comprehensively addressing existing fiscal and regulatory constraints. This broader effort mandated
more specific initiatives in civil rights and other programs. These
included new leadership and improved management, increased
technical assistance and incentives for voluntary compliance, greater involvement of State and local governments in assuring civil
rights guarantees, and other "fine tuning." More fundamentally,
searching examinations were conducted of the programs themselves. These examinations looked beyond program's intentions to
whether those intentions are realized or distorted in practice, and
to the burdens and benefits of their regulations and the way they
are implemented. Also, there was renewed emphasis on protecting
civil rights guaranteed individuals by the Constitution, and on
avoiding discrimination by Government itself.
This reexamination and renewal of Federal civil rights activities
has not been without controversy. Not every program and not
every regulation, come to judgment before the bar of efficacy, has
been found to justify its costs or the burdens it imposes. Not every
policy has been found to promote the broader equities it seeks, or
the consensus it requires for success. And not every program or
policy found wanting has been without its sincere and forceful
advocates. But this ongoing review has not strayed from its intent
to pursue and strengthen our national commitment to battle
against discrimination. Nor, as the President has promised, will it.

SPECIAL A N A L Y S I S H

TO GUARANTEE THE CONSTITUTIONAL RIGHTS OF ALL
CITIZENS
' 'Recently, in some places in the Nation there's been a disturbing reoccurrence of bigotry and violence. . .
To those individuals who persist in such
conduct
I would say 'You are the ones who willfully violate the meaning of
the dream which is America. And this country, because of what it stands for,
will not stand for your conduct/ My administration will vigorously investigate
and prosecute those who, by violence or intimidation, would attempt to deny
Americans their constitutional rights."—RONALD REAGAN, June 29, 1981

To be secure in one's person and property and to enjoy the
freedoms guaranteed each individual by the Constitution are the
most basic of civil rights. Any violations of these rights offend the
American spirit. However, as the President forcefully remarked,
they are particularly repugnant when based on an individual's
religion, race, color, or national origin. Protecting individuals
against such violations has always been a fundamental responsibility of Government. The increased activities of individuals and terrorist groups bent on violating civil rights, however, have given
that responsibility a renewed importance.
The Department of Justice enforces the Federal statutes guaranteeing these rights. These statutes include the Voting Right Act of
1965, as amended (43 U.S.C. 1973 et seq. and the Overseas Citizens
Voting Rights Act (42 U.S.C. 1973 dd) (which guarantee the opportunity to register and vote to all qualified citizens, without discrimination on account of race, color, membership in a language minority
group, age, or absence from legal residence), and the following
criminal statutes:
—Title 18 of the United States Code, which prohibits deprivations of rights and privileges guaranteed under the Constitution and the laws of the United States, including 18 U.S.C. 241
(conspiracy against the rights of citizens), 18 U.S.C. 242 (deprivation of rights under color of law), 18 U.S.C. 245 (interference
with federally protected rights), 18 U.S.C. 1581 (prohibition
against peonage), 18 U.S.C. 1584 (prohibition against involuntary servitude).
—42 U.S.C. 3631, which prohibits interference with housing
rights.2
Although not widely known as an agency with substantial civil
rights responsibilities, the Department of Justice's Federal Bureau
of Investigation devotes significant resources to investigating alleged violations of Federal civil rights guarantees. During the first
11 months of 1981, the Bureau received 8,757 requests for investigations of alleged violations of these statutes, and completed 8,914
investigations. Given recent increases in criminal violations of indi2 Thirty other civil rights criminal statutes are enforced by the Civil Rights Division, but are not
as frequently used as the above.

THE BUDGET FOR FISCAL YEAR 1983

victuals' civil rights, the Bureau estimates that such investigations
will substantially increase this year and remain at that higher
level in 1983 (with requests for 11,000 investigations per year). The
President's budget for 1983 provides for outlays of $7.7 million for
the Bureau's investigations of civil rights violations in 1983.
The Criminal Section of the Department of Justice's Civil Rights
Division prosecutes criminal civil rights violations. In 1981, the
Section initiated 2,542 and closed 2,461 investigations of alleged
criminal violations of Federal civil rights laws. It obtained 30 indictments and filed 3 criminal informations against 63 persons
alleged to have violated the civil rights of individuals. Twentyseven trials were completed, resulting in the conviction of 29 defendants. An additional 15 defendants entered guilty pleas.
The cases brought by the Department of Justice demonstrate the
range and severity of threats to the civil rights it protects. One
case, for example, involved the enslavement of three migratory
farm workers under conditions resulting in the death of one of the
men. The Department's efforts resulted in the indictment and conviction of the persons responsible for these acts. Another widely
reported case emphasized the Department's increased prosecution
of matters involving racial violence. Joseph Paul Franklin was
convicted and sentenced to two consecutive life terms for the racially motivated slaying of two black men in Salt Lake City, Utah.
This emphasis on cases of racial violence, particularly those involving terrorist groups, will continue in 1983. The President's
Budget for 1983 provides for outlays of $5.9 million by the Civil
Rights Division to prosecute criminal civil rights violations.
The Voting Rights Section of the Civil Rights Division is primarily responsible for enforcing statutes guaranteeing the right to
vote. In addition, the Office of Personnel Management (OPM) provides observers to monitor elections for compliance with the Act.
During 1981, the Voting Rights Section received 1,556 submissions
involving 4,887 proposed changes in laws affecting voting for clearance under section 5 of the Voting Rights Act. It interposed objections to 14 of these submissions (including plans for redistricting
the Virginia legislature). During the first months of the current
fiscal year, the section also interposed an objection to a plan for
redistricting the New York City Council. To reduce uncertainty
and make it easier for jurisdictions to comply with the Voting
Rights Act, the section issued revised guidelines reflecting court
interpretations of the Act during the ten years since the original
guidelines were issued. The President's budget for 1983 provides for
outlays of $2.6 million by the Department of Justice for general
enforcement of the Voting Rights Act, and $689 thousand by OPM
to monitor elections.

SPECIAL ANALYSIS H

Similarly, the Department of Justice's Community Relations
Service (CRS) worked in 1981 to help States and communities prevent deprivations of civil rights and defuse tensions which could
have given rise to such violations. For example, the CRS worked
closely with the Mayor of Atlanta to develop civic unity programs
in which white and black citizens worked together to demonstrate
that concern over the murders and disappearances of black children in Atlanta was shared by citizens of both races. The CRS was
also active in reducing tensions resulting from the resettlement of
refugees from Southeast Asia and the Caribbean, the growth in
activities by anti-Semitic and racist groups, and the increased incidence of harassment and intimidation of religious and ethnic minorities. For example, CRS mediated disputes between Indochinese
residents and other citizens over employment opportunities in Minneapolis and fishing rights in Texas and other gulf coast States,
and helped officials and community groups in West Virginia and
Maryland develop programs combating racial and religious harassment and intimidation. The President's Budget provides for outlays
of $5.7 million for CRS's activities in 1983.
Thus, the President's budget for 1983 assures continuance and
expansion of the Federal Government's renewed emphasis on protecting basic civil rights. To further enhance these protections, the
President has requested that Congress renew the Voting Rights
Act, with modifications enabling jurisdictions currently covered by
the preclearance provisions of the Voting Rights Act, with records
of complying with the Act, to petition for removal of the preclearance requirement. This not only would provide an incentive
for jurisdictions to comply with the Act, but also would permit the
Civil Rights Division to focus more of its resources on substantive
violations of the Act (as noted above, the Division was required to
review over 1,500 proposed changes to local election laws in fiscal
year 1981, only 14 of which were determined to be potentially
discriminatory).
TO ROOT OUT DISCRIMINATION BY GOVERNMENT
"My administration will root out any case of government discrimination
. . . we will not retreat on the Nation's commitment to equal treatment of all
c i t i z e n s . ' — RONALD REAGAN, J u n e 29, 1 9 8 1

Equal in importance to protecting Constitutional rights is the
Federal Government's obligation to assure that its own activities
and statutes are not discriminatory. During 1981, the administration initiated major improvements in efforts to assure that Federal
dollars are spent in a nondiscriminatory manner. It also initiated,
in cooperation with the States, an effort to, once and for all, get all

1 0

THE BUDGET FOR FISCAL YEAR 1983

levels of government out of the business of mandating invidious
discrimination based on sex.3
Eliminating invidious sex discrimination from Government mandates.—Based on his experience as Governor of California (where
he signed 14 pieces of legislation eliminating sexually discriminatory regulations and statutes), the President recognized that the
statutes and regulations of Government itself are significant
sources of discrimination against women. The President therefore
initiated major efforts to eliminate such mandates.
To address this problem at the Federal level, the President
issued Executive Order 12336 establishing the Task Force on Legal
Equity for Women. Composed of representatives of 21 Federal departments and agencies, the Task Force is conducting a comprehensive review of Federal regulations to indentify provisions that,
by purpose or effect, invidiously discriminate based on sex. The
Department of Justice is providing staff support for this effort. In
addition, the President is supporting elimination of Social Security
provisions that discriminate against women who work outside the
home.
To assist States in making similar efforts, the President initiated
the Fifty States Project. Coordinated by a special assistant in the
White House and by representatives appointed by each of the
Nation's 50 governors, the Fifty States Project is a cooperative
effort to identify, in every State and territory, statutory provisions
that discriminate against women. The Women's Bureau is also
providing staff support for this project.
These efforts were in addition to passage of the Omnibus Budget
Reconciliation Act of 1981, which included provisions significantly
expanding protections against sex discrimination in federally assisted programs (see below).
Nondiscrimination in federally assisted programs.—Since the
Federal Government is supported by taxes levied on citizens without discrimination, it is fundamental that activities it funds must
be conducted without discrimination. This principle is embodied in
a substantial body of legislation including in addition to numerous
program-specific statutory provisions prohibiting discrimination:
—Title VI of the Civil Rights Act of 1964 prohibits discrimination
in federally assisted programs and activities based on race,
color, or national origin.
—Title IX of the Education Amendments of 1972 prohibits discrimination based on sex in federally assisted educational programs and activities.

3 Federal agency efforts to assure that their employment practices are nondiscriminatory are discussed below
with equal employment efforts generally.

SPECIAL ANALYSIS H

1 1

—Section 504 of the Rehabilitation Act of 1973, as amended,
prohibits discrimination based on handicap in federally assisted programs and activities.
—The Age Discrimination Act of 1975 prohibits discrimination
based on age in federally assisted programs and activities.
While discrimination based on race, color, national origin, age, or
handicap is prohibited in all federally assisted programs, the only
"crosscutting" statute prohibiting sex discrimination is title IX,
which applies only to educational programs. During 1981, the
President alleviated this problem by securing inclusion of prohibitions against sex discrimination in several titles of the Omnibus
Budget Reconciliation Act of 1981. For example, all of the Block
Grants administered by the Department of Health and Human
Services include such prohibitions. This extended this protection to
a wide array of federally assisted activities in which sex discrimination was previously not prohibited.
Because each agency is responsible for enforcing the "crosscutting" nondiscrimination statutes in regard to each of its grants of
Federal assistance, enforcement authority is widely distributed:
Table J - l . DISPERSION OF ENFORCEMENT AUTHORITY UNDER STATUTES REQUIRING
NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS
Statute

Title VI, Civil Rights Act of 1964
Section 504, Rehabilitation Act of 1973
Title IX, Education Act Amendments of 1972
Age Discrimination Act of 1975

Number of
enforcement
agencies

37
All
28
37

Thus, assuring nondiscrimination by recipients of Federal assistance is the most widely dispersed Federal civil rights enforcement
program. The basic complexity of administering legislative mandates enacted over the years with disparate purposes and applications is further complicated by a large body of judicial and administrative interpretation, much of it quite abstruse. As a result, agencies' efforts to enforce these laws exhibited many of the problems
discussed in the overview:
—Because institutions commonly receive assistance from more
than one agency, recipients of Federal assistance were subjected to multiple reporting requirements and duplicate agency
investigations and reviews.
—Individual agencies determined resource levels for these programs with little central coordination. Therefore, resources devoted to combating discrimination in given programs sometimes bore little relationship to the extent discrimination was
actually a problem. This resulted in expenditures by agencies
and recipients on procedures of dubious value (e.g., one agency

1 2

THE BUDGET FOR FISCAL YEAR 1983

reported conducting over 6,700 preapproval reviews of prospective recipients, none of which identified any noncompliance).
Complaints that compliance reviews and other activities focused on procedural minutiae, not the substance of nondiscrimination, were frequent.
—Some agencies imposed additional regulatory requirements unrelated to statutory mandates. Others shifted their focus from
nondiscrimination in services and benefits to nondiscrimination in employment, duplicating the activities of the EEOC and
other agencies.
—Agencies with minimal responsibilities under these statutes
were required to spend resources on developing regulations
and other procedural requirements that could be more economically performed on an inter-agency basis (e.g., one agency's sole expenditure on this program in 1981 was $35 thousand to develop regulations).
—Legitimate regulatory ends (e.g., nondiscrimination on the
basis of handicap) were sometimes obscured in unduly detailed
prescriptions of means, imposing unnecessary costs and precluding more effective methods.
—Agencies frequently made little effort to obtain compliance
through cooperative approaches. They provoked unnecessary
confrontations, and seldom involved State governments in compliance activities in any meaningful way.
A number of efforts to eliminate these problems were initiated in
1981. The administration implemented Executive Order 12250 assigning extensive new responsibilities for coordinating enforcement
of these statutes4 to the Department of Justice. The staff of the
Civil Rights Division's Coordination and Review Section, responsible for implementing Executive Order 12250, was increased by 11
persons. The section implemented an automated system for monitoring agency activities to identify and eliminate duplication.
The section is working with the President's Task Force on Regulatory Relief and the Office of Management and Budget (OMB) to
develop regulations implementing Executive Order 12250. These
regulations, to be published in 1982, will:
—Assign a "lead agency" for each type of recipient, ending overlapping agency activities once and for all. Other agencies providing assistance will delegate compliance and investigative
functions to the lead agencies. Resources will be conformed to
program needs, and economical interagency approaches to developing regulations and implementing other statutory requirements will be adopted.

4 Except the Age Discrimination Act, which assigns coordination responsibility to the Department of Health
and Human Services.

SPECIAL ANALYSIS J

1 3

—Permit recipients to adopt the methods that most efficiently
and effectively assure nondiscrimination in their programs by
requiring that regulations emphasize compliance objectives,
not extensive prescriptions of methodology.
—Preclude data requirements and other compliance burdens not
clearly necessary to assure nondiscrimination by programs receiving Federal assistance.
—Emphasize technical assistance and other approaches which
maximize opportunities and incentives for recipients to comply
voluntarily.
—Increase opportunities for States to participate in assuring
compliance with nondiscrimination requirements.
After these Coordination Regulations are issued, the Section will
begin a major review of existing agency regulations and implementing issuances (such as guidelines, compliance manuals, and
training materials) for conformance with these principles. OMB's
Office of Information and Regulatory Affairs will cooperate in this
review.
A regulation developed jointly by the EEOC and the Department
of Justice will also be published in 1982. This regulation will eliminate another serious problem of overlapping jurisdictions by requiring agencies to refer most employment discrimination complaints
under these statutes to the EEOC for investigation.
Individual agencies also made significant progress in eliminating
the problems discussed above. The Department of Education's
Office of Civil Rights (OCR), a prototype of these deficiencies in the
past, in 1981 became a prototype for efforts to eliminate them.
Under aggressive new leadership, OCR enhanced compliance with
nondiscrimination laws by substituting cooperation for coercion,
expanding technical assistance, and exploring means of increasing
State involvement in resolving civil rights problems.
As a result, OCR resolved longstanding controversies with the
State university systems of Florida, North Carolina, South Carolina, Louisiana, Delaware, West Virginia, and Missouri. Improved
management enabled OCR to reduce its backlog of pending complaints by 17% during the first 9 months of 1981, and its compliance reviews and investigations helped to assure equal opportunities for over 5.6 million beneficiaries of institutions receiving Federal assistance.
In cooperation with OMB, the Department worked to eliminate
data and regulatory requirements superfluous to achieving equal
opportunity. Examples include the Department's rescission of a
form requiring school districts to spend 46,000 hours to provide
data already available to OCR; and its withdrawal of unreasonably
prescriptive guidelines on bilingual education. The latter provided
school districts greater freedom to adopt approaches that most

1 4

THE BUDGET FOR FISCAL YEAR 1983

effectively assure equal educational opportunities for children in
their jurisdictions whose primary language is not English.
Similarly, the Department of Transportation acted to guarantee
that handicapped persons benefit equally from Federal assistance
to public transportation, while eliminating requirements that made
the cost of doing so prohibitive. The Department's interim regulations enable recipients to implement the most efficient and effective methods for providing transportation to handicapped persons
in their localities. In 1982 the Department will issue final regulations incorporating improvements suggested by the public.
As noted above, the Age Discrimination Act is not covered by
Executive Order 12250. However, the statute largely precludes duplication by requiring that agencies refer all complaints under the
Act to the Federal Mediation and Conciliation Service, which attempts to mediate the disputes. The Service is successful in resolving most complaints, expediting service to complainants while
minimizing burdens on recipients.
The General Litigation Section of the Department of Justice's
Civil Rights Division litigates violations of these statutes. Most of
this litigation alleges denials of equal educational opportunities. In
1981 the Division obtained comprehensive desegregation plans for
three southern school districts (in Baton Rouge, Shreveport, and
Monroe, Louisiana), and negotiated a partial consent decree covering junior colleges in Mississippi. However, most of its cases concerned jurisdictions outside the South. The Division successfully
litigated cases involving the public schools in Indianapolis, Indiana,
St. Louis, Missouri, Kansas City, Kansas, and Tucson, Arizona; and
negotiated consent decrees covering the school districts of Chicago,
Illinois, South Bend, Indiana, and Flint, Michigan. The Division
also filed three new suits alleging denials of equal educational
opportunity based on race or national origin, and pursued suits
alleging violations of title IX by a secondary school system and two
universities.
The Department of Justice also announced a new policy for
litigation and remedies to assure equal elementary and secondary
educational opportunities. Henceforth, in addition to cases involving
illegal segregation, the Department will litigate against jurisdictions
which discriminate in the quality of education they provide based on
race or national origin. Remedies will be designed to assure that all
children have an equal opportunity to obtain a quality education.
Both litigation and remedies will seek not mandatory busing, but the
more permanent mobility provided by equal access to a quality
education.
The President's Budget for 1983 provides for total agency outlays
of $71.9 million to implement statutes requiring nondiscrimination
in federally assisted programs, in addition to $3.3 million for co-

SPECIAL A N A L Y S I S H

1 5

ordination and legal enforcement of these statutes by the Department of Justice.
TO GUARANTEE EQUALITY OF TREATMENT
" . because guaranteeing equality of treatment is government's proper
function/'—RONALD REAGAN, June 29, 1981

During 1981, the administration also initiated several improvements in Federal efforts to guarantee equality of treatment in
employment, housing, and credit.
Equal employment.—The principal statutes and Executive orders
prohibiting discrimination in employment are:
—Title VII of the Civil Rights Act, which prohibits employment
discrimination based on race, color, religion, national origin, or
sex.
—The Equal Pay Act (EPA), as amended, which prohibits discrimination in compensation based on sex.
—The Age Discrimination in Employment Act (ADEA), which
prohibits discrimination against persons aged 40 through 70
based on age.
—Executive Order 11246, as amended, section 503 of the Rehabilitation Act of 1973, and section 402 of the Vietnam Veterans
Readjustment Act, prohibit employment discrimination by Federal contractors based on race, color, sex, national origin, religion, handicap, service-connected disability, or Vietnam era
military service, and require Federal contractors to take affirmative action to assure that such discrimination does not
occur.
The EEOC enforces the Equal Pay Act and the Age Discrimination in Employment Act. It also enforces all aspects of title VII
(except litigation involving State and local governments). The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) enforces Executive Order 11246, section 503 of the
Rehabilitation Act, and section 402 of the Vietnam Era Veterans
Readjustment Act. The Federal Enforcement Section of the Department of Justice's Civil Rights Division litigates all employment
discrimination cases under Executive Order 11246 and the statutes
prohibiting discrimination by federally assisted programs. It also
litigates alleged violations of title VII by State and local governments. The Equal Employment Opportunity Act of 1972 and Executive Order 12067 require the EEOC to coordinate enforcement of all
Federal statutes and regulations prohibiting employment discrimination. Each of these agencies effected major management and
policy improvements during 1981.
At the EEOC, the administration tightened management procedures and increased productivity. One of the first actions of EEOC's
new management was to request a General Accounting Office audit

1 6

THE BUDGET FOR FISCAL YEAR 1983

of the Commission's financial management system. The General
Accounting Office found evidence of unreliable accounting records,
reports, and fund controls; mismanagement of payments; and inadequate financial controls, including an internal audit office that
was severely understaffed: "For example . . . EEOC was still recording obligations against its 1980 appropriation in June 1981 and
had charged some of its fiscal 1980 travel costs against the 1981
appropriation." The Commission is currently taking action to eliminate these problems, and will increase the size of its internal audit
staff to prevent their recurrence.
While confronting these management problems, the EEOC both
improved its productivity and achieved savings in personnel and
other resources. Charges filed with EEOC rose to 58,754 during
1981, a 4% increase over charges filed in 1980 (charges under the
Age Discrimination in Employment Act increased by the highest
percentage, 9%). The Commission processed 71,690 charges during
1981—25% more than in 1980. Especially significant increases occurred in Rapid Charge Processing (34% more charges processed
than in 1980) and Continued Investigations and Conciliation (75%
more than 1980). The Commission's emphasis on closing cases
through negotiated agreements acceptable to all parties is evident
in the high percentages of cases closed through settlement during
1981: 43% of all title VII, 23% of all ADEA, and 26% of all EPA
cases. Settlements provided remedies for over 38,000 charging parties—15% more than in 1980. Total backpay and other compensation for victims of discrimination also increased dramatically over
1980: from $57.3 million to $91.7 million, an increase of 60%. The
increases in dollar benefits negotiated in processing complaints
under ADEA (+128%) and EPA (60%) reflect improvement in
EEOC's enforcement of these statutes (responsibility EEOC acquired in 1979). Monetary benefits resulting from ADEA and EPA
litigation similarly increased by 36%. The Commission continued to
litigate where voluntary remedies for discrimination could not be
negotiated. The Commission filed 368 suits during 1981, an increase
of 13%. Suits settled by voluntary agreement increased by 23%, to
237.
The EEOC has led Federal civil rights agencies in involving State
and local agencies in resolving discrimination complaints. During
1981, the Commission provided over $17.5 million in grants to State
and local nondiscrimination agencies. These grants enabled those
agencies to process 39,471 charges, and the Commission accepted
their findings in over 97% of those cases. During 1982, these grants
are projected to increase to $18.5 million, enabling State and local
agencies to process 40,300 charges. Moreover, a certification procedure will be implemented for agencies whose complaint processing

SPECIAL ANALYSIS H

1 7

has consistently been of high quality, eliminating routine reviews
of their findings for sufficiency by EEOC.
The President's budget for 1983 provides for outlays of $142
million by the EEOC, maintaining the 5% increase over its 1981
level granted by the President for 1982. In a period of budgetary
stringency and general reductions, this indicates the administration's commitment to EEOC's mission, and to continuing the management and productivity improvements initiated in 1981.
Of the administration's efforts to improve Federal equal employment enforcement, those involving the OFCCP were perhaps the
most widely noticed. Established by Executive Order over 20 years
ago, OFCCP's basic premise was a simple one: To expand equal
employment opportunities for women and minorities by requiring
that Federal contractors act affirmatively to assure th&t qualified
minorities and women were recruited and considered for vacancies,
and that their procedures for filling those vacancies were nondiscriminatory in fact as well as precept. During the 1970's, Congress
expanded this "affirmative action" mandate to include handicapped persons and Vietnam era veterans. Contractors were required to develop plans detailing the recruitment and other efforts
they would undertake to assure equal opportunity. The administration found that this simple premise had evolved into a regulatory
morass, criticized both by Federal contractors and the intended
beneficiaries of OFCCP's regulations.
The most serious concerns regarded OFCCP's requirements for
affirmative action plans:
—There was no clear answer to the basic question of what constituted compliance with the affirmative action requirements:
was compliance based on contractors' good faith efforts to recruit women and minorities and assure that employee selection
was nondiscriminatory, or did OFCCP disregard these considerations in a single-minded focus on whether employment goals
were met? Many believed that such goals, originally intended
as yardsticks of progress, had been distorted in practice into
quotas.
—Requirements for drafting the plans were, at once, overly prescriptive and insufficiently clear. Contractors were required to
produce voluminous affirmative action plans and supporting
data, with no assurance that the resulting product would be
found acceptable during a compliance review. Compliance reviews frequently degenerated into mindless confrontations over
which job titles belonged in which "job group", or how the 8
factors for determining the "availability" of minorities and
women for jobs should be considered in arriving at overall
"availability" figures.

1 8

THE BUDGET FOR FISCAL YEAR 1983

—Requirements did not consider differences in the size of contractors or their individual establishments. The same level of
detail was required in an affirmative action plan for a contractor employing only 50 persons as for a contractor employing
thousands; and for a contractor's plan for a small retail sales
outlet as for the same contractor's plan for a large manufacturing plant.
—These frustrations with the requirements themselves were
compounded by OFCCP's adversarial approach to enforcing
them. The potential that contractors attempting in good faith
to comply might nevertheless be found in noncompliance was
inherent in the ambiguity of OFCCP's regulations. Due to
OFCCP's approach, many contractors feared that this potential
would be fully realized.
During 1981, the new leadership at the Department of Labor
developed and published for public comment a comprehensive proposal for reforming OFCCP's regulations. These proposed amendments were designed to:
—Assure equal employment opportunities for minorities, women,
the handicapped, and Vietnam era veterans without imposing
inequities on others;
—Change the program's emphasis to generating opportunities,
not paperwork, by pruning the lush overgrowth of regulatory
minutiae and by emphasizing equal employment objectives instead of extensive prescriptions of methodology;
—Tailor program requirements to the size of contractors and
their establishments;
—Clarify the remaining requirements so that they can be understood by all. This will eliminate guesswork by Federal contractors—and OFCCP's compliance officers.
The Department also requested public comment on alternative
approaches to several thorny regulatory issues. After incorporating
these suggestions and comments, the Department of Labor will
publish final amended regulations in 1982.
Significant improvements were also made in OFCCP's management, including:
—A program to eliminate a backlog of some 250 appeals of
discrimination complaints under section 503 of the Rehabilitation Act and prevent its recurrence.
—Expedited procedures for resolving individual complaints
under section 503. These procedures emphasize detection of
meritless or nonjurisdictional charges before they consume resources; and rapid resolution of issues through face-to-face discussions with complainants and contractors. Successfully tested
in 1981, these procedures will be implemented throughout the
agency in 1982.

SPECIAL ANALYSIS H

1 9

—Scheduling of compliance reviews based on contractor's individual records, discontinuing the practice of "targeting" entire
industries for reviews.
—Expanded technical assistance and other efforts to develop
closer, nonadversarial relations with Government contractors.
Contractor advisory committees were formed to institutionalize
this partnership.
—Increased emphasis on bringing contractors together with local
organizations (government and private) that can provide persons with required skills or facilitate upward mobility by their
present employees through training. Previously, many opportunities for substantial and voluntary employment gains by minorities, women, and the handicapped were lost because
OFCCP personnel failed to apprise contractors of such programs (including those funded by the Department of Labor
itself).
While instituting these reforms, OFCCP completed 2,136 complaint investigations and 3,137 compliance reviews during 1981. Of
these, 521 investigations and 1,781 compliance reviews produced
relief for identified victims of discrimination, including $7.9 million
in backpay for 4,754 persons. 867 identified victims of discrimination were placed in or restored to the positions they were denied,
and 500 contractors agreed to changes in their personnel practices
that will preclude future discrimination. Further improvements
through fiscal year 1983 will continue these accomplishments while
lowering their cost. A number of area offices will be consolidated to
reduce overhead and increase management control. The Voluntary
Compliance Project will enable small contractors to meet their
obligations while substantially reducing compliance burdens. Nonadversarial approaches to assuring nondiscrimination will be substantially expanded, including a 500% increase in contractors receiving technical assistance activities.
The President's budget provides for outlays of $40.7 million for
OFCCP's nondiscrimination efforts in 1983.
The Department of Justice announced equally significant policy
improvements. The Civil Rights Division will continue to seek appropriate relief for identified victims of discrimination. However,
the remedies sought to preclude future discrimination by employers will be substantially improved. Previously, the Department
asked courts to impose arbitrary employment quotas on employers
found to have discriminated. While acceptable to some as a short
term expedient, employment quotas cannot assure equal access in
the long term as it is impossible to, at once, open a door for some
while slamming it shut on others. Henceforth, the Department will
seek remedies that are more equitable, and more permanent. These
remedies will require specific, result-oriented programs that assure

2 0

THE BUDGET FOR FISCAL YEAR 1983

that persons of the race, color, religion, national origin, or sex
employers previously discriminated against are among those considered for future employment opportunities. They also will assure
that genuinely nondiscriminatory procedures are used in selecting
from the resulting pool of eligibles. By institutionalizing nondiscrimination, such remedies are more likely to produce lasting gains
in employment for women and minorities than court imposed numbers, forgotten by employers after decrees have expired.
During 1981, there were substantial litigative accomplishments
as well. The Civil Rights Division's Federal Employment Section
won favorable decisions in cases involving the Virginia State
Police; the Jefferson County, Ala. and Garfield Heights, Ohio,
Boards of Education; the Philadelphia, St. Louis, New York City,
and Jefferson County, Alabama, police departments; and the government of Fairfax County, Va.
The President's Budget provides for outlays of $2.53 million for
equal employment litigation by the Civil Rights Division in 1983.
Through 1983, remaining vestiges of duplication in Federal equal
employment enforcement activities will be eliminated. In 1982, a
regulation published jointly by the Department of Justice and the
EEOC will substantially alleviate this problem by requiring that
agencies refer most employment discrimination complaints filed
under statutes prohibiting discrimination based on race, color, religion, sex, or national origin in federally assisted programs to the
EEOC for investigation. However, miscellaneous, small scale
agency equal employment programs based on program-specific statutory provisions will continue to pose potential problems of duplication. In 1981, OMB and the EEOC's Office of Interagency Coordination identified and eliminated several reports required by these
small programs that duplicated those of other agencies. One such
form required State and local governments to spend 15,000 hours
producing data already provided to EEOC. OMB and EEOC will be
examining these programs as a whole to determine whether they
address needs that would otherwise be unmet or duplicate activities more efficiently performed by OFCCP, EEOC, or the Department of Justice. Improvements in coordinating the activities of the
EEOC and OFCCP are also possible. OMB will be working with
these agencies to assure, through improved implementation of their
Memorandum of Understanding, that past problems of duplication
do not recur.
Federal employment—As the servant of all Americans, and as an
institution responsible for enforcing laws requiring equal employment by other institutions, the Federal Government has a particular obligation to assure nondiscrimination in its own employment.
Moreover, especially in this period of reduced resources, Federal
agencies simply cannot afford to hire or promote employees on any

SPECIAL ANALYSIS H

2 1

bases other than their job-related abilities and demonstrated diligence in applying them. Congress has, therefore, mandated that
each Federal department and agency make special efforts to assure
that their employment decisions are made without regard to race,
color, religion, national origin, sex, age, or handicap; and the President has reiterated his determination that agencies implement this
mandate.
Under the Equal Employment Opportunity Act of 1972, as
amended, the EEOC is responsible for coordinating these efforts. In
addition OPM, under the Civil Service Reform Act, coordinates
agency efforts under the Federal Equal Opportunity Recruitment
Program (FEORP) to assure that qualified minorities and women
are among the applicants for positions in which they are underrepresented.
Despite reductions in total employment, minorities and women
continue to be well represented in the overall Federal workforce.
The additional economies achieved in this Budget will decrease the
total employment levels of most agencies and result in some near
term dislocations that will affect all Federal employees, including
minorities and women. However, they also hold the potential for
long term gains through upward mobility for Federal employees in
clerical positions and lower pay grades generally, many of whom are
women or minorities. The necessity that Federal managers maximize the productivity of their employees will require many of them
to look anew at traditional divisions between clerical and professional tasks, resulting in new opportunities for job enrichment, skill
acquisition, and advancement through newly created paraprofessional and other bridge positions. The fact that the same managers
can no longer afford to "carry" unproductive higher graded employees will produce still more advancement opportunities for the deserving. Federal equal employment efforts in 1983 will build on this
potential for increased upward mobility.
During its final hours, the previous administration submitted a
proposed consent decree requiring replacement of the Professional
and Administrative Career Examination ("PACE") now used to
examine applicants for most white collar positions within the Federal civil service. During 1981, the Department of Justice's new
leadership negotiated substantial modifications to that decree.
While the amended decree neither embodied all provisions desirable under different circumstances nor resolved all attendant controversies, the administration succeeded in removing several elements widely criticized as threatening the basic principle of nondiscrimination in filling Federal jobs. The administration will, insofar
as possible, seek to implement the resulting agreement in a
manner that enhances that principle.

2 2

THE BUDGET FOR FISCAL YEAR 1983

Federal agencies, under the leadership of OPM, will devote considerable effort and expense to developing alternatives to PACE designed to measure applicants for Federal employment in terms of the
particular abilities and traits required to successfully perform the
jobs they apply for. The PACE examination although not without its
critics, was widely considered to be a fair and cost effective instrument for selecting candidates for the Federal service. Replacing it
with several alternative examinations is therefore not without its
potential pitfalls. While Governor of California, however, the President successfully implemented a voluntary transition to more jobspecific selection criteria that improved performance in State government jobs while increasing the number of minorities who held
them several fold. The administration will seek to implement the
terms of the decree in a manner that similarly realizes the potential,
inherent in more job-specific criteria, for improving performance
and opportunities in the Federal service.
In addition to the challenge of implementing this consent decree,
the administration will be exploring more cost effective alternatives of assuring equal employment opportunity in the Federal
Government. As noted in Table J-3, even with economies already
achieved, the Federal Government's total expenditures on activities
to assure equal employment for Federal employees will exceed the
combined outlays of the EEOC and the OFCCP to implement equal
employment guarantees in the private sector.
Much of this disparity results from the cumbersome procedures
currently used by Federal agencies to process discrimination complaints against them. During 1981, these procedures cost an average of more than $8,000 per closed complaint—over ten times the
average cost for EEOC's processing of charges involving other employers. Despite the high costs of current procedures for processing
these complaints, they satisfy neither Federal agencies nor the
complainants themselves. Further unnecessary costs are imposed
by current data and other requirements for developing agency
affirmative action plans (characterized by several of the defects in
OFCCP's current requirements). The administration is investigating alternatives for effecting cost saving improvements in both of
these areas in 1983.
Fair housing.— Title VIII of the Fair Housing Act of 1968, as
amended, prohibits discrimination based on race, color, religion,
sex, or national origin in the sale, rental, or financing of housing or
provisions of brokerage services. Two Federal agencies are responsible for enforcing title VIII:
—The Department of Housing and Urban Development's Office
for Fair Housing and Equal Opportunity investigates complaints alleging violations of title VIII. Where it concludes that

SPECIAL ANALYSIS H

2 3

violations of title VIII have occurred, HUD attempts to resolve them through informal conference, conciliation, and
persuasion.
—The General Litigation Section of the Department of Justice's
Civil Rights Division brings suits to enjoin alleged patterns and
practices of discrimination prohibited by title VIII. The Section
brings cases based both on referrals by HUD and its own
investigations.
During 1981, HUD significantly improved the efficiency of its
complaint processing by implementing "Rapid Response" procedures in all of its regional offices. Under this approach, time consuming field investigations are reduced by quickly bringing the
parties together to discuss and settle the issues informally. As a
result, HUD received 2,410 complaints and closed 2,710 complaints
and by the end of the year had only 35 complaints in its inventory
over 90 days old. Increased processing efficiency will increase closures to 4,510 in 1982 while enabling HUD to reduce the number of
staff years required for complaint processing.
Title VIII provides for deferral of complaints filed with HUD to
State and local fair housing agencies with equivalent statutory
authority. During 1981 HUD aggressively worked to expand the
involvement of State and local agencies in assuring Fair Housing.
HUD provided technical assistance to increase their complaint handling capacities through "Rapid Response" and other means, and
$3.7 million in grants to defray processing costs. These efforts
increased the number of State and local agencies participating in
charge processing by 30% (to 42). Through 1983, further efforts will
increase the number of participating State and local agencies to
70—more than doubling the number in the program at the beginning of 1981. As a result, the number of title VIII complaints
processed at the State and local rather than the Federal level will
more than triple in 1982 (to 2,025), with further increases in 1983.
In addition, HUD will increase efforts to preclude violations of title
VIII through technical assistance.
During 1981, the Civil Rights Division's General Litigation Section initiated 60 investigations of suspected patterns and practices
of housing discrimination, and completed 45. Litigation by the Division resulted in court orders and settlements mandating future
nondiscrimination in the sale or rental of over 9,000 housing units.
The Division currently has 94 suits in progress to enjoin alleged
patterns and practices of housing discrimination.
The President's 1983 Budget provides for total outlays of $16
million to enforce Fair Housing guarantees, including $15 million
for complaint processing and technical assistance by HUD and $1
million for litigation by the Department of Justice.

T H E BUDGET FOR FISCAL Y E A R 1983

2 4

Equal credit opportunity.—The Equal Credit Opportunity Act of
1974 (ECOA) prohibits discrimination in credit transactions based
on race, color, national origin, sex, marital status, age or derivation
of part or all of one's income from public assistance. The Act
assigns administrative enforcement responsibilities to 12 different
Federal agencies, and requires the Federal Reserve Board to coordinate their activities. In addition, the General Litigation Section of
the Department of Justice's Civil Rights Division is responsible for
litigating alleged violations of ECOA.
Since the act's passage, the Department of Justice has worked
closely with the other agencies responsible for enforcing ECOA,
and has filed significant suits involving alleged violations in nonhousing lending by banks, small loan companies, and retail creditors; as well as alleged violations by real estate appraisers and
mortgage lenders. Litigation involving non-housing lending has
been selective rather than extensive, designed to eliminate violations with widespread impacts (e.g., one defendant processes
4,000,000 loan applications each year). During 1981 the Department
resolved three cases through court orders or negotiated settlement
and initiated two additional cases. Five equal credit cases are currently in progress.
ECOA's wide dispersal of enforcement authority among agencies,
while not consistent with reducing proliferation of agency responsibilities for enforcing civil rights laws, has not produced the problems of duplication present in other areas of dispersed responsibility. Because the structure for enforcing ECOA reflects the division
of responsibility for financial regulation generally, it enables agencies to review compliance with ECOA and other financial regulations at the same time.
The budget for 1983 provides for outlays of $524 thousand for
ECOA litigation by the Department of Justice and $5.9 million for
the ECOA enforcement activities of the various Federal entities
with responsibilities under the act. As several of those entities are
not required to submit their budgets to OMB for review, the latter
figure is incomplete.
TO SEEK NEW SOLUTIONS . . .
"Let us issue a call for exciting programs to spring America forward toward
the next century, an America full of new solutions to old problems."—RONALD
REAGAN, June 29, 1981.

As catalogued above, the administration initiated efforts in each
area of major Federal civil rights responsibility during 1981 to
substitute new solutions for past approaches that have proven ineffective. These were in addition to advances in related areas. For
example, the President signed Executive Order 12320, directing
agencies to make special efforts to assist historically black colleges,

SPECIAL ANALYSIS H

2 5

and has requested a record $552 million for minority business
development programs in 1983 by the Small Business Administration and the Minority Business Development Administration.
All of these efforts involve increased technical assistance to build
on the genuine desire of most Americans to implement our national civil rights commitment. Toward this end, the administration
initiated a major reorientation of the two agencies primarily responsible for civil rights research: the Commission on Civil Rights,
and the Women's Bureau of the Department of Labor. The President's budget for 1983 provides for outlays of $11.7 million by the
Commission on Civil Rights and $3.5 million by the Women's
Bureau.
Congress established the Commission on Civil Rights in 1957 to
study the enforcement of laws guaranteeing civil rights regardless
of race, color, religion, or national origin. During the 1970's, the
Commission's mandate was expanded to cover civil rights issues
related to sex, age, and handicap. Since its inception, the Commission has focused its energies on research demonstrating the existence of civil rights problems.
This emphasis was appropriate to the early years of the Commission's existence. However, the questions of the 1980's involve not
whether civil rights problems exist, but how to most effectively
resolve them. The President believes that the Commission's contributions to answering those questions can be more substantial and
original than they have been. He therefore appointed leadership
that will renew the Commission's relevance.
Many employers and institutions have instituted effective programs for resolving civil rights problems. The Commission will
devote increased emphasis to identifying these initiatives and sharing them with others who can benefit from them. It will also
provide significant "backup" support for the technical assistance
efforts of other civil rights agencies. As part of this renewal, the
Commission will initiate a study in 1983 of how the role of State
and local agencies in civil rights enforcement can be expanded.
The Women's Bureau of the Department of Labor, on the other
hand, is already making substantial contributions to answering the
questions of the 1980's, both by assisting States, municipalities, and
the private sector in developing solutions to civil rights problems
affecting women, and by sharing those solutions with others. As
previously noted, the Women's Bureau is providing staff support
for the President's Fifty States Project, an effort to help States
identify sexually discriminatory provisions in their statutes.
During 1981, the Bureau completed a preliminary study of the
progress already made by the various States in eliminating such
provisions, and shared the study's results with the State officials
designated to work on the President's project. Closer to home, the

THE BUDGET FOR FISCAL YEAR 1983

Bureau is playing a leading role in the Secretary of Labor's initiative to eliminate sex bias from the Department's own regulations.
The new leadership of the Women's Bureau is exploring innovative ways of cooperating with businesses and State and local governments to improve employment opportunities for women who
work outside the home. In one noteworthy effort already underway, the Women's Bureau is drawing upon the experience of
women who have been successful in business. Through a series of
regional meetings, the Women's Bureau is obtaining direct input
from women who hold top level management jobs, are directors of
corporations, or own their own businesses. In 1983, the Women's
Bureau will make similar efforts to tap the knowledge and experience of the private sector in developing solutions to job-related
problems of women at all levels of employment.
From these and similar efforts to seek new solutions rather than
to document the misunderstandings of the past will come the exciting programs demanded by the President to address the needs of
the future and to win, once and for all, America's battle against
discrimination.
Table J-2. CIVIL RIGHTS OUTLAYS BY DEPARTMENT AND AGENCY
(In millions of dollars)
1981 actual

Department of Agriculture
Department of Commerce
Department of Defense
Department of Education
Department of Energy
Department of Health and Human Services
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Equal Employment Opportunity Commission
Commission on Civil Rights
Office of Personnel Management
Small Business Administration
Veterans Administration
All other Executive agencies 1
(U.S. Postal S e r v i c e ) 2
(Legislative B r a n c h 2 — G A O , GPO)
Total
"The Departments of
distributed among other
1 Includes outlays by
- U.S. Postal Service

1982 estimate

1983 estimate

7.9
4.6
94.8
43.8
2.3
32.9
15.2
10.3
38.2
52.4
.8
11.1
8.6
134.2
12.1
3.3
2.7
12.1
21.8
14.8
.86

8.9
3.9
85.7
42.1
2.2
30.9
18.5
9.6
41.6
46.3
.84
12.2
11.2
143
11.9
3.0
2.7
14.9
20.6
15.76
.99

9.0
4.0
89.6
*43.2
*2.1
32.6
16.5
9.9
43.9
45.7
.93
12.8
11.9
142
11.7
3.0
2.8
15.7
20.6
16.81
1.0

524.6

526.8

535.8

Education and Energy are scheduled for termination in 1983. Civil rights and other functions of these departments will be
agencies.
49 agencies.
and Legislative Branch outlays appear in the Annexed Budget and are included here for memorandum purposes only.

SPECIAL ANALYSIS H

2 7

Table J-3. TOTAL ESTIMATED FEDERAL CIVIL RIGHTS EXPENDITURES BY CATEGORY, FISCAL YEAR
1983
(In millions of dollars)

Federal Civilian and Military Equal Employment Opportunity
Private Sector and non-Federal Public Sector Equal Employment Opportunity
Fair Housing
Nondiscrimination, Federally Assisted Programs
Equal Credit Opportunity
Voting Rights
Other Civil and Constitutional Rights
Research

180.7
173
13.1
75.2
5.9
3.3
29.1
15.2

Table J-4. TOTAL FULL-TIME PERMANENT CIVIL RIGHTS STAFF BY EXECUTIVE DEPARTMENT AND
AGENCY, FISCAL YEAR 1983 (ESTIMATE)
Total *

Department of Agriculture
Department of Commerce
Department of Defense
Department of Education**
Department of Energy**
Department of Health and Human Services
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury
Equal Employment Opportunity Commission
Commission on Civil Rights
Office of Personnel Management
Small Business Administration
Veterans Administration
All other Executive agencies
Total

Internal EEO

External
programs*

165
55

94
52

71
3

1,084
21
806
476
230
867
1,091
17
199
254
3,316
215
60
57
71

** 14
**9
282
25
195
8
50
17
144
213
18
2
60
16
57

** 1,070
** |2
524
451
30
859
1,041
0
55
41
3,215
213
0
38
14

11,369

3,566

7,633

* Agency totals for FTP Internal EEO and FTP External program staff in some cases are less than figures for total civil rights FTP because
some personnel have duties in both areas.
••Scheduled for termination in 1983.

Table J-5. DISTRIBUTION AMONG PROGRAM CATEGORIES, FTP CIVIL RIGHTS PERSONNEL OF
EXECUTIVE DEPARTMENTS AND AGENCIES, FISCAL YEAR 1983 ESTIMATE
Total FTE

Federal service and military service equal employment opportunity
Private sector and non-Federal public sector equal employment opportunity
Fair Housing
Nondiscrimination, federally assisted programs
Equal Credit Opportunity
Voting Rights
Other Civil and Constitutional Rights
Research
,

3,566
4,409
402
1,907
8
52
673
213

SPECIAL ANALYSIS K

RESEARCH AND DEVELOPMENT

The Budget of the United States Government, 1983

Note.—All years referred to are fiscal years, unless otherwise noted. Details in the tables, text, and charts of this booklet may not add to totals
because of rounding.

OFFICE OF MANAGEMENT AND BUDGET
EXECUTIVE OFFICE OF THE PRESIDENT

February 1982

SPECIAL ANALYSES
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.

Each Special Analysis listed above can be purchased from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402.

FOR REFERENCE
Do Not Take From This Room

SPECIAL ANALYSIS K
RESEARCH AND DEVELOPMENT
This analysis summarizes the funding of research and development across all departments and agencies. It consists of two parts.
The first highlights the R. & D. policies and trends in the 1983
budget. The second describes in more detail the R. & D. programs
of the 13 agencies whose 1983 obligations account for over 99% of
total Federal funding for R. & D.
The Federal Government does not have a separate R. & D.
budget. Rather, R. & D. programs are reviewed and funded primarily in the context of the missions of individual agencies and on the
basis of their importance in meeting mission objectives.
P A R T I. HIGHLIGHTS

R. & D. activities are supported by the Federal Government in
two broad categories, namely, to meet:
• Federal Government needs—where the sole or primary user
of the R. & D. is the Government itself, for example, in
national defense and environmental regulation.
• National needs—where the Federal Government helps to
assure the strength of the Nation's economy and the welfare
of its citizens through the support of R. & D. in specific areas
such as agriculture, energy, and health.
The 1983 budget reflects a clearer delineation, than has been the
case in the past, between the responsibilities of the Federal Government and those of the private sector with respect to R. & D. to
help meet national needs.
The Federal Government has two main responsibilities with respect to R. & D. to meet national needs.
• First, it should provide a climate for technological innovation
which encourages private sector R. & D. investment that best
reflects the realities of the marketplace where new and improved processes and products are developed, bought, and
sold. The administration is fulfilling this responsibility primarily by reducing Government spending, regulation and
taxes. Thus, the administration's R. & D. policy is part of its
overall economic policy.
• Second, the Government should focus its direct R. & D. support on those areas where there is substantial prospect for
significant economic gain to the Nation, but where the pri-

THE BUDGET FOR FISCAL YEAR 1983

vate sector is unlikely to invest adequately in the national
interest because the benefits, in large measure, are not immediately "appropriable" by individual firms. Thus, for example,
the Federal Government supports basic research across all
scientific disciplines but limits its spending on technology
development to technologies requiring a long period of initial
development, such as fusion power, where the risk is high but
the payoff to the Nation is potentially large. This strategy is
reflected in the funding for R. & D. to meet national needs in
the 1983 budget.
Total obligations and outlays for the conduct of all Federal R. &
D. programs and for related facilities are shown in table K - l
below.
Table K - l . TOTAL FEDERAL FUNDING FOR CONDUCT OF R. & D. AND RELATED FACILITIES
(In billions of dollars)
Obligations

Conduct of R. & D
R. & D. facilities
Total

Outlays

1982 estimate

1983 estimate

35.0
1.5

38.8
1.5

43.0
1.3

36.5

40.4

44.3

1981 actual

1982 estimate

1983 estimate

34.3
1.6

37.4
1.7

41.1
1.2

35.9

39.1

42.3

CONDUCT OF RESEARCH A N D DEVELOPMENT

The 1983 budget includes $43.0 billion in obligations for the
conduct of R. & D., an increase of $4.2 billion over 1982, largely in
the R. & D. programs of the Department of Defense. Smaller but
significant increases are also proposed for the R. & D. programs of
a number of agencies including the National Aeronautics and
Space Administration, the Department of Health and Human Services and the National Science Foundation. A major further decrease is proposed in 1983 in Federal support of energy R. & D. to
be funded through the proposed Energy Research and Technology
Administration within the Department of Commerce. Included
within the total funding for the conduct of R. & D. is support for
the conduct of basic research, but not the funding for R. & D.
facilities, which is reported separately in this analysis.
Highlights of the programs of major R. & D. agencies that account for 94% of the proposed obligations for the conduct of R. &
D. by all agencies are presented below:
• Department of Defense (DOD).—Obligations for the conduct of
R. & D. by DOD will rise to $24.5 billion, an increase of $3.9
billion over 1982; this represents 57% of the total Federal
funding for R. & D. In 1983, the Department will provide
increased support for basic research and for R. & D. related to

SPECIAL ANALYSIS K

the development of advanced strategic systems, such as bombers, ballistic missiles and ballistic missile defense.
• National Aeronautics and Space Administration (NASA).—Obligations for the conduct of R. & D. by NASA are estimated at
$6.5 billion for 1983, $0.7 billion over 1982. Increased funding
for 1983 is proposed to assure timely transition of the Space
Shuttle to an operational system and to continue the highest
priority research and space exploration projects, including the
further development of the Space Telescope, Gamma-Ray Observatory and the Galileo Mission to Jupiter.
• Department of Commerce (DOC).—Obligations by this Department for the conduct of R. & D. would be $4.2 billion in 1983,
$0.6 billion below 1982. Included in the 1983 total amount is
$3.9 billion for programs transferred to the Department as
part of the proposed dismantlement of the Department of
Energy. This represents a net decrease of $0.6 billion for these
programs but includes increases for nuclear weapons R, & D.
and for long-term research in energy sciences and fundamental physics. These increases are more than offset by eliminating subsidies to industry for near-term energy research and
Table K - 2 summarizes Federal support for the conduct of R. &
D. by agency.
Table K-2. 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
Commerce
(Energy Research and Technology Administration)
Health and Human Services
(National Institutes of Health)
National Science Foundation
Agriculture
Interior
Transportation
Environmental Protection Agency
Nuclear Regulatory Commission
Agency for International Development....
Veterans Administration
Education
All other 1
Total conduct of R. & D

Outlays

1981 actual

1982
estimate

1983
estimate

1981 actual

1982
estimate

1983
estimate

16,494

20,553

24,469

15,720

18,784

22,673

5,407
5,276

5,841
4,793

6,513
4,157

5,279
5,466

5,696
5,240

6,460
4,352

(4,948)
3,973
(3,332)
964
773
424
420
326
227
156
147
91
354

(4,522)
3,972
(3,427)
961
807
397
329
317
223
160
137
74
279

(3,917)
4,122
(3,533)
1,033
838
371
366
230
220
186
145
76
272

(5,121)
3,991
(3,350)
892
742
438
418
344
211
151
138
96
366

(4,948)
3,935
(3,390)
1,018
805
402
321
335
209
157
130
94
298

(4,104)
4,039
(3,487)
908
824
380
316
274
206
159
140
112
280

35,033

38,843

42,997

34,252

37,425

41,122

Includes the Departments of Housing and Urban Development, Justice, Labor, Treasury, and State, the Tennessee Valley Authority, the
Smithsonian Institution, the Corps of Engineers, the Federal Emergency Management Agency, the U.S. Office of Personnel Management, the Library
of Congress, the Arms Control and Disarmament Agency, the Federal Communications Commission, the Advisory Committee on Intergovernmental
Relations, and the Federal Trade Commission.
1

THE BUDGET FOR FISCAL YEAR 1983

technology development. The other R. & D. programs of the
Department of Commerce, such as metrology and oceanic,
marine and atmospheric research, would be reduced by $31
million below 1982, to a level of $240 million in 1983.
• Department of Health and Human Services (HHS).—Obligations for the conduct of R. & D. in HHS are estimated to total
$4.1 billion in 1983, $150 million above 1982, of which the
National Institutes of Health (NIH) accounts for about $3.5
billion, $106 million above 1982. The 1983 budget for NIH
continues to support a strong national effort in biomedical
research, including research related to potentially hazardous
occupational and environmental exposures.
• National Science Foundation (NSF).—Obligations for the conduct of R. & D. by NSF are estimated to total $1,033 million
in 1983, an increase of $72 million over 1982. Included in the
total is $984 million for the support of basic research, an
increase of $72 million over 1982. The 1983 budget for NSF
proposes increased support of research in the natural sciences
and engineering and selected retrenchment in relatively
lower priority programs.
CONDUCT OF BASIC RESEARCH

Support for the conduct of basic research is included within the
overall funding for the conduct of R. & D. Obligations for the
conduct of basic research are estimated to increase in 1983 by $0.5
to $5.8 billion or 9% over 1982.
The 1983 budget recognizes the need to maintain a strong national research effort in all scientific disciplines. Basic research in such
fields as chemistry, physics, biology, materials, oceanography, and
earth sciences provides the underpinning, for example, for advances in health care, improved nutrition and agricultural production, and new technologies for defense, space and energy.
The allocation of funds in the 1983 budget provides for the further strengthening of basic research in specific areas of Government responsibility such as defense and space. Special emphasis is
also being given, in the national interest, to strengthening basic
research in the physical sciences and engineering as exemplified in
programs of the new Energy Research and Technology Administration in the Department of Commerce and the National Science
Foundation. Such areas of research are of particular importance to
long-term industrial productivity and economic growth.
The increase in basic research support will particularly encourage scientists at the Nation's colleges and universities in their
efforts to advance the frontiers of knowledge and thereby also aid
in the training of future scientists and engineers. About one-half of
the total Federal obligations for basic research are made to support

SPECIAL ANALYSIS K

researchers in universities and colleges who conduct about one-half
of all basic research performed in the Nation.
Table K-3 summarizes Federal support for the conduct of basic
research by agency.
Table K-3. CONDUCT OF BASIC RESEARCH BY MAJOR DEPARTMENTS AND AGENCIES
(In millions of dollars) 1
Outlays

Obligations
Department or agency

Health and Human Services
(National Institutes of Health)
National Science Foundation
Defense-military functions
Commerce
(Energy Research and Technology Administration)
National Aeronautics and Space Administration
Agriculture
Interior
Smithsonian Institution
Veterans Administration
Education
Environmental Protection Agency
All other 2
Total

1982
estimate

1983
estimate

1,944
(1,750)
830
554
614

1,978
(1,813)
972
616
670

2,034
(1.869)
861
712
759

(741)

(597)

(652)

(737)

580
332
73
45
13
14
15
27

682
359
68
51
14
14
10
28

538
302
79
41
15
18
12
29

575
337
73
44
13
18
12
29

661
354
69
51
14
22
10
28

5,348

5,821

4,975

5,337

5,574

1982
estimate

1983
estimate

1,955
(1,767)
898
603
608

2,000
(1,839)
912
673
665

2,069
(1,897)
984
781
762

(591)

(647)

532
314
80
44
15
17
10
32
5,108

1981 actual

Amounts reported in this Table are included in Totals for conduct of R. & D.
2 Includes the Departments of Justice, Transportation, Treasury and Labor, the Tennessee Valley Authority, the Corps of Engineers, the Federal
Trade Commission, the Library of Congress, and the Agency for International Development.
1

R. & D. FACILITIES

The successful conduct of R. & D. is dependent on the quality of
instrumentation and facilities that are available to the research
community. A significant amount of funding for equipment and
instrumentation is included, but not separately identified, in the
funding for the conduct of R. & D. Funds separately identified for
R. & D. facilities by Federal Government agencies are summarized
in table K-4.
Obligations for R. & D. facilities in 1983, including the construction or renovation of facilities and the acquisition of major equipment, will amount to $1.3 billion, $265 million below 1982.
Significant changes in R. & D. facilities support are being proposed in 1983, primarily for programs that are being transferred to
the Department of Commerce, as part of the proposed dismantlement of the Department of Energy. In these programs in 1983,
support will be maintained generally for basic research facilities,
such as those for high energy physics research. However, significant reductions are proposed for facilities related to the demonstration of energy technologies, largely in keeping with the policy of

THE BUDGET FOR FISCAL YEAR 1983

relying more on industry investment. The 1982 budget includes
funds to bring many energy demonstrations to an orderly close or
to assist industry in taking over the support of these facilities.
Table K-4. RESEARCH AND DEVELOPMENT FACILITIES BY MAJOR DEPARTMENTS AND AGENCIES
(In millions of dollars)

Department or agency

Commerce
(Energy Research and
Technology
Administration)
Defense-military
functions
National Aeronautics
and Space
Administration
Agriculture
Health and Human
Services
(National Institutes of
Health)
National Science
Foundation
All other 1
Total

Obligations

Outlays

1981 actual

1982 estimate

1983 estimate

1981 actual

1982 estimate

1983 estimate

982

964

681

1,112

1,191

644

(981)

(955)

(678)

(Ull)

(1184)

(640)

278

285

366

238

248

320

114
21

143
35

116
30

147
39

135
39

122
34

(23)

(18)

(20)

(42)

(32)

(28)

13
47

10
28

16
33

13
35

10
43

15
25

1,480

1,526

1,262

1,627

1,702

1,198

Includes the Departments of the Interior, Transportation, and Treasury, the Veterans Administration, the Tennessee Valley Authority, the Agency
for International Development, and the Smithsonian Institution.
1

PART II. AGENCY R . & D .

PROGRAMS

Presented below are summaries of the R. & D. activities of the 13
agencies that support more than 99% of Federally funded R. & D.
DEPARTMENT OF DEFENSE

The primary purpose of the Defense R. & D. program is to
develop new strategic and tactical weapons and supporting systems
to improve the Nation's defense. In 1983, DOD obligations for the
conduct of R. & D. will increase by $3.9 billion to $24.5 billion,
which represents over one-half of total Federal funding for research and development in 1983. Within the total funding by DOD
for the conduct of R. & D., funding of basic research will increase
from $673 million in 1982 to $781 million in 1983. Funding for R. &
D. facilities will increase by $81 million in 1983 to a total of $366
million. By mission category, major R. & D. efforts for 1983 include:
Technology Base and Advanced Technology Development—There
will be substantial real growth in DOD support of these areas,
above the 1982 level, to investigate promising new technologies and
to avoid technological surprise. Current thrusts in very high speed

SPECIAL ANALYSIS K

integrated circuits and guided munitions capable of being operated
in adverse weather will continue. Increased emphasis will be given
to new technologies that offer significant opportunities to increase
the effectiveness of existing military forces, such as improved information processing, better materials, and improved sensors. Other
programs include work on electronic devices that will continue to
operate when parts malfunction, electronics that are resistant to
various types of radiation, advanced computer languages and methods of computing high-power lasers and advanced composite
materials.
Strategic Programs.—The budget provides significant increases in
this area for the accelerated development of ballistic missile defense, as well as the exploration of future options for MX basing—
either deep underground or in continuous patrol aircraft. In addition, development efforts continue on an anti-satellite system and
an advanced technology bomber. Development of the communications and control systems needed to support strategic weapons will
receive increased emphasis.
Tactical Programs.—Funds will be provided in 1983 to continue
the development of systems to increase the capability of U.S. general purpose and theater nuclear forces, as well as to develop the
capability to project forces rapidly wherever the vital interests of
the U.S. are threatened.
• Army efforts include improvement programs for the M - l
tank, chemical defense equipment and chemical weapons, and
various helicopter systems, and continued development of the
Patriot anti-aircraft missile system.
• The Air Force is developing deep strike interdiction versions
of F-15 and F-16 fighters, LANTIRN night/all weather navigation and targeting pods for tactical aircraft, and the
AMRAAM advanced medium range air-to-air combat missile.
• The Navy is developing a lightweight anti-submarine torpedo,
a new destroyer and a vertical launch system for missiles.
Upgrades to current subsystems to improve detection, tracking and targeting will also increase the capability of major
systems now in production.
Intelligence and Communications, Program Management and Support.—R. & D. on intelligence and communication systems will
focus on communication satellites, on radios that will work in the
electronic noise of the battlefield, and on battlefield surveillance
radars. Work will also continue on the use of technology to reduce
manufacturing costs and to extend the life and capability of existing defense systems.

THE BUDGET FOR FISCAL YEAR 1983

NATO Cooperation.—Cooperation in research and development
and joint production of new weapon systems will be pursued to
exploit, fully, Alliance resources. Funding for these activities is not
identified separately in table K-5 but is included in the other
categories discussed above.
Table K-5 provides the details of the Department of Defense
military R. & D. funding.
Table K-5. DEPARTMENT OF DEFENSE—MILITARY RESEARCH AND DEVELOPMENT
(In millions of dollars)
Type of activity

1981 actual

1982 estimate

1983 estimate

2,570
578
3,187
5,914
1,565
2,096
585

2,849
736
4,802
7,029
2,167
2,289
681

3,288
928
6,520
7,524
2,675
2,849
685

16,494

20,553

24,469

OBLIGATIONS
Conduct of R. & D.:
Research, development, test and evaluation:
Technology base
Advanced technology development
Strategic programs
Tactical programs
Intelligence and communications
Program management and support
Other appropriations
Total conduct of R. & D
Total conduct of basic research, included above
R. & D. facilities
Total obligations

(603)
278

(673)
285

(781)
366

16,772

20,838

24,835

15,720
238

18,784
248

22,673
320

15,958

19,032

22,993

OUTLAYS
Conduct of R. & D
R. & D. facilities
Total outlays

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

Through the programs of NASA, the Federal Government makes
investments in R. & D. that yield new space technologies to improve the national security and the long-term scientific and technological strength of the Nation. They also provide new knowledge
about the earth, the solar system, and the universe.
In 1983, the R. & D. request would continue flight missions
launched in prior years (e.g., Voyagers to the outer planets) and
further development of most major ongoing projects, including the
Space Shuttle. Obligations for the conduct of R. & D. would increase by $672 million in 1983 to a total of $6.5 billion. Within this
amount, basic research would amount to $682 million, an increase
of $102 million over 1982. Obligations for construction of facilities
in 1983 would total $116 million.

SPECIAL ANALYSIS K

Space Transportation.—Shuttle development, testing and procurement of a fleet of four orbiters will continue in the space
transportation systems program. The Space Shuttle is essential to
exploit space effectively and will help maintain U.S. leadership in
space throughout this century. It will allow retrieval, repair and
service of satellites in space and the operation of space laboratories, such as the European-built Spacelab, for scientific and technology applications. Because it is reusable, the Shuttle has the
potential to reduce the cost of space missions.
The Shuttle is expected to operate on a routine basis in 1983 to
meet the needs of domestic and foreign users, who have already
made significant investments in anticipation of its availability in
the early 1980s. Also, regular Shuttle operations are important to
meet civilian and national security commitments in a timely
manner at the lowest total cost to the Nation. While the Shuttle is
expected to replace most expendable launch vehicles, the budget
continues efforts to assure adequate expendable vehicle capacity
until the Shuttle becomes fully operational.
With the second successful launch of the Space Shuttle orbiter,
Columbia, the U.S. clearly demonstrated that a manned reusable
space vehicle is feasible. The 1983 budget provides the funds
needed to make possible a timely and effective operational Shuttle
system. Included are funds to:
• Demonstrate the ability to use the Shuttle for repairing a
damaged satellite while in orbit;
• Enhance the payload lift performance of the Shuttle, providing users with additional assurance that its full planned capabilities will be available to both civil and national security
users.
• Continue procurement of the second Spacelab (with an initial
flight of the first Spacelab planned for mid-1983) and continue
to develop and procure an upper stage for use with the Shuttle for high-Earth orbit and for interplanetary missions. The
Shuttle will be operated from the Kennedy Space Center in
Florida and from the Vandenberg Air Force Base in California.
Space Science.—In this area, in-flight projects are conducting
deep space astronomy while in orbit and others are exploring the
solar system. Most of these spacecraft will continue their flight
missions and will gather scientific data well beyond 1983.
• The Solar Maximum Mission, launched in 1980, will continue
operations and data analysis activities.
• Two Voyager spacecraft, launched in 1977, have successfully
encountered Jupiter and Saturn, and Voyager 2 will continue
on its way to Uranus.

THE BUDGET FOR FISCAL YEAR 1983

• The flight of several other scientific satellites (e.g., International Ultraviolet Explorer) will be extended.
The 1983 budget supports continuation of the flight of these
satellites in space and analysis of scientific data sent back to
Earth. It also provides for the retrieval and repair in orbit of the
partially disabled Solar Maximum Mission Satellite.
The proposed budget continues development of major flight projects to be launched in the future.
• The Space Telescope is planned for launch in 1985 and will
serve as a major astronomy facility for a 15- to 20-year period.
• The Gamma Ray Observatory is planned for launch in 1988
and will enhance basic research in high energy astrophysics,
providing new knowledge about objects in deep space.
• Spacelab astronomy experiments, designed for repeated use,
will be conducted on the Shuttle to improve our understanding of the Sun and the universe from Earth orbit.
• Work is continuing on the Galileo mission to Jupiter; the
spacecraft is composed of two segments—an orbiter and a
probe to enter the upper atmosphere of Jupiter. The Galileo
orbiter and probe will be launched in 1985 and will arrive at
Jupiter in 1989 to carry out long-term studies of the giant
planet, its satellites, and its magnetosphere.
• Experiments will be conducted using several smaller Explorer
satellites, balloons, aircraft, and sounding rockets.
Space and Terrestrial Applications.—The 1983 budget continues
to support research that could lead to the broad application of
space technology to national needs. The 1983 budget requests continued funding for relatively fundamental and long-term research
activities to:
• Improve understanding of Earth resources, climate, weather,
and pollution;
• Develop agriculture forecasting techniques based on satellite
data;
• Advance knowledge in materials science through low gravity
experiments; and
• Extend the capability for satellite communications at higher
frequencies than those employed with current satellites.
Development of the fourth and fifth in the series of land remote
sensing satellites is continuing with launches scheduled for 1982
and 1985. With the completion of Landsat development activities
by NASA in 1983, the National Oceanic and Atmospheric Administration (NOAA) in the Department of Commerce will assume responsibility for an operational satellite data system based on the
Landsat-D series of satellites. Space remote-sensing technology,
such as that employed by Landsat-D, has the potential to improve
our ability to manage critical Earth resources.

SPECIAL ANALYSIS K

The climate-observing satellite program, designed to provide
global measurements of the Earth's radiation, is being continued.
The mission is an important part of the national effort aimed at
providing a better understanding of the Earth's climate.
In addition, NASA is developing ways to use the Spacelab (to be
flown in the Shuttle) for materials processing and other applications.
Aeronautical Research and Technology Programs.—In 1983,
support will be focused on fundamental research in all basic
aeronautical disciplines, the maintenance of specialized facilities
for research and testing, and technology development and demonstration activities critical to the Nation's defense needs.
Research emphasis will be placed on:
• Aerodynamics, propulsion and avionics;
• Flight controls and human-vehicle interaction; and
• Materials and structures.
Technology development and demonstration projects with relatively near term commercial applications will be curtailed as an
inappropriate Federal subsidy.
Agency-wide Support Activities.—Obligations for agency-wide support activities will increase by $168 million in 1983 to $1.9 billion.
These programs include, primarily, satellite tracking and data acquisition support, all NASA civil service and administrative costs,
construction and maintenance of the agency's R. & D. facilities,
and R. & D. addressing fundamental space technology problems
and opportunities common to a broad spectrum of space programs.
For 1983, the increased obligations are needed primarily to initiate
lease payments for the new Tracking and Data Relay Satellite
System.
Table K-6 provides the details of NASA's R. & D. funding.
DEPARTMENT OF COMMERCE

In 1983, the scope of the Department of Commerce R. & D.
activities will expand significantly as a result of the proposed dismantlement of the Department of Energy and the transfer of its R.
& D. programs to the Department of Commerce, where they will be
administered by the new Energy Research and Technology Administration (ERTA).
R. & D. support for the ongoing R. & D. programs of the Department is provided primarily through the National Bureau of Standards (NBS), and the National Oceanic and Atmospheric Administration (NOAA).
Total obligations for the conduct of R. & D. will decrease from
$4.8 billion in 1982 to $4.2 billion in 1983. The Department's activities by area are summarized below.

THE BUDGET FOR FISCAL YEAR 1983

Table K-6. NATIONAL AERONAUTICS AND SPACE ADMINISTRATION—RESEARCH AND DEVELOPMENT
(In million of dollars)
1981 actual

1982 estimate

1983 estimate

Conduct of R. & D.:
Space transportation systems
Space science
Space and terrestrial applications
Aeronautical research and technology
Space research and technology
Energy technology
Tracking and data acquisition
Research and program management

2,729
542
340
271
111
2
341
1,071

3,090
568
334
233
111

3,468
682
320
232
123

402
1,103

509
1,179

Total conduct of R. & D

5,407

5,841

6,513

Type of activity

OBLIGATIONS

Total conduct of basic research, included above
R. & D. facilities
Total, obligations

(532)
114

—

(580)
143

—

(682)
116

5,520

5,984

6,629

5,279
147

5,696
135

6,460
122

5,426

5,831

6,582

OUTLAYS
Conduct of R. & D
R. & D. facilities
Total, outlays

Energy Research and Technology Administration (ERTA).—Support will be provided by ERTA for a substantial R. & D. program
related to the development and testing of nuclear weapons; a general science program comprised largely of basic research in high
energy physics and nuclear sciences; and a broad energy research
program focused on long-term R. & D.
Obligations for the conduct of research and development at
ERTA will total $3.9 billion in 1983, a reduction of $604 million
from 1982. Obligations for R. & D. facilities will total $678 million
in 1983, $277 million below 1982. These decreases for energy R. &
D., particularly the decrease for R. & D. facilities, reflect the proposed curtailment of Federal support for major demonstration projects (e.g., in fossil and solar energy conversion) consistent with the
Administration policy that such projects are more appropriately
the responsibility of the private sector. ERTA programs by major
area are highlighted below.
The national defense program of ERTA supports the continued
development and production of new nuclear weapons. This program also supports the development of improved technologies for
monitoring nuclear weapons treaties and of improved methods for
safeguarding nuclear materials. Efforts will be continued to develop improved technologies and methods for the safe storage and
disposal of radioactive wastes produced by the national defense

SPECIAL ANALYSIS K

programs and to develop improved propulsion reactors for naval
vessels.
Obligations for these activities are proposed to increase from $1.5
billion in 1982 to $1.7 billion in 1983 for the conduct of R. & D. to
assure an effective long-term nuclear weapons program. Obligations for R. & D. facilities in this area will be $336 million in 1983,
a decrease of $60 million below 1982.
The general science and research program of ERTA primarily
supports research in high energy and nuclear physics. An increase
of $56 million to $483 million in 1983 for the conduct of R. & D.
will allow continued emphasis on advanced accelerator concepts
and efforts to understand the fundamental nature and constituents
of matter at about the 1981 level of effort. Life sciences research
and research on nuclear medicine applications, also supported as
part of the general science program, are continued at a reduced
level. In addition, $117 million will be obligated in 1983 for R. & D.
facilities in this area, approximately the same level as 1982.
Because of the exceptional research opportunities in high energy
physics and the demonstrated excellence of the U.S. program, the
administration is committed to maintaining a strong national
effort in this field. The 1983 budget request of $429 million for the
conduct of R. & D. and related facilities in this field represents a
$65 million increase over 1982. This would provide for an increased
level of utilization of existing research facilities, expeditious completion of the Energy Saver and TEVATRON I and II projects at
Fermilab, research and development work at the Stanford Linear
Accelerator Center leading to the planned Stanford Linear Collider
project, and accelerator research and development on improved
components and novel concepts. A principal thrust in this field will
be accelerator R. & D. efforts at the Brookhaven National Laboratory, related to a future high energy physics accelerator project.
Any decision to proceed with this project will be based on overall
scientific potential and budget considerations.
The energy program of ERTA includes a broad program of support in the basic energy sciences and other long-term research to
provide a scientific underpinning for advancements in energy technology by Government and industry. It also includes support for
the development of selected energy technologies of a high risk but
potentially high pay-off nature, such as magnetic fusion, where
significant private investment is unlikely at this time.
Obligations for the conduct of energy R. & D. are proposed to
decrease from $2.6 billion in 1982 to $1.8 billion in 1983. Obligations for R. & D. facilities in this area will be $224 million in 1983,
a decrease of $216 million below 1982.
In the basic energy sciences, funding for the conduct of R. & D.
and related facilities will be increased by $40 million to $284 mil-

THE BUDGET FOR FISCAL YEAR 1983

lion in 1983 for long-term research in such fields as nuclear science, chemistry, engineering, materials science, mathematics, biology, and geoscience. Such support is intended to strengthen the
scientific and technical base for future advances in all energy
technologies. In addition, emphasis will be given to providing support for the operation of several unique national user facilities,
which the basic energy science program manages (e.g., the National Synchrotron Light Source at the Brookhaven National Laboratory). In 1983, the basic energy science program, for the first time,
will assume full responsibility for the Stanford Synchrotron Radiation Laboratory. This facility was previously funded by the National Science Foundation.
The 1983 budget will continue the redirection of the non-nuclear
R. & D. programs to emphasize long-term generic research and
place greater reliance on the private sector for technology development. Obligations for the conduct of R. & D. in fossil, solar, biomass and other renewable energy sources are expected to be $315
million in 1983, down from $814 million in 1982, with an additional
reduction of $95 million for demonstration projects included under
support for R. & D. facilities. The budget provides $107 million for
the conduct of fossil related R. & D. and associated facilities which
strengthen the scientific base, in such areas as catalysis, kinetics,
waste characterization, flame research and coal structure. Funding
at the level of $90 million will be provided for research in support
of solar energy and energy conservation.
The 1983 budget provides for a broad nuclear program of fission
and fusion R. & D. The breeder reactor program will be funded at
$577 million in 1983, maintaining a priority on the design and
construction of the Clinch River Breeder Reactor (CRBR). In addition, long-range research will continue in support of breeder technology. Total funding for breeder R. & D. will decrease by $108
million from 1982, through curtailment of technology development
in support of the follow-on Large Developmental Plant (LDP) and
through phase-out of the Light Water Breeder Reactor demonstration.
In other fission R. & D., there will be a focus on safety and waste
management research. The Department, in cooperation with the
Nuclear Regulatory Commission, will conduct technical investigations associated with the disabled Three Mile Island (TMI) plant.
This will permit a better understanding of accidents such as the
occurrence at Three Mile Island and will help to prevent them in
the future. The disabled TMI plant will serve as a source of useful
data to aid this research. The budget includes $205 million in 1983
for the conduct of other fission R. & D., a reduction of $47 million
below 1982.

SPECIAL ANALYSIS K

The budget request for fusion R. & D. and related facilities in
1983 of $444 million is a decrease of $10 million from the 1982
level. This change consists of an increase of $66 million in the
operating budget offset by a decrease of $76 million in capital
equipment and construction. The increase in the operating component of the budget is based on the goal of resolving key outstanding
physics and technology issues before continuing the pace of construction of new large facilities.
Finally, the energy R. & D. program of ERTA includes research
on the environmental effects of energy production and use which
will continue at about the same level of effort as 1982 with emphasis on determining the health effects of radiation and generic research related to synthetic fuels technology. Funding also will continue for research to determine the relationship between the CO 2
content of the atmospheric and the Earth's climate changes.
National Oceanic and Atmospheric Administration (NOAA).—
NOAA will continue research programs in the development of
systems and components in such areas as mapping and charting;
ocean research; conservation, protection and management of endangered and threatened species in the Nation's fisheries resources; forecasting, detection and tracking of weather systems and
violent storms; and air pollution. Obligations for the conduct of
R.& D. by NOAA in 1983 will decrease slightly from $159 million
to $152 million.
National Bureau of Standards (NBS).—R. & D. efforts for NBS
are organized into four programs: measurement research and
standards; engineering measurement and standards; computer sciences and technology; and central technical support.
In 1983, NBS is expected to obligate $76 million for the conduct
of R. & D. This is an $11 million decrease from 1982. Most of this
decrease is related to the transfer of the governmentwide ADP
standards program to the General Services Administration. In addition, there will be selected reductions in activities that are more
appropriate for private sector funding (e.g., automated manufacturing) and increases for basic research activities needed to improve
measurement techniques and standards.
Other Commerce R. & D. Activities.—The Bureau of the Census,
the Patent and Trademark Office, and the National Telecommunications and Information Administration also maintain smaller research and development programs. R. & D. funding for these areas
in 1983 would be $12 million.
Table K-7 provides the details of the R. & D. funding by the
Department of Commerce.

THE BUDGET FOR FISCAL YEAR 1983

Table K-7. DEPARTMENT OF COMMERCE—RESEARCH AND DEVELOPMENT
(In millions of dollars)
Type of activity

1981 actual

1982 estimate

1983 estimate

4,948
(1,347)
(395)
(3,206)
201
83
44

4,522
(1,504)
(427)
(2,590)
159
88
24

3,917
(1,684)
(483)
(1,750)
152
76
12

5,276

4,793

4,157

OBLIGATIONS
Conduct of R. & D.:
Energy Research and Technology Administration 1
National defense
General sciences
Energy research
National Oceanic and Atmospheric Administration
National Bureau of Standards
Other department activities
Total conduct of R. & D
Total conduct of basic research, included above
R. & D. facilities:
Energy Research and Technology Administration
National defense
General sciences
Energy research
National Oceanic and Atmospheric Administration
National Bureau of Standards
Total R. & D. facilities
Total obligations

(608)

(665)

(762)

981
(319)
(126)
(536)
1
0

955
(396)
(119)
(440)
0
9

678
(336)
(117)
(224)
0
3

982

964

681

6,258

5,757

4,838

5,466
1,112

5,240
1,191

4,352
644

6,578

6,431

4,995

OUTLAYS
Conduct of R. & D
R. & D. facilities
Total, outlays
1

Formerly, programs of the Department of Energy.

DEPARTMENT OF HEALTH AND HUMAN

SERVICES

The Department of Health and Human Services (HHS) obligations in 1983 for the conduct of R. & D. would increase by $150
million over the 1982 level to a total of $4.1 billion. Within this
total, funding for basic research will increase by $69 million to $2.1
billion. Obligations for R. & D. facilities will total $20 million in
1983. This represents a substantial decline from the $62 million
provided in 1982. However, it should be noted that the relatively
higher level in 1982 was primarily due to the nonrecurring costs
for a single large project—construction of new research headquarters for the Food and Drug Administration—for which $35 million
was provided in 1982.
Health.—Over 85% of the Department's funds for the conduct of
R. & D. and over 90% of the department's basic research funds are
obligated by the National Institutes of Health (NIH) for biomedical
research to advance the Nation's capabilities for the prevention,
diagnosis, and treatment of disease. R. & D. programs in healthrelated research also are supported by several other agencies

SPECIAL ANALYSIS K

within the Department. The 1983 budget will also provide for continuation of these health research efforts in the Alcohol, Drug
Abuse, and Mental Health Administration, the Food and Drug
Administration, the Centers for Disease Control, the Health Services Administration, the Health Care Financing Administration,
and the Office of the Assistant Secretary for Health.
The National Institutes of Health would obligate $3.5 billion in
1983, an increase of $106 million above the 1982 level; over one-half
or $1.9 billion of NIH's total 1983 R. & D. budget would support
basic research. Among the most significant activities to be supported by NIH are:
• Basic research on fundamental life processes in health and
disease;
• Clinical research designed to transfer and apply the results of
basic science to intervention, including development and refinement of techniques, processes, methods, and practices;
• Cooperative clinical trials of new antiviral drugs against
neonatal herpes, herpes encephalitis, herpes genitalis, and
rhinoviruses;
• Basic and clinical research into the cause, cure, and prevention of diabetes;
• Targeted research in epidemiology and risk estimation; and
• Test development related to reproductive toxicology, fertility
assessment, and neurological toxicology.
The Alcohol, Drug Abuse and Mental Health
Administration
would conduct studies of mental disease and neurological disorders,
biomedical factors and health effects of drug abuse, and causes and
consequences of alcohol abuse, with emphasis on strengthening
prevention activities.
Specific research areas would include:
• the use of computerized imaging techniques for mapping
metabolic processes of the human brain;
• the role of endorphins and enkephalins in addiction and substance abuse;
• the role of genetic factors in alcoholism; and the role of alcohol in fetal defects.
The Food and Drug Administration would support research relevant to its mission of regulating food, drugs, and biological and
radiological products.
The Centers for Disease Control would continue studies on the
epidemiology and control of communicable diseases and on health
promotion and disease prevention.
Other Health Related Agencies within HHS would support research in areas such as treatment and control of Hansen's disease;
survey methods and techniques for analysis of health statistics; and
the organization, delivery, and financing of health services. This

THE BUDGET FOR FISCAL YEAR 1983

support will be provided through programs of the Health Services
Administration, the Office of the Assistant Secretary for Health
and the Health Care Financing Administration.
Human Services.—The Department's obligations for R. & D. in
human services programs in 1983 would be $100 million, $9 million
above 1982. These funds would be devoted to research related to the
missions of the Office of Human Development Services and the
Social Security Administration and to policy research conducted on
behalf of departmental management.
Table K-8 provides the details of the R. & D. funding of the
Department of Health and Human Services.
Table K-8. DEPARTMENT OF HEALTH AND HUMAN SERVICES—RESEARCH AND DEVELOPMENT
(In millions of dollars)
Type of activity and organizational units

1981 actual

1982 estimate

1983 estimate

3,332
286
71
74
5
39
35
19
1

3,427
256
73
68
2
30
20
3
2

3,533
289
75
74

3,862

3,881

4,023

70
23
20

56
21
13

59
25
15

112

100

3,973

3,972

4,122

(1955)
25

(2,000)
62

(2,069)
20

3,999

4,034

4,142

3,991
43

3,935
35

4,039
38

4,034

3,971

4,078

OBLIGATIONS
Conduct of R. & D.:
Health:
National Institutes of Health
Alcohol, Drug Abuse, and Mental Health Administration
Food and Drug Administration
Centers for Disease Control
Health Resources Administration
Health Care Financing Administration
Office of Assistant Secretary for Health
Health Services Administration
Special Foreign Currency Program
Subtotal, Health
Human Services:
Office of Human Development Services
Social Security Administration
Departmental Management
Subtotal, Human Services
Total conduct of R. & D
Total conduct of basic research, included above
R. & D. facilities
Total obligations

30
20
1
1

OUTLAYS
Conduct of R. & D
R. & D. facilities
Total outlays

NATIONAL SCIENCE FOUNDATION

The National Science Foundation (NSF) primarily supports basic
research in all scientific disciplines through grants, largely to scientists and engineers in academic institutions. The Foundation's
support is of particular significance because it complements the

SPECIAL ANALYSIS K

basic research programs of mission agencies, such as the Department of Defense and the National Institutes of Health, and helps
to balance Federal support across all fields of science and engineering.
NSF obligations for the conduct of R. & D. would increase from
$961 million in 1982 to $1,033 million in 1983, an increase of $72
million above 1982. In addition, $16 million will be obligated for
research facilities and major equipment in 1983, $6 million above
the 1982 level. Funding for basic research programs would increase
from $912 million in 1982 to $984 million in 1983.
These increases will allow primarily for cost increases due to
inflation in research project support, partially offset by reductions
in some lower priority activities. Specifically, the 1983 budget
would:
• Provide an increase over 1982 in the support by NSF of
research in the natural sciences and engineering that would
more than offset the estimated cost increases due to inflation.
• Emphasize support of the mathematical and physical sciences
(particularly computer sciences), engineering and the earth
sciences largely because of the importance of these disciplines
to the long-term technological advancement and economic
strength of the Nation.
• Continue support of U.S. activities in the Antarctic—managed
by the NSF—at approximately the ongoing level of effort.
This support is continued because of the importance of the
Antarctic as an area where a number of nations conduct
valuable scientific research in peaceful coexistence under the
terms of the Antarctic Treaty, of which the U.S. is a signatory.
• Continue NSF's research fellowship program, as a complement to the Foundation support of research. However, other
lower priority science education activities previously supported by the NSF would be phased out in 1983.
• Provide increases in 1982 and 1983 over the previously reduced level of the administration's 1982 (March) budget for
the social, behavioral and economic sciences to allow continued funding for relatively higher priority areas. Examples
include maintenance of long-term data bases, methodological
improvements and quantitative research which are important
to the continued development of these disciplines as fields of
scientific inquiry.
• Emphasize, within the funds provided for the conduct of research, support for upgrading research instrumentation.

THE BUDGET FOR FISCAL YEAR 1983
DEPARTMENT OF AGRICULTURE

The Department of Agriculture supports research and development in several disciplines related to agriculture and forestry.
Obligations of the Department for the conduct of research and
development are estimated to total $838 million in 1983, compared
to $807 million in 1982, an increase of $31 million.
The Department's 1983 budget is highlighted below by agency:
The Agricultural Research Service would obligate $454 million
for research on protection of plants and animals against diseases
and pests, and on the conservation, use and improvement of soil,
water and air resources.
The Cooperative State Research Service would obligate $223 million to maintain support of the cooperative program with the landgrant institutions and to expand the competitive grants for basic
plant research.
In addition, $9 million would be provided to initiate a 5-year, $50
million, facilities improvement program for the 1890 Colleges and
the Tuskegee Institute.
The Forest Service would obligate $98 million to improve knowledge needed to manage and protect forest and related rangeland
resources to meet demands for their use. Research will be conducted on: genetics, silviculture and timber management, watershed
management, range and fish habitats, protection for forest resources from fire and forest pests, surface environment and
mining, forest engineering and utilization, and economics of forest
commodity production, processing and distribution.
In addition, $62 million would be obligated for other areas, such
as economic research, international cooperation and development,
agricultural marketing, transportation of commodities, statistical
reporting, and agricultural cooperatives.
DEPARTMENT OF THE INTERIOR

The Department of the Interior's R. & D. activities derive from a
broad range of responsibilities, ranging from encouraging wise development of the Nation's energy and nonenergy mineral, water,
land, and recreation resources to managing those resources on the
public lands in the public interest.
Obligations for the conduct of R. & D. for the Department of
Interior for 1983 are estimated at $371 million. This represents a
decrease of approximately $27 million from the 1982 level, primarily in areas of geological hazards, and mining development and
demonstrations.
The Department's research objectives for 1983 are highlighted
below by major organization.
The Bureau of Land Management and The Bureau of Reclamation would continue programs in watershed conservation and devel-

SPECIAL ANALYSIS K

opment, timber and range forage production, wildlife habitat,
water resources planning and research, and dam safety.
The Fish and Wildlife Service would emphasize R. & D. activities
which:
• Improve the quality of habitats and the availability of fish
and wildlife; and
• Contribute to population control methods and preserve endangered species of fish and wildlife.
The National Park Service would emphasize research in archeology and the natural and social sciences.
In energy and minerals R. & D., a small overall reduction in
effort is proposed. Decreases are proposed in the Geological Survey
and the Bureau of Mines, with a small increase for the Office of
Surface Mining.
The Geological Survey research priorities would include:
• Developing accurate appraisal and exploration techniques to
determine mineral resources;
• Developing basic data on geological principles and processes;
• Understanding the ways to appraise and evaluate our water
resources; and
• Improving uses of satellite acquired data in Earth and marine
sciences.
The Bureau of Mines would stress:
• Health and safety in mines and processing plants;
• Helping the Nation become less dependent on foreign minerals; and
• Protection of the environment during mineral extraction.
The Office of Surface Mining research plans involve studies dealing with regulations compliance, monitoring of coal mining operations and ecological investigations.
DEPARTMENT OF TRANSPORTATION

The Department of Transportation's R. & D. program is oriented
toward providing the information and new technology needed for
its own operational (e.g., air traffic control) and regulatory (e.g.,
automotive safety standards) programs. Obligations for the conduct
of research and development by the Department are estimated at
$366 million for 1983, an increase of $37 million over 1982. The
Department's 1983 budget is highlighted below by agency.
The Federal Aviation Administration (FAA) is expected to obligate $152 million in 1983. The proposed 1983 R. & D. obigations for
FAA represent an increase over 1982 of $46 million. This increase
will allow greater emphasis on engineering work on the national
air traffic control system, and on emerging technology to improve
collision avoidance systems and enhance enroute and terminal air
traffic control systems.

THE BUDGET FOR FISCAL YEAR 1983

The National Highway Traffic Safety Administration would obligate $59 million for motor vehicle research, traffic safety research
and demonstrations, and other statistical and analytical studies.
An increase is proposed in 1983 for continuing the National Accident Sampling system which provides nationally representative
accident and injury data, and for focusing analysis on major traffic
accidents.
The Urban Mass Transportation Administration plans to obligate
$44 million to assist in the development of improved mass transportation systems, equipment and procedures. Emphasis will be
placed on assisting existing proven transit systems.
The Federal Highway Administration would obligate $43 million
to continue research programs in highway planning, design, construction, and maintenance to insure an effective and efficient
highway system. Research would also be conducted in identifying,
and correcting impediments to highway safety and on improving
common carrier safety.
The Federal Railroad Administration would obligate $20 million
to continue its emphasis on safety research. A $16 million reduction in funding from the 1982 level would eliminate nearly all
nonsafety research.
The Maritime Administration would obligate $18 million to improve the productivity and competitive posture of the U.S. maritime industries. Increased funds are provided to support icebreaking vessels in the Arctic for R. & D. and increased ship research.
The U.S. Coast Guard would obligate $15 million to support
research to maintain and improve search and rescue systems, environmental protection, marine safety, and aids to navigation. The
proposed 1983 figure represents a decrease of $3 million for R. & D.
from the 1982 level.
The Research and Special Programs Administration would obligate $8 million to support emergency preparedness and mobilization efforts and to support the hazardous materials and pipeline
safety regulatory programs.
The Office of the Secretary would obligate $8 million for broadbased policy research on domestic and international transportation
issues of importance to the Nation.
ENVIRONMENTAL PROTECTION AGENCY

The Environmental Protection Agency (EPA) conducts research
and development in support of the Agency's regulatory and enforcement mission to protect human health and the environment.
The R. & D. request for 1983 reflects a focusing on the highest
priority research areas. These areas emphasize the following
themes:

SPECIAL ANALYSIS K

• Benefit and risk assessment in support of Agency regulatory
decisions and impact analysis activities;
• Scientific support and technology transfer activities to help
develop and install cost-effective pollution control technologies; and
Improved scientific quality through peer review, quality assurance guidelines, and specially designed information systems.
Total obligations for the conduct of R. & D. are estimated to
decrease from $317 million in 1982 to $230 million in 1983. EPA's
activities by area are highlighted below.
The air research program would be reduced from 1982 by $8
million to a level of $27 million in 1983. The research will evaluate
and establish national ambient air quality standards, new source
performance standards, and emission standards for hazardous air
pollutants and mobile source pollutants. EPA research into health
effects of air pollution will continue past efforts to assess actual
human exposure. Research on the effects of diesel engine exhaust
will be reduced, reflecting attainment of EPA's current information
goals for 1982.
The water quality research program expects to obligate $13 million in 1983, a decrease of $15 million from the 1982 level. In the
municipal wastewater program, activities that are more appropriately conducted by the private engineering community, such as
design engineering, are being eliminated. All extramural research
in the water quality program will be eliminated, shifting all future
activities to in-house R. & D. labs. The engineering-related extramural research of the industrial wastewater program is being reduced, due to near completion of the effluent limitations effort.
The drinking water research program would decrease by $6 million to a level of $15 million in 1983. The program will continue to
evaluate data on the incidence and health effects of contaminants,
evaluate alternate disinfectant techniques, provide a national quality assurance program, and carry out research related to the problems of small systems. Research on the nature and movement of
contamination in subsurface waters will be expanded.
The hazardous waste program would obligate $18 million in 1983,
a decrease of $4 million below the 1982 level. This research will
support the development of methods and protocols for the regulatory program involving assessing risks to human health and ensuring quality control. Research will continue on developing a better
understanding of the various hazardous waste control technologies.
The pesticide research program would obligate $3 million, an
increase of $1 million over 1982. The research program supports
development of methods for measuring and assessing human exposure to pesticides and the ecological effects of pesticides, risk as-

THE BUDGET FOR FISCAL YEAR 1983

sessments, and development of improved methods for detecting
chemical and biological pesticides.
The radiation research program would decrease by $.5 million, to
a level of $0.4 million in 1983. These reductions occur in lower
priority research areas, such as nonionizing radiation, which are
not directly related to statutory mandates.
The toxic substance program would total $14 million for 1983, a
decrease of $6 million. Research will support the development of
more effective techniques, models and data bases to predict health
effects of new chemicals. Development of methodologies and models
for defining exposure and risk will be continued.
The energy program, which includes activities related to the
impact and regulation of fossil fuel combustion and synthetic fuels,
is projected at a level of $36 millon in 1983, a decrease of $19
million below 1982. Emphasis will continue to be placed on assessing the health and environmental impacts of synthetic fuels, evaluating control technology options, and providing the regions and
States with indirect technical expertise. The 1983 funding includes
$12 million to support a major government-wide effort to assess the
sources and effects of acid rain.
Super fund Research in 1983 shows a reduction of $6 million, to a
level of $4 million. This reduction is a result of the fast start-up
required to implement Superfund and the fact that much of the
information needed for developing guidelines and protocols and for
developing the required cleanup and safety manuals will be completed in 1982. Funds for this program are derived from the Hazardous Substance Response Trust Fund, as opposed to general revenues.
NUCLEAR REGULATORY COMMISSION

The Nuclear Regulatory Commission (NRC) performs research in
civil uses of nuclear materials and facilities consistent with public
health and safety, environmental quality, and national security. A
major share of NRC's effort is devoted to research on the use of
nuclear energy to generate electric power. Its research objective is
to provide safety and analytical methods for assuring the quality of
NRC's licensing procedures and regulatory work.
In 1983, NRC's obligations for the conduct of R. & D. are expected to decrease from $223 to $220 million. In 1983, key areas, such
as accident evaluation and mitigation and systems and reliability
analysis will be strengthened. Additionally, reactor safety research,
principally on the Clinch River Fast Breeder Reactor, will be increased in 1983. The Loss of Fluid Test Facility experimental program is planned to be completed in 1982. Funding for loss-ofcoolant accidents and transient research will, therefore, be reduced
more than offsetting proposed increases.

SPECIAL ANALYSIS K
AGENCY FOR INTERNATIONAL

DEVELOPMENT

Research and development activities of the Agency for International Development (AID) consist mainly of applied research to
solve specific problems associated with basic human needs development and social and economic research aimed at improving U.S.
and host country understanding of the major obstacles to such
development.
Programs in this area reflect the administration's recognition of
the importance of R. & D. in addressing the development problems
faced by the Third World.
Obligations of AID for the conduct of R. & D. are estimated at
$186 million in 1983, an increase of $26 million over 1982.
Most of AID's 1983 R. & D. funds will be devoted to three critical
problems: Food production, with an emphasis on affecting developing country efforts to overcome the growing food crisis; population
growth, emphasizing methods of controlling increasing population
growth rates in the developing countries; and energy supply, emphasizing renewable and nonconventional energy sources critical
for development to proceed.
VETERANS ADMINISTRATION

The Veterans Administration (VA) conducts and administers
medical, rehabilitative, and health services research. In 1983 this
agency would obligate $145 million, an increase of $8 million over
1982, for the conduct of R. & D.
The VA intramural biomedical research program is designed to
benefit patients through increased quality and effectiveness of
health care delivery. Priorities for 1983 include special research on
alcoholism, geriatrics and hypertension.
In rehabilitative research, the V A works to develop and test
prosthetic, orthopedic, and adaptive equipment for improving the
care and rehabilitation of disabled veterans, including amputees,
paraplegics and the blind.
The health services research program supports projects at VA
health care facilities to improve the delivery and accessibility of
health services to veterans. The preventive health program begun
last year will be continued in 1983.
FOUNDATION FOR EDUCATION ASSISTANCE

The proposed Foundation for Education Assistance will continue to support a variety of R. & D. activities in 1983. Included
among those activities will be basic and applied educational research; the conduct of surveys, evaluations and experiments in the
field of education; the funding of developmental and demonstration
projects; the assessment of the performance of children and adults

THE BUDGET FOR FISCAL YEAR 1983

in reading, mathematics, communication and citizenship skills; the
collection, analyses and reporting of statistics and other data related to education; and the dissemination of information and findings.
The Foundation expects, in 1983, to obligate a total of $76
million for the conduct of R. & D.
In addition to its general research and data gathering activities,
the Foundation will carry out R. & D. activities related to the areas
of vocational and adult education for the handicapped, education
programs for persons with limited English proficiency, and development activities that provide technical support for the dissemination
activities of the Foundation.
OTHER AGENCY PROGRAMS

An additional 15 agencies (listed in table K-2, footnote 1) would
obligate an estimated $272 million in 1983, for the conduct of R. &
D., a decrease of $7 million below the 1982 total. Obligations by
these agencies amount to less than 1% of all federally funded
programs in R. & D. The programs of these agencies, like those of
other agencies discussed above, are closely related to the agencies'
missions.
Among the agencies in this category that expect to increase their
obligations for R. & D. in 1983 are the Smithsonian Institution, the
Army Corps of Engineers, the Arms Control and Disarmament
Agency, and the Federal Emergency Management Agency.
SUPPLEMENTARY

INFORMATION

Table K-9 provides information on the long-term trends in Federal funding for the conduct of R. & D.

SPECIAL ANALYSIS K
Table K-9. TRENDS IN CONDUCT OF R. & D.
(Obligations in billions of dollars)
Year

195 3
195 4
195 5
195 6
195 7
195 8
195 9
196 0
196 1
196 2
196 3
196 4
196 5
196 6
196 7
196 8
196 9
197 0
197 1
197 2
197 3
197 4
197 5
197 6
197 7
197 8
197 9
198 0
198 1
1982 (estimate)
1983 (estimate)
1

Includes military-related R. & D. programs of the Departments of Defense and Commerce.

Defense1

2.8
2.5
2.2
2.5
3.3
3.8
5.6
6.1
7.0
7.2
7.8
7.8
7.3
7.5

8.6

8.3
8.4

8.0

8.1
8.9
9.0
9.0
9.7
10.4
11.9

12.6

13.6
15.1
17.8

22.1

26.2

All other

.3
.3
.4
.5
.6
.8

1.1
1.5
2.1
3.1
4.7
6.4
7.3
7.8
7.9
7.6
7.2
7.3
7.4
7.6
7.8
8.4
9.3
10.4
12.1
13.8
15.4

16.6
17.2

16.8
16.8

Full text of Budget of the United States Government, Special Analyses : Fiscal Year 1983

FRASER