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MID-SESSION REVIEW

BUDGET OF THE
UNITED STATES GOVERNMENT

Fiscal Year 2001

June 26, 2000

The Honorable J. Dennis Hastert
Speaker of the House
of Representatives
Washington, DC 20515
Dear Mr. Speaker:
Section 1106 of Title 31, United States Code, requires that the President transmit to the
Congress a supplemental update of the Budget that was transmitted to the Congress earlier in the
year. This supplemental update of the Budget, commonly known as the Mid-Session Review,
contains revised estimates of the budget surplus, receipts, outlays, and budget authority for fiscal
years 2000 through 2010 and other summary information required by statute.

Enclosure

Identical Letter Sent to The President of the Senate

TABLE OF CONTENTS
Page

Transmittal Letter
Table of Contents ...............................................................................................................

i

List of Tables ......................................................................................................................

ii

Summary ............................................................................................................................

1

Economic Assumptions ......................................................................................................

9

Receipts ...............................................................................................................................

15

Spending .............................................................................................................................

17

Current Status of Enforcement Procedures .....................................................................

21

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

25

GENERAL NOTES
1. All years referred to are fiscal years unless otherwise noted.
2. All totals in the text and tables display both on-budget and offbudget spending and receipts unless otherwise noted.
3. Details in the tables and text may not add to totals due to
rounding.
4. Web address: http://www.gpo.gov/usbudget.

i

LIST OF TABLES
Page

Table 1.

4

Table 2.

Framework for Social Security and Medicare Reform and Fiscal
Discipline .....................................................................................................

5

Table 3.

Allocation of Unified Surplus, 2001–2010 ....................................................

6

Table 4.

Current Services Surpluses ...........................................................................

6

Table 5.

Summary of Mid-Session Baseline Revisions ..............................................

7

Table 6.

Economic Assumptions ..................................................................................

13

Table 7.

Comparison of Economic Assumptions .........................................................

14

Table 8.

Change in Receipts ........................................................................................

16

Table 9.

Change in Outlays .........................................................................................

18

Table 10.

Current Status of Discretionary Spending Limits ......................................

21

Table 11.

Net Cost of Pay-as-you-go Legislation Reported on by OMB as of
June 20, 2000 ..............................................................................................

23

Table 12.

Proposed Discretionary Spending Limits .....................................................

27

Table 13.

Estimated Spending from 2001 Balances of Budget Authority ..................

28

Table 14.

Outlays for Mandatory Programs Under Current Law ..............................

29

Table 15.

Mandatory Proposals by Agency ...................................................................

30

Table 16.

Effect of Proposals on Receipts .....................................................................

35

Table 17.

Outlays by Category ......................................................................................

43

Table 18.

Receipts by Source .........................................................................................

44

Table 19.

Outlays by Agency .........................................................................................

45

Table 20.

Outlays by Function ......................................................................................

46

Table 21.

Discretionary Budget Authority by Agency .................................................

47

Table 22.

Discretionary Budget Authority by Function ..............................................

48

Table 23.

ii

Budget Policy Totals ......................................................................................

Federal Government Financing and Debt ....................................................

49

SUMMARY
Both the American economy and the Federal
budget have entered the new millennium
with remarkably improved levels of performance. After five consecutive years of declining
deficits, the past two budgets recorded the
first surpluses in 29 years. This will be
the eighth consecutive year of improved fiscal
results, with a third surplus larger than
the last two combined. This will be the
first series of three consecutive surpluses
since the late 1940’s. Moreover, last year’s
budget registered a modest surplus over and
above the amount of the Social Security
surplus for the first time in 40 years, and
the non-Social Security surplus this year
will be the first of significant size in generations.
In his first budget, submitted in 1993,
President Clinton addressed the then-record
deficit head on. The President proposed—
and won enactment of—a program with budget
savings totaling $505 billion over five years,
with more than half that sum coming from
spending cuts. Thus began a virtuous cycle.
Deficit reduction contributed to lower interest
rates. Lower interest rates have helped unleash the productive potential of the American
people and American business, fueling record
investment growth and sustained economic
growth, low inflation, and further budgetary
improvement.

ance. The U.S. economy continued to outperform projections with strong, noninflationary growth and continued low unemployment. The robust economy produced higher
incomes that in turn generated stronger revenue growth. Technical reestimates added
to the increase in projected receipts and
also reduced outlay estimates.
Because we have put our fiscal house
in order for the first time in decades, we
now can address the long-term solvency problems of the Social Security and Medicare
programs in a timely fashion and from a
position of fiscal strength. By setting the
budget on a course to eliminate the debt
held by the public by 2012, the Administration
seeks to remove the current burden of interest
on the debt from the budget prior to the
demographic changes heralded by the retirement of the baby-boom generation.
Framework for Social Security and
Medicare Reform and Fiscal Discipline
The Administration’s framework for Social
Security and Medicare reform and fiscal discipline allocates the surplus to extend the
solvency of Social Security and Medicare,
establish a new voluntary Medicare prescription drug benefit, provide targeted tax relief,
expand health insurance coverage, and eliminate the publicly held debt by 2012.

The Administration now projects that, under
our proposed policy, the overall budget surplus
for 2000 will be $211 billion, the largest
surplus ever in dollar terms and the largest
as a percentage of GDP since 1948. The
projections in this Review show the surplus
growing to $228 billion in fiscal year 2001.
Taking the five years from 2001 through
2005 as a whole, projected baseline unified
budget surpluses have been raised by more
than $470 billion from the February budget;
over the next ten years, the upward revision
is $1.3 trillion.

In this Mid-Session Review, the total baseline budget surplus over 2001 through 2010
is estimated at $4.2 trillion, a $1.3 trillion
increase from the 10-year surplus estimated
in the February budget. Of the $4.2 trillion
total surplus, $2.3 trillion is due to the
surplus in the off-budget accounts, which
consists almost entirely of the Social Security
trust fund surplus. As in the February budget,
the entire Social Security surplus is reserved
for Social Security and debt reduction.

Much of this impressive improvement in
the budget outlook reflects a further brightening in prospects for macroeconomic perform-

In this Mid-Session Review, the Administration builds on its record of fiscal discipline
by taking the next major step for debt

Taking Medicare Off-budget

1

2

MID–SESSION REVIEW

reduction to prepare for the challenges of
the future. The Administration proposes moving the Medicare Hospital Insurance trust
fund off-budget, ensuring that its $403 billion
surplus over 10 years is not used for other
purposes and therefore will be used to reduce
the debt.
Taking the Medicare Hospital Insurance
trust fund off-budget, like Social Security,
ensures that payroll taxes are used entirely
for Medicare, to prepare for its future demographic challenges. This policy builds on
the many steps the Administration has taken
to strengthen Medicare. In 1993, the Medicare
trust fund was projected to be exhausted
in 1999. Today, Medicare is projected to
be solvent through 2025. The annual Medicare
surplus has risen from $3.7 billion in 1993
to $21.5 billion in 1999, and the surplus
is projected to rise further over the next
ten years. The next logical step is to lock
away these surpluses for debt reduction,
better positioning the Government to pay
for Medicare benefits for the baby-boom generation.
Taking Medicare off-budget does not eliminate the need to make Medicare more efficient
and provide it with additional resources to
meet future needs. Instead, it means that
Medicare reforms can be based entirely on
their impact on the long-term solvency of
Medicare and the quality of care for beneficiaries. Medicare savings need not be used
to meet budget targets or to pay for other
spending increases or tax cuts. The Administration has proposals to modernize Medicare’s
benefits, make Medicare more competitive,
and provide additional resources to address
the inevitable challenges of the retirement
of the baby-boom generation.
Allocating the On-Budget Surplus
With the Administration’s new proposal
to take Medicare off-budget, the current services baseline on-budget surplus is $1.5 trillion
over 10 years. The Administration proposes
to allocate this surplus as follows:
• Interest savings transfers to extend Medicare solvency to at least 2030. Moving
Medicare HI off-budget results in additional debt reduction and thus added interest savings. The Administration uses

the benefit of these interest savings to extend the life of Medicare. Over 2001
through 2010, the Administration proposes
to make $115 billion of solvency transfers
to extend the solvency of Medicare. These
transfers reflect the total interest savings
resulting from devoting the Medicare surplus to debt reduction from 2001 to 2010.
• Medicare prescription drug benefits with
catastrophic protection. The framework allocates a net $224 billion over ten years
for Medicare prescription drug benefits
and other reforms. This strengthens the
February budget’s prescription drug proposal by starting the benefit in 2002,
specifying a catastrophic policy to limit
out-of-pocket spending at $4,000 for beneficiaries, and paying for prescription drugs
in managed care in 2001. It maintains the
key elements of the Administration’s
Medicare reform plan, such as the increased competition and anti-fraud provisions from the February budget. (The $224
billion figure includes the off-budget impact.)
• Balanced Budget Act (BBA) provider payment adjustments. An addition to the
framework allocates $40 billion over ten
years to mitigate further the impacts of
the BBA payment reductions for Medicare
and Medicaid providers. This will ensure
access to high-quality services at hospitals,
teaching hospitals, home health agencies,
nursing homes, and other health care providers. (This figure includes the off-budget
impact.)
• Health coverage initiative. The framework
continues to allocate $90 billion over ten
years to expand health coverage to lowincome families and children, people between jobs, and vulnerable older Americans not yet eligible for Medicare.
• Targeted tax relief. The framework maintains the President’s proposals from the
February budget, allocating $263 billion
over ten years for targeted tax relief—to
provide educational opportunities, make
health care more affordable, increase retirement saving, and promote other priorities.

3

SUMMARY

• Reserve for America’s future. Finally, the
framework sets aside $500 billion over ten
years that could be used for key national
priorities, such as retirement saving, targeted tax cuts, investments in education,
research, health and the environment, or
further debt reduction.
Repaying the Publicly Held Debt
Budget surpluses in fiscal years 1998 and
1999 have already reduced the publicly held
debt by $140 billion, and the surplus in
2000 is expected to bring cumulative debt
reduction to more than $320 billion. By
locking away the Social Security and Medicare
surpluses for debt reduction, the Administration would ensure that the publicly held
debt continues on this sharply downward
path. The Administration estimates that its
proposals would result in full repayment
of the publicly held debt by 2012. This
is one year earlier than the 2013 date
projected in the February budget.
Allocating the Reserve for America’s
Future
The $500 billion reserve for America’s future
is proposed to be available for a variety
of key national priorities. The reserve could
be used for targeted tax cuts, to enhance
incentives for individual retirement savings,
for investment in critical priorities such as
education, research, health, and the environment, or it could be earmarked for debt
reduction beyond that already proposed in
this Mid-Session Review.
There are always uncertainties surrounding
any long-range budget projections. The Administration believes the reserve could provide

a margin of insurance. If the surplus is
not as large as projected, then any use
of the reserve could be reduced. The allocation
of the reserve should be subject to a full
debate over national priorities, given the
competing visions for use of these funds.
Extending the Solvency of Social Security
and Medicare
Locking away the surpluses in the Social
Security and Medicare trust funds ensures
that these resources are not used for other
purposes. These resources therefore remain
available to reduce the publicly held debt.
This increases national saving and improves
the financial position of the Government,
making it easier to finance future Social
Security and Medicare benefits for the babyboom generation. Moreover, using the Social
Security and Medicare surpluses for debt
reduction produces interest savings. The Administration believes these interest savings
should be used to extend the life of Social
Security and Medicare. As in the February
budget, solvency transfers from the on-budget
surplus to Social Security would begin in
2011, based on the interest savings from
locking away the Social Security surplus.
According to the Social Security Administration’s actuaries, these transfers would extend
the life of Social Security to 2057, or to
2063 if a limited and prudent portion of
the transfers were invested for higher returns.
Medicare solvency transfers of $115 billion
over the first ten years are made based
on the interest savings from locking away
Medicare surpluses for debt reduction. Interest
savings transfers would continue beyond 2010,
extending the life of the Medicare trust
fund to at least 2030.

4

Table 1.

BUDGET POLICY TOTALS
(In billions of dollars)

2000
February Budget Policy:
Receipts ......................................................................
Outlays .......................................................................
Unified surplus .........................................................
Mid-Session Budget Policy:
Receipts ......................................................................
Outlays .......................................................................
Reserve for America’s future ....................................
Unified surplus .........................................................
Difference:
Receipts ......................................................................
Outlays .......................................................................
Reserve for America’s future ....................................
Unified surplus .........................................................

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2001–2010

1,956
1,790
167

2,019
1,835
184

2,081
1,895
186

2,147
1,963
185

2,236
2,041
195

2,341
2,125
215

2,440
2,185
256

2,559
2,267
292

2,676
2,362
314

2,785
2,456
329

2,917
2,553
363

24,202
21,683
2,519

2,013
1,802
..............
211

2,096
1,848
20
228

2,168
1,919
25
224

2,245
1,984
25
236

2,339
2,059
26
255

2,440
2,145
27
268

2,537
2,202
49
286

2,661
2,282
75
304

2,790
2,375
83
332

2,916
2,467
85
364

3,065
2,563
85
416

25,256
21,844
500
2,912

57
12
..............
45

77
13
20
44

87
24
25
38

98
22
25
51

103
17
26
60

99
20
27
52

97
17
49
30

102
15
75
12

114
13
83
18

131
11
85
35

148
10
85
53

1,054
161
500
393

MEMORANDUM:
Mid-Session surplus estimates:.
On-budget ..............................................................
Off-budget:
HI trust fund ......................................................
Social security ....................................................
Postal service .....................................................

39

9

1

6

10

1

1

1

2

4

14

49

24
150
-2

60
160
-*

47
176
-1

39
191
-*

40
205
-1

41
226
-*

47
238
*

46
256
*

57
271
1

72
286
2

97
304
2

546
2,314
3

Subtotal, off-budget ...............................................

172

219

223

230

245

267

285

302

330

360

402

2,863

*$500 million or less.

MID–SESSION REVIEW

FRAMEWORK FOR SOCIAL SECURITY AND MEDICARE REFORM AND FISCAL DISCIPLINE
(In billions of dollars)
2000

Available On-budget Surplus ...................................................................
52
Allocation of Surplus:
Health initiatives:
Medicare solvency transfer .................................................................... ..........
Prescription drugs and Medicare reforms 1 .......................................... ..........
Health coverage ...................................................................................... ..........
Subtotal, health initiatives ................................................................
Net tax cut ..................................................................................................
Other ...........................................................................................................
Reserve for America’s future .....................................................................
Debt service 2 ..............................................................................................

2001

2002

2003
68

2004
81

2005
95

2006
139

2007

2008

2009

Total
Total
2010 2001–05 2001–10

49

67

179

215

261

316

360

1,470

31
3
1

14 .......... .......... .......... .......... ..........
11
23
22
25
27
31
2
3
5
6
10
14

9
34
15

21
38
16

40
42
18

45
84
17

SUMMARY

Table 2.

115
255
90

..........
*
12
..........
*

35
–*
–16
20
2

27
4
5
25
5

27
10
–8
25
9

27
17
–12
26
13

31
24
–6
27
18

38
38
–11
49
25

44
40
–16
75
34

58
40
–14
83
46

75
44
–6
85
60

100
47
–7
85
77

146
54
–38
123
47

460
263
–91
500
290

Resulting on-budget surplus ....................................................................
39
Off-budget:
Social Security solvency lock-box ..............................................................
148
Medicare solvency lock-box:
Medicare off-budget baseline .................................................................
24
Solvency transfers .................................................................................. ..........
Interest earnings on proposals .............................................................. ..........
Medicare programmatic proposals ........................................................ ..........

9

1

6

10

1

1

1

2

4

14

27

49

160

176

191

204

226

239

256

273

288

306

956

2,317

30
31
1
–2

36
36
38
39
44
43
14 .......... .......... .......... .......... ..........
2
3
3
3
3
3
–5
*
–1
–1
–*
*

44
9
4
1

45
21
5
1

48
40
7
1

179
45
12
–8

403
115
34
–5

24

60

47

39

40

41

47

46

57

72

97

227

546

148
24
39

160
60
9

176
47
1

191
39
6

204
40
10

226
41
1

239
47
1

256
46
1

273
57
2

288
72
4

306
97
14

956
227
27

2,317
546
49

211

228

224

236

255

268

286

304

332

364

416

1,210

2,912

Subtotal, medicare off-budget .............................................................
Memorandum—debt reduction:
Social Security solvency lock-box ..............................................................
Medicare solvency lock-box .......................................................................
On-budget surplus .....................................................................................
Total debt reduction ..........................................................................
1 Includes
2 Includes

on-budget effects only. Excludes Medicare HI and Social Security.
debt service from using the reserve. If part of the reserve is dedicated to debt reduction, debt service costs would be smaller.

5

6

MID–SESSION REVIEW

Table 3.

ALLOCATION OF UNIFIED SURPLUS, 2001–2010
(In billions of dollars)
Social
Security
(offbudget) 1

Baseline surplus ............................................................
Surplus allocation:
Medicare solvency transfer .......................................
Medicare prescription drugs and modernization .....
Provider payment restoration ...................................
Health coverage .........................................................
Tax relief ....................................................................
Other ...........................................................................
Reserve for America’s future .....................................
Debt service ................................................................

..................
–1
..................
..................
..................
–2
..................
..................

Policy surplus .................................................................

Medicare
(offbudget)

2,320

2,317

On-budget

403

2

4

115
18
–26
..................
..................
2
..................
34

Unified
budget

1,470

3
3

5

546

–115
–241
–14
–90
–263
91
–500
–290

4,193
...................
–224
–40
–90
–263
91
–500
–256

49

2,912

1 Including

Postal Service.
effects on Social Security of Medicare buy-in proposal.
3 Net impact of Medicare modernization and provider payment restoration on Medicare HI outlays.
4 Largely impact of military service credits on net Social Security outlays.
5 Medicare debt service consists of interest earnings on solvency transfers less $5 billion interest cost
from programmatic changes.
2 Indirect

Table 4.

CURRENT SERVICES SURPLUSES
(In billions of dollars)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2001–
2005

2001–
2010

Unified surplus ..................
On-budget .......................
Off-budget:
Medicare HI ................
Social security .............
Postal service ..............

224
52

239
49

279
67

295
68

324
81

360
95

422
139

479
179

532
215

595
261

670
316

1,497
360

4,193
1,470

24
150
–2

30
160
–*

36
177
–1

36
191
–*

38
205
–1

39
226
–*

44
239
*

43
256
*

44
272
1

45
286
2

48
304
2

179
960
–2

403
2,317
3

Subtotal, off-budget ........

172

190

212

227

243

265

283

299

317

333

354

1,137

2,723

* $500 million or less.

7

SUMMARY

Table 5.

SUMMARY OF MID-SESSION BASELINE REVISIONS
(In billions of dollars)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2001– 2001–
2005 2010

February unified baseline surplus ...
Enacted legislation ........................
Impact of revised economic outlook ..............................................
Technical reestimates ....................

179
–9

171
–8

197
–7

193
–8

213
–8

247
–8

304
–9

347
–9

377
–9

411
–9

457 1,022 2,919
–9 –40 –84

17
37

37
39

49
40

68
42

82
37

88
33

96
30

107
34

126
38

152
40

179
43

325
190

Subtotal, changes .......................
Mid-Session unified baseline surplus .................................................

44

68

82

102

111

113

117

131

154

183

214

475 1,275

224

239

279

295

324

360

422

479

532

595

670 1,497 4,193

984
375

ECONOMIC ASSUMPTIONS
Introduction
The economy’s remarkable performance has
continued into the new millennium. As of
June, this business cycle expansion—the longest period of continuous economic growth
on record—has lasted 111 months. Sustained
and rapid growth has driven the Nation’s
unemployment rate down to the lowest level
in thirty years, reduced poverty, and raised
real wages and family incomes. The small
increase in inflation this year was largely
due to the surge in world oil prices, but
with little pass-through to the prices of
nonpetroleum goods and services. The doubledigit annual growth of business equipment
investment during the last seven years—
principally for computers, high-tech communications equipment, and software—has helped
raise the trend growth of productivity to
the highest rate in over a quarter century.
Stronger productivity growth, in turn, has
enabled firms to accommodate higher wages
without putting upward pressure on prices.
The economic successes of recent years
have been fostered by prudent fiscal policy.
The Omnibus Budget Reconciliation Act of
1993 (OBRA) and the Balanced Budget Act
of 1997 (BBA) ended an era of large budget
deficits and helped create the large budget
surpluses that are now projected to continue
through the next decade. The budget has
swung from a $290 billion deficit in fiscal
year 1992 to a $124 billion surplus last
year. In the current fiscal year, the surplus
is estimated to rise to $211 billion, or 2.2
percent of GDP—by the first measure, the
largest in U.S. history; by the latter, second
only to the winding down of our financing
of the Second World War in 1948. OBRA
1993 and BBA 1997, together with favorable
economic developments, are estimated to have
improved the budget balance compared with
the pre-OBRA 1993 baseline by a cumulative
total of $7.3 trillion over 1993–2005. By
reducing inflation without impeding economic
growth, the Federal Reserve and its monetary
policy have also played an important role
in the economy’s performance in recent years.

The Administration’s budget is based upon
the prudent and conservative assumption that
growth will not maintain the rapid pace
of the last several years. Like most other
forecasters, the Administration’s budget projections assume that economic growth will moderate over the next year to a pace compatible
with continued low and stable inflation. With
continued prudent fiscal policy that fosters
high investment and rapid productivity
growth, this expansion could extend for many
more years.
Recent Developments
Real Gross Domestic Product (GDP) expanded at a robust 5.4 percent annual rate
in the first quarter of this year, following
a 7.3 percent surge in the previous quarter.
Continuing the trend of recent years, the
fastest-growing component of GDP in the
first quarter was business equipment investment. Business investment in new structures
rose significantly as well, as did residential
investment. Consumer spending accelerated
in the first quarter to the fastest pace
in 15 years, led by record sales of light
motor vehicles. The enormous gains in household stock-market wealth during the prior
five years enabled consumers to step up
their purchases of large-ticket discretionary
durable goods while maintaining their net
worth.
State and local government spending also
grew in the first quarter, as governments
continued to use part of their unexpectedly
large revenue gains. Federal spending declined
sharply in the first quarter. This reflected
primarily the timing of national defense purchases; over the last four quarters, the Federal
spending component of GDP was little
changed. Net exports declined considerably
in the first quarter, as the strong growth
of domestic demand pushed up import growth,
while foreign purchases of U.S. goods and
services continued to be hampered by slower
growth abroad.
Partial information for the second quarter
suggests that the economy has continued
9

10
to expand, at a more moderate but still
very strong pace. The first official estimate
of second quarter GDP growth will be available
on July 28th.
The Consumer Price Index (CPI) rose at
a 3.6 percent annual rate during the first
five months of 2000, compared with a 2.7
percent increase during the twelve months
of 1999. The acceleration was due mostly
to a runup in world oil prices causing a
jump in petroleum product prices in the
CPI and other price indexes. Excluding food
and energy components, the core CPI rose
at a 2.7 percent annual rate during the
first five months of this year, compared
with 1.9 percent during all of 1999. The
GDP chain-weighted price index, a broader
measure of inflation than the CPI, rose
at a 2.7 percent annual rate in the first
quarter, up from 1.6 percent during 1999.
The uptick was largely due to higher energy
prices and the annual Federal pay increase
in January. Whether measured by the CPI
or by broader measures, the underlying rate
of inflation appears to have risen only slightly
this year.
During the first five months of this year,
the Nation’s payrolls expanded by 1.6 million
new jobs, bringing the total job creation
since this Administration took office to 22.2
million. Following job losses during 1998–1999
caused by weakness in overseas markets,
manufacturing payrolls held steady this year
and mining payrolls expanded. Construction
and private service-sector job growth remained
robust, and Federal payrolls expanded temporarily with the addition of workers for the
decennial census.
This strong job growth has pulled the
unemployment rate down. During the first
five months of this year, unemployment averaged 4.0 percent. The last time the unemployment rate was lower than this for as long
as five months was at the end of 1969.
Unemployment rates have fallen to lower
levels for all demographic groups. The unemployment rates this year for Blacks and
for Hispanics are the lowest since record
keeping began over a quarter century ago.
Tight labor markets have resulted in sizeable
gains in workers’ paychecks, even after adjusting for inflation. Over the past five years,

MID–SESSION REVIEW

real average hourly earnings have risen an
average of 1.3 percent per year, following
more than two decades of decline.
Most interest rates have risen recently
as a result of the rapid growth of demand
and the tightening of monetary policy. During
1999, the Federal Reserve raised the Federal
funds rate by one-quarter percentage point
on three occasions, returning the rate to
the 5.5 percent level that prevailed before
the 1998 international financial dislocations;
and the Fed raised rates further this year,
to 6.5 percent by May. At the longer end
of the maturity spectrum, however, Treasury
rates have fallen. The yield on 10-year Treasury notes by mid-June was about 30 basis
points lower than the yield at the end
of last year, and the yield on 30-year Treasury
bonds was down about 50 basis points from
the end of last year. The larger decline
in the 30-year yield is partly the consequence
of Treasury’s issuing fewer long-term securities
while buying back some longer-duration issues
as part of the Administration’s planned reduction in publicly held debt.
After a surge late in 1999 and early
in 2000, equity prices in the U.S. have
fallen, especially for those high-tech and
Internet stocks that experienced extraordinarily large gains in recent years. The
technology-laden NASDAQ composite index
dropped nearly 25 percent from its peak
in March to mid-June; during 1999 and
early 2000, however, the index had risen
about 125 percent. The Dow Jones Industrial
Average fell about 9 percent from its peak
earlier this year, after gains in 1999 and
early 2000 of over 25 percent. The Wilshire
5000, which mirrors the entire market, fell
7 percent from its March peak to midJune, following four years of gains in excess
of 20 percent annually. The market retreat
has reduced the value of households’ equity
holdings from their recent peaks, which is
likely to slow the growth of consumer spending
somewhat.
Revised Economic Assumptions
The economic assumptions for
Session Review have been revised
porate recent developments. Real
growth in the fourth quarter of

the Midto incoreconomic
last year

ECONOMIC ASSUMPTIONS

and so far this year has been much stronger
than projected in the Budget assumptions,
which were based on information available
as of late November. Productivity growth
has been stronger than expected. The unemployment rate has fallen slightly this year
instead of rising slowly as expected. On
the other hand, inflation has been slightly
faster than projected, largely because of the
surge in oil prices early this year. Interest
rates have also been higher than projected
in the Budget.
Nonetheless, the overall contours of the
economic assumptions have not changed. The
Administration, like most other forecasters,
expects the pace of economic activity to
moderate to a rate that can be maintained
over the long run with continued low and
stable inflation. However, the projections of
the sustainable rate of real GDP growth
have been revised upward because of higher
trend productivity growth. In addition, the
sustainable unemployment rate has been lowered slightly, while interest rates have been
raised to reflect market developments. The
projections of inflation and taxable income
shares have changed very little.
Although the Mid-Session economic assumptions imply much larger budget surpluses
in the coming years than those underlying
the FY 2001 Budget, it is possible that
the economy may outperform the forecast
presented here—and surpluses may prove
to be larger still—if fiscal policy continues
its recent sound course. But just as the
economy and the budget may do better than
the Administration projects, they could also
do worse. The recent performance of both
the economy and the budget is virtually
unprecedented, and thus should not be assumed to continue indefinitely. Tax revenues
have grown faster than the economy, and
faster than established quantitative models
can explain—perhaps in part because of the
extraordinary growth of the stock market,
which may or may not continue. There have
been past episodes—such as from the mid1970s through the early 1990s—when what
had been an apparently strong economy gave
way to slower growth and larger budget
deficits over an extended period. That is
why budget policy must remain responsible,
and why, for purposes of budget planning,

11
the Administration relies on reasonable, prudent economic projections.
Real GDP: From a budgetary perspective,
the most important revision to the economic
assumptions is to real GDP growth. Incoming
data and a revised view of productivity growth
have combined to cause a significant increase
in projected levels for real GDP. As was noted
earlier, the economy expanded at a 7.3 percent
annual rate in the fourth quarter of last year
and at a 5.4 percent rate in the first quarter
of this year. This was much faster than projected in the budget assumptions. The jumping-off point for real GDP in the Mid-Session
Review projections was higher than assumed
in the budget assumptions. The higher jumpoff point alone is responsible for a substantial
increase in the projected budget surplus for
2000 and beyond.
The Administration has also modestly raised
its projection of labor-productivity growth because of the accumulating evidence of a
secular increase since the mid-1990s. The
FY 2001 budget assumptions cautiously increased the projected productivity growth rate
and the growth of potential and actual GDP,
but new data and new research warrant
a further increase. Thanks to the increase
in productivity growth, real GDP is now
assumed to grow 3.0 percent per year on
average over the 10 years through 2010,
up from 2.7 percent in the budget assumptions. Though the 0.3 percentage point difference may appear to be small, the upward
revision significantly raises the level of real
GDP and projected budget surpluses when
compounded over 10 years.
The Mid-Session Review assumptions take
into account the higher productivity growth
trend experienced in recent years. Productivity
growth in the nonfarm business sector is
assumed to be 2.5 percent per year through
the fourth quarter of 2002, and thereafter
to slow gradually to 2.0 percent per year.
This is an upward revision of productivity
growth from the FY 2001 budget assumptions
by 0.3 percentage points per year through
2002 and by 0.2 percentage points for each
year thereafter.
The 2.8 percent rate of labor-productivity
growth since 1995 is double the 1.4 percent
per year rate experienced over the prior

12

MID–SESSION REVIEW

22 years; it is close to the pace during
the quarter-century following World War II,
the best period of productivity growth in
U.S. history. Of the 1.4 percentage point
step up in productivity growth from the
1973–95 average to the 1995–1999 average,
research by several economists attributes
about half to investment in high-tech equipment and the rapid productivity gains in
the production of such equipment; the rest
is traced to improvements outside the hightech sector, some of which may be indirectly
due to the increased use of computer and
telecommunication technology. Behind the improvement in labor productivity is the extraordinary boom in business investment over
the past eight years, which was stimulated
by the lower cost of capital allowed by
this Administration’s policy of fiscal responsibility. The ratio of real investment in business
equipment to real GDP is higher than at
any time since the end of World War II.

reflect actual experience. Thereafter, inflation
rates are identical to those in the budget. As
in the Budget, the Mid-Session Review projects
the CPI, measured on a fourth quarter to
fourth quarter basis, to rise 2.6 percent yearly
beginning in 2002, and the chain-weighted
GDP price index to rise 2.0 percent yearly beginning in 2001. These are slightly higher inflation rates than experienced in recent years.

Unemployment: Real GDP growth through
2006 is projected to be slightly below the
growth of potential GDP. This would be consistent with a gradual rise in the unemployment rate. Beginning in 2007, the unemployment rate is projected to remain on a plateau
of 5.1 percent, the center of the range the Administration now assumes is consistent with
stable inflation in the long run. This rate,
which is one-tenth of a percentage point lower
than assumed in the Budget, reflects the recent experience of historically low unemployment and continued low inflation, excluding
fluctuations in the volatile food and energy
components. The economy now appears to be
able to operate at a slightly lower unemployment rate than previously assumed without
experiencing accelerating inflation.

The yield on 10-year Treasury notes is
projected to be 6.3 percent in 2001 and
beyond. This is 20 basis points higher than
in the Budget. The higher long-term rate
is consistent with the expected improvement
in productivity growth, which will raise the
return to capital, which in turn should flow
through to higher real interest rates.

Inflation: The CPI and GDP inflation rates
have been raised for the first half of 2000 to

Interest Rates: The Mid-Session Review interest rate projections have been revised to reflect recent market developments. The 91-day
Treasury bill rate is projected to rise slightly
in coming quarters, paralleling the rise implied
by contracts in the Federal funds futures market. Beginning in 2002, the Treasury bill rate
is assumed to decline as the pace of economic
activity moderates, and afterwards is projected
to remain on a plateau of 5.8 percent. This
is about 60 basis points higher than in the
budget projection.

Taxable Incomes: The Mid-Session Review
assumes taxable incomes as a share of nominal
GDP that are similar to those assumed in the
Budget. The overall taxable income share is
assumed to decline through 2010, as a growing
depreciation share in a high-investment economy crowds out taxable income, especially the
share of corporate profits. The share of wages
and salaries in GDP also edges down over the
projection period, as untaxed benefits absorb
a growing share of labor compensation.

ECONOMIC ASSUMPTIONS 1

(Calendar years; dollar amounts in billions)
Actual
1999
Gross Domestic Product (GDP):
Levels, dollar amounts in billions:
Current dollars ....................................................................................
Real, chained (1996) dollars ................................................................
Chained price index (1996 = 100), annual average ..........................
Percent change, fourth quarter over fourth quarter:
Current dollars ....................................................................................
Real, chained (1996) dollars ................................................................
Chained price index (1996 = 100) .......................................................
Percent change, year over year:
Current dollars ....................................................................................
Real, chained (1996) dollars ................................................................
Chained price index (1996 = 100) .......................................................

9,256
8,848
104.6

Projections
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

9,886 10,407 10,946 11,494 12,065 12,660 13,283 13,942 14,624 15,335 16,079
9,272 9,573 9,873 10,166 10,461 10,760 11,068 11,389 11,712 12,040 12,377
106.6 108.7 110.8 113.0 115.3 117.6 120.0 122.4 124.8 127.3 129.9

6.3
4.6
1.6

6.0
3.9
2.0

5.3
3.2
2.0

5.1
3.1
2.0

4.9
2.9
2.0

5.0
2.9
2.0

4.9
2.8
2.0

5.0
2.9
2.0

5.0
2.9
2.0

4.9
2.8
2.0

4.9
2.8
2.0

4.8
2.8
2.0

5.7
4.2
1.4

6.8
4.8
1.9

5.3
3.2
2.0

5.2
3.1
2.0

5.0
3.0
2.0

5.0
2.9
2.0

4.9
2.9
2.0

4.9
2.9
2.0

5.0
2.9
2.0

4.9
2.8
2.0

4.9
2.8
2.0

4.9
2.8
2.0

Incomes, billions of current dollars:
Corporate profits before tax ................................................................
Wages and salaries ..............................................................................
Other taxable income 2 ........................................................................

848
4,472
2,100

880
4,761
2,222

858
5,034
2,274

903
5,277
2,337

932
5,529
2,409

957
5,791
2,485

995
6,060
2,569

1,036
6,353
2,662

1,068
6,663
2,756

1,096
6,990
2,852

1,128
7,326
2,952

1,160
7,669
3,055

Consumer Price Index (all urban): 3
Level (1982–84 = 100), annual average .............................................
Percent change, fourth quarter over fourth quarter .........................
Percent change, year over year ..........................................................

166.7
2.6
2.2

172.1
3.2
3.3

176.5
2.5
2.6

181.0
2.6
2.6

185.7
2.6
2.6

190.6
2.6
2.6

195.5
2.6
2.6

200.6
2.6
2.6

205.8
2.6
2.6

211.2
2.6
2.6

216.7
2.6
2.6

222.3
2.6
2.6

Unemployment rate, civilian, percent:
Fourth quarter level ............................................................................
Annual average ....................................................................................

4.1
4.2

4.1
4.1

4.2
4.1

4.4
4.3

4.6
4.5

4.8
4.7

4.9
4.8

5.1
5.0

5.1
5.1

5.1
5.1

5.1
5.1

5.1
5.1

Federal pay raises, January, percent:
Military 4 ...............................................................................................
Civilian 5 ...............................................................................................

3.6
3.6

4.8
4.8

3.7
3.7

3.7
3.7

3.2
3.2

3.2
3.2

3.2
3.2

NA
NA

NA
NA

NA
NA

NA
NA

NA
NA

Interest rates, percent:
91-day Treasury bills 6 ........................................................................
10-year Treasury notes .......................................................................

4.7
5.6

5.8
6.3

6.2
6.3

5.9
6.3

5.8
6.3

5.8
6.3

5.8
6.3

5.8
6.3

5.8
6.3

5.8
6.3

5.8
6.3

ECONOMIC ASSUMPTIONS

Table 6.

5.8
6.3

1 Based

on information available as of late April 2000.
interest, dividend and proprietor’s components of personal income.
3 Seasonally adjusted CPI for all urban consumers.
4 Percentages apply to basic pay only; adjustments for housing and subsistence allowances will be determined by the Secretary of Defense.
5 Overall average increase, including locality pay adjustments.
6 Average rate (bank discount basis) on new issues within period.
2 Rent,

13

14

Table 7.

COMPARISION OF ECONOMIC ASSUMPTIONS
(Calendar years)
Projections
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Real GDP (chain-weighted): 1
2001 Budget .................................................................
CBO March ..................................................................
2001 Mid-Session Review ...........................................

2.9
2.9
3.9

2.6
3.0
3.2

2.5
2.7
3.1

2.5
2.6
2.9

3.0
2.6
2.9

3.0
2.7
2.8

2.9
2.7
2.9

2.8
2.7
2.9

2.6
2.8
2.8

2.6
2.9
2.8

2.6
2.9
2.8

Chain-weighted GDP price index: 1
2001 Budget .................................................................
CBO March ..................................................................
2001 Mid-Session Review ...........................................

1.9
1.7
2.0

2.0
1.6
2.0

2.0
1.7
2.0

2.0
1.7
2.0

2.0
1.7
2.0

2.0
1.7
2.0

2.0
1.7
2.0

2.0
1.7
2.0

2.0
1.7
2.0

2.0
1.7
2.0

2.0
1.7
2.0

Consumer Price Index (all-urban): 1
2001 Budget .................................................................
CBO March ..................................................................
2001 Mid-Session Review ...........................................

2.3
2.3
3.2

2.5
2.5
2.5

2.6
2.5
2.6

2.6
2.5
2.6

2.6
2.5
2.6

2.6
2.5
2.6

2.6
2.5
2.6

2.6
2.5
2.6

2.6
2.5
2.6

2.6
2.5
2.6

2.6
2.5
2.6

Unemployment rate: 2
2001 Budget .................................................................
CBO March ..................................................................
2001 Mid-Session Review ...........................................

4.2
4.1
4.1

4.5
4.2
4.1

5.0
4.4
4.3

5.2
4.7
4.5

5.2
4.8
4.7

5.2
5.0
4.8

5.2
5.0
5.0

5.2
5.1
5.1

5.2
5.2
5.1

5.2
5.2
5.1

5.2
5.2
5.1

Interest rates: 2
91-day Treasury bills:
2001 Budget .............................................................
CBO March ..............................................................
2001 Mid-Session Review ........................................

5.2
5.4
5.8

5.2
5.6
6.2

5.2
5.3
5.9

5.2
4.9
5.8

5.2
4.8
5.8

5.2
4.8
5.8

5.2
4.8
5.8

5.2
4.8
5.8

5.2
4.8
5.8

5.2
4.8
5.8

5.2
4.8
5.8

10-year Treasury notes:
2001 Budget .............................................................
CBO March ..............................................................
2001 Mid-Session Review ........................................

6.1
6.3
6.3

6.1
6.4
6.3

6.1
6.1
6.3

6.1
5.8
6.3

6.1
5.7
6.3

6.1
5.7
6.3

6.1
5.7
6.3

6.1
5.7
6.3

6.1
5.7
6.3

6.1
5.7
6.3

6.1
5.7
6.3

1 Percent
2 Annual

change, fourth quarter over fourth quarter.
averages, percent.

MID–SESSION REVIEW

RECEIPTS
The current estimates of receipts for 2000
and 2001 exceed the February budget estimates by $56.9 billion and $76.9 billion,
respectively. Over the 10-year period 2001
to 2010, the estimates have been revised
upward by $1,054.1 billion. These changes
result primarily from revised economic projections and technical reestimates.
Revised economic projections increase receipts by $19.2 billion in 2000, $43.8 billion
in 2001, and increasing amounts in each
subsequent year. For the 10-year period 2001
to 2010, revised economic assumptions account
for $881.2 billion of the upward revision
in receipts. Higher levels of wages and salaries
and other sources of personal income increase
collections of individual income taxes and
payroll taxes in each year by amounts rising
annually from $10.9 billion in 2000, to $31.8
billion in 2001, to $59.5 billion in 2005.
For the 10-year period 2001 to 2010, higher
levels of income increase collections of individual income taxes and payroll taxes by
$670.9 billion. Higher corporate profits increase collections of corporation income taxes
by $5.5 billion in 2000, $6.8 billion in 2001,
and $181.7 billion over the 10 years, 2001
to 2010. Higher levels of nominal and real
GDP, which affect excise taxes, and higher
interest rates, which affect deposits of earnings
by the Federal Reserve, also contribute to
the increase in receipts in each year. Beginning in 2003, customs duties are reduced
in each year, reflecting lower levels of imports
than forecast for the February budget.
Technical adjustments increase receipts by
$36.6 billion in 2000, $30.6 billion in 2001,

and declining amounts in each subsequent
year. For the 10-year period 2001 to 2010,
technical adjustments increase receipts by
a net $163.1 billion. These net increases
are in large part attributable to higherthan-anticipated collections of individual income taxes, which are partially offset by
net downward adjustments in other sources
of receipts. The technical revisions in individual income taxes, which in large measure
reflect continued strength in the stock market
and its effects on capital gains realizations
and other market sensitive components of
income, increase receipts by $36.7 billion
in 2000, $31.4 billion in 2001, and $173.7
billion over the 10 years, 2001 to 2010.
Administrative and legislative actions, which
include the Civil Asset Forfeiture Reform
Act of 2000, the Trade and Development
Act of 2000, and the repeal of the Social
Security earnings test, increase receipts by
a net $1.1 billion in 2000, but have a
relatively minor effect in each subsequent
year.
Reestimates of the Administration’s proposals increase receipts by $2.4 billion in
2001 and by declining amounts in each
subsequent year. These revisions result largely
from the correction of the distribution of
the effects of the proposed earned income
tax credit (EITC) between outlays and receipts,
enactment of the Administration’s initiatives
to enhance trade benefits for subsaharan
African and Caribbean Basin countries, and
the revised economic forecast.

15

16

MID–SESSION REVIEW

Table 8.

CHANGE IN RECEIPTS
(In billions of dollars)

2000

2001

2002

2003

2004

2005

February unified estimate .....................
Revisions due to:
Economic assumptions .......................
Technical reestimates .........................
Administrative action .........................
Enacted legislation .............................
Reestimates of proposals ....................

1,956.3

2,019.0

2,081.2

2,147.5

2,236.1

2,340.9

19.2
36.6
–0.2
1.3
–*

43.8
30.6
–0.2
0.4
2.4

54.3
30.4
–0.2
0.2
2.1

68.7
26.9
–0.3
0.1
2.1

80.3
21.2
–0.1
0.1
1.6

Total change ....................................
Mid-Session unified estimate ................

56.9
2,013.1

76.9
2,096.0

86.8
2,168.0

97.6
2,245.1

103.1
2,339.2

* $50 million or less.

2001–2005

2001–2010

83.3
14.7
–*
*
1.0

330.5
123.8
–0.9
0.8
9.1

881.2
163.1
–1.2
0.9
10.1

99.0
2,439.9

463.4

1,054.1

SPENDING
Current outlay totals for 2000 increase
by $12.1 billion relative to the February
budget estimates. The higher estimates arise
from enactment of the Agriculture Risk Protection Act and the repeal of the Social Security
earnings test, and the net effect of revised
economic and technical assumptions.
For the 10-year period 2001 through 2010,
the Administration now estimates total outlays
at $161.0 billion higher than in February.
Because of higher estimates of revenues discussed in the previous section, the Administration has revised its proposals, increasing
outlays by $380.5 billion over the period.
Enacted legislation also increases the 10year projections. These increases are partially
offset by changes due to revised economic
and technical assumptions.
Policy changes
The Administration has refined its framework spending proposals in light of the
changes in baseline surpluses projected in
this Review. These refinements enhance the
proposed medicare drug coverage and adjust
the February medicare reform proposals. The
Administration also proposes to increase the
discretionary caps to maintain a program
level equal to current services levels over
the 10-year period 2001 through 2010, increasing budget authority and outlays beginning
in 2003. Minor revisions to Administration
discretionary requests for 2000 and 2001,
and releases of previously enacted emergency
funding, increase outlays by $0.5 billion in
both years.
The Agriculture Risk Protection Act provides
$5.5 billion in income support to farmers
in 2000. The Act also reforms the crop
insurance program by increasing federal subsidies for insurance premiums and expanding
coverage to more crops, among other changes.
The Administration’s framework proposal to
enhance the farm safety net has been refined
to conform to the new policy baseline established by this Act. The Act’s crop insurance
provisions, as well as its income assistance
for the 2000 crop only, have been substituted

for the Administration’s corresponding proposals. On net, these changes add $4.8 billion
in 2000 outlays compared with the Administration’s February proposal, and $5.5 billion
in outlays for 2001 through 2005. The legislation repealing the Social Security earnings
limits increases 2000 and 2001 outlays by
$4.4 billion and $4.6 billion, respectively.
Economic assumptions
Revisions in economic assumptions, discussed earlier in this report, increase outlays
by $2.4 billion in 2000 and $7.0 billion
in 2001. Over the 10-year period 2001 through
2010, however, outlay estimates decrease by
a net of $91.1 billion due to revised economic
assumptions. Outlays are increased by higher
interest rates and slightly higher inflation
rates. These increases are more than offset
by the impact of lower unemployment rate
projections and the debt service impact of
higher receipts due to revised economic assumptions.
Technical changes
For 2000, estimated outlays are $0.3 billion
lower than in February for technical reasons.
For 2001, technical changes reduce outlays
by $6.2 billion. The following changes in
outlay projections all arise from technical
factors.
Commodity credit corporation (CCC) farm
price supports.—Spending on farm programs
through the Commodity Credit Corporation is
projected to increase by $7.3 billion over the
five years 2001 through 2005 and $10.0 billion
over 10 years, relative to the February budget.
These changes largely reflect increases in projected demand for USDA commodity loans and
payments due primarily to increased crop production estimates and slower price recovery for
certain commodities.
Medicaid.—Projected outlay estimates for
medicaid are $1.6 billion above the February
estimate for 2001 and $20.5 billion higher for
the 10-year period 2001 through 2010. This
is the result of higher projections of spending
17

18

MID–SESSION REVIEW

from States on benefits and administration,
and increases in vaccines for children.
Medicare.—Current estimates of Medicare
outlays are $1.2 billion higher than the February estimate for 2000. The change is partially a result of a $3.4 billion shift in spending
from 2001 into 2000, reflecting a correction
in the number of managed care payments in
those years. Medicare outlays are projected to
be $8.2 billion lower in 2001 and $92.2 billion
lower over the 10-year period, 2001 through
2010, than the February estimates for technical reasons. These changes reflect (1) lower
enrollment projections for managed-care enrollees, which reduces managed-care spending,
(2) lower projections for the increase in hospital case-mix (a measure of the intensity of
inpatient hospital services), and (3) lower projections for skilled nursing spending. Increases
in the projections for spending for physician
services and outpatient hospital departments
partially offset these decreases. Because the
effect of changes in economic assumptions offset the revisions due to technical factors, the
total change in the Medicare baseline over the
10-year period is $44.8 billion.
Table 9.

Earned income tax credit (EITC).—Outlays
for the refundable portion of the EITC are
$17.2 billion more over 10 years than projected
in February. This results largely from the correction of the distribution between outlays and
receipts of the Administration’s proposed
changes in the EITC. This change is offset on
the receipt side of the budget.
Agency contributions to Civil Service Retirement Trust Fund.—Enhancements to estimating procedures, including more accurate
salary history projections for Federal employees, have increased estimates of agency contributions to the Civil Service Retirement
Trust Fund by $1.0 billion in 2000 and by
$12.4 billion over the 10-year period 2001
through 2010. These contributions appear in
the budget as negative mandatory outlays and
are offset within appropriations accounts. The
effect of increasing the estimated contributions
is to reduce mandatory outlays.
Net interest.—Estimates of net interest outlays are $116.3 billion lower than in February
over the 10-year period 2001 through 2010,
primarily reflecting reduced debt service costs
related to technical changes in receipts and
outlays.

CHANGE IN OUTLAYS
(In billions of dollars)

2000

2001

2002

2003

2004

2005

1,789.6

1,835.0

1,895.3

1,962.9

2,041.1

2,125.5

9,859.8

21,682.9

............
0.5
............
*

5.7
0.5
–*
0.2

17.5
0.3
–0.3
1.0

19.2
1.9
0.1
2.2

13.4
3.5
0.1
3.5

15.7
5.1
0.1
4.9

71.7
11.2
0.1
11.9

166.4
25.5
0.8
62.5

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

0.6

2.1

3.7

5.5

7.4

19.4

125.3

Subtotal, revised policies ........
0.5
Enacted legislation:
Agriculture Risk Protection Act
4.8
Social security earnings test ......
4.4
Other ............................................ ............
Related debt service ....................
0.2

7.1

20.6

27.1

26.1

33.3

114.3

380.5

–0.1
4.6
–0.1
0.7

0.9
3.9
–0.1
1.0

1.5
3.8
–0.1
1.3

1.6
3.5
–0.1
1.6

1.6
3.1
–0.1
2.0

5.5
18.9
–0.5
6.5

14.7
27.4
–1.1
22.2

9.9

12.2

26.2

33.6

32.7

39.9

144.6

443.6

*
–0.6
–0.2
0.9
–0.1

0.9
–1.0
–1.4
1.2
2.8

2.5
–1.3
–3.1
1.0
3.6

3.6
–1.6
–3.5
1.0
3.5

4.7
–1.5
–2.2
0.8
3.6

5.8
–1.3
–1.1
0.9
3.9

17.5
–6.7
–11.2
4.8
17.5

61.3
–11.6
–8.1
8.4
45.8

February estimate .....................................
Revisions due to:
Policy changes:
Revised proposals:
Medicare reforms and drug coverage .........................................
Discretionary programs ..............
Other ............................................
Related debt service ....................
Debt service for reserve for
America’s future ......................

Subtotal, policy changes ..........
Economic assumptions:
Mandatory:
Medicare and Medicaid ...............
Food stamps .................................
Unemployment insurance ...........
EITC .............................................
Social security ..............................

2001–2005 2001–2010

19

SPENDING

Table 9.

CHANGE IN OUTLAYS—Continued
(In billions of dollars)
2000

Other mandatory programs ........
Net interest:
Interest rates ...............................
Debt service .................................

2001

2002

2003

2004

2005

2001–2005 2001–2010

–0.1

0.4

0.6

0.6

0.6

0.6

2.8

6.3

2.8
–0.5

6.3
–2.2

7.0
–4.8

5.4
–8.1

5.1
–12.6

4.7
–17.5

28.4
–45.2

36.0
–229.0

7.0

5.4

0.9

–1.4

–4.0

7.9

–91.1

–1.2

0.6

0.6

0.4

0.1

0.5

1.2

–0.3
1.6
–8.2
2.0
–1.1
3.2
–2.1

0.7
1.6
–5.2
1.6
–1.1
–1.3
–4.7

1.0
1.6
–6.4
1.7
–1.1
–2.4
–7.9

2.9
1.9
–7.0
1.7
–1.2
–3.2
–9.3

2.9
1.9
–9.2
1.7
–1.2
–2.1
–10.6

7.3
8.6
–36.1
8.6
–5.7
–5.7
–34.6

10.0
20.5
–92.2
17.2
–12.4
–19.6
–116.3

–0.3

–6.2

–7.7

–12.9

–13.8

–16.4

–57.1

–191.6

Total, changes ........................................
12.1
Mid-Session estimate ................................ 1,801.6
Memorandum:
Net discretionary budget authority:
February estimate ..............................
574.7
Changes ...........................................
0.9
Mid-Session estimate .........................
575.5

13.0
1,848.0

23.9
1,919.2

21.6
1,984.4

17.4
2,058.6

19.5
2,145.0

95.4
9,955.2

161.0
21,843.8

614.3
–*
614.3

625.5
0.1
625.5

635.5
2.9
638.4

650.1
4.3
654.4

665.4
6.0
671.4

3,190.9
13.3
3,204.1

6,791.3
25.4
6,816.7

Subtotal, economic assumptions .......................................
2.4
Technical reestimates:
Discretionary programs ..................
2.3
Mandatory:
CCC ..............................................
–0.1
Medicaid .......................................
0.7
Medicare .......................................
1.2
EITC ............................................. ............
CSRS agency contributions ........
–1.0
Other mandatory programs ........
–3.0
Net interest .....................................
–0.3
Subtotal, technical reestimates ..

CURRENT STATUS OF ENFORCEMENT
PROCEDURES
The Budget Enforcement Act of 1990 (BEA)
contains procedures designed to enforce the
deficit reduction contained in the Omnibus
Budget Reconciliation Act of 1990. The BEA
divides the budget into two categories: 1)
discretionary programs, and 2) direct spending
(also called mandatory spending) and receipts.
The BEA established, through 1995, annual
limits or ‘‘caps’’ on discretionary spending
and a ‘‘pay-as-you-go’’ (PAYGO) requirement
that legislation affecting direct spending or
receipts not result in a net cost. The BEA
has been extended several times, most recently
by the Balanced Budget Act of 1997, which
extended the caps and PAYGO requirements
through 2002. The Transportation Equity Act
for the 21st Century further modified the
discretionary caps by creating new caps for
highway and mass transit outlays.
The BEA requires that OMB issue reports
after enactment of individual bills and three
times a year on the overall status of discretionary and PAYGO legislation. This section
discusses the status of the discretionary limits
and enacted legislation subject to PAYGO.
Table 10.

The BEA also requires OMB to use the
economic and technical assumptions underlying the President’s budget submission in
scoring PAYGO legislation and appropriations
action for the rest of this session of Congress.
Discretionary Spending
Generally, discretionary programs are those
whose program levels are established annually
through the appropriations process. The
scorekeeping guidelines accompanying the
BEA identify accounts with discretionary resources. The BEA limits budget authority
and outlays available for discretionary programs each year through 2002. OMB monitors
compliance with the discretionary limits
throughout the fiscal year. Appropriations
that would cause either the budget authority
or outlay limits to be exceeded would trigger
a sequester to eliminate any such breach
after Congress has adjourned. The BEA permits certain adjustments to the discretionary
limits. Table 10 shows the current status
of the discretionary spending limits.

CURRENT STATUS OF DISCRETIONARY SPENDING LIMITS
(In millions of dollars)
FY 2000
BA

OL

FY 2001
BA

FY 2002

OL

BA

OL

Violent Crime Reduction Trust Fund Preview Report
Spending Limit ............................................................................
4,500
6,344
N/A
N/A
N/A
N/A
No Adjustments .............................................................................. .............. .............. .............. .............. .............. ..............
Current Estimate, Violent Crime Reduction Trust Fund
Spending Limit ............................................................................

4,500

6,344

N/A

N/A

N/A

N/A

Highway Category Preview Report Spending Limit ............. .............. 24,574 .............. 26,920 .............. 27,925
No Adjustments .............................................................................. .............. .............. .............. .............. .............. ..............
Current Estimate, Highway Category Spending Limit ........ ..............

24,574 ..............

26,920 ..............

27,925

Mass Transit Category Preview Report Spending Limit ..... ..............
4,117 ..............
4,639 ..............
5,419
No Adjustments .............................................................................. .............. .............. .............. .............. .............. ..............
Current Estimate, Mass Transit Category Spending Limit

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

4,117 ..............

4,639 ..............

5,419

21

22

MID–SESSION REVIEW

Table 10.

CURRENT STATUS OF DISCRETIONARY SPENDING LIMITS—Continued
(In millions of dollars)
FY 2000
BA

FY 2001

OL

BA

FY 2002

OL

BA

OL

Other Discretionary Preview Report Spending Limit .......... 566,472 564,913 541,095 547,279 550,333 537,231
Release of Contingent Emergency Funding 1 ...............................
678
775 ..............
531 ..............
184
Current Estimate, Other Discretionary Spending Limit ..... 567,150 565,688 541,095 547,810 550,333 537,415
Anticipated Other Adjustments:
EITC Tax Compliance ....................................................................
N/A
N/A
145
145
146
146
Continuing Disability Reviews ......................................................
N/A
N/A
450
405
450
450
Adoption Incentive Payments ........................................................
N/A
N/A
20
2
20
13
Subtotal, Anticipated Other Adjustments ................................

N/A

N/A

615

552

616

609

Estimate of Other Discretionary Spending Limit, Including Anticipated Other Adjustments ....................................... 567,150 565,688 541,710 548,362 550,949 538,024
Total Discretionary Preview Report Spending Limit ........... 570,972 599,948 541,095 578,838 550,333 570,575
Release of Contingent Emergency Funding .................................
678
775 ..............
531 ..............
184
Current Estimate, Total Discretionary Spending Limit ...... 571,650 600,723 541,095 579,369 550,333 570,759
Anticipated Other Adjustments ....................................................
N/A
N/A
615
552
616
609
Estimate of Total Discretionary Spending Limit, Including
Anticipated Other Adjustments .............................................. 571,650 600,723 541,710 579,921 550,949 571,368
1 Includes an adjustment of $277 million in contingent emergency funding released for the Department of Defense on
December 16, 1999 that was not included in the Preview Report.

PAYGO Legislation
PAYGO enforcement covers all direct spending and receipts legislation. The BEA defines
direct spending as entitlement authority, the
food stamp program, and budget authority
provided by law other than in appropriations
acts.
The BEA requires that, in total, receipts
and direct spending legislation not result
in a net cost in any year. If such legislation
yields a net cost, and if the President and
Congress do not fully offset it by other
legislative savings, the law requires that
a sequester of non-exempt direct spending
programs offset the net cost after Congress
has adjourned.
The BEA requires that OMB submit a
report to Congress that estimates the resulting
change in outlays or receipts for the current
year, the budget year, and the following
four fiscal years. The estimates, which must
rely on the economic and technical assumptions underlying the most recent President’s
Budget, determine whether the PAYGO re-

quirement is met. The PAYGO process requires that OMB maintain a ‘‘scorecard’’
that shows the cumulative net cost of such
legislation. On January 3, 2000, the PAYGO
scorecard for all years was reset to zero
as required by the Consolidated Appropriations Act of 2000.
Table 11 presents estimates of PAYGO
legislation reported by OMB as of June
20, 2000. At the end of this session of
Congress, OMB will determine the need for
sequestration. The 2000 impact of legislation
enacted this year will be added to the
year 2001 balances in the end-of-session report
that OMB is to issue after the second session
of the 106th Congress adjourns sine die.
Under current estimates, a sequester of $563
million is projected for 2001. The Agricultural
Risk Protection Act, for which OMB has
not yet issued an official PAYGO report
as of June 20, 2000, will increase the sequester
amount to $1,302 million. The Administration
looks forward to working with the Congress
to ensure that an unintended sequester does
not occur.

23

CURRENT STATUS OF ENFORCEMENT PROCEDURES

The table does not include the cost of
repealing the Social Security earnings test,
because it was exempt from PAYGO procedures. The act increased Social Security benefits by $22 billion over 2000–2005. The table
also excludes agricultural assistance and other
spending under Title II of the Agricultural
Risk Protection Act, because the act exempts
all spending under this title from PAYGO.
OMB estimates this spending to be $5.5
billion in 2000, $1.7 billion in 2001, and
less than $25 million in each year thereafter.
Maintaining Strong Budget Enforcement
Rules
As proposed in the BEA Preview report,
the Administration will continue its emphasis
on BEA budget restraint and discipline by
recommending an extension of caps and
PAYGO. In order to maintain the positive
fiscal policy that produced the surplus, decisions on how to allocate the surplus should
be made in the context of budget enforcement
Table 11.

mechanisms designed to monitor and control
aggregate spending and receipt policies. The
Administration proposes to strengthen and
protect Social Security and Medicare, reduce
the debt held by the public, and make
additional resources available for other high
priority national needs. The Administration
will work with the Congress to ensure that
the framework proposals complement the BEA
procedures. Beginning in 2001, the Administration proposes to revise the discretionary
caps to reflect the cost of maintaining the
operation of the Federal Government at currently enacted levels through 2010. The proposed changes would increase discretionary
spending at about the same pace as inflation.
The Administration also proposes to extend
the PAYGO enforcement system to 2010.
The Administration would like to work with
Congress to design appropriate budget rules
that protect medicare surpluses for medicare
and debt reduction.

NET COST OF PAY–AS–YOU–GO LEGISLATION REPORTED ON BY OMB AS
OF JUNE 20, 2000
(In millions of dollars)

Report
Number

Act Number

Act Title

2000

2001

2002

2003

2004

2005

2000–05

Legislation enacted since the Balanced Budget Act of 1997:
Balances shown in FY2000 Preview Report (also FY1999 End of Session report) 1
OMB estimate ........................
0
0
0
0
0
0
CBO estimate .........................
0
0
0
0
0
0

0
0

Legislation enacted in the 2nd session of the 106th Congress:
502

P.L. 106–171
S. 1733

Electronic Benefit Transfer Interoperability and Portability Act
OMB estimate ........................
0
1
1
1
CBO estimate .........................
0
1
1
1

1
1

1
1

5
5

P.L. 106–176
H.R. 149

Omnibus Parks Technical Corrections Act
OMB estimate ........................
2
CBO estimate .........................
3

1
4

0
2

0
0

0
0

6
15

P.L. 106–181
H.R. 1000

Wendell H. Ford Aviation Investment and Reform Act
OMB estimate ........................
*
*
*
CBO estimate .........................
0
2
5

*
7

*
9

*
11

*
34

505

P.L. 106–180
S. 376

Open-market Reorganization for the Betterment of International Telecommunications Act
OMB estimate ........................
0
0
0
0
0
0
0
CBO estimate .........................
0
0
0
5
5
5
15

506

P.L. 106–185
H.R. 1658

Civil Asset Forfeiture Reform Act
OMB estimate ........................
CBO estimate .........................

0
0

40
40

8
8

1
1

1
1

1
1

51
51

P.L. 106–200
H.R. 434

Trade and Development Act of 2000
OMB estimate ........................
40
CBO estimate .........................
60

477
395

588
512

636
546

671
578

657
561

3,069
2,652

673
594

659
579

3,131
2,772

503

504

507

3
6

Subtotal, legislation reported on by OMB as of June 20, 2000
OMB estimate ........................
42
521
598
638
CBO estimate .........................
63
444
530
562

24
Table 11.

MID–SESSION REVIEW

NET COST OF PAY–AS–YOU–GO LEGISLATION REPORTED ON BY OMB AS
OF JUNE 20, 2000—Continued
(In millions of dollars)

Report
Number

Act Number

Act Title
Total, Current balances
OMB estimate ........................
CBO estimate .........................

2000

2001

42
63

521
444

Current balance for sequester ........................................... ..........

2002

598
530

2003

638
562

2004

673
594

2005

2000–05

659
579

3,131
2,772

563

1,565 1,633
n/a
n/a

6,825
n/a

Total, balances including the Agricultural Risk Protection Act
OMB estimate ........................
42
1,260
2,006
2,118
2,238 2,292
CBO estimate .........................
63
444
530
562
594
579

9,956
2,772

Legislation for which OMB has not issued an official PAYGO report as of June 20, 2000:
H.R. 2559

Agricultural Risk Protection Act
OMB estimate ........................
CBO estimate .........................

Total balance for sequester

0
n/a

..........

739
n/a

1,408
n/a

1,480
n/a

1,302

* Net costs or savings of $500,000 or less.
1 The Consolidated Appropriations Act set the scorecard to zero for all years as of January 3, 2000.
Note: OMB also scored the following bills as PAYGO bills that had an impact of $500,000 or less in all years: Hillory J.
Farias and Samantha Reid Date-Rape Drug Prohibition Act (P.L. 106–172, H.R. 2130), Congressional gold medal to John
Cardinal O’Connor (P.L. 106–175, H.R. 3557), Child Abuse Prevention and Enforcement Act (P.L. 106–177, H.R. 764), Senior Citizens’ Freedom to Work Act (P.L. 106–182, H.R. 5), Private relief for Belinda McGregor (Pvt. L. 106–4, S. 452),
Worker Economic Opportunity Act (P.L. 106–202, S. 2323), To establish a fee system for commercial filming activities on
Federal land (P.L. 106–206, H.R. 154), Hmong Veterans’ Naturalization Act (P.L. 106–207, H.R. 371), and Muhammad Ali
Boxing Reform Act (P.L. 106–210, H.R. 1832).

SUMMARY TABLES

25

26

MID–SESSION REVIEW

PROPOSED DISCRETIONARY SPENDING LIMITS, MID-SESSION REVIEW
(Dollars in millions)
1998

Original Balanced Budget Act Limits:
BA ...........................................................................................
OL ...........................................................................................
Spending Funded by Alternative Mechanisms:.
BA ...........................................................................................
OL ...........................................................................................
Adjustments for Reestimates and Changes in Concepts: 1.
BA ...........................................................................................
OL ...........................................................................................
Enacted Program Levels/Current Services: 2.
BA ...........................................................................................
OL ...........................................................................................

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

526.9
553.3

533.0
559.3

537.2
564.3

542.0
564.4

551.1 ............ ............ ............ ............ ............ ............ ............ ............
560.8 ............ ............ ............ ............ ............ ............ ............ ............

8.5
3.6

37.0
19.2

50.9 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............
30.0 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............

–1.1
–2.2

1.5
–3.4

4.3 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............
26.1 ............ ............ ............ ............ ............ ............ ............ ............ ............ ............

534.2
554.7

571.5
575.1

SUMMARY TABLES

Table 12.

592.4
620.4

607.0
634.7

624.8
649.9

640.7
666.5

656.8
683.9

673.4
699.6

690.0
713.0

709.1
731.0

727.1
749.2

745.1
766.9

763.5
785.5

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

292.2
278.6

295.9
285.3

302.0
294.1

309.2
302.8

317.3
316.7

325.6
318.1

334.1
322.4

342.8
332.4

351.7
340.8

360.8
349.2

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

322.2
347.1

329.7
364.4

336.5
371.7

345.2
379.8

354.1
387.7

359.8
394.7

369.5
403.6

379.4
413.6

389.5
423.5

399.5
433.8

Total Discretionary:
BA ........................................................................................... ............ ............ ............
OL ........................................................................................... ............ ............ ............

614.3
625.7

625.5
649.7

638.4
665.7

654.4
682.6

671.4
704.4

685.4
712.8

703.6
726.0

722.2
746.0

741.2
764.3

760.3
782.9

Additional Spending Offset by Mandatory Savings:
BA ........................................................................................... ............ ............ ............
OL ........................................................................................... ............ ............ ............

7.9
7.5

2.3
2.3

2.0
2.0

2.0
2.0

2.0
2.0

1.7
1.7

1.3
1.3

0.8
0.8

0.4
0.4

0.4
0.4

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

4.5
–3.4

0.8
–1.5

–0.2
–1.9

–0.4
–1.4

0.1
4.9

0.4
2.0

–0.3
–1.6

0.1
0.4

0.4
0.5

0.8
0.3

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

10.7
4.4

2.1
3.6

0.0
3.1

0.0
2.2

0.0
1.9

–3.4
–0.6

–4.0
–2.2

–4.2
–2.7

–3.9
–2.6

–3.6
–2.4

Total Discretionary:
BA ........................................................................................... ............ ............ ............
OL ........................................................................................... ............ ............ ............

15.2
4.5

3.0
2.1

–0.2
1.2

–0.4
0.7

0.0
6.8

–2.9
1.4

–4.3
–3.8

–4.1
–2.4

–3.5
–2.1

–2.8
–2.1

Proposed Discretionary Spending:
Defense Military:.
BA ...........................................................................................
OL ...........................................................................................
Non-Defense:.
BA ...........................................................................................
OL ...........................................................................................

Difference—Program Level from Current Services: 3
Defense Military:
BA ...........................................................................................
OL ...........................................................................................
Non-Defense:
BA ..........................................................................................
OL ...........................................................................................

27

1 This line includes reestimates , second and third year effects of emergency appropriations, and changes in concepts and definitions that are not included in the original
BBA limits, or in the alternative funding mechanisms.
2 Enacted program levels are shown for 1998 and 1999, proposed program level for 2000, and current services for 2001–2010.
3 Program level includes additional spending offset by mandatory savings and excludes timing shifts.

28

MID–SESSION REVIEW

Table 13. ESTIMATED SPENDING FROM 2001
BALANCES OF BUDGET AUTHORITY: DISCRETIONARY PROGRAMS 1
(In billions of dollars)

Total
Total balances, end of 2001 ..........................................................
Spending from 2001 balances:
2002 ............................................................................................
2003 ............................................................................................
2004 ............................................................................................
2005 ............................................................................................
Expiring balances, 2002 through 2005 .......................................
Unexpended balances at the end of 2005 ...................................

731.5
260.1
159.5
99.2
67.9
............
145.0

1 This table is required by section 221(b) of the Legislative Reorganization Act of 1970.

OUTLAYS FOR MANDATORY PROGRAMS UNDER CURRENT LAW 1
(In billions of dollars)
1999
Actual

Estimate
2000

Human resources programs:
Education, training, employment and social services .............
Health .........................................................................................
Medicare .....................................................................................
Income security ..........................................................................
Social security ............................................................................
Veterans’ benefits and services ................................................

11.3
114.1
187.7
197.8
387.0
23.8

9.6
124.1
200.6
207.4
406.4
25.1

2001

16.0
133.9
210.9
217.3
429.1
25.9

2002

14.3
145.1
220.7
227.3
449.6
27.1

2003

15.9
157.1
238.6
237.4
471.9
29.0

2004

16.5
170.3
252.3
248.3
496.1
30.2

2005

17.4
184.4
272.9
262.0
522.4
33.3

2006

18.4
199.6
281.6
271.0
550.6
32.7

2007

19.6
216.7
305.1
280.1
581.1
31.9

2008

21.0
234.6
325.2
293.2
614.1
35.4

2009

22.4
253.5
346.6
304.6
651.0
36.9

2010

SUMMARY TABLES

Table 14.

24.0
274.2
369.0
315.8
691.4
38.4

Subtotal, human resources programs ...................................

921.7

973.1 1,033.0 1,084.0 1,149.9 1,213.6 1,292.4 1,353.9 1,434.4 1,523.5 1,614.8 1,712.8

Other mandatory programs:
International affairs ..................................................................
Energy ........................................................................................
Agriculture .................................................................................
Commerce and housing credit ..................................................
Transportation ...........................................................................
Undistributed offsetting receipts ..............................................
Other functions ..........................................................................

–4.3
–2.2
18.4
–0.9
1.9
–40.4
4.0

–5.0
–4.5
31.5
–3.3
2.4
–43.1
3.6

–4.1
–3.3
16.1
1.0
2.1
–46.8
2.1

–3.7
–3.9
11.8
–1.6
1.6
–50.6
1.1

–3.7
–3.7
11.9
–1.6
2.0
–50.1
1.1

–3.7
–4.0
11.9
–0.8
1.9
–50.6
2.8

–3.7
–4.0
11.0
–0.3
1.9
–50.9
2.5

–3.7
–4.1
9.4
0.4
1.9
–52.5
2.4

–3.6
–4.3
9.1
0.6
1.9
–54.3
2.5

–3.6
–3.0
9.2
0.7
1.9
–56.4
2.7

–3.5
–2.8
9.5
–0.2
2.0
–58.0
2.5

–3.5
–2.7
9.5
1.1
2.0
–60.2
2.5

Subtotal, other mandatory programs ...................................

–23.4

–18.3

–33.0

–45.4

–44.1

–42.6

–43.6

–46.3

–48.2

–48.4

–50.7

–51.4

Total, outlays for mandatory programs under current
law ....................................................................................

898.3

954.8 1,000.0 1,038.7 1,105.8 1,171.1 1,248.8 1,307.6 1,386.2 1,475.1 1,564.1 1,661.4

1 This

table meets the requirements of Section 221(b) of the Legislative Reorganization Act of 1970.

29

30

Table 15.

MANDATORY PROPOSALS BY AGENCY
(In millions of dollars; minus means savings)

2000
Health initiatives:
Medicare:
Prescription Drug Benefit and other reforms ... ............
Provider payment adjustments 1 ........................ ............
Subtotal, Medicare ...........................................
Medicaid/SCHIP:
Family coverage Medicaid/SCHIP initiative .....
Benefits for legal immigrant children, pregnant
women, and the disabled .................................
Other initiatives (accelerating SCHIP/Medicaid, children, etc.) ..........................................
Other offsets (cost allocation, generic drugs,
etc.) ....................................................................

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

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2001–05 2001–10

1,386 10,790 18,952
3,650 4,890 4,232

19,763
3,833

21,588
4,099

23,805
4,180

26,755
4,030

29,751
3,868

33,354
3,757

37,417
3,742

72,479 223,561
20,704 40,281

5,036 15,680 23,184

23,596

25,687

27,985

30,785

33,619

37,111

41,159

93,183 263,842

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

800

1,600

2,600

3,800

5,000

8,900

12,000

12,800

13,700

14,800

13,800

76,000

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

63

123

229

332

461

623

808

1,070

1,276

1,482

1,208

6,467

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

372

968

1,038

1,229

1,174

1,365

1,585

1,661

1,867

1,962

4,781

13,221

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

–122

–278

–578

–734

–680

–665

–668

–725

–714

–411

–2,392

–5,575

1,113 2,413 3,289
6,149 18,093 26,473

4,627
28,223

5,955
31,642

10,223
38,208

13,725
44,510

14,806
48,425

16,129
53,240

17,833 17,397 90,113
58,992 110,580 353,955

3,814 13,129 26,670

26,894

30,619

37,602

44,284

48,536

53,683

59,646 101,126 344,877

–197

1,329

1,023

606

226

–111

–443

6,149 18,093 26,473

28,223

31,642

38,208

44,510

48,425

53,240

Subtotal, Medicaid/SCHIP ............................... ............
Subtotal, Medicare and Medicaid/SCHIP ... ............
Total, health initiatives:
On-budget ................................................................ ............
Off-budget (Social Security and Medicare, HI effects) ...................................................................... ............
Total, health initiatives ....................................... ............

2,335

4,964

–654

9,454

9,078

58,992 110,580 353,955

Other proposals:
............

1,654

3,757

578

646

711

714

720

725

730

726

7,346

10,961

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

25
1

95
30

140
120

160
250

145
260

140
270

125
280

120
290

110
300

115
310

565
661

1,175
2,111

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

5

5

5

5

5

5

5

5

5

5

25

50

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

–270
270

–270
270

–270
270

–270
270

–270
270

–270
270

–270
270

–270
270

–270
270

–270
270

–1,350
1,350

–2,700
2,700

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

–315
315

–320
320

–317
317

–315
315

–314
314

–331
331

–331
331

–331
331

–331
331

–331
331

–1,581
1,581

–3,236
3,236

............
–8
............ ............

–28
–17

–47
–12

–56
–7

–62
–62
–2 ..............

–62
10

–62
10

–62
10

–62
8

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

–6 ............ ............ .............. .............. .............. .............. .............. .............. ..............

–201
–511
–38 ..............
–6

–6

MID–SESSION REVIEW

Department of Agriculture
Farm safety net programs ..................................
Food Stamps:
Restore Food Stamp benefits for legal immigrants ............................................................
State option on vehicle policy ..........................
Conforming Food Stamp and Medicaid income definition ..............................................
Payments to states stabilization:
Collections to offset payments ........................
Payments ..........................................................
Healthy Investments in Rural Environments:
Collections to offset payments ........................
Payments ..........................................................
Forest Service proposals:
Fair Market Value fees for ski resorts and
timber ............................................................
Make Recreation Fee Permanent ...................
Fair Market Value fees for concessions and
land uses .......................................................

MANDATORY PROPOSALS BY AGENCY—Continued
(In millions of dollars; minus means savings)
2000

Road and Trail Fund:
Increased receipts ............................................
Increased spending ..........................................
Selected program offsets from FS permanent,
trust, and owl payments:
Spending under new proposals .......................
Reduction of existing program spending ........
Facilities Acquisition and Enhancement Fund:
Increased receipts ............................................
Increased spending ..........................................
Land Acquisition Reinvestment Fund:
Increased receipts ............................................
Increased spending ..........................................
Department of Education
Offsets designated for mandatory:
Reduce default retention to 12% for consolidating loans ...................................................
Reduce GA retention rate to 18.5% ................
Eliminate tax-exempt lenders’ interest special allowance ................................................
Reduce lender subsidy by 11 basis pts for
comm. paper rates ........................................
Reduce lender subsidy by 20 basis pts for
basis risk transfer ........................................
Accelerate BBA recall from Restricted Account ..............................................................
Accelerate Federal fund reserve recall ...........
Offsets designated for discretionary:
Reduce default retention to 12% for consolidating loans ...................................................
Reduce GA retention rate to 18.5% ................
Recall excess federal fund reserves ................
Eliminate tax-exempt lenders’ interest special allowance ................................................
Reduce lender subsidy by 11 basis pts for
comm. paper rates ........................................
Reduce lender subsidy by 20 basis pts for
basis risk transfer ........................................
Accelerate Federal fund reserve recall ...........

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2001–05 2001–10

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

–25
25

–25
25

–25
25

–25
25

–25
25

–25
25

–25
25

–25
25

–25
25

–25
25

–125
125

–250
250

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

596
–596

570
–570

553
–553

547
–547

545
–545

564
–564

574
–574

574
–574

574
–574

572
–572

2,811
–2,811

5,669
–5,669

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

–2
2

–5
5

–5
5

–10
10

–10
10

–10
10

–10
10

–13
13

–15
15

–15
15

–32
32

–95
95

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

–1
1

–1
1

–2
2

–3
3

–3
3

–5
5

–5
5

–8
8

–11
11

–11
11

–10
10

–50
50

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

–56
–27

–59
–28

–63
–30

–66
–31

–71
–34

–75
–35

–80
–37

–84
–39

–89
–42

–244
–116

–643
–303

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

–149

–164

–187

–204

–214

–227

–242

–257

–271

–704

–1,915

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

–131

–89

–23 .............. .............. .............. .............. .............. ..............

–243

–243

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

–239

–165

–43 .............. .............. .............. .............. .............. ..............

–447

–447

............ ............
194 ............ .............. .............. .............. .............. .............. .............. ..............
194
............ ............ ............ ............ .............. ..............
83
83 .............. .............. .............. ..............

SUMMARY TABLES

Table 15.

194
166

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

–428 ............ ............ .............. .............. .............. .............. .............. .............. ..............
–220 ............ ............ .............. .............. .............. .............. .............. .............. ..............
–950 ............ ............ .............. .............. .............. .............. .............. .............. ..............

–428
–220
–950

–428
–220
–950

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

–94 ............ ............ .............. .............. .............. .............. .............. .............. ..............

–94

–94

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

–83 ............ ............ .............. .............. .............. .............. .............. .............. ..............

–83

–83

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

–152 ............ ............ .............. .............. .............. .............. .............. .............. ..............
–165 ............ ............ .............. .............. .............. .............. .............. .............. ..............

–152
–165

–152
–165

31

32

Table 15.

MANDATORY PROPOSALS BY AGENCY—Continued
(In millions of dollars; minus means savings)
2000

Department of Health and Human Services
Child Care: Establish early learning fund ........
Child support:
State option on simplified distribution ...........
Federal match on pass-through ......................
Reduce paternity match ..................................
Mandatory review and adjustment .................
Expanded enforcement measures ...................
Reduction in offset savings due to initiatives
Social Services Block Grant ................................
Tribal Child Welfare Pilot ...................................
TANF/Reduce supplemental grants to 1998 levels:
Offsets designated for mandatory ...................
Offsets designated for discretionary ...............

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

402

2003

606

2005

606

2006

600

2007

180

2008

2009

2010

2001–05 2001–10

2,802

3,000

49
102
124
121
127
132
140
147
154
23
23
23
23
24
26
26
28
28
–8
–8
–8
–9
–9
–9
–10
–10
–11
–7
–44
–63
–66
–69
–71
–73
–76
–76
–91
–92
–92
–91
–94
–93
–96
–99
–101
8
8
8
8
8
8
8
7
7
9 ............ .............. .............. .............. .............. .............. .............. ..............
1
1
1
1 .............. .............. .............. .............. ..............

396
97
–41
–151
–391
33
75
5

1,096
229
–90
–516
–874
71
75
5

............ ............
–53
–41
–24 .............. .............. .............. .............. .............. ..............
............
–122 ............ ............ .............. .............. .............. .............. .............. .............. ..............

–118
–122

–118
–122

............ ............
............
5
............
–8
............
29
............
–25
............
1
............
66
............
1

588

2004

3

51

114

138

144

150

150

150

150

147

450

1,197

............
11
............ ............

14
–40

17
7

19
49

20
87

22
87

23
86

25
86

26
85

27
85

81
103

204
532

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

–8

–26

–26

–26

–26

–26

–26

–26

–26

–86

–216

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

–2
2

–4
4

–11
11

–11
11

–11
11

–11
11

–11
11

–11
11

–11
11

–11
11

–39
39

–94
94

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

–3
3

–3
3

–4
4

–4
4

–5
5

–5
5

–5
5

–5
5

–5
5

–5
5

–18
18

–43
43

–100
............

–450
31

170
77

304
110

76 .............. .............. .............. .............. .............. ..............
119
122
49
12 .............. .............. ..............

100
459

100
520

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

–138
36

–122
73

–122
110

–122
122

–122
122

–122
122

–122
122

–122
122

–122
122

–122
122

–626
463

–1,236
1,073

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

1

1

2

3

3

3

3

3

3

2

10

24

MID–SESSION REVIEW

Department of Labor
Extend Welfare-to-Work ......................................
Trade Adjustment Assistance reforms ...............
Implement alien labor certification fees:
Fee receipts .......................................................
Spending ...........................................................
PBGC: Raise guarantee cap for multi-employer
pensions ............................................................

2002

18 .............. .............. ..............

Department of Housing and Urban
Development
Fund Round II Urban Empowerment Zones ..... ............
Department of the Interior
BLM timber payments to States delinkage .......
Recreation/entrance fees .....................................
Hardrock mining production fee on public
lands ..................................................................
Finance land purchases with sales of surplus
land:
Surplus land sales receipts .............................
Land purchases ................................................
Filming and photography on public lands:
Filming fee receipts .........................................
Increased spending ..........................................

2001

MANDATORY PROPOSALS BY AGENCY—Continued
(In millions of dollars; minus means savings)
2000

Department of Transportation
Shift St. Lawrence Sea way to mandatory ........ ............

2001

2002

2005

2006

2007

2008

2009

2010

2001–05 2001–10

14

15

15

15

16

16

17

17

70

151

–424
–1,036

–465
–1,059

–511
–1,082

–562
–1,106

–617
–1,130

–678
–1,155

–746
–1,181

–889
–2,095

–4,003
–7,749

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

238

238

240

246

256

265

274

284

296

308

1,218

2,645

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

5

5

5

5

5

4

4

4

4

4

25

45

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

–105

–111

–122

–125

–135

–149

–162

–176

–338

–1,085

–14
–33
–52
–69
–94
–120
–144
–157
–6 .............. .............. .............. .............. .............. .............. ..............

–99
–6

–683
–6

–691

–1,986

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

–228

–226

–237

–246

–254

–260

–264

–271

–963

–960

–996

–1,014

–1,040

–1,067

–1,095

–1,124

–1,153

39

84

108

122

129

134

138

143

147

150

482

1,194

–92

–96

–102

–106

–111

–117

–123

–129

–136

–143

–507

–1,155

–104
47

–107
95

–109
108

–112
110

–114
112

–116
115

–118
117

–118
118

–118
117

–118
117

–546
472

–1,134
1,056

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

–195
122
–7

–281
177
–10

–302
189
–14

–326
203
–18

–352
218
–22

–380
235
–27

–409
251
–32

–443
271
–37

–474
287
–43

–492
311
–49

–1,456
909
–71

–3,654
2,264
–259

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

27
–35

64
–38

49
11
–3
–3
–4
–4
–4
–4
–4 .............. .............. .............. .............. .............. .............. ..............

148
–77

129
–77

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

4

1

11

32

Corps of Engineers
Harbor services fees ............................................ ............

–966

Environmental Protection Agency
Fund Superfund orphan shares .......................... ............
Federal Deposit Insurance Corporation
State bank exam fees .......................................... ............
Federal Emergency Management Agency
Flood Map Modernization:
Fee receipts ....................................................... ............
Spending ........................................................... ............

1

2

3

3

4

4

5

5

–4,899 –10,378

33

Office of Personnel Management
Contract separately for dental benefits:
Paygo savings ...................................................
Nonpaygo costs .................................................
Omnibus human resources improvements ........
Government-wide voluntary separation incentives (nonpaygo):
Increased CSRDF outlays ...............................
Increased CSRDF agency contributions .........
Correction of retirement coverage errors:
Increased CSRDF outlays ...............................

13

2004

Department of Treasury
Extend customs user fees:
Conveyance/passenger fee ............................... ............ ............ ............ ............
Merchandise processing fee ............................. ............ ............ ............ ............
Department of Veterans Affairs
Increase veterans’ education benefits ................
Pay full benefits for Filipino veterans residing
in the U.S. ........................................................
Extend expiring OBRA VA provisions:
Limit pension benefits to Medicaid eligible
beneficiaries in nursing homes (includes
Medicaid offset) .............................................
Round down to the next lower dollar COLAs
for disability compensation and DIC ..........
Verify income of beneficiaries with the IRS ..
Retain current loan fees and obtain authority to reduce resale losses ............................

13

2003

SUMMARY TABLES

Table 15.

34

Table 15.

MANDATORY PROPOSALS BY AGENCY—Continued
(In millions of dollars; minus means savings)
2000

Reduced CSRDF agency contributions
(nonpaygo) .....................................................
Eliminate retirement inequities .........................
Children’s coverage under FEHBP:
Paygo costs .......................................................
Nonpaygo savings ............................................
Social Security Administration
Restore SSI benefits for disabled legal immigrants ................................................................
OASI and DI, payment for military service
credit (off-budget) .............................................
SSI State supplemental timing shift:.
Offsets designated for mandatory ...................
Offsets designated for discretionary ...............

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2001–05 2001–10

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

69
1

16
1

21
1

24
1

26
1

27
1

30
1

32
1

34
1

37
1

156
5

316
10

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

1
–1

1
–2

2
–3

3
–4

3
–5

4
–7

4
–8

5
–9

6
–10

6
–11

10
–15

35
–60

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

23

99

208

377

523

651

953

1,122

1,272

707

5,228

321

285

289

291

296

300

304

308

308

1,457

2,973

............ ............ ............
–10
–13
–7
–7
–13
–10
377
–9
............ ............
–311 ............ .............. .............. .............. .............. .............. .............. ..............

–30
–311

308
–311

39

230

432

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

40

40

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

271

United Mine Workers of America
Payment to UMWA CBF to maintain current
benefits .............................................................. ............

49

47

46

45

43

42

Other
Indirect impact of other proposals ..................... ............

4

15

8

8

5

–1

41

40

40

Timing shifts
Medicare+choice payment timing shift .................. ............ ............ 4,500 –4,500 .............. .............. .............. .............. .............. .............. .............. .............. ..............
Repeal the delay of the Oct. 2000 benefit payment date:
VA compensation benefits ...................................
1,800 –1,800 ............ ............ .............. .............. .............. .............. .............. .............. .............. –1,800 –1,800
SSI benefits ..........................................................
2,190 –2,190 ............ ............ .............. .............. .............. .............. .............. .............. .............. –2,190 –2,190
Total, other proposals:
On-budget ................................................................
3,890 –5,558
Off-budget ................................................................ ............
271
Total, other proposals ..........................................

3,890 –5,287

7,621 –4,131
321
285

–796
289

–677
291

–1,080
296

–1,311
300

–1,288
304

–911
308

–1,307
308

–3,541
1,457

–9,438
2,973

7,942 –3,846

–507

–386

–784

–1,011

–984

–603

–999

–2,084

–6,465

1 Includes

Medicaid and other health policy changes.

MID–SESSION REVIEW

Recap, other proposals:
Initiatives .................................................................
–100 2,436 5,605 2,889
3,076
3,263
2,953
2,900
3,198
3,392
3,560 17,269 33,272
Offsets ...................................................................... ............ –3,733 –2,163 –2,235 –3,583 –3,649 –3,737 –3,911 –4,182 –3,995 –4,559 –15,363 –35,747
Timing shifts ............................................................
3,990 –3,990 4,500 –4,500 .............. .............. .............. .............. .............. .............. .............. –3,990 –3,990

EFFECT OF PROPOSALS ON RECEIPTS
(In millions of dollars)

2000

Provide tax relief:
Expand educational opportunities:
Provide College Opportunity tax cut .....................................
Provide incentives for public school construction and modernization ..............................................................................
Expand exclusion for employer-provided educational
assistance to include graduate education ...........................
Eliminate 60-month limit on student loan interest deduction .........................................................................................
Eliminate tax when forgiving student loans subject to
income contingent repayment .............................................
Provide tax relief for participants in certain Federal education programs ....................................................................
Subtotal, expand educational opportunities .......................
Provide poverty relief and revitalize communities:
Increase and simplify the Earned Income Tax Credit
(EITC) 1 ..................................................................................
Increase and index low-income housing tax credit per-capita cap ....................................................................................
Provide New Markets Tax Credit ..........................................
Extend Empowerment Zone (EZ) tax incentives and
authorize additional EZs ......................................................
Bridge the Digital Divide .......................................................
Provide Better America Bonds to improve the environment
Permanently extend the expensing of brownfields remediation costs .............................................................................
Expand tax incentives for specialized small business
investment companies (SSBICs) .........................................
Subtotal, provide poverty relief and revitalize communities 1 ................................................................................
Make health care more affordable:
Assist taxpayers with long-term care needs 1 ........................
Encourage COBRA continuation coverage ............................
Provide tax credit for Medicare buy-in program ..................
Provide tax relief for workers with disabilities 1 ..................
Provide tax relief to encourage small business health
plans ......................................................................................
Encourage development of vaccines for targeted diseases ..

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Total
2001–
2010

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

–365

–1,851

–2,256

–3,480

–3,758

–4,255

–4,612

–5,077

–5,054

–5,260

–35,968

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

–36

–174

–419

–739

–1,020

–1,127

–1,127

–1,127

–1,127

–1,127

–8,023

–66

–275

–90 .............. .............. .............. .............. .............. .............. .............. ..............

–365

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

–23

–80

SUMMARY TABLES

Table 16.

–914

–87

–89

–93

–103

–105

–109

–112

–113

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

–3

–7

–7

–7

–6

–6

–6

–6

–7

–7

–62

–66

–702

–2,202

–2,769

–4,315

–4,877

–5,491

–5,850

–6,319

–6,300

–6,507

–45,332

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

–325

–317

–320

–338

–341

–344

–361

–384

–416

–431

–3,577

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

–6
–30

–55
–222

–168
–515

–306
–743

–448
–940

–591
–960

–736
–768

–906
–474

–1,114
–247

–1,336
–197

–5,666
–5,096

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

–36
–107
–8

–167
–272
–41

–333
–344
–112

–452
–289
–214

–568
–207
–315

–629
–169
–410

–618
–170
–479

–618
–171
–511

–610
–172
–512

–345
–173
–513

–4,376
–2,074
–3,115

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

–98

–152

–146

–140

–133

–125

–116

–104

–93

–1,107

–*

–*

–*

–*

–*

–*

–*

–*

–*

–*

–*

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

–512

–1,172

–1,944

–2,488

–2,959

–3,236

–3,257

–3,180

–3,175

–3,088

–25,011

............ –109
............ ............
............ ............
............
–18

–1,150
–41
–5
–128

–1,681
–858
–105
–143

–2,427
–1,149
–140
–158

–3,028
–1,286
–164
–165

–3,344
–1,323
–196
–168

–3,420
–1,370
–224
–168

–3,461
–1,393
–246
–169

–3,448
–1,412
–261
–169

–3,376
–1,434
–270
–171

–25,444
–10,266
–1,611
–1,457

............
–1
–9
–22
–35
–38
............ ............ .............. .............. .............. ..............

–35
–25

–35
–175

–40
–176

–46
–264

–52
–360

–313
–1,000

–5,091

–5,392

–5,485

–5,600

–5,663

–40,091

Subtotal, make health care more affordable 1 .................... ............

–128

–1,333

–2,809

–3,909

–4,681

35

–*

36

Table 16.

EFFECT OF PROPOSALS ON RECEIPTS—Continued
(In millions of dollars)

2000
Strengthen families and improve work incentives:
Provide marriage penalty relief and increase standard
deduction ............................................................................... ............
Increase, expand and simplify child and dependent care
tax credit 1 ............................................................................. ............
Provide tax incentives for employer-provided child-care
facilities ................................................................................. ............
Subtotal, strengthen families and improve work incentives 1 .................................................................................
Promote expanded retirement savings, security, and portability:
Establish Retirement Savings Accounts ................................
Provide small business tax credit for automatic contributions for non-highly compensated employees .....................
Provide tax credit for plan start up and administrative
expenses; provide for payroll deduction IRAs ....................
Provide for the SMART plan ...................................................
Enhance the 401(k) SIMPLE plan ........................................
Accelerate vesting for qualified plans ...................................
Other changes affecting retirement savings, security and
portability ..............................................................................

2001

2003

2004

2005

2006

2007

2008

2009

2010

Total
2001–
2010

–289

–859

–1,471

–2,061

–4,540

–6,661

–6,570

–6,730

–6,893

–7,285

–43,359

–125

–608

–954

–1,369

–1,778

–2,271

–2,467

–2,701

–2,629

–2,902

–17,804

–42

–88

–121

–140

–148

–157

–167

–177

–187

–198

–1,425

–456

–1,555

–2,546

–3,570

–6,466

–9,089

–9,204

–9,608

–9,709 –10,385

–62,588

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

–657

–2,185

–2,290

–4,034

–8,097

–8,679

–9,010

–9,309

–9,586

–53,847

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

–157

–648

–1,878

–3,074

–3,116

–2,135

–1,294

–1,496

–1,560

–15,358

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

–16
–44
–25
214

–35
–65
–61
137

–61
–66
–108
104

–92
–68
–161
66

–135
–70
–236
29

–164
–55
–264
–10

–180
–49
–266
–48

–192
–50
–266
–88

–198
–51
–264
–127

–203
–53
–261
–167

–1,276
–571
–1,912
110

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

–55

–207

–288

–377

–450

–519

–566

–604

–649

–687

–4,402

–1,045

–3,252

–4,800

–7,970 –12,225 –11,923 –11,504 –12,094 –12,517

–77,256

–587

–1,122

–1,448

–1,885

–2,295

–2,852

–4,388

–35,882

–29

–33

–51

–37

–38

–37

–39

–44

–46

–396

–97

–102

–107

–112

–116

–122

–128

–134

–141

–1,125

–192

–207

–208

–209

–213

–218 .............. .............. ..............

–1,247

–206

–19

–86

–135

–178

–222

–259

–292

–410

–2,024

–102
–23

–46
–27

10
–30

27
–35

28
–41

22
–52

18
–66

15
–90

12
–126

–184
–507

–1,236

–1,556

–1,920

–2,386

–2,853

–3,481

–4,862

–9,433 –12,742

–41,365

–161

–896

–8,888 –12,031

MID–SESSION REVIEW

–1
............
............
............

Subtotal, promote expanded retirement savings, security
and portability ...................................................................
–1
74
Provide AMT relief for families and simplify the tax laws:
Provide adjustments for personal exemptions and the
standard deduction in the individual alternative minimum tax (AMT) ...................................................................
–73 –386
Simplify and increase standard deduction for dependent
filers .......................................................................................
–7
–42
Replace support test with residency test (limited to children) ...................................................................................... ............
–66
Provide tax credit to encourage electronic filing of individual income tax returns 1 ................................................. ............ ............
Simplify, retarget and expand expensing for small business ........................................................................................ ............ –217
Simplify the foreign tax credit limitation for dividends
from 10/50 companies ...........................................................
–80 –168
Other simplification ................................................................
–1
–17
Subtotal, provide AMT relief for families and simplify
the tax laws 1 .....................................................................

2002

EFFECT OF PROPOSALS ON RECEIPTS—Continued
(In millions of dollars)

2000
Encourage philanthropy:
Allow deduction for charitable contributions by nonitemizing taxpayers .............................................................. ............
Simplify and reduce the excise tax on foundation investment income .......................................................................... ............
Increase limit on charitable donations of appreciated property ........................................................................................ ............
Clarify public charity status of donor advised funds ...........
*
Subtotal, encourage philanthropy .......................................
Promote energy efficiency and improve the environment:
Provide tax credit for energy-efficient building equipment ..
Provide tax credit for new energy-efficient homes ...............
Extend electric vehicle tax credit and provide tax credit
for hybrid vehicles ................................................................
Provide 15-year depreciable life for distributed power
property .................................................................................
Extend and modify the tax credit for producing electricity
from certain sources .............................................................
Provide tax credit for solar energy systems .........................
Subtotal, promote energy efficiency and improve the environment ..........................................................................
Electricity restructuring ..............................................................
Modify international trade provisions:
Extend and modify Puerto Rico economic-activity tax credit .............................................................................................
Extend GSP and modify other trade provisions 2 .................
Levy tariff on certain textiles/apparel produced in the
CNMI 2 ...................................................................................

2002

2003

2004

2005

2006

2007

2008

2009

2010

Total
2001–
2010

–537

–1,115

–797

–860

–944

–1,353

–1,891

–1,989

–2,105

–2,225

–13,816

–49

–70

–71

–73

–75

–78

–81

–84

–87

–90

–758

–7
*

–47
*

–29
*

–20
*

–12
*

–8
*

–8
*

–9
*

–9
*

–10
*

–159
*

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

–593

–1,232

–897

–953

–1,031

–1,439

–1,980

–2,082

–2,201

–2,325

–14,733

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

–18
–82

–35
–150

–49
–194

–71
–134

–28
–73

–3
1
1
1 ..............
–28 .............. .............. .............. ..............

–201
–661

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

–4

–182

–700

–1,192

–1,930

–1,863

–125

12

49

–5,935

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

–1

–1

–2

–3

–3

–4

–5

–5

–6

–7

–37

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

–91
–9

–173
–19

–220
–25

–231
–34

–261
–45

–245
–78

–218
–116

–225
–230
–237
–51 .............. ..............

–2,131
–377

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

–201
3

–382
11

–672
20

–1,173
30

–1,602
41

–2,288
51

–2,201
61

–405
72

–195
95

–9,342
468

............
–10

–35
–18

–67
–395

–101
–429

–134
–330

–166
–9

–974
–9

–1,544
–9

–1,620
–8

–937 ..............
–8
–7

–5,578
–1,222

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

169

169

169

169

169

169

169

169

169

1,521

–53

–293

–361

–295

–6

–814

–1,384

–1,459

–776

162

–5,279

–43
–17

–174
–18

–180
–19

–138 .............. .............. .............. .............. .............. ..............
–15 .............. .............. .............. .............. .............. ..............

–535
–69

–60

–192

–199

–153 .............. .............. .............. .............. .............. ..............

–604

Subtotal, modify international trade provisions 2 ..............
–10
Miscellaneous provisions:
Make first $2,000 of severence pay exempt from income
tax .......................................................................................... ............
Exempt Holocaust reparations from Federal income tax ....
–4
Subtotal, miscellaneous provisions .....................................

2001

SUMMARY TABLES

Table 16.

–4

–223
84

Subtotal, provide tax relief 1 2 ........................................
–242 –3,524 –10,631 –16,985 –23,546 –31,937 –42,475 –44,611 –44,832 –49,427 –53,165 –321,133
Refundable credits ........................................................ ............ –2,116 –2,417 –2,460 –3,913 –4,012 –4,635 –4,700 –4,431 –4,468 –4,507 –37,659
–242 –5,640 –13,048 –19,445 –27,459 –35,949 –47,110 –49,311 –49,263 –53,895 –57,672 –358,792

37

Total gross tax relief including refundable credits 2

38

Table 16.

EFFECT OF PROPOSALS ON RECEIPTS—Continued
(In millions of dollars)

2000
Eliminate unwarranted benefits and adopt other revenue measures:
Limit benefits of corporate tax shelter transactions:
Increase disclosure of certain transactions; modify substantial understatement penalty for corporate tax shelters;
codify the economic substance doctrine; tax income from
shelters involving tax-indifferent parties; and impose a
penalty excise tax on certain fees received by promotors
and advisors ..........................................................................
Require accrual of income on forward sale of corporate
stock .......................................................................................
Modify treatment of ESOP as S corporation shareholder ...
Limit dividend treatment for payments on certain self-amortizing stock ........................................................................
Prevent serial liquidation of U.S. subsidiaries of foreign
corporations ...........................................................................
Prevent capital gains avoidance through basis shift transactions involving foreign shareholders ...............................
Prevent mismatching of deductions and income in transactions with related foreign persons ...................................
Prevent duplication or acceleration of loss through
assumption of certain liabilities ..........................................
Amend 80/20 company rules ..................................................
Modify corporate-owned life insurance (COLI) rules ...........
Require lessors of tax-exempt-use property to include service contract options in lease term .......................................
Interaction ...............................................................................

2001

2002

2003

2004

2005

2006

2007

2008

2009

Total
2001–
2010

2010

1,872

1,392

1,357

1,351

1,374

1,402

1,425

1,437

1,443

1,444

14,497

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

5
15

10
47

15
67

21
88

26
104

32
111

37
117

40
123

42
128

44
133

272
933

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

22

37

39

40

42

44

45

47

49

51

416

12

20

19

19

19

18

18

17

18

18

18

184

71

328

121

65

45

26

17

16

14

9

3

644

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

62

108

112

117

122

127

132

137

142

147

1,206

4
............
............

34
21
176

36
46
340

37
53
417

38
54
489

40
56
548

41
57
593

43
58
631

44
60
664

46
61
695

48
63
726

407
529
5,279

............
–42

6
–239

11
–175

17
–157

24
–157

30
–160

38
–167

45
–176

53
–188

62
–198

71
–205

357
–1,822

2,322

1,992

2,041

2,129

2,226

2,313

2,390

2,449

2,497

2,543

22,902

63

21

4

5

5

5

5

6

6

6

126

7
73
30
18

13
74
34
22

19
71
33
21

25
70
34
19

31
70
35
18

38
69
35
17

45
69
36
15

52
69
38
14

60
68
40
12

68
68
41
10

358
701
356
166

29

31

31

31

31

32

32

33

34

36

320

2

5

8

10

11

12

13

14

16

17

108

34

41

39

38

39

39

39

39

39

39

386

Subtotal, limit benefits of corporate tax shelter transactions ................................................................................
46
Other proposals:
Require banks to accrue interest on short-term obligations
6
Require current accrual of market discount by accrual
method taxpayers .................................................................
1
Modify and clarify certain rules in debt-for-debt exchanges
9
Modify and clarify the straddle rules ....................................
14
Provide generalized rules for all stripping transactions .....
7
Require ordinary treatment for certain dealers of commodities and equity options ........................................................
16
Prohibit tax deferral on contributions of appreciated property to swap funds ................................................................ ............
Conform control test for tax-free incorporations, distributions, and reorganizations ...................................................
13

MID–SESSION REVIEW

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

EFFECT OF PROPOSALS ON RECEIPTS—Continued
(In millions of dollars)

2000

2002

2003

2004

2005

2006

2007

2008

2009

2010

Total
2001–
2010

28

108

158

153

149

151

155

158

159

160

161

1,512

1

41

51

53

55

57

61

64

66

69

72

589

17
11
............

49
53
314

66
61
90

71
64
–23

77
67
–15

83
54
–8

90
27
–3

96
17
1

103
18
4

110
19
7

117
20
9

862
400
376

3

15

18

19

20

21

22

23

24

25

26

213

–41
50
............
1
............ ............

52
4
1

55
8
1

60
12
1

58
17
1

57
24
1

55
32
1

53
41
1

50
53
1

48
68
1

538
260
9

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

99

489

457

429

405

384

368

356

349

346

3,682

............
3
16

5
59
92

17
59
130

29
59
137

42
61
144

55
63
151

69
66
158

83
69
166

98
72
175

114
75
183

130
78
193

642
661
1,529

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

459

447

371

372

154

57

59

61

62

64

2,106

4
............
............
12

11
23
–216
40

18
111
–220
65

24
98
34
82

30
83
259
91

35
64
445
99

39
43
464
108

43
24
387
112

46
26
308
108

47
29
222
101

48
32
132
93

341
533
1,815
899

2
............

43
65

73
174

113
285

141
522

139
782

124
374

106
88
23 ..............

68
–9

46
–13

941
2,203

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

536

1,820

2,191

2,413

1,328

606

675

722

755

773

11,819

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

48
13

82
35

98
39

115
43

133
48

150
55

169
63

188
72

210
80

232
89

1,425
537

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

12
180

22
309

23
325

24
341

25
358

26
376

26
395

27
414

28
435

28
457

241
3,590

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

24
70

23
78

22
83

21
106

19
125

17
139

15
148

13
157

10
166

164
1,105

39

Treat receipt of tracking stock in certain distributions and
exchanges as the receipt of property ..................................
Require consistent treatment and provide basis allocation
rules for transfers of intangibles in certain nonrecognition transactions ...................................................................
Modify tax treatment of certain reorganizations involving
portfolio stock .......................................................................
Modify definition of nonqualified preferred stock ................
Modify estimated tax provision for deemed asset sales ......
Modify treatment of transfers to creditors in devisive reorganizations ............................................................................
Provide mandatory basis adjustments for partners that
have a significant net built-in loss in partnership property ........................................................................................
Modify treatment of closely held REITs ...............................
Apply RIC excise tax to undistributed profits of REITs ......
Allow RICs a dividends paid deduction for redemptions
only in cases where the redemption represents a contraction in the RIC ......................................................................
Require REMICs to be secondarily liable for the tax liability of REMIC residual interest holders ..............................
Deny change in method treatment to tax-free formations ..
Deny deduction for punitive damages ...................................
Repeal lower-of-cost-or-market inventory accounting method ...........................................................................................
Disallow interest on debt allocable to tax-exempt obligations .......................................................................................
Require capitalization of mutual fund commissions ............
Provide consistent amortization periods for intangibles .....
Clarify recovery period of utility grading costs ....................
Apply rules generally applicable to acquisitions of tangible
assets to acquisitions of professional sports franchises ....
Require recapture of policyholder surplus accounts ............
Modify rules for capitalizing policy acquisition costs of life
insurance companies ............................................................
Increase the proration percentage for P&C insurance companies ....................................................................................
Modify rules that apply to sales of life insurance contracts
Modify rules that apply to tax-exempt property casualty
insurance companies ............................................................
Subject investment income of trade associations to tax ......
Impose penalty for failure to file an annual information
return ....................................................................................
Restore phaseout of unified credit for large estates ............

2001

SUMMARY TABLES

Table 16.

40

Table 16.

EFFECT OF PROPOSALS ON RECEIPTS—Continued
(In millions of dollars)

2000

2002

2003

2004

2005

2006

2007

2008

2009

Total
2001–
2010

2010

1

5

10

14

18

21

23

26

29

32

35

213

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

2

3

4

5

5

6

6

7

8

9

55

42
59
2
2
575
600
–1 ..............
20
20

75
2
636
5
22

92
2
618
14
20

110
2
621
30
21

130
2
644
51
23

151
2
683
75
26

174
2
725
102
27

199
2
767
133
29

1,051
18
6,140
408
208

3
19
............ ............
............
271
............
–1
............ ............
............ ............
............
1

47
12

3
13

3
14

3
14

4
15

4
16

4
17

4
17

4
18

76
137

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

92
5
48
16

156
3
64
29

159
3
64
30

151
3
63
32

150
2
63
33

148
2
62
35

145
2
62
37

132
2
61
39

121
3
61
41

105
3
61
43

1,359
28
609
335

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

26
20

44
1

45
1

41
1

37
1

27
1

28
1

29
1

30
1

31
1

338
29

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

5

10

14

18

21

24

28

31

35

39

225

............
6
15
15
9
............ ............ .............. .............. ..............
............ ............
253
261
264

10
1,583
266

10
79
269

10
72
272

10
12
274

10
53
277

11
63
278

106
1,862
2,414

101
–2

103
–3

105
–3

107
–3

109
–4

111
–5

1,022
–6

............
6

94
7

96
5

97
99
2 ..............

............
4
............ ............

11
378

12
27

12
30

13
32

14
35

14
34

15
37

16
39

17
42

128
654

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

10

13

11

11

11

11

11

12

12

12

114

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

36

52

40

36

35

35

33

32

29

27

355

1

78

136

143

151

161

170

179

189

198

209

1,614

*

*

*

*

*

*

*

*

*

*

*

*

3

28

58

107

155

212

281

367

469

579

694

2,950

MID–SESSION REVIEW

Require consistent valuation for estate and income tax
purposes ................................................................................
Require basis allocation for part sale, part gift transactions ...................................................................................
Conform tratement of surviving spouses in community
property States .....................................................................
Include QTIP trust assets in surviving spouse’s estate .......
Eliminate non-business valuation discounts ........................
Eliminate gift tax exemption for personal residence trusts
Modify requirements for annual exclusion for gifts .............
Increase elective withholding rate for nonperiodic distributions from deferred compensation plans .............................
Increase excise tax for excess IRA contributions .................
Limit pre-funding of welfare benefits for 10 or more employer plans ...........................................................................
Subject signing bonuses to employment taxes .....................
Clarify employment tax treatment of choreworkers ............
Prohibit IRAs from investing in foreign sales corporations
Tighten the substantial understatement penalty for large
corporations ...........................................................................
Require withholding on certain gambling winnings ............
Require information reporting for private separate accounts ....................................................................................
Increase penalties for failure to file correct information
returns ...................................................................................
Modify deposit requirement for FUTA 2 ................................
Reinstate Oil Spill Liability Trust Fund taxes 2 ..................
Repeal percentage depletion for non-fuel minerals mined
on Federal and formerly Federal lands ..............................
Impose excise tax on purchase of structured settlements ...
Require taxpayers to include rental income of residence in
income without regard to the period of rental ...................
Eliminate installment payment of heavy vehicle use tax 2
Require recognition of gain on sale of principal residence if
acquired in a tax-free exchange within five years of the
sale .........................................................................................
Limit benefits of transactions with ‘‘Identified Tax Havens’’ ......................................................................................
Modify treatment of built-in losses and other attributes
trafficking ..............................................................................
Simplify taxation of property that no longer produces income effectively connected with a U.S. trade or business
Prevent avoidance of tax on U.S.-accrued gains (expatriation) .......................................................................................

2001

EFFECT OF PROPOSALS ON RECEIPTS—Continued
(In millions of dollars)

2000
Expand ECI rules to include certain foreign source income ............
Limit basis step-up for imported pensions ...........................
2
Replace sales-source rules ...................................................... ............
Modify rules relating to foreign oil and gas extraction
income ................................................................................... ............
Recapture overall foreign losses when CFC stock is disposed ......................................................................................
1
Modify foreign office material participation exception
applicable to inventory sales attributable to nonresident’s U.S. office .............................................................
1

2001

2002

2003

2004

2005

2006

2007

2008

2009

Total
2001–
2010

2010

22
26
320

38
33
570

39
34
600

41
36
630

42
38
660

44
40
690

45
42
725

47
44
800

48
46
840

50
48
880

416
387
6,715

5

69

112

118

124

130

136

143

150

158

1,145

1

*

*

*

*

*

*

*

*

*

1

7

10

11

11

11

12

12

13

13

14

114

7,635

8,565

9,478

6,975

6,884

7,148

7,486

7,799

SUMMARY TABLES

Table 16.

72,733

Subtotal, other proposals 2 ...................................................

143

3,542

7,221

Subtotal, eliminate unwarranted benefits and
adopt other revenue measures 2 ................................
Net tax relief including refundable credits 2 .............

189
–53

5,864
224

9,213
–3,835

............
152

725
707

432
762

438
772

434
785

437
797

470
810

494
824

496
838

508
864

4,929
8,009

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

724

1,399

1,500

1,522

1,522

1,170

797

385 .............. ..............

9,019

446

4,084

3,738

3,532

10,140

9,700

9,789

9,410

9,676 10,694 11,704
9,288
9,274
9,597
9,983 10,342
95,635
–9,769 –16,765 –24,245 –37,822 –40,037 –39,666 –43,912 –47,330 –263,157

Other provisions that affect receipts:
Reinstate environmental tax on corporate taxable income 3 ....
Reinstate Superfund excise taxes 2 ............................................
Convert Airport and Airway Trust Fund taxes to a cost-based
user fee system 2 .......................................................................
Increase excise tax on tobacco products and levy a youth
smoking assessment on tobacco manufacturers 2 ..................
Recover State bank supervision and regulation expenses
(receipt effect) 2 .........................................................................
Maintain Federal Reserve surplus transfer to the Treasury ...
Restore premiums for United Mine Workers of America Combined Benefit Fund ..................................................................
Extend abandoned mine reclamation fees 2 ...............................
Replace Harbor Maintenance tax with the Harbor Services
User Fee (receipt effect) 2 ........................................................
Revise Army Corps of Engineers regulatory program fees 2 ....
Roll back Federal employee retirement contributions ..............
Provide Government-wide buyout authority (receipt effect) ....

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

–549
5
–427
–9

–602
5
–619
–18

Total, other provisions 2 3 ...................................................

598

9,101

5,189

5,527

12,304

12,065

11,804

11,040

10,415

3,897

3,842

85,184

–2,359

–2,358

–2,404

–2,432

–2,475

–2,497

–2,526

–2,561

–2,594

–24,639

–608
–1,199

–954
–1,753

–2,751
–2,532

–3,196
–3,161

–4,246
–3,492

–4,484
–3,573

–4,800
–3,618

–4,760
–3,606

–5,055
–3,532

–30,979
–26,580

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

3,103

65,867

78
82
86
90
95
99
104
109
113
119
3,752 .............. .............. .............. .............. .............. .............. .............. .............. ..............

975
3,752

............
11
10
10
9
............ ............ .............. .............. ..............

9
218

8
220

8
221

9,233

495
850

7
222

3,138

7
223

7
224

86
1,328

–647
–681
–718
–767
–823
–880
–934
–988
5
5
5
5
5
5
5
5
–160 .............. .............. .............. .............. .............. .............. ..............
–9 .............. .............. .............. .............. .............. .............. ..............

–7,589
50
–1,206
–36

ADDENDUM

41

Total effect of proposals with refundable credits:
Increase and simplify the Earned Income Tax Credit (EITC) ............ –2,433
Increase, expand and simplify child and dependent care tax
credit ......................................................................................... ............ –125
Assist taxpayers with long-term care needs .............................. ............ –114

42

Table 16.

EFFECT OF PROPOSALS ON RECEIPTS—Continued
(In millions of dollars)

2000

2001

2002

2003

2004

2005

2006

2007

2008
–202

2009
–203

2010

Total
2001–
2010

Provide tax relief for workers with disabilities ......................... ............
–21
Provide tax credit to encourage electronic filing of individual
income tax returns ................................................................... ............ ............

–151

–169

–187

–196

–199

–200

–206

–1,734

–495

–531

–539

–548

–563

–580 .............. .............. ..............

–3,256

Total, proposals with refundable credits ................................ ............ –2,693

–4,812

–5,765

–8,413

–9,533 –10,975 –11,334 –11,146 –11,130 –11,387

–87,188

* $500,000 or less.
1 Amounts shown are the effect on receipts.
2 Net of income offsets.
3 Net of deductibility for income tax purposes.

MID–SESSION REVIEW

OUTLAYS BY CATEGORY
(In billions of dollars)

2000
February estimates:
Discretionary:
Department of Defense ..........................................
Non-defense ............................................................

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

278.2
339.3

278.6
355.3

285.3
365.8

294.1
371.2

302.8
378.0

316.7
384.4

318.1
392.6

322.4
401.9

332.4
411.6

340.8
421.2

349.2
431.4

Subtotal, discretionary .......................................
Mandatory:
Social security ........................................................
Medicare .................................................................
Medicaid .................................................................
Other .......................................................................

617.5

633.9

651.1

665.3

680.7

701.2

710.7

724.3

744.0

762.0

780.6

403.3
199.5
116.1
232.8

422.2
217.6
124.8
228.3

443.0
226.3
135.8
240.4

465.4
239.2
149.4
254.3

489.8
261.9
163.6
267.5

516.4
283.5
178.2
282.4

544.8
292.1
196.9
290.4

575.3
318.2
216.4
298.6

608.2
340.1
234.1
317.7

644.6
363.8
253.3
331.9

684.5
387.8
273.3
347.0

Subtotal, mandatory ..........................................
Net interest ................................................................

951.7
220.3

992.8
208.3

1,045.6
198.6

1,108.3
189.3

1,182.9
177.5

1,260.5
163.8

1,324.1
149.8

1,408.4
134.3

1,500.1
117.8

1,593.7
100.5

1,692.6
80.2

Total, outlays ......................................................
Mid-Session estimates:
Discretionary:
Department of Defense ..........................................
Non-defense ............................................................

1,789.6

1,835.0

1,895.3

1,962.9

2,041.1

2,125.5

2,184.7

2,267.0

2,361.9

2,456.1

2,553.4

278.2
342.1

278.6
354.6

285.3
366.6

294.0
373.7

302.8
381.8

316.7
389.7

318.1
396.4

322.4
404.9

332.4
414.4

340.8
423.9

349.2
434.2

Subtotal, discretionary .......................................
Mandatory:
Social security ........................................................
Medicare .................................................................
Medicaid .................................................................
Other .......................................................................

620.3

633.1

652.0

667.8

684.6

706.4

714.4

727.2

746.8

764.7

783.4

406.4
200.6
116.9
234.8

429.1
215.7
126.7
231.6

449.7
239.6
139.0
238.9

472.0
255.3
151.7
251.8

496.2
273.7
165.3
267.4

522.5
296.3
180.0
285.1

550.7
307.1
198.9
292.9

581.2
333.2
218.7
301.1

614.2
356.1
236.8
319.7

651.1
380.8
256.5
332.7

691.5
407.0
277.1
348.0

Subtotal, mandatory ..........................................
Net interest ................................................................

958.6
222.7

1,003.0
211.8

1,067.1
200.2

1,130.8
185.9

1,202.6
171.4

1,283.9
154.7

1,349.5
138.0

1,434.2
120.2

1,526.8
101.3

1,621.1
81.0

1,723.7
56.3

Total, outlays ......................................................
1,801.6
Difference:
Discretionary:
Department of Defense .......................................... ................
Non-defense ............................................................
2.8

1,848.0

1,919.2

1,984.4

2,058.6

2,145.0

2,202.0

2,281.7

2,374.9

2,466.8

2,563.3

–*
–0.7

–*
0.8

–*
2.5

–*
3.9

–*
5.2

SUMMARY TABLES

Table 17.

–* ................ ................ ................ ................
3.7
3.0
2.8
2.7
2.8

Subtotal, discretionary .......................................
Mandatory:
Social security ........................................................
Medicare .................................................................
Medicaid .................................................................
Other .......................................................................

2.8

–0.7

0.8

2.5

3.9

5.2

3.7

3.0

2.8

2.7

2.8

3.0
1.2
0.7
2.0

6.9
–1.9
1.9
3.3

6.6
13.3
3.2
–1.6

6.6
16.1
2.3
–2.5

6.4
11.7
1.7
–*

6.2
12.8
1.8
2.7

6.0
15.0
2.0
2.5

5.9
15.1
2.3
2.5

6.0
16.0
2.7
2.0

6.4
16.9
3.2
0.8

7.0
19.3
3.8
1.1

Subtotal, mandatory ..........................................
Net interest ................................................................

6.9
2.3

10.2
3.5

21.5
1.5

22.5
–3.4

19.7
–6.1

23.4
–9.1

25.4
–11.8

25.8
–14.0

26.7
–16.5

27.4
–19.5

31.1
–23.9

Total, outlays ......................................................

12.1

13.0

23.9

21.6

17.4

19.5

17.3

14.8

12.9

10.6

9.9

43

* $500 million or less.

44

Table 18.

RECEIPTS BY SOURCE
(In billions of dollars)

1999
Actual
February estimates:
Individual income taxes .................................................
Corporation income taxes ..............................................
Social insurance and retirement receipts .....................
Excise taxes ....................................................................
Estate and gift taxes ......................................................
Customs duties ...............................................................
Miscellaneous receipts ...................................................

Estimates
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

879.5
184.7
611.8
70.4
27.8
18.3
34.9

951.6
192.4
650.0
68.4
30.5
20.9
42.5

972.4
194.8
682.1
76.7
32.3
20.9
39.9

995.2
195.4
712.2
79.8
34.9
22.6
41.2

1,025.6
195.7
741.7
80.8
36.3
24.3
43.2

1,066.1
200.0
771.3
81.8
38.7
25.7
52.6

1,116.8
205.9
815.3
83.4
37.0
27.9
54.5

1,172.9
211.3
847.2
84.4
37.6
29.8
57.0

1,234.5
221.5
886.9
85.9
39.4
31.9
58.7

1,298.1
230.2
922.9
87.8
42.2
34.1
60.7

1,359.7
238.6
959.9
89.4
44.7
36.3
56.7

1,425.0
249.5
1,005.5
91.6
47.3
38.3
59.4

1,827.5

1,956.3

2,019.0

2,081.2

2,147.5

2,236.1

2,340.9

2,440.3

2,558.8

2,676.0

2,785.2

2,916.7

879.5
184.7
611.8
70.4
27.8
18.3
34.9

998.9
202.7
648.7
70.1
30.1
19.6
43.1

1,028.0
202.9
689.9
79.0
33.3
20.0
42.8

1,052.5
208.2
723.3
82.8
35.9
21.5
43.8

1,082.9
216.6
755.8
84.4
37.3
22.6
45.5

1,124.0
223.0
788.1
85.8
39.7
23.2
55.5

1,171.0
228.5
832.5
87.7
38.1
24.2
57.8

1,225.8
233.1
864.6
89.1
38.7
25.1
60.6

1,292.3
241.3
908.0
91.4
40.5
25.9
61.3

1,364.4
249.5
948.3
93.9
43.3
26.8
63.5

1,436.7
257.2
990.9
96.3
45.9
29.1
59.7

1,513.2
267.7
1,042.8
99.3
48.6
30.5
62.6

1,827.5

2,013.1

2,096.0

2,168.0

2,245.1

2,339.2

2,439.9

2,536.9

2,660.6

2,789.8

2,915.8

3,064.7

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

47.3
10.3
–1.3
1.7
–0.4
–1.3
0.6

55.6
8.2
7.8
2.3
1.0
–0.8
2.9

57.3
12.8
11.2
3.0
1.0
–1.1
2.6

57.3
20.9
14.1
3.6
1.0
–1.8
2.4

57.9
22.9
16.7
4.0
1.0
–2.5
2.9

54.1
22.6
17.2
4.3
1.1
–3.7
3.3

52.9
21.7
17.4
4.7
1.1
–4.8
3.5

57.8
19.8
21.1
5.4
1.1
–6.0
2.6

66.3
19.3
25.4
6.1
1.2
–7.3
2.8

77.0
18.6
31.0
6.8
1.2
–7.2
3.0

88.2
18.3
37.2
7.7
1.3
–7.8
3.2

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

56.9

76.9

86.8

97.6

103.1

99.0

96.6

101.8

113.8

130.5

148.0

Total .............................................................................
Mid-Session estimates:
Individual income taxes .................................................
Corporation income taxes ..............................................
Social insurance and retirement receipts .....................
Excise taxes ....................................................................
Estate and gift taxes ......................................................
Customs duties ...............................................................
Miscellaneous receipts ...................................................
Total .............................................................................
Difference:
Individual income taxes .................................................
Corporation income taxes ..............................................
Social insurance and retirement receipts .....................
Excise taxes ....................................................................
Estate and gift taxes ......................................................
Customs duties ...............................................................
Miscellaneous receipts ...................................................

MID–SESSION REVIEW

45

SUMMARY TABLES

Table 19.

OUTLAYS BY AGENCY
(In billions of dollars)
1999
Actual

Legislative Branch ..............................................................
Judicial Branch ...................................................................
Agriculture ..........................................................................
Commerce ............................................................................
Defense—Military ...............................................................
Education .............................................................................
Energy ..................................................................................
Health and Human Services ..............................................
Housing and Urban Development .....................................
Interior .................................................................................
Justice ..................................................................................
Labor ....................................................................................
State .....................................................................................
Transportation ....................................................................
Treasury ..............................................................................
Veterans Affairs ..................................................................
Corps of Engineers ..............................................................
Other Defense Civil Programs ...........................................
Environmental Protection Agency .....................................
Executive Office of the President ......................................
Federal Emergency Management Agency .........................
General Services Administration .......................................
International Assistance Programs ...................................
National Aeronautics and Space Administration .............
National Science Foundation .............................................
Office of Personnel Management .......................................
Small Business Administration .........................................
Social Security Administration ..........................................
Other Independent Agencies ..............................................
Allowances ...........................................................................
Undistributed Offsetting Receipts .....................................
Total .................................................................................
* $50 million or less.

February estimates
2000

2001

Mid-Session estimates
2000

2001

2.6
3.8
62.8
5.0
261.4
32.4
16.0
359.7
32.7
7.8
18.3
32.5
6.5
41.8
386.7
43.2
4.2
32.0
6.8
0.4
4.0
–*
10.1
13.7
3.3
47.5
0.1
419.8
7.1
....................
–159.1

3.2
4.4
71.1
8.1
277.5
36.4
15.3
387.3
30.1
8.4
18.5
34.0
8.4
45.9
388.4
46.7
4.5
33.0
7.0
0.3
3.2
0.5
10.5
13.4
3.6
49.4
0.1
439.5
14.0
0.8
–174.1

3.0
4.6
64.9
5.4
277.5
38.2
16.4
421.4
32.3
8.5
22.4
38.6
8.8
49.0
388.4
46.4
2.9
34.0
7.5
0.3
2.2
0.5
12.2
13.7
4.0
51.8
0.7
455.6
14.2
–1.0
–189.2

3.2
4.4
75.3
8.1
277.5
35.0
15.3
390.0
32.2
8.4
19.9
33.2
8.4
46.0
392.9
46.7
4.5
33.0
7.0
0.3
3.4
0.5
10.5
13.4
3.6
49.4
–0.4
442.3
10.9
0.8
–174.0

3.0
4.6
63.7
5.4
277.5
38.5
16.4
422.0
32.3
8.5
20.9
37.5
8.8
49.0
394.4
46.7
2.9
34.2
7.5
0.3
2.5
0.5
12.3
13.7
4.0
52.1
0.7
462.5
16.1
–1.0
–189.4

1,703.0

1,789.6

1,835.0

1,801.6

1,848.0

46

MID–SESSION REVIEW

Table 20.

OUTLAYS BY FUNCTION
(In billions of dollars)
1999
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 ..................................................................................
Medicare ..............................................................................
Income security ...................................................................
Social Security .....................................................................
Veterans benefits and services ..........................................
Administration of justice ....................................................
General government ...........................................................
Net interest .........................................................................
Allowances ...........................................................................
Undistributed offsetting receipts .......................................
Total .................................................................................

February estimates
2000

2001

Mid-Session estimates
2000

2001

274.9
15.2
18.1
0.9
24.0
23.0
2.6
42.5
11.9
56.4
141.1
190.4
237.7
390.0
43.2
25.9
15.8
229.7
....................
–40.4

290.6
17.1
18.9
–1.6
24.5
32.0
5.6
46.7
11.1
63.4
154.2
202.5
251.3
406.6
46.8
26.8
15.0
220.3
0.8
–43.1

291.2
19.6
19.6
–0.7
25.0
22.4
2.9
49.5
10.2
67.5
166.7
220.5
259.7
425.7
46.4
31.4
15.4
208.3
–1.0
–45.6

290.6
17.1
18.9
–1.6
24.5
36.8
3.7
46.8
10.8
61.7
155.0
203.7
252.5
409.7
46.8
28.2
16.3
222.7
0.8
–43.1

291.2
19.7
19.6
–0.2
25.0
21.7
4.7
49.5
10.7
68.2
168.6
218.6
261.8
432.7
46.7
30.0
15.4
211.8
–1.0
–46.7

1,703.0

1,789.6

1,835.0

1,801.6

1,848.0

47

SUMMARY TABLES

Table 21.

DISCRETIONARY BUDGET AUTHORITY BY AGENCY
(In billions of dollars)
1999
Actual

Legislative Branch ..............................................................
Judicial Branch ...................................................................
Agriculture ..........................................................................
Commerce ............................................................................
Defense—Military ...............................................................
Education .............................................................................
Energy ..................................................................................
Health and Human Services ..............................................
Housing and Urban Development .....................................
Interior .................................................................................
Justice ..................................................................................
Labor ....................................................................................
State .....................................................................................
Transportation ....................................................................
Treasury ..............................................................................
Veterans Affairs ..................................................................
Corps of Engineers ..............................................................
Other Defense Civil Programs ...........................................
Environmental Protection Agency .....................................
Executive Office of the President ......................................
Federal Emergency Management Agency .........................
General Services Administration .......................................
International Assistance Programs ...................................
National Aeronautics and Space Administration .............
National Science Foundation .............................................
Office of Personnel Management .......................................
Small Business Administration .........................................
Social Security Administration ..........................................
Other Independent Agencies ..............................................
Allowances ...........................................................................
Undistributed Offsetting Receipts .....................................
Total .................................................................................

February estimates
2000

2.6
2.5
3.4
3.7
16.4
16.3
5.4
8.6
274.6
280.9
28.8
29.3
17.9
17.3
41.5
44.9
25.2
22.0
8.0
8.3
18.4
18.5
11.0
8.8
8.3
7.9
12.9
12.6
12.8
12.4
19.2
20.9
4.1
4.1
0.1
0.1
7.6
7.6
0.4
0.3
2.9
3.3
0.5
0.1
31.0
14.0
13.7
13.6
3.7
3.9
0.2
0.2
0.8
0.9
5.5
5.5
6.2
6.0
.................... ....................
.................... ....................
583.1

574.7

2001

Mid-Session estimates
2000

2001

2.8
2.5
4.1
3.7
16.7
16.4
5.4
8.6
292.2
280.9
40.1
29.3
18.9
17.4
49.7
45.4
32.0
22.0
9.1
8.3
19.6
18.5
12.3
8.8
7.6
7.9
14.0
12.7
14.0
12.4
22.0
20.9
4.1
4.1
0.1
0.1
7.3
7.6
0.3
0.3
3.6
3.3
0.9
0.1
12.8
14.2
14.0
13.6
4.6
3.9
0.2
0.2
1.1
0.9
6.0
5.6
7.0
5.9
–0.2 ....................
–0.2 ....................

2.8
4.1
16.6
5.4
292.2
40.1
18.9
49.7
32.2
9.1
19.6
12.3
7.6
14.0
14.0
22.0
4.1
0.1
7.3
0.3
3.6
0.9
12.8
14.0
4.6
0.2
1.1
6.0
6.8
–0.2
–0.2

622.2

622.2

575.5

48

MID–SESSION REVIEW

Table 22.

DISCRETIONARY BUDGET AUTHORITY BY FUNCTION
(In billions of dollars)
1999
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 ..................................................................................
Medicare ..............................................................................
Income security ...................................................................
Social Security .....................................................................
Veterans benefits and services ..........................................
Administration of justice ....................................................
General government ...........................................................
Allowances ...........................................................................
Undistributed offsetting receipts .......................................
Total .................................................................................

February estimates
2000

288.1
294.1
41.5
23.9
18.8
19.2
2.9
2.6
23.8
24.0
4.5
4.5
3.8
7.2
13.7
13.3
11.0
11.5
46.6
44.4
30.2
33.8
2.8
3.1
32.7
29.8
3.2
3.2
19.3
20.9
26.5
26.6
13.7
12.6
.................... ....................
.................... ....................
583.1

574.7

2001

Mid-Session estimates
2000

2001

306.3
294.1
22.8
24.1
20.8
19.2
2.9
2.6
24.9
24.1
4.6
4.5
3.5
7.1
14.5
13.3
12.3
11.5
61.5
44.4
35.0
33.7
3.0
3.1
41.3
30.4
3.5
3.2
22.1
20.9
29.0
26.6
14.7
12.6
–0.2 ....................
–0.2 ....................

306.3
22.8
20.8
2.9
24.9
4.6
3.4
14.5
12.3
61.5
35.0
3.0
41.3
3.5
22.1
29.1
14.6
–0.2
–0.2

622.2

622.2

575.5

FEDERAL GOVERNMENT FINANCING AND DEBT 1
(In billions of dollars)
2000

Financing:
Unified surplus or deficit (–) ........................................................
Off-budget surplus:
Social Security solvency lock-box:
Social Security solvency transfers ....................................
Other Social Security surplus (including Postal) ............
Medicare HI solvency lock-box:
Medicare solvency transfers ..............................................
Other Medicare HI surplus ...............................................
On-budget surplus .....................................................................
Means of financing other than borrowing from the public:
Premiums paid (–) on buybacks of Treasury securities 2 .......
Changes in: 3
Treasury operating cash balance ......................................
Checks outstanding, deposit funds, etc. 4 .........................
Seigniorage on coins ..............................................................
Less: Equity purchases by Social Security trust fund ........
Less: Net financing disbursements:
Direct loan financing accounts ..........................................
Guaranteed loan financing accounts ................................

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

211

228

224

236

255

268

286

304

332

364

416

500

547

..........
148

..........
160

..........
176

..........
191

..........
204

..........
226

..........
239

..........
256

..........
273

..........
288

..........
306

123
316

147
335

..........
24
39

31
29
9

14
33
1

..........
39
6

..........
40
10

..........
41
1

..........
47
1

..........
46
1

9
48
2

21
51
4

40
57
14

2
58
1

4
60
1

–5

–2

..........

..........

..........

..........

..........

..........

..........

..........

..........

..........

..........

6
–4
2
..........

10
–*
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
..........

..........
..........
2
–63

..........
..........
2
–82

–27
*

–14
1

–18
1

–17
1

–16
2

–15
2

–15
2

–15
2

–15
2

–15
2

–15
2

–15
3

–15
3

–27
185
–184

–3
225
–225

–14
210
–210

–14
222
–222

–12
243
–243

–11
257
–257

–12
274
–274

–11
293
–293

–11
321
–321

–11
353
–353

–11
406
–406

–74
426
–426

–93
454
–454

5,629

5,683

5,748

5,809

5,861

5,921

5,982

6,040

6,094

6,146

6,189

6,240

6,525

–15
5

–15
5

–15
5

–15
5

–15
4

–15
4

–15
4

–15
4

–15
3

–15
3

–15
2

–15
2

–15
2

Total, debt subject to statutory limitation 8 ............................
Debt Outstanding, End of Year:
Gross Federal debt:
Debt issued by Treasury ...........................................................
Debt issued by other agencies ..................................................

5,619

5,673

5,737

5,798

5,850

5,910

5,971

6,028

6,082

6,134

6,176

6,227

6,511

5,629
28

5,683
28

5,748
27

5,809
26

5,861
24

5,921
22

5,982
21

6,040
19

6,094
19

6,146
19

6,189
18

6,240
18

6,525
18

Total, gross Federal debt ......................................................
Held by:
Debt securities held as assets by Government accounts .......
Social Security .......................................................................
Federal employee retirement ................................................
Other ......................................................................................
Debt securities held as assets by the public 9 .........................

5,657

5,711

5,774

5,834

5,885

5,943

6,003

6,060

6,113

6,165

6,208

6,259

6,543

2,208
1,005
681
522
3,449

2,487
1,165
718
604
3,224

2,760
1,341
756
663
3,014

3,042
1,532
792
718
2,792

3,335
1,737
828
770
2,550

3,651
1,963
864
823
2,293

3,985
2,201
899
885
2,018

4,334
2,457
932
944
1,726

4,708
2,729
965
1,014
1,405

5,113
3,014
997
1,102
1,052

5,561
3,318
1,027
1,216
646

6,038
3,692
1,056
1,290
220

SUMMARY TABLES

Table 23.

6,543
4,090
1,085
1,368

Total, means of financing other than borrowing from
the public .....................................................................
Total, repayment of debt held by the public ............
Change in debt held by the public 5 ............................................
Debt Subject to Statutory Limitation, End of Year:
Debt issued by Treasury ..............................................................
Adjustment for Treasury debt not subject to limitation and
agency debt subject to limitation 6 ...........................................
Adjustment for discount and premium 7 .....................................

10

49

50

* $500 million or less.
1 Treasury securities held by the public and zero-coupon bonds held by Government accounts are almost entirely measured at sales price plus amortized discount or less
amortized premium. Agency debt is almost entirely measured at face value. Treasury securities in the Government account series are measured at face value less unrealized discount (if any).
2 Treasury buybacks of outstanding securities are expected to continue into the future, but this table includes estimates for only those buybacks announced to date—$30
billion (face value) during calendar year 2000. The remaining buybacks in calendar year 2000 are assumed to occur evenly over the course of the year. The premiums paid
on buybacks have averaged about 25 percent of the face value of securities purchased to date, and the average premium is assumed for future buybacks.
3 A decrease in the Treasury operating cash balance (which is an asset) would be a means of financing a deficit and therefore has a positive sign. An increase in checks
outstanding or deposit fund balances (which are liabilities) would also be a means of financing a deficit and therefore would also have a positive sign.
4 Besides checks outstanding and deposit funds, includes accrued interest payable on Treasury debt, miscellaneous liability accounts, allocations of special drawing
rights, and, as an offset, cash and monetary assets other than the Treasury operating cash balance, miscellaneous asset accounts, and profit on sale of gold.
5 Includes a $355 million reclassification of debt in 2000. Indian tribal funds that are owned by the Indian tribes and held and managed in a fiduciary capacity by the
Government on the tribes’ behalf were reclassified from trust funds to deposit funds as of October 1, 1999, and their holdings of Treasury securities were accordingly reclassified from debt held by Government accounts to debt held by the public.
6 Consists primarily of Federal Financing Bank debt.
7 Consists of unamortized discount (less premium) on public issues of Treasury notes and bonds (other than zero-coupon bonds) and unrealized discount on Government
account series securities.
8 The statutory debt limit is $5,950 billion.
9 At the end of 1999, the Federal Reserve Banks held $497 billion of Federal securities and the rest of the public held $3,136 billion. Debt held by the Federal Reserve
Banks is not estimated for future years.
10 Total debt held by the public is fully redeemed in 2012. Policy decisions will be required on the use of the surplus once the debt has been redeemed.

MID–SESSION REVIEW


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102