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F I S CAL YEA R 2009 Mid-Session Review Budget of the U.S. Government OFFICE OF MANAGEMENT AND BUDGET MID-SESSION REVIEW A G E ME N TA D S N N TES TA MA UNITED F BUDGET E TH OF OFFICE O E OFFIC TIV E U PRESIDEN T HE FT O EXE C BUDGET OF THE UNITED STATES GOVERNMENT FISCAL YEAR 2009 i Table of Contents Page Summary............................................................................................................................. 1 Economic Assumptions....................................................................................................... 9 Receipts............................................................................................................................. 13 Spending............................................................................................................................ 15 Summary Tables............................................................................................................... 19 Glossary............................................................................................................................. 41 iii List of Charts Page Chart 1. Balancing the Budget................................................................................. 1 Chart 2. Americans are Not Under-Taxed............................................................... 4 Chart 3. Federal Outlays in 2008............................................................................. 5 Chart 4. Declining Federal Debt............................................................................... 6 Chart 5. Unsustainable Growth in Entitlements.................................................... 7 List of Tables Page Table 1. Changes from the February Budget.......................................................... 8 . Table 2. Economic Assumptions ........................................................................... 10 Table 3. Comparison of Economic Assumptions.................................................... 11 Table 4. Change in Receipts................................................................................... 13 Table 5. Change in Outlays.................................................................................... 16 Table S–1. Budget Totals............................................................................................ 21 Table S–2. Discretionary Funding by Category. ....................................................... 22 . Table S–3. Discretionary Funding by Major Agency................................................. 23 Table S–4. Homeland Security Funding by Agency ................................................. 24 Table S–5. Mandatory Proposals ............................................................................... 25 Table S–6 Receipts Proposals.................................................................................... 30 Table S–7. Budget Summary by Category................................................................. 34 Table S–8. Receipts by Source.................................................................................... 35 Table S–9. Outlays by Agency.................................................................................... 36 Table S–10. Outlays by Function................................................................................. 37 Table S–11. Current Services Baseline Category Totals............................................. 38 Table S–12. Outlays for Mandatory Programs under Current Law. ......................... 39 . Table S–13. Federal Government Financing and Debt............................................... 40 v Summary The Mid-Session Review updates the Administration’s estimates of Government receipts, outlays, and deficits or surpluses to reflect economic, legislative, and other changes since the President’s Budget was released in February. For 2008, the budget deficit is now estimated to be $389 billion, $21 billion lower than estimated in February. At 2.7 percent of gross domestic product (GDP), the 2008 deficit is projected to be only slightly above the average of the past 40 years, 2.4 percent of GDP. Excluding the tax rebates and other provisions in the enacted bipartisan economic stimulus package, the 2008 deficit would be only 1.9 percent of GDP. Although projected to rise to $482 billion or 3.3 percent of GDP in 2009, the deficit is still projected to be below the recent peak of 3.6 percent of GDP in 2004. The deficit is projected to fall sharply after 2009, with the deficits in 2010 and 2011 only slightly higher than projected in February. These projected deficits are both manageable and temporary if spending is kept in check, the tax burden remains low, and the economy continues to grow. Last year, the President announced a goal of balancing the budget by 2012; and, with the President’s pro-growth economic policies and commitment to fiscal restraint, the budget remains on track to attain balance by 2012. promoting economic growth Since he took office, the President has worked to promote economic growth and provide opportunity to all Americans. Beginning with his first tax relief package enacted in 2001 and continuing through six additional significant tax relief packages enacted during his terms in office, the President has successfully promoted low-tax, pro-growth economic policies. Recently, the President worked with Congress to enact legislation that provides one-time tax rebate payments to households and temporary investment tax incentives to businesses in an effort to help ensure the recent economic slowdown is both mild and short-lived. This bipartisan legislation, the Economic Stimulus Act of 2008, provides an immediate stimulus to the Nation’s economy of over $150 billion, or more than one percent of GDP. Despite the recent slower economic growth associated with the declines in housing markets, disruptions in credit markets, and in- Chart 1. Balancing the Budget Deficit as a percent of GDP 4.0% 3.6% Actuals 3.3% 3.0% 2.0% Projections 2.7% 2.6% 1.9% 1.2% 1.0% 1.1% 0.6% -0.3% -0.2% 0.0% -1.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1 2 Mid-Session Review creases in food and energy prices, the Nation’s economy has continued to expand and remains fundamentally resilient. The U.S. economy is the largest and most diverse national economy in the world and has been bolstered by a low-tax environment, liberalized international trade and growing exports, a relatively low rate of underlying inflation, and sustained growth in labor productivity. by recent challenges. Nonetheless, the tax rebate payments and business investment tax incentives of the stimulus legislation are expected to help support economic performance this year, and the economy is expected to return to stronger growth in coming years. Exports of goods and services have accounted for more than 40 percent of the Nation’s economic growth over the past year, growing more than 9 percent in real, inflationadjusted terms over the four quarters ending in March of this year. Representing over 12.5 percent of GDP, exports now account for a greater share of the Nation’s output than at any time in history. The contribution from the improving U.S. international trade position has offset much of the negative effects on growth from declines in residential investment. The President’s major tax relief proposals enacted during his terms in office reflect a commitment to rewarding hard work and prudent risk-taking. These provisions have allowed Americans to keep more of their hard-earned money and encouraged businesses to make additional investments. Because of the President’s efforts, workers and businesses saved $1.3 trillion in taxes by the end of calendar year 2007. The enacted tax relief has led to reductions in every marginal income tax rate, the marriage tax penalty, and the capital gains and dividend tax rates; the creation of a new low ten percent income tax bracket; a doubling of the child tax credit; reductions in and the eventual elimination of the death tax; and increases in small business investment incentives. More than six million individuals and families will see their income tax liabilities completely eliminated this year. Although food and energy prices have increased significantly over the past year, the underlying rate of inflation has been relatively low by historical standards. Excluding volatile food and energy prices, the consumer price index increased a modest 2.4 percent over the 12-month period ending in June. Including food and energy, the overall price index rose 5.0 percent. Although higher for this year than anticipated in February, the overall rate of inflation is expected to return to lower rates in later years as projected in the February Budget. providing tax relief for all americans The Nation’s labor productivity growth remains relatively strong by historical standards despite the recent economic slowdown and the changes in the near-term economic outlook. Ongoing improvements in labor productivity, which reflect efficiency gains of the labor force, are fundamental to long-term economic growth and sustained increases in the Nation’s standard of living. Since the President took office, productivity growth has averaged 2.6 percent per year, which is greater than the averages for each of the past three decades. The President’s tax relief has been good for individual Americans and good for the economy. However, it is set to expire at the end of 2010. If Congress does not extend these tax relief provisions, Americans can expect to pay an additional $280 billion per year in taxes. One hundred sixteen million taxpayers will face an increase in their taxes if Congress does not act, with the average increase expected to be $1,800. Nearly 50 million married couples will see a tax increase of more than $3,000, on average, if the marriage penalty is reinstated. Forty-three million families with children will face tax increases averaging $2,300. Seniors and single women will also be forced to pay higher taxes, with 18 million seniors and 12 million single women facing increases averaging $2,200 and $1,100, respectively. Even with its fundamental flexibility and resilience, the Nation’s economy is not immune to adverse shocks; economic performance clearly has been negatively affected The President’s tax relief has benefitted businesses as well as individuals. If the tax relief provisions are not extended, approximately 27 million small business owners will Summary face an average $4,000 tax increase. Lower capital gains and dividend tax rates and incentives for small business investment are necessary to strengthen the economy. The President urges the Congress to extend permanently all of his tax relief proposals. The sooner these provisions are extended, the sooner the uncertainty will be eliminated for financial markets and the sooner small businesses and families will be able to plan with confidence for the future. In passing the Economic Stimulus Act of 2008, the Administration and Congress worked together in a bipartisan manner to achieve results for the American people. The bipartisan growth package delivered stimulus payments directly to individuals, averaging more than $800 per payment and providing Americans with additional money for their families. In addition, the growth package provides temporary tax incentives for investment, reducing the cost for businesses to increase their production capacity. This package should bolster the economy in the short run, helping to reduce the adverse effects of the recent economic slowdown. Ensuring fiscal discipline The President’s fiscal policy approach has focused on pro-growth economic policies and fiscal restraint. As noted above, the President’s tax relief policies have promoted economic growth and rewarded hard-working Americans. The President’s policies of spending restraint have held down the growth in spending in the face of significant fiscal pressures on the Government over the past seven and a half years as a result of the September 11th terrorist attacks, the ensuing Global War on Terror, Hurricane Katrina, and increasing entitlement costs. These challenges came on top of significant underfunding in national security, an inherited recession, and an economy built on a high-tech bubble. The President’s tax relief and other pro-growth policies worked to strengthen the economy, and the resulting revenue growth helped drive down the deficit substantially over the last three years. Yet, as a result of the recent slowdown in economic activity and the subsequent bipartisan economic growth package, deficits for this year and next year are projected to increase. Despite myriad fiscal pressures, the President is committed to 3 policies that restrain Federal spending and balance the budget by 2012. In February, the President proposed to impose strict constraints on non-security discretionary spending and address the rapid rate of growth in entitlement spending. Specifically, the President proposed to eliminate or reduce 151 unnecessary or duplicative programs totaling $18 billion and to hold the growth in non-security spending to below one percent for 2009. This reduction in nonsecurity discretionary spending is especially dramatic given that this category of spending was growing at an annual rate of 16.6 percent during the final year of the Clinton Administration. In addition, the President proposed reasonable reforms to entitlement spending, including Medicare, Medicaid, the Pension Benefit Guaranty Corporation, Social Services Block Grants, the Perkins loan program, and the Disability Insurance program. During his tenure, the President has repeatedly offered sensible proposals to reduce growth in the automatic spending that now accounts for almost two-thirds of the budget and continues to grow faster than the economy and faster than the Nation’s ability to pay for it. The 2008 Supplemental Appropriations Act, signed by the President on June 30, provides U.S. troops in Iraq and Afghanistan with the resources they need to fight the Global War on Terror. In addition, it enhances the educational benefits available to service members by permitting members to transfer unused benefits to spouses and children, as proposed by the President. The Supplemental Appropriations Act also provides funding to replenish disaster relief accounts that were used to fund relief from flooding in the Midwest. Most importantly, the supplemental appropriations stayed within the President’s discretionary spending thresholds. While the Congress has successfully completed action on an economic growth package and supplemental appropriations, its action in other areas of fiscal policy is discouraging. The Congressional Budget Resolution adopted by the Congress for the next fiscal year would increase appropriations made in 2009 by $25 billion and allow an increase of $209 billion over five years above the President’s Budget. In addition, the Resolution 4 Mid-Session Review fails to address the unsustainable growth in entitlement programs. The President urges Congress to adopt the proposals he made in February that begin to address the large and growing entitlement challenge. mid-session update The most significant changes to the Government receipt, outlay, and deficit estimates for this Mid-Session Review are the result of the recent economic slowdown and changes in the economic outlook since the Budget was released. The estimates have been revised to reflect, among other things, the economic stimulus package and other legislation enacted since February, higher inflation, and more modest expectations regarding economic growth. Changes in Receipts Receipts for 2008 are now projected to be $2.553 trillion, $32 billion higher than projected in February and close to the strong receipt showing witnessed in 2007. At 18.8 percent of GDP, 2007 receipts were above the 40-year historical average of 18.3 percent. Last fiscal year marked the third year in a row in which receipts grew faster than GDP. It followed two years of double-digit growth in receipts in 2005 and 2006: 14.5 percent in 2005 and 11.8 percent in 2006. For the first nine months of the current fiscal year, receipts were about the same as they were during the first nine months of last fiscal year. Individual income tax receipts came in slightly lower than last year, including the effect of the refunds provided in the stimulus act, and corporate income tax receipts came in lower as well. For the fiscal year as a whole, receipts are now estimated to be slightly lower than last year. As a result, 2008 receipts are projected to be 17.9 percent of GDP, slightly less than the 40-year historical average. Receipts for 2008 are projected to exceed the February estimate primarily because of the budgetary treatment of the economic stimulus package. The President’s Budget contained an allowance for the stimulus package, which was shown as a reduction in receipts of $125 billion in 2008 and $20 billion in 2009. The stimulus legislation that was enacted in February affects both receipts and outlays, reducing receipts by $83 billion in 2008 and $32 billion in 2009, and increasing outlays by $33 billion in 2008 and $6 billion in 2009. The enacted stimulus package has almost the same effect on the deficit Chart 2. Americans are Not Under-Taxed Receipts Near Historical Average Percent of GDP 25 20 40-Year Historical Average 18.3% 15 10 1980 1984 1988 1992 1996 2000 2004 2008 2012 5 Summary as the President’s allowance, but the effect on receipts in 2008 is lower than what was shown in the Budget, resulting in an upward revision in the 2008 receipts projection. Receipts for 2009 are projected to be $49 billion lower than estimated in February because of the stimulus package and because of revised economic assumptions. The MidSession Review assumes more modest nearterm economic growth than was assumed in the President’s Budget. The effect of more modest growth also appears in 2010, when receipts are projected to be $16 billion lower than projected in February. Even though the annual levels of nominal GDP are projected to remain lower in 2011 through 2013 than the levels assumed in February, reducing growth in receipts, these reductions are expected to be more than offset by projected increases in receipts resulting from other factors. As a result, receipts for the 2011-2013 period are projected to be slightly higher than projected in February. On average over the five-year budget window of 2009 through 2013, receipts are now projected to be 18.6 percent of GDP, slightly above the 40-year historical average of 18.3 percent. Changes in Outlays Outlays for 2008 are projected to be $2.942 trillion, $11 billion higher than projected in February. Legislative action increases outlays by $39 billion, due to the outlay effect of the rebate payments from the stimulus act, as discussed above, and to the cost of the extended unemployment insurance benefits enacted in the Supplemental Appropriations Act. Revisions in estimates for economic and technical factors reduce 2008 outlays by $28 billion. The largest reductions are for interest outlays on debt held by the public, reflecting lower-than-expected interest rates, and slower rates of spending from discretionary appropriations. Equal to 20.7 percent of GDP, 2008 outlays are projected to be close to the 40-year historical average of 20.6 percent. Outlays for 2009 are projected to be $26 billion higher than projected in February. Outlays for 2010 are projected to be about the same as projected in February, but outlays in 2011 through 2013 are projected to be from $8 billion to $16 billion higher in each year than projected in February. The outlay increases in the outyears result primarily from the enhanced veterans’ education benefits in the 2008 Supplemental Appropriations Act and higher-than-expected annual Chart 3. Federal Outlays in 2008 Medicare/Medicaid 20.1% Other Mandatory 12.8% Social Security 20.8% Interest 7.9% Defense Discretionary 20.5% Nondefense Discretionary 17.9% 6 Mid-Session Review Chart 4. Declining Federal Debt Debt held by the public as a percent of GDP 120 110 100 90 80 70 60 50 40 30 20 10 1940 1950 1960 1970 cost-of-living adjustments for Social Security and other benefit programs. The Deficit Outlook For 2008, the deficit is projected to be $389 billion, $21 billion lower than projected in February. The revised deficit estimate results primarily from changes in economic and technical assumptions. This estimate includes $117 billion from individual rebates and other effects of the enacted economic stimulus legislation, without which the deficit would have been $272 billion. As a percent of GDP, the 2008 deficit is projected to be 2.7 percent, slightly above the 40-year historical average of 2.4 percent of GDP. Without the effects of the economic stimulus package, the deficit for 2008 would have been lower than the historical average, at 1.9 percent of GDP. For 2009 through 2011, the deficits are projected to be higher than projected in February—$74 billion higher in 2009, $18 billion higher in 2010, and $9 billion higher in 2011. These increases are due largely to revised economic and technical assumptions, and, in particular, more modest economic growth and higher cost-of-living adjustments. In addition to revised as- 1980 1990 2000 2010 sumptions, the economic stimulus package and the Supplemental Appropriations Act are projected to have a negative impact on the 2009 deficit estimate. As a percent of GDP, the 2009 deficit is projected to be 3.3 percent. The deficit is projected to fall to 1.1 percent of GDP in 2010, to continue falling to 0.6 percent of GDP in 2011, and to reach balance in 2012. With the adoption of the President’s proposed policies and assuming the economic slowdown is both mild and temporary, the budget is projected to generate surpluses equal to 0.3 and 0.2 percent of GDP in 2012 and 2013, respectively. Over the past 20 years, debt held by the public has ranged from 33 to 49 percent of GDP, and over the past 40 years, it has averaged 35.6 percent. At the end of 2007, debt held by the public was $5.0 trillion, or 36.8 percent of GDP, down from 37.1 percent in 2006. The deficits for 2008 and 2009 are expected to increase the debt, as a share of GDP, to 38.0 percent and 40.2 percent, respectively. After 2009, falling deficits and a return to surplus will reduce the debt as a share of GDP, with the debt in 2013 projected to be 34.0 percent of GDP. 7 Summary Chart 5. Unsustainable Growth in Entitlements Percent of GDP 40 Entitlements Net Interest Discretionary Spending Total Revenues 30 20 10 0 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 addressing future fiscal challenges While the projected near-term budget deficits are temporary and manageable, longerterm projections of the budget under current law show rising Federal budget deficits that are not sustainable. This year, the first of the Nation’s 78 million baby boomers became eligible for early retirement benefits under Social Security. In three years, these same individuals will become eligible for Medicare. As the baby boomers begin to retire en masse, the cost of Social Security, Medicare, and Medicaid will increase sharply. In addition, today’s retired Americans are living longer than previous generations of retirees, putting additional cost pressures on these three programs. Furthermore, if health care costs continue to grow at a rate that exceeds the rate of growth in the economy, as they have since 1960, the costs for Medicare and Medicaid will become unsustainable. As the share of the population that is working declines relative to the share of the population that is retired, these increased entitlement costs will have to be borne by a relatively smaller working population. Without meaningful changes to Social Security, Medicare, and Medicaid, these three programs are likely to exert unsustainable pressure on Federal spending over the next several decades and leave policymakers with bad choices: higher taxes, benefit cuts, or increased debt. Long-term projections of spending on all Government programs and interest on Government debt show that by 2080, the budget deficit could reach 22 percent of GDP if taxes are assumed to remain at their 40-year historical average of 18.3 percent of GDP and entitlement spending remains as specified under current law. In addition, such deficits could lead to unsustainable levels of Government borrowing with debt held by the public projected to reach nearly 300 percent of GDP by 2080. This would be greater than any level of borrowing on record in the Nation’s history, even after World War II, when borrowing reached nearly 110 percent of GDP. Before any such unprecedented level of borrowing were to occur, there would likely be a crisis of confidence among potential U.S. creditors and a significant reduction in the amount of credit available to the Government. The President urges Congress to act on the reasonable proposals he made in February to begin the much-needed process of reforming these important entitlement programs. 8 Mid-Session Review Table 1. CHANGES FROM THE FEBRUARY BUDGET (In billions of dollars) 2008 2009 2010 2011 2009 February Budget deficit ��������������������������������������������������������� –410 –407 –160 –95 Percent of GDP ���������������������������������������������������������������������������� –2.9% –2.7% –1.0% –0.6% Enacted legislation and policy changes: Economic Stimulus Act ��������������������������������������������������������� 2008 Supplemental Appropriations Act ������������������������������� Farm bill ��������������������������������������������������������������������������������� Other legislation and policy changes 1 ���������������������������������� Subtotal, policy changes ������������������������������������������������������������� 2012 2013 48 0.3% 20092013 29 0.2% 8 –7 * 1 2 –18 –18 * –* –36 3 2 –2 –* 3 –* –7 –2 –1 –9 –1 –8 6 –2 –4 –* –8 –9 –3 –19 –15 –37 –6 –6 –65 –10 9 –38 –6 –20 1 6 –3 13 –1 16 –2 –22 –11 –* 3 –5 –4 7 7 7 12 19 –13 1 –8 –12 5 –1 –28 33 –39 –17 2 –6 –5 7 –5 –23 21 –21 –17 5 –3 1 8 –6 –12 10 1 –17 3 –2 5 7 –2 –6 8 14 –17 5 –1 6 7 –1 –1 6 19 –80 16 –21 –5 34 –15 –71 78 –26 Total, changes ���������������������������������������������������������������������������������� 21 –74 –18 –9 10 –* –91 Mid-Session Review deficit ������������������������������������������������������������� –389 –482 –178 –103 58 29 Percent of GDP ���������������������������������������������������������������������������� –2.7% –3.3% –1.1% –0.6% 0.3% 0.2% Economic and technical reestimates: Receipts ���������������������������������������������������������������������������������� Discretionary programs ��������������������������������������������������������� Mandatory: Social Security and other indexed benefit programs ������ Medicare and Medicaid ���������������������������������������������������� Unemployment compensation ����������������������������������������� Deposit insurance ������������������������������������������������������������� OCS receipts ��������������������������������������������������������������������� Other ��������������������������������������������������������������������������������� Total mandatory ������������������������������������������������������������ Net interest 2 ��������������������������������������������������������������������������� Subtotal, economic and technical reestimates ��������������������������� * $500 million or less. 1 Includes debt service on all policy changes. 2 Includes debt service on all reestimates. Economic Assumptions At mid-year 2008 the U.S. economy has continued to expand, but growth has slowed as a result of the sharp housing decline, disruptions in financial markets, and high energy prices. 1 Nonetheless, the ongoing growth in the face of these shocks continues to testify to the fundamental resilience of the U.S. economy. In addition, Federal Reserve monetary policy actions and the timely passage of the Economic Stimulus Act of 2008 are helping to give the economy a needed boost. The Administration’s pro-growth policies—including maintained tax relief, the promotion of innovative technologies, and pursuit of liberalized international trade—help to establish a sound foundation for a return to faster growth in the future. The Administration expects that the rebound to stronger growth over the next five years will provide a basis for sustained increases in tax receipts. In recent years, the expansion of the economy helped generate dramatic increases in Federal receipts and lower Federal budget deficits. Estimates for 2008 suggest, however, that receipts are likely to decline slightly this year because of the combined effects of the slowdown in the economy and the income tax rebates provided by the Economic Stimulus Act. Returning the budget to a sustainable path toward balance by 2012 will require solid economic growth and continued spending restraint. Economic Projections The Administration’s economic projections are based on information available as of early June 2008. The projections are summarized in Table 2, and a comparison with the Blue Chip consensus (an average of about 50 private sector forecasts) is shown in Table 3. For 2008, the projected 1.6 percent rate of real GDP growth matches that of Blue Chip, but the Administration envisions a stronger rebound in 2009– 2011 than the Blue Chip shows. Real Gross Domestic Product (GDP) and the Unemployment Rate: Because of the slower 1 Economic performance is discussed in terms of calendar years. Budget figures are in terms of fiscal years. rate of growth in recent quarters, real GDP is expected to increase only 1.6 percent this year, but it is projected to rise by 2.2 percent in 2009 and to reach a strong 3.4 percent growth rate in 2010–2011. Beyond the next three years, real GDP growth is projected to moderate, declining gradually to a 3.1 percent rate in 2012 and 2.9 percent in 2013 as labor force growth slows with the aging of the work force. Because of the recent slower economic growth, the labor market is likely to remain sluggish for a period of time before returning to better performance. The unemployment rate is projected to average 5.6 percent in 2009, up from 5.3 percent in 2008 and 4.6 percent in 2007. With a return to stronger growth, the unemployment rate is expected to decline to an annual average of 4.8 percent by 2012. Inflation: Inflation has increased in recent years, in large part because of surging food and energy prices, and continued rapid increases in these prices contributed to 5 percent inflation in the first half of 2008. If food and energy prices stabilize as expected, the inflation rate should decline. Core inflation, excluding food and energy prices, has remained relatively stable at around 2.3 percent per year, and higher unemployment will put downward pressure on inflation in 2009. On a year-overyear basis, the consumer price index (CPI) is projected to increase 3.8 percent this year and then to rise by 2.3 percent in 2009 and 2.2 percent in 2010 before settling in on a 2.3 percent growth rate in 2011–2013. Growth in the GDP price index is projected to be 2.2 percent in 2008 and 2009, 2.1 percent in 2010, and 2.0 percent in 2011 and beyond. These projections are consistent with well-contained inflation expectations and the Federal Reserve’s stated intention to keep inflation under control. Interest Rates: The Administration’s projections for interest rates are based largely on financial market data and private market expectations at the time that the forecast was developed in early June. The 3-month Treasury bill rate is expected to average 1.9 percent in 2008 and then to rise to 4.1 percent by 2011. The yield on the 10-year Treasury note is projected to average 4.0 percent in 2008 9 10 Mid-Session Review and then to rise to 5.3 percent by 2012. At that point, projected real interest rates would be close to their historical averages given the projected rate of inflation. Incomes and Income Shares: Labor compensation—consisting of wages and salaries and employee fringe benefits such as employerprovided insurance and pensions—is projected to rise relative to the size of the economy, Table 2. ECONOMIC ASSUMPTIONS 1 (Calendar years; dollar amounts in billions) 2007 Actual Gross Domestic Product (GDP): Levels, dollar amounts in billions: Current dollars ��������������������������������������������������������� Real, chained (2000) dollars ������������������������������������� Chained price index (2000 = 100), annual average � Percent change, fourth quarter over fourth quarter: Current dollars ��������������������������������������������������������� Real, chained (2000) dollars ������������������������������������� Chained price index (2000 = 100) ���������������������������� Percent change, year over year: Current dollars ��������������������������������������������������������� Real, chained (2000) dollars ������������������������������������� Chained price index (2000 = 100) ���������������������������� Projections 2008 2009 2010 2011 2012 2013 13,841 14,370 15,007 15,850 16,730 17,585 18,457 11,567 11,751 12,010 12,423 12,849 13,241 13,624 119.7 122.3 125.0 127.6 130.2 132.8 135.5 5.1 2.5 2.6 3.5 1.2 2.3 5.1 2.9 2.1 5.7 3.5 2.1 5.4 3.3 2.0 5.1 3.0 2.0 4.9 2.8 2.0 4.9 2.2 2.7 3.8 1.6 2.2 4.4 2.2 2.2 5.6 3.4 2.1 5.5 3.4 2.0 5.1 3.1 2.0 5.0 2.9 2.0 Incomes, billions of current dollars: Corporate profits before tax ������������������������������������� Wages and salaries ��������������������������������������������������� Other taxable income 2 ���������������������������������������������� 1,877 6,366 3,055 1,694 6,643 3,199 1,890 6,979 3,329 1,950 7,369 3,499 1,958 7,791 3,636 1,971 8,187 3,766 2,019 8,585 3,937 Consumer Price Index (all urban): 3 Level (1982-84 = 100), annual average �������������������� Percent change, fourth quarter over fourth quarter ����� Percent change, year over year �������������������������������� 207.3 4.0 2.9 215.2 3.1 3.8 220.2 2.2 2.3 225.0 2.2 2.2 230.1 2.3 2.3 235.4 2.3 2.3 240.8 2.3 2.3 Unemployment rate, civilian, percent: Fourth quarter level ������������������������������������������������� Annual average ��������������������������������������������������������� 4.8 4.6 5.5 5.3 5.5 5.6 5.1 5.3 4.9 5.0 4.8 4.8 4.8 4.8 Federal pay raises, January, percent: Military 4 �������������������������������������������������������������������� Civilian 5 �������������������������������������������������������������������� 2.7 2.2 3.5 3.5 3.4 2.9 NA NA NA NA NA NA NA NA Interest rates, percent: 91-day Treasury bills 6 ���������������������������������������������� 10-year Treasury notes ��������������������������������������������� 4.4 4.6 1.9 4.0 2.8 4.6 3.9 4.9 4.1 5.2 4.1 5.3 4.1 5.3 NA = Not Available 1 Based on information available as of early June 2008. 2 Rent, interest, dividend, and proprietors’ income components of personal income. 3 Seasonally adjusted CPI for all urban consumers. 4 Percentages apply to basic pay only; percentages to be proposed for years after 2009 have not yet been determined. 5 Overall average increase, including locality pay adjustments. Percentages to be proposed for years after 2009 have not yet been determined. 6 Average rate, secondary market (bank discount basis). 11 Economic Assumptions while the share of corporate profits declines. Profits have been unusually high in recent years, and the share of compensation has been below its long-run average. During the projection period, labor compensation is expected to catch up with the rising productivity trend and return to its historical average relative to GDP. The wage share in GDP is also expected to rise from its recent low level, but less than for total compensation because the share of employee benefits in total compensation is expected to increase further, holding down the expected rise in wages and salaries. Forecast Comparisons Table 3 compares the Mid-Session Review (MSR) economic assumptions with those from the 2009 Budget and from the July Blue Chip consensus. While the Administration forecast generally assumes that the President’s budget policies will be enacted as proposed, private forecasters use their own assumptions about fiscal policy. In the medium term, the Administration’s economic forecast for the MSR is similar to the forecast in the 2009 Budget published in Feb- Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS (Calendar Years) Projections 2008 2009 2010 2011 2012 2013 Nominal GDP (in billions of dollars): MSR ������������������������������������������������������������������������������������� 2009 Budget ������������������������������������������������������������������������ Blue Chip Consensus ���������������������������������������������������������� 14,370 14,480 14,391 15,007 15,215 14,979 15,850 15,987 15,742 16,730 16,782 16,545 17,585 17,603 17,371 18,457 18,462 18,222 Real GDP:1 MSR ������������������������������������������������������������������������������������� 2009 Budget ������������������������������������������������������������������������ Blue Chip Consensus ���������������������������������������������������������� 1.6 2.7 1.6 2.2 3.0 1.7 3.4 3.0 2.9 3.4 2.9 2.9 3.1 2.8 2.8 2.9 2.8 2.7 Consumer Price Index:1 MSR ������������������������������������������������������������������������������������� 2009 Budget ������������������������������������������������������������������������ Blue Chip Consensus ���������������������������������������������������������� 3.8 2.7 4.2 2.3 2.1 2.9 2.2 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 Unemployment Rate:2 MSR ������������������������������������������������������������������������������������� 2009 Budget ������������������������������������������������������������������������ Blue Chip Consensus ���������������������������������������������������������� 5.3 4.9 5.4 5.6 4.9 5.9 5.3 4.8 5.1 5.0 4.8 5.0 4.8 4.8 4.9 4.8 4.8 4.8 1.9 3.7 1.9 2.8 3.8 2.5 3.9 4.0 4.3 4.1 4.1 4.3 4.1 4.1 4.4 4.1 4.1 4.4 4.0 4.6 3.9 4.6 4.9 4.4 4.9 5.1 5.1 5.2 5.2 5.1 5.3 5.3 5.2 5.3 5.3 5.2 Interest Rates:2 91-Day Treasury Bills: MSR �������������������������������������������������������������������������������� 2009 Budget ������������������������������������������������������������������� Blue Chip Consensus ���������������������������������������������������� 10-Year Treasury Notes: MSR �������������������������������������������������������������������������������� 2009 Budget ������������������������������������������������������������������� Blue Chip Consensus ����������������������������������������������������� MSR = Mid-Session Review Sources: Chapter 12, “Economic Assumptions” of Analytical Perspectives, FY 2009 Budget; July 2008 Blue Chip Economic Indicators, Aspen Publishers, Inc. for 2008 and 2009; March 2008 Blue Chip Economic Indicators for 2010–2013. 1 Year-over-year percent change. 2 Annual averages, percent. 12 ruary. The most significant difference is that real GDP growth for 2008 is now expected to be 1.6 percent on a year-over-year basis compared to 2.7 percent in the Budget. In 2009, real growth is also lowered to 2.2 percent compared with 3.0 percent in the 2009 Budget. The lower growth forecast results in higher unemployment than previously projected. Following this period of slow growth, a catch-up is projected for 2010–2011 which exceeds the growth rates for those years in the 2009 Budget. The unemployment rate is higher in the current projections compared with the Budget for the next few years, but it returns to the same 4.8 percent average in the long run. Also of note, inflation is higher for 2008, but the long-run projections are the same. The interest rate projections are lower in the near term but also return to the same long-run levels as in the Budget. Mid-Session Review SUMMARY The economic news since the Budget was issued has been mixed. Economic growth slowed late last year and remains subdued so far in 2008. The housing slump, tighter conditions in credit markets, and continuing energy price shocks have cut into the expected growth rate. Even though inflation has been boosted by higher energy prices, the long-run inflation outlook remains favorable if energy prices stabilize. The MidSession Review economic forecast projects a return to stronger economic growth and to low and stable inflation in 2009 and subsequent years. With these changes, interest rates on Treasury securities are likely to rise somewhat, and healthy job creation and real wage growth are expected to resume. Receipts The current estimate of receipts for 2008 exceeds the February Budget estimate by $32 billion. The current estimates for 2009 and 2010 are below the February Budget estimates by $49 billion and $16 billion, respectively, and the current estimates for 2011 through 2013 exceed the February Budget estimates, resulting in receipts that are $28 billion lower than the February Budget estimates over the five-year period, 2009 through 2013. These changes are the net effect of revised economic assumptions, technical reestimates, enacted legislation, and revisions in the Administration’s proposals. Revised economic assumptions and technical reestimates reduce receipts by $21 to $25 billion in 2008 through 2010, reduce receipts modestly in 2011, and increase receipts in 2012 and 2013. Lower-than-expected collections of corporation income taxes are primarily responsible for the net decrease in 2008 receipts. This reduction in corporation income taxes is in large part attributable to lower-than-expected corporation income tax liability in 2007 and 2008, as reflected in collection experience since February. The downward revisions for 2009 through 2011 reflect increases in individual income taxes that are more than offset by reductions in all other sources of receipts, primarily corporation income taxes and social insurance and retirement receipts. For 2012 and 2013, increases in both individual income taxes and corporation income taxes more than offset the reductions in all other sources of receipts, resulting in an upward revision in receipts. The increases in individual income taxes in each year are pri- Table 4. CHANGE IN RECEIPTS (in billions of dollars) 2008 2009 2010 2011 2012 2009– 2013 2013 February estimate ���������������������������������������������������������������� 2,521.2 2,699.9 2,931.3 3,076.4 3,269.9 3,428.2 Changes due to: Economic assumptions and technical reestimates: Individual income taxes ��������������������������������������������� 9.0 21.5 7.3 15.0 16.0 16.0 75.8 Corporation income taxes ������������������������������������������� –27.0 –19.8 –10.8 –5.3 0.6 4.5 –30.8 Social insurance and retirement receipts ������������������ –9.0 –16.8 –10.3 –6.5 –6.3 –6.7 –46.6 Other sources of receipts �������������������������������������������� Subtotal, economic assumptions and technical reestimates �������������������������������������������������������� 2.4 –7.8 –7.3 –6.2 –5.9 –5.8 –32.9 –24.6 –22.9 –21.1 –3.0 4.3 8.1 –34.5 Economic Stimulus Act ����������������������������������������� Less February allowance for economic growth package �������������������������������������������������������������� –83.4 –32.0 13.0 7.9 5.4 4.0 –1.6 125.0 20.0 –10.0 –8.0 –6.0 –4.0 –8.0 Net effect of Economic Stimulus Act ����������������� 41.7 –12.0 3.0 –0.1 –0.6 –0.0 –9.6 Other enacted legislation ������������������������������������������� –0.3 1.0 1.7 1.3 5.1 –4.7 4.4 Economic and technical revisions in proposals ��������� 15.0 –14.7 0.8 9.4 9.1 7.4 12.0 Subtotal, policy ��������������������������������������������������� 56.3 –25.7 5.6 10.7 13.6 2.7 6.9 Total change �������������������������������������������������������� 31.8 –48.6 –15.5 7.7 17.9 10.8 –27.7 Policy: Economic stimulus: Mid-session estimate ����������������������������������������������������������� 2,552.9 2,651.4 2,915.8 3,084.1 3,287.8 3,439.0 13 14 marily the net effect of increases attributable to revisions in estimating models to reflect current collection experience that are partially offset by downward revisions in wages and salaries and proprietors’ income. Downward revisions in wages and salaries and proprietors’ income—the tax base for Social Security and Medicare payroll taxes are in large — part responsible for the reductions in social insurance and retirement receipts in each year. The reductions in corporation income taxes in 2009 through 2011 are the combined effect of downward revisions in taxable profits and downward revisions attributable to new tax and collections data used in the estimating models that were not available at the time the budget estimates were made. In 2012 and 2013, upward revisions in taxable profits more than offset the reductions attributable to revisions in the estimating models, resulting in a net increase in corporation income taxes. Policy changes since February, which include legislated tax changes and revisions in the Administration’s proposals, increase receipts by $56 billion in 2008, reduce receipts by $26 billion in 2009, and increase receipts by $3 to $14 billion in 2010 through 2013. The February Budget included an allowance for a proposed economic growth package that provided $125 billion in tax relief in 2008, $20 billion in tax relief in 2009, and tax increases of $4 to $10 billion in 2010 through 2013. Congress acted quickly in a bipartisan manner, and the Economic Stimulus Act of 2008 was signed by President Bush on February 13, 2008. The stimulus provided by the enacted legislation was similar in size to the President’s proposal, but a portion of the stimulus—payments to U.S. territories and payments in excess of tax liability—was provided as outlays rather Mid-Session Review than refunds of receipts. The tax rebates to certain individuals and incentives for business investment in this act reduce receipts by $83 billion in 2008, reduce receipts by $32 billion in 2009, and increase receipts by $4 to $13 billion in 2010 through 2013. Relative to the economic growth package proposed in the February Budget, this act increases receipts by $42 billion in 2008, reduces receipts by $12 billion in 2009, and reduces receipts by a net $10 billion over the five-year period, 2009 through 2013. Other legislation enacted since February that affects receipts includes the Andean Trade Preference Extension Act of 2008, the Heroes Earnings Assistance and Relief Tax Act of 2008, the 2008 Supplemental Appropriations Act, and the Food, Conservation, and Energy Act of 2008. Together, these legislated tax changes reduce receipts by less than $1 billion in 2008 and increase receipts by a net $4 billion over the five years, 2009 through 2013, relative to similar proposals in the February Budget. Revisions in the estimates of the February Budget proposals that have not been enacted increase receipts by $15 billion in 2008, reduce receipts by $15 billion in 2009, and increase receipts by $12 billion over the five years, 2009 through 2013. The changes in 2008 and 2009 are in large part attributable to delay in enactment of the Administration’s proposal to prevent the number of Alternative Minimum Tax (AMT) taxpayers for tax year 2008 from increasing sharply, which reduces the receipt loss in 2008 and increases the loss in 2009. The increases in 2010 through 2013 are in large part attributable to changes in the estimated cost of extending the 2001 and 2003 tax cuts. Spending Total outlays for 2008 are now estimated to be $2,942 billion, an increase of $11 billion from the February estimate. For 2009, the estimate of total outlays has increased by $26 billion relative to February, to $3,133 billion. These increases are largely due to legislation enacted since February. Policy changes In total, policy changes increase outlays by $39 billion in 2008 and $25 billion in 2009. Over the five-year period 2009 through 2013, policy changes increase outlays by $60 billion. Since the transmittal of the Budget, the Congress has enacted the Economic Stimulus Act of 2008, the Food, Conservation, and Energy Act of 2008 (the “Farm Bill”), and the 2008 Supplemental Appropriations Act. Economic Stimulus Act.—The recovery rebates provided to individuals by the stimulus act are recorded as outlays in cases where the rebates exceed an individual’s income tax liability. (The estimates for stimulus in the February Budget were entirely receipts.) In addition, the act provided stimulus payments to U.S. territories in lieu of individual rebates. These provisions increase outlays relative to the February Budget by $33 billion in 2008 and $6 billion in 2009. 2008 Supplemental Appropriations Act.— The Supplemental Appropriations Act provided discretionary appropriations for the Global War on Terror, largely as proposed in the February Budget, along with additional emergency funding related to the Midwest floods, Hurricane Katrina recovery, and other items. It also included a 13-week extension of unemployment benefits and enhancements to educational benefits for service members, including transferability to spouses and dependents. Relative to the February Budget, the act increases outlays by $7 billion in 2008, $18 billion in 2009, and $38 billion over 2009 through 2013. 2008 Farm Bill.—The Farm Bill decreased outlays relative to the February Budget by $1 billion in 2008 and had a minimal effect on 2009. Over the five-year period 2009 through 2013, the bill increases outlays by $7 billion. Estimating changes Estimating changes arise from non-policy related factors including changes in economic assumptions, discussed earlier in this Review, and changes in technical factors. For 2008 and 2009, estimated outlays are $28 billion lower and $1 billion higher, respectively, than in February for non-policy related reasons. Over the period 2009 through 2013, outlays are $4 billion above February for non-policy related reasons. Discretionary appropriations.—Outlays for discretionary appropriations decrease by $9 billion in 2008 and increase by $6 billion in 2009 relative to the February Budget as a result of estimating changes. These changes reflect slower spending of regular and emergency appropriations in the Department of Homeland Security, the Department of Housing and Urban Development, the Corps of Engineers, and other agencies. Outlays for the highway trust fund for 2008 are now estimated at $1.6 billion less than originally projected. In addition, receipts for the highway account portion of the trust fund are now projected to decline by $1.5 billion for the remainder of the authorization period. As a result of these adjustments, the 2009 end-of-year balance for the highway account is estimated to be –$3.1 billion as of the Mid-Session Review, compared with –$3.2 billion in the 2009 Budget. Social Security.—Estimating changes increase outlays for Social Security by $47 billion over the next five years. The increase largely results from higher projections for Cost of Living Adjustments (COLA) as well as recent program experience and updated demographic assumptions in the 2008 Trustees’ Report resulting in higher average benefit amounts. Outer Continental Shelf (OCS) receipts.— OCS receipts, which are recorded as offsets to outlays, are estimated to increase by $7 billion in 2008 and $34 billion over the next 15 16 Mid-Session Review five years. The increase results from higher forecasts for oil and natural gas prices and changes in estimates of OCS oil and natural gas production. benefits by $21 billion over five years, independent of the extension of benefits enacted in the Supplemental Appropriations Act. This increase largely results from technical changes that adjusted current insured employee rate levels and average weekly benefits, and economic changes from higher-than-expected current and projected unemployment rates. Medicare.—Estimates of Medicare outlays are approximately $4 billion lower for 2008 and $22 billion lower over the 2009 through 2013 period. The lower outlays are driven by reduced estimated Hospital Insurance outlays, which mainly result from revised estimates of an accounting error. Food Stamps.—Outlays for Food Stamps are estimated to increase by $20 billion over the next five years due to economic and technical factors. The increase is largely due to changes in the latest Thrifty Food Plan, which is used to index Food Stamp benefit levels, Unemployment compensation.—Estimating changes increase outlays for unemployment Table 5. CHANGE IN OUTLAYS (In billions of dollars) 2008 February estimate ������������������������������������� 2009 2010 2011 2012 2013 2,931.2 3,107.4 3,091.3 3,171.2 3,221.8 3,398.9 33.3 5.6 * * * –* 5.6 Changes due to policy: Economic Stimulus Act ������������������� 2008 Supplemental Appropriations Act ������������������������������������������������ 2009-13 7.3 17.8 –2.2 6.9 7.8 8.0 38.2 Farm Bill ������������������������������������������ Other legislation and policy changes 1 �������������������������������������� –0.8 0.2 2.5 2.0 –1.6 3.8 6.8 –0.6 0.9 1.3 1.8 2.2 2.8 9.0 Subtotal, policy �������������������������������������� 39.3 24.5 1.5 10.7 8.4 14.6 59.7 Changes due to reestimates: Discretionary appropriations ���������� –8.6 6.0 –0.5 3.2 1.0 1.5 11.2 Social Security ��������������������������������� 0.6 6.8 9.6 9.6 10.0 11.0 46.9 OCS receipts ������������������������������������ –7.0 –5.2 –6.9 –7.8 –7.2 –7.1 –34.2 Medicare ������������������������������������������� –3.8 –1.5 –3.6 –6.4 –4.0 –6.3 –21.8 Unemployment compensation ��������� 4.5 8.0 6.1 3.4 1.9 1.5 20.8 Food Stamps ������������������������������������� 0.5 3.6 4.2 4.1 3.7 3.8 19.5 Federal retirement ��������������������������� 0.2 1.6 2.0 1.9 1.9 2.0 9.4 Foreign Military Sales trust fund ��� –3.3 –0.7 2.3 1.9 1.5 1.1 6.1 Medicaid ������������������������������������������� 0.9 0.8 1.1 1.2 1.4 1.0 5.4 Deposit insurance ���������������������������� 4.3 12.1 4.7 –0.8 –4.6 –6.1 5.3 Digital television auction receipts �� –5.1 ......... ......... ......... ......... ......... ......... Other programs ������������������������������� 0.9 2.4 3.2 5.2 1.9 0.5 13.3 Net interest 2 ������������������������������������� –12.2 –32.7 –21.5 –10.0 –7.6 –6.2 –78.0 Subtotal, reestimates ���������������������������� –28.1 1.3 0.7 5.5 –0.2 –3.3 3.9 Total, changes �������������������������������������������� 11.2 25.8 2.2 16.2 8.1 11.2 63.6 Mid-Session estimate �������������������������������� 2,942.4 3,133.2 3,093.5 3,187.5 3,229.9 3,410.1 * $50 million or less 1 Includes debt service on all policy changes. 2 Includes debt service on all reestimates. Spending and changes in participation rates due to increases in actual unemployment. Federal retirement.—Over the next five years, estimating changes increase outlays by $9 billion. These increases are almost entirely due to the effect of revised COLA projections for the civilian and military retirement programs. Foreign Military sales.—Outlays in the Foreign Military Sales trust fund net of advance payments on new orders are expected to fall by $3 billion in 2008 and $1 billion in 2009, due to higher projections of new supply orders supporting Afghan and Iraqi security forces as well as increasing military sales to the Middle East. Over the next five years, net outlays increase by $6 billion due to the fulfillment of these new orders along with revised projections for the delivery of new orders. Medicaid.—The projection of Federal Medicaid outlays has increased slightly, with a total increase of about $5 billion over the next five years, primarily due to revised State estimates of program spending. 17 Deposit insurance.—Over the next five years, net outlays for the Federal Deposit In surance Corporation are expected to increase by $5 billion. Net outlays increase by $4 billion in 2008 and $12 billion in 2009 due to higher projections of net payments for deposit insurance losses over the next few years. Starting in 2011, net outlays are lower than in the February estimate because of higher projected premiums necessary to restore funding ratios in the Deposit Insurance Fund. Digital television auction receipts—Receipts in the Digital Television Transition and Public Safety Fund are expected to increase by $5 billion in 2008 due to higher-than-anticipated bids in the recently completed spectrum auction. Net interest.—Excluding the debt service associated with policy changes, outlays for net interest are projected to decrease by $78 billion over five years. This reduction largely reflects lower interest rates and lower debt service costs related to estimating changes in receipts and outlays. Summary Tables 19 21 Summary Tables Table S–1. BUDGET TOTALS (In billions of dollars) 2007 2008 2009 2010 2011 2012 2013 Budget Totals: Receipts ���������������������������������������������������������� 2,568 2,553 2,651 2,916 3,084 3,288 3,439 Outlays ����������������������������������������������������������� 2,730 2,942 3,133 3,094 3,187 3,230 3,410 Deficit(–)/Surplus ���������������������������������� –162 –389 –482 –178 –103 58 29 Gross Domestic Product (GDP) ������������������������� 13,671 14,248 14,822 15,632 16,513 17,369 18,239 Receipts ���������������������������������������������������������� 18.8% 17.9% 17.9% 18.7% 18.7% 18.9% 18.9% Outlays ����������������������������������������������������������� 20.0% 20.7% 21.1% 19.8% 19.3% 18.6% 18.7% 0.3% 0.2% Budget Totals as a Percent of GDP: Deficit(–)/Surplus �������������������������������� –1.2% –2.7% –3.3% –1.1% –0.6% 22 Mid-Session Review Table S–2. DISCRETIONARY FUNDING BY CATEGORY (Net budget authority; in billions of dollars) 2007 Actual 2008 Enacted 2009 Request Change from 2008 Amount Percent Base Discretionary: Security Funding 1 �������������������������������������������������������������������� Non-Security Funding ������������������������������������������������������������� 498.0 382.0 549.6 391.3 594.5 393.3 +44.9 +2.0 +8.2% +0.5% Total, Discretionary ����������������������������������������������������������������� 880.0 940.9 987.8 +46.9 +5.0% Enacted Supplemental and Emergency Funding: Global War on Terror ��������������������������������������������������������������� Gulf Coast/Hurricane Recovery ����������������������������������������������� Veterans Affairs ����������������������������������������������������������������������� Border Security and Other ������������������������������������������������������ 173.6 7.7 1.8 9.3 192.5 5.9 4.2 12.8 68.4 5.8 ......... 1.7 Total, Enacted ���������������������������������������������������������������������������� 192.3 215.3 75.8 Project BioShield ���������������������������������������������������������������������� ......... ......... 2.2 Discretionary Outyears Base Discretionary: Security Funding 2 ���������������������������������������������� Non-Security Funding 3���������������������������������������� Total, Discretionary ������������������������������������������������ 2010 605.0 393.3 998.2 2011 2012 2013 613.5 393.3 1,006.7 624.5 393.3 1,017.7 636.1 393.3 1,029.3 This category is comprised of funding for the Department of Defense, Homeland Security activities Governmentwide (see Table S-4), and funding for International Affairs (Function 150). 2 Department of Defense levels are consistent with the Future Years Defense Plan and the Homeland Security levels are consistent with the Future Years Homeland Security Plan. 3 These amounts exclude the budgetary effects of the Administration’s reauthorization proposal of the Federal Aviation Administration (FAA). The proposal would transform the current tax-financing system for FAA to a cost-based user-fee system. For more information, see the Transportation chapter in the main volume of the 2009 Budget and other related sections in the Appendix and Analytical Perspectives volumes. If this proposal were enacted, the Administration would adjust its discretionary cap proposal downward in these years to reflect the offsetting collections that would result from this user-based fee system. 1 23 Summary Tables Table S–3. DISCRETIONARY FUNDING BY MAJOR AGENCY (Net budget authority; in billions of dollars) Change: Agency 2001 Actual 2008 2009 Enacted Request 2008-2009 Dollar Percent 2001-2009 Average Cumulative Agriculture ��������������������������������������������������� Commerce ���������������������������������������������������� Defense ��������������������������������������������������������� Education ����������������������������������������������������� Energy ���������������������������������������������������������� Health and Human Services ����������������������� Homeland Security �������������������������������������� Housing and Urban Development �������������� Interior ��������������������������������������������������������� Justice ���������������������������������������������������������� Labor ������������������������������������������������������������ 19.2 5.1 302.5 40.1 20.0 54.0 14.0 28.4 10.3 18.4 11.9 22.1 7.1 479.5 57.2 23.9 71.9 34.9 37.1 11.2 22.7 11.5 20.7 8.6 515.4 59.2 25.0 70.4 37.6 38.5 10.4 20.3 10.6 –1.4 +1.5 +35.9 +2.0 +1.1 –1.5 +2.7 +1.4 –0.8 –2.4 –0.8 –6.5% +21.7% +7.5% +3.5% +4.7% –2.1% +7.7% +3.8% –6.8% –10.7% –7.4% +0.9% +6.8% +6.9% +5.0% +2.8% +3.4% +13.2% +3.9% +0.2% +1.2% –1.4% +7.4% +69.0% +70.4% +47.6% +24.9% +30.3% +168.7% +35.7% +1.8% +10.4% –10.9% State and Other International Programs ��� Transportation ��������������������������������������������� Treasury ������������������������������������������������������� Veterans Affairs ������������������������������������������� Corps of Engineers �������������������������������������� Environmental Protection Agency �������������� Executive Office of the President ���������������� Judicial Branch �������������������������������������������� 21.7 14.6 10.3 22.4 4.7 7.8 0.3 4.0 32.9 15.5 12.0 39.4 4.8 7.5 0.3 5.8 38.3 11.5 12.4 44.8 4.7 7.1 0.4 6.3 +5.4 –4.0 +0.4 +5.3 –0.1 –0.3 +0.0 +0.5 +16.5% –25.7% +3.6% +13.5% –1.9% –4.4% +5.6% +8.1% +7.3% –2.9% +2.3% +9.1% +0.1% –1.2% +3.9% +5.9% +76.2% –20.9% +20.3% +100.1% +1.2% –8.8% +35.9% +58.6% Legislative Branch ��������������������������������������� National Aeronautics and Space Administration ���������������������������������������� National Science Foundation ���������������������� Small Business Administration ������������������ Social Security Administration ������������������� Other Agencies ��������������������������������������������� 2.8 4.0 4.7 +0.7 +17.7% +7.0% +71.6% 14.3 4.4 0.9 6.0 5.8 17.1 6.0 0.6 8.0 8.0 17.6 6.9 0.7 8.4 7.2 +0.5 +0.8 +0.1 +0.4 –0.7 +2.9% +13.6% +15.5% +4.9% –9.0% +2.7% +5.6% –3.9% +4.3% +2.8% +23.6% +54.7% –27.0% +40.0% +25.0% Total, Discretionary Funding ���������������� 643.8 940.9 987.8 +46.9 +5.0% +5.5% +53.4% Note: Supplemental and emergency funding is excluded. 24 Mid-Session Review Table S–4. HOMELAND SECURITY FUNDING BY AGENCY (Budget authority in millions of dollars) 2007 Agency 1 2008 2009 Actual Supplemental/ Emergency Agriculture ������������������������������������� 541 ........ 571 ........ 691 ........ Commerce ��������������������������������������� 1,204 ........ 207 ........ 264 ........ Defense (DOD) ������������������������������� 16,538 ........ 17,375 ........ 17,647 ........ Energy �������������������������������������������� 1,719 ........ 1,830 ........ 1,944 ........ Health and Human Services ��������� 4,328 ........ 4,300 ........ 4,458 ........ Homeland Security ������������������������ 26,856 2,695 30,093 2,641 35,017 112 Justice ��������������������������������������������� 3,309 210 3,273 174 3,794 ........ State ������������������������������������������������ 1,241 ........ 1,720 ........ 2,465 ........ Transportation ������������������������������� 206 ........ 206 ........ 221 ........ Treasury ����������������������������������������� 128 ........ 117 ........ 126 ........ Veterans Affairs ����������������������������� 260 ........ 271 ........ 348 ........ Environmental Protection Agency 167 ........ 138 ........ 171 ........ General Services Administration �� National Aeronautics and Space Administration ��������������������������� 168 ........ 143 225 119 ........ 199 ........ 205 ........ 204 ........ National Science Foundation ��������� 386 ........ 374 ........ 379 ........ Social Security Administration ����� Intelligence Community Management ������������������������������� 194 ........ 212 ........ 221 ........ 56 ........ 122 ........ 13 ........ Nuclear Regulatory Commission ��� 72 ........ 72 ........ 73 ........ Smithsonian Institution ���������������� 81 ........ 93 ........ 97 ........ Other Agencies ������������������������������� 266 ........ 236 ........ 253 ........ Total, Homeland Security Funding 57,919 2,905 61,558 3,040 68,505 112 Less, Defense (DOD) ���������������������� –16,538 Less, Mandatory Homeland Security Funding 2 ���������������������� –3,436 ........ –17,375 ........ –17,647 ........ ........ –2,871 ........ –3,225 ........ Less, Funding for Project BioShield ��� Less, Discretionary Fee-Funded Activities ������������������������������������� ........ ........ ........ ........ –2,175 ........ –4,519 ........ –5,096 ........ –5,368 ........ Net Non-DOD Discretionary Homeland Security �������������������� 33,426 2,905 36,216 3,040 40,090 112 Enacted Supplemental/ Request Emergency Supplemental/ Emergency For more detail on Homeland Security funding, consult the Homeland Security Funding Analysis Chapter in the Analytical Perspectives volume of the 2009 Budget. Dollar amounts in this table are rounded to the nearest million at the account level, which accounts for any discrepancies with the Analytical Perspectives chapter. 2 2007 mandatory homeland security programs include $1 billion from anticipated spectrum auction receipts appropriated in the Deficit Reduction Act of 2005 for the Department of Commerce to make grants to public safety agencies for communications interoperability purposes. 1 25 Summary Tables Table S–5. MANDATORY PROPOSALS (In millions of dollars) 2008 2009 2010 2011 2012 2013 2009–13 2009–18 Mandatory Proposals, including Savings and Augmentations: Agriculture: Improve program integrity within Food and Nutrition Programs ������������������� Charge Food Safety and Inspection Service user fees 1 ������������������������������� Charge Grain Inspection, Packers and Stockyards Administration user fees 1 ���� ......... –73 –152 –186 –189 –194 –794 –1,832 ......... –96 –98 –100 –102 –104 –500 –1,053 ......... –27 –30 –30 –31 –32 –150 –318 Charge crop insurance user fees 1 ���������� ......... ......... –15 –15 –15 –15 –60 –135 Charge Animal Welfare Act user fees ����� Implement country of origin labeling audit program: Receipts ��������������������������������������������� ......... –20 –27 –27 –28 –29 –131 –290 ......... –10 –10 –10 –10 –10 –50 –100 Spending �������������������������������������������� ......... 10 10 10 10 10 50 100 Net effect ���������������������������������������� Extend Forest County Safety Net Payments �������������������������������������������� ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 100 60 40 ......... 200 200 Total, Agriculture ������������������������������ ......... –216 –222 –298 –325 –374 –1,435 –3,428 ......... –1,387 –29 –21 –16 –11 –1,464 –1,485 1 Education: Reform the Federal student aid programs: �������������������������������������������� Restrict loans eligible for public sector loan forgiveness ����������������� Eliminate the interest subsidy on loans eligible for income-based repayment ������������������������������������� ......... –260 –47 –45 –48 –56 –457 –788 Recall Perkins Loan balances ���������� ......... –1,116 –698 –735 –821 –792 –4,162 –7,220 Total, Education ����������������������������� ......... –2,763 –775 –801 –885 –859 –6,083 –9,493 Energy: Repeal oil and gas research and development program ������������������������ ......... –20 –40 –50 –50 –50 –210 –300 Health and Human Services: Reform Medicare ������������������������������������ ......... –11,084 –26,677 –40,197 –46,163 –53,579 –177,700 –557,403 Reform Medicaid ������������������������������������ Reauthorize State Children’s Health Insurance Program (SCHIP) 2 ������������ 140 –1,695 –2,740 –3,515 –3,915 –4,260 –16,125 –42,125 ......... 2,335 2,865 3,825 4,680 5,280 18,985 49,955 Fund high-risk health insurance pools � Eliminate Social Services Block Grant (SSBG) ������������������������������������������������ Provide Temporary Assistance for Needy Families (TANF) supplemental grants and contingency fund for child welfare option �������������������������������������������������� Improve child support enforcement collection tools ������������������������������������ ......... 50 75 25 ......... ......... 150 150 ......... ......... –1,445 –1,683 –1,700 –1,700 ......... 236 299 317 323 326 ......... 6 9 6 1 –1 21 4 Extend Abstinence Education program Introduce Foster Care child welfare program option ����������������������������������� 5 25 43 48 49 50 215 465 ......... 8 6 21 –8 –25 2 –1 –6,528 –15,028 1,501 3,102 26 Mid-Session Review Table S–5. MANDATORY PROPOSALS—Continued (In millions of dollars) 2008 Modify Foster Care District of Columbia Federal Medical Assistance Percentage (FMAP) rate � Charge Food and Drug Administration re-inspection and export certification fees 1 ����������������������������������������������������� Total, Health and Human Services �� 2009 2010 2011 2012 2013 2009–13 2009–18 ......... 6 6 7 6 7 32 69 ......... –27 –28 –28 –29 –30 –142 –302 145 –10,140 –27,587 –41,174 –46,756 –53,932 –179,589 –561,114 Homeland Security: Propose a surcharge on the passenger security fee to fund baggage screening systems ������������������������������ ......... –106 –21 –8 1 107 –29 ......... Housing and Urban Development: Charge Government-Sponsored Enterprises oversight fee ������������������� ......... –6 –6 –6 –6 –6 –30 –60 ......... 20 55 80 100 100 355 855 Receipts ������������������������������������������ ......... ......... –3,502 –2 –503 –3 –4,010 –4,025 Expenditures ���������������������������������� ......... ......... 3,502 2 503 3 4,010 4,025 Receipts ������������������������������������������ Require up-front payment of coal bonus bids ������������������������������������������������������ Return to net receipts sharing for energy minerals ���������������������������������� Repeal Energy Policy Act fee prohibition and mandatory permit funds ��������������������������������������������������� Amend Bureau of Land Management (BLM) Federal land sale authority ���� Terminate BLM Range Improvement Fund ���������������������������������������������������� Increase fees for Migratory Bird Hunting and Conservation Stamps 3 ��� ......... ......... –3,502 –2 –503 –3 –4,010 –4,025 ......... –385 –676 48 506 225 –282 –8 ......... –65 –72 –56 –52 –57 –302 –618 ......... –35 –36 –30 –30 –30 –161 –239 ......... –2 –20 –61 –41 –37 –161 –322 ......... –6 –9 –10 –10 –10 –45 –95 ......... 10 14 14 14 14 66 136 Recover Pick-Sloan project costs ����������� Implement a settlement to restore the San Joaquin River ����������������������������� ......... –23 –23 –23 –23 –23 –115 –230 ......... 14 –177 19 19 29 –96 17 Total, Interior ������������������������������������ ......... –472 –4,446 –21 –20 208 –4,751 –4,529 ......... –381 –1,615 –1,542 –1,572 –1,530 ......... ......... –612 –553 –375 –376 –1,916 –3,904 ......... –95 –95 –95 –95 –95 –475 –950 Interior: Match National Park Centennial Challenge Fund gift receipts ������������� Authorize Arctic National Wildlife Refuge leasing: State of Alaska’s share: Federal share: Labor: Reform Pension Benefit Guaranty Corporation premiums ����������������������� Recover Unemployment Insurance overpayment ��������������������������������������� Implement foreign labor certification user fees: Receipts ��������������������������������������������� –6,640 –14,024 Spending �������������������������������������������� ......... 95 95 95 95 95 475 950 Net effect ���������������������������������������� ......... ......... ......... ......... ......... ......... ......... ......... 27 Summary Tables Table S–5. MANDATORY PROPOSALS—Continued (In millions of dollars) 2008 Reform Federal Employees Compensation Act ����������������������������� Refinance the Black Lung Disability Trust Fund: Black Lung Disability Trust Fund ��� Interest payments on repayable advances ���������������������������������������� 2009 2010 2011 2012 2013 2009–13 2009–18 ......... –10 –14 –21 –15 –12 –72 –288 ......... 2,156 –410 –395 –386 –387 578 –1,322 ......... –2,156 410 395 386 387 –578 1,322 Net effect ���������������������������������������� ......... ......... ......... ......... ......... ......... ......... ......... Reform Trade Adjustment Assistance ��� ......... 6 3 8 1 –3 15 –81 Total, Labor ��������������������������������������� ......... –385 –2,238 –2,108 –1,961 –1,921 Transportation: Modify financing of the Airport and Airway Trust Fund ����������������������������� ......... ......... ......... ......... ......... ......... ......... –608 ......... –10 –10 –10 –10 –10 –50 –100 75 102 25 ......... ......... ......... 127 127 75 92 15 –10 –10 –10 77 27 ......... –44 –44 –44 –43 –43 –218 –420 ......... –335 –421 –414 –464 –483 –2,117 –4,796 ......... –379 –465 –458 –507 –526 –2,335 –5,216 Receipts ������������������������������������������ ......... –9 –17 –17 –17 –17 –77 –162 Spending ����������������������������������������� ......... ......... 8 17 17 17 59 144 Net effect ����������������������������������� ......... –9 –9 ......... ......... ......... –18 –18 Commodity Futures Trading Commission: Charge user fees 1 ����������������������������������� ......... –96 –100 –103 –107 –111 –517 –1,130 ......... –52 –56 –55 –55 –45 –263 –502 –50 –150 –300 –300 –400 –450 –1,600 –4,081 Treasury: Modernize cash investment practices ��� Extend the rum carryover for Puerto Rico ����������������������������������������������������� Total, Treasury ���������������������������������� Veterans Affairs: Eliminate third-party insurance copayment offset 1 ����������������������������������� Charge medical care enrollment fees for non-disabled higher-income veterans and increase pharmacy copayments to align with other health care plans 1 ������������������������������������������ Total, Veterans Affairs ���������������������� –8,613 –18,297 Army Corps of Engineers: Collect additional recreation user fees, lease receipts, and contributions: Environmental Protection Agency: Increase or reinstate pesticide user fees and lift cap on pre-manufacture notice fee 1 �������������������������������������������� Federal Communications Commission (FCC): Provide spectrum license fee authority � Charge Ancillary Terrestrial Component spectrum fee ������������������� –30 –60 –100 –125 –125 –125 –535 –1,160 Extend spectrum auction authority ������ ......... ......... ......... ......... –200 –200 –400 –1,400 Auction domestic satellite spectrum ����� Eliminate Telecommunications Development Fund ����������������������������� ......... –350 –100 –75 –20 –15 –560 –593 –5 –6 –7 –7 –7 –7 –34 –69 Total, FCC ����������������������������������������� –85 –566 –507 –507 –752 –797 –3,129 –7,303 28 Mid-Session Review Table S–5. MANDATORY PROPOSALS—Continued (In millions of dollars) 2008 Office of Personnel Management (OPM): Amend Federal Employee Health Benefits Program statute ������������������� Improve equity and administration of the Federal retirement system ���������� Replace non-foreign cost of living adjustment with locality pay 3 ������������ Total, OPM ���������������������������������������� Social Security Administration (SSA): Extend temporarily length of timelimited Supplemental Security Income eligibility for refugees and asylees ������������������������������������������������� Total, Mandatory Proposals including Savings and Augmentations ��������������������������� Establish Social Security Personal Accounts (Off-Budget) ����������������������������� 2009 2010 2011 2012 2013 2009–13 2009–18 ......... –40 –147 –248 –327 –403 –1,165 –3,675 ......... 2 3 4 6 7 22 74 ......... ......... ......... ......... ......... ......... ......... ......... ......... –38 –144 –244 –321 –396 –1,143 –3,601 ......... 53 47 49 ......... ......... 149 149 135 –15,103 –36,553 –45,795 –51,755 –58,712 –207,919 –615,423 ......... ......... ......... ......... ......... 30,479 30,479 644,635 ......... 6 –182 –168 –168 –183 –695 –1,838 ......... ......... 30 26 24 23 103 218 ......... 160 3,168 2,494 1,817 1,073 8,712 1,934 ......... 3 –78 –72 –72 –78 –297 –787 ......... ......... –388 –396 –401 –404 –1,589 –3,681 ......... 169 2,550 1,884 1,200 431 6,234 –4,154 ......... –71 –530 –828 –936 –1,046 –3,411 –9,732 ......... –850 –29 –51 –62 –69 –1,061 –1,357 ......... –10 –88 –161 –167 –172 –598 –1,566 ......... –4 –35 –84 –152 –240 –515 –1,100 ......... ......... ......... ......... –144 –316 –460 –2,533 Outlay Effects of Tax Proposals 3: Earned Income Tax Credit (EITC): Clarify uniform definition of a child ������ Simplify EITC eligibility requirement regarding filing status, presence of children, and work and immigration status �������������������������������������������������� Provide a new standard deduction for health insurance ($15,000 for family coverage and $7,500 for individual coverage) ��������������������������������������������� Child Tax Credit: Clarify uniform definition of a child ������ Reduce computational complexity of refundable child tax credit ����������������� Total, Outlay Effects of Tax Proposals ������������������������������������ Other Proposals and Indirect Effects: Provide six months of retroactivity for disability applications (off-budget) ��������� Combine retroactive Old-Age, Survivors, and Disability Insurance benefits with monthly benefit payment (off-budget) ���� Require full-time school attendance for child’s Social Security benefits at age 16 (off-budget) ����������������������������������������������� Simplify the benefit offset for combined beneficiaries of Disability Insurance and Workers Compensation (off-budget) ������� Improve enforcement of Windfall Elimination Provision/Government Pension Offset (off-budget) ���������������������� 29 Summary Tables Table S–5. MANDATORY PROPOSALS—Continued (In millions of dollars) 2008 Eliminate Commodity Supplemental Food Program: Food Stamp impact (third scorecard) ���� Reduce SSBG in 2009: TANF impact (third scorecard) ������������������������������������������������� Eliminate SSBG as of 2010: TANF, Child Care, and Foster Care impact (third scorecard) ������������������������������������������������� Increase program integrity efforts: Supplemental Security Income impact (third scorecard) ��������������������������������� Disability Insurance impact (third scorecard) �������������������������������������������� Recover Unemployment Insurance overpayments ������������������������������������������ Match National Park Centennial Challenge Fund gift receipts (third scorecard) ������������������������������������������������� Transfer royalty oil to the Strategic Petroleum Reserve (third scorecard) ������ Amend Federal Employee Health Benefits Program statute (third scorecard) ���������� Replace non-foreign cost of living adjustment with locality pay (third scorecard) ������������������������������������������������� Morris K. Udall Scholarship Fund (third scorecard) ������������������������������������������������� Total, Other Proposals and Indirect Effects �������������������������������������������� Grand Total ���������������������������������������������������� 2009 2010 2011 2012 2013 2009–13 2009–18 ......... 54 65 57 52 48 276 471 ......... 28 5 –28 –5 ......... ......... ......... ......... ......... –49 120 147 181 399 804 ......... –119 –892 –1,627 –1,525 –750 –4,913 –6,480 ......... –4 –58 –242 –457 –517 –1,278 –3,527 ......... ......... –73 –148 –151 –156 –528 –1,405 ......... 20 55 80 100 100 355 855 ......... ......... ......... ......... 1,235 ......... 1,235 28,370 ......... 81 173 239 289 333 1,115 3,214 ......... –2 –8 –15 –23 –31 –79 –361 ......... 4 4 4 4 4 20 45 ......... –873 –1,460 –2,684 –1,795 –2,631 –9,443 5,698 135 –15,810 –35,465 –46,589 –52,346 –30,431 –180,641 30,768 Memorandum: Outlay Effects of Tax Extensions Assumed in Baseline 3: Child Tax Credit extension ������������������������� Earned Income Tax Credit: marriage penalty relief �������������������������������������������� ......... ......... ......... 34 ......... ......... ......... –108 –19 –24 –151 –270 Total �������������������������������������������������������� ......... ......... ......... –74 13,760 13,761 27,447 97,413 13,779 13,785 27,598 97,683 If enacted, the Administration would work to classify the receipts as discretionary offsets beginning in 2010. Represents total cost of SCHIP reauthorization, including SCHIP and Medicaid costs as well as spending resulting from outreach grants. 3 Affects both receipts and outlays. Only the outlay effect is shown here. For receipt effects, see Table S–6. 1 2 30 Mid-Session Review Table S–6. RECEIPTS PROPOSALS (In millions of dollars) 2008 Make Permanent Certain Tax Relief Enacted in 2001 and 2003 (assumed in the baseline): Dividends tax rate structure �������������������������� Capital gains tax rate structure ��������������������� Expensing for small businesses ���������������������� Marginal individual income tax rate reductions ������������������������������������������������������ Child tax credit 1 ���������������������������������������������� Marriage penalty relief 1 ���������������������������������� Education incentives ��������������������������������������� Repeal of estate and generation-skipping transfer taxes, and modification of gift taxes ������������������������������������������������������������� Other incentives for families and children ���� Total, make permanent certain tax relief enacted in 2001 and 2003 ��������� 2009 2010 2011 2012 2013 2009–13 2009–18 ......... ......... ......... 425 –4,903 –21,647 –4,064 –12,675 –42,864 –185,999 ......... –4,402 –17,748 –3,118 –8,520 –33,788 –100,897 ......... ......... –3,431 –4,839 –3,728 –11,998 –24,364 ......... ......... ......... ......... ......... ......... ......... ......... ......... –72,274 –114,578 –118,642 –305,494 ......... –5,028 –20,241 –20,732 –46,001 ......... –4,514 –9,587 –9,218 –23,319 ......... –738 –1,339 –1,414 –3,491 –968,854 –155,465 –62,348 –11,547 –422 –3,025 –4,202 –25,666 –56,053 –58,152 –147,098 –510,922 ......... ......... 6 –353 –650 –652 –1,649 –4,980 –422 –2,600 –13,501 –151,399 –214,469 –233,733 –615,702 –2,025,376 Tax Incentives: Simplify and encourage saving: Expand tax-free savings opportunities ���������� Consolidate employer-based savings accounts ������������������������������������������������������� Total, simplify and encourage saving ����� Encourage entrepreneurship and investment: Increase expensing for small businesses ������� Invest in health care: Provide a new standard deduction for health insurance ($15,000 for family coverage and $7,500 for individual coverage) 1 ���������� Expand and make health savings accounts (HSAs) more flexible ����������������������������������� Allow the orphan drug tax credit for certain pre-designation expenses 2 �������������������������� Total, invest in health care ��������������������� Provide incentives for charitable giving: Permanently extend tax-free withdrawals from IRAs for charitable contributions ������ Permanently extend the enhanced charitable deduction for contributions of food inventory ���������������������������������������������� Permanently extend the deduction for corporate donations of computer equipment for educational purposes ���������� Permanently extend increased limits on contributions of partial interests in real property for conservation purposes ������������ Permanently extend basis adjustment to stock of S corporations contributing appreciated property ���������������������������������� ......... 1,527 3,545 3,023 1,075 –1,314 7,856 –592 ......... ......... –80 1,447 –120 3,425 –132 2,891 –141 –150 934 –1,464 –623 7,233 –1,484 –2,076 –5,025 –7,550 ......... –22,155 –27,790 –20,968 –13,233 –3,692 –87,838 37,444 ......... –1,085 –1,501 –1,035 ......... –420 –779 –770 –634 –931 –1,031 –1,123 –4,284 –11,511 ......... ......... ......... ......... ......... ......... ......... ......... –22,575 –28,569 –21,899 –14,264 –4,815 –92,122 ......... 25,933 ......... –300 –551 –434 –284 –211 –1,780 –3,321 ......... –66 –115 –124 –134 –144 –583 –1,495 ......... –116 –147 –154 –162 –170 –749 –1,736 ......... –17 –41 –28 –21 –21 –128 –250 ......... –12 –21 –25 –28 –32 –118 –351 31 Summary Tables Table S–6. RECEIPTS PROPOSALS—Continued (In millions of dollars) 2008 Reform excise tax based on investment income of private foundations �������������������� Total, provide incentives for charitable giving ��������������������������������������������������� Strengthen education: Permanently extend the above-the-line deduction for qualified out-of-pocket classroom expenses ������������������������������������� Allow the saver’s credit for contributions to qualified tuition programs �������������������������� Total, strengthen education �������������������� Strengthen housing: Expand tax-exempt qualified mortgage bond program to assist subprime borrowers ������ Protect the environment: Permanently extend expensing of brownfields remediation costs �������������������� Eliminate the volume cap for private activity bonds for water infrastructure ������ Total, protect the environment ��������������� Restructure assistance to New York City for continued recovery from the attacks of September 11th: Provide tax incentives for transportation infrastructure ���������������������������������������������� Total, tax incentives ��������������������������� Simplify the Tax Laws for Families: Clarify uniform definition of a child 1 ������������������� Simplify EITC eligibility requirement regarding filing status, presence of children, and work and immigrant status 1 ������������������������������������� Reduce computational complexity of refundable child tax credit 1 ������������������������������������������������� Total, simplify the tax laws for families ��������� Improve Tax Compliance: 3 Expand information reporting ����������������������������� Improve compliance by businesses ���������������������� Strengthen tax administration ���������������������������� Expand penalties �������������������������������������������������� Total, improve tax compliance ������������������������ Improve Tax Administration and Other Miscellaneous Proposals: Implement IRS administrative reforms and extend IRS authority to fund undercover operations 2 �������������������������������������������������������� Increase transparancy of the cost of employerprovided health insurance 2 ������������������������������ Equalize penalty standards between preparers and taxpayers ��������������������������������������������������� 2009 2010 2011 2012 2013 2009–13 2009–18 ......... –113 –163 –164 –165 –165 –770 –1,617 ......... –624 –1,038 –929 –794 –743 –4,128 –8,770 ......... –198 –183 –185 –188 –191 –945 –1,945 ......... ......... –88 –286 –183 –366 –198 –383 –213 –401 –227 –418 –909 –1,854 –2,259 –4,204 ......... –86 –191 –280 –303 –304 –1,164 –2,433 –38 –649 –359 –346 –330 –287 –1,971 –3,037 ......... –38 ......... –649 –2 –361 –6 –352 –10 –340 –15 –302 –33 –2,004 –205 –3,242 ......... –200 –200 –200 –200 –200 –1,000 –38 –24,058 –28,801 –22,187 –16,138 –8,880 –100,064 –2,000 –4,342 ......... 6 30 38 17 23 114 275 ......... ......... –42 –17 –15 –13 –87 –99 ......... ......... ......... 6 ......... –12 ......... 21 ......... 2 ......... 10 ......... 27 ......... 176 ......... ......... ......... ......... ......... 302 3 ......... ......... 305 1,333 5 ......... ......... 1,338 2,227 5 3 ......... 2,235 2,961 5 6 ......... 2,972 3,654 6 8 1 3,669 10,477 24 17 1 10,519 35,763 57 72 6 35,898 ........ ........ ........ ......... ........ ........ ........ ........ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... –1 –2 –2 –2 –7 –17 32 Mid-Session Review Table S–6. RECEIPTS PROPOSALS—Continued (In millions of dollars) 2008 Eliminate the special exclusion from unrelated business taxable income for gain or loss on the sale or exchange of certain brownfields ���� Limit related party interest deductions �������������� Repeal excise tax on local telephone service 4 ������ Modify financing of the Airport and Airway Trust Fund 4 ������������������������������������������������������ Improve financing of the Inland Waterways Trust Fund 4 ������������������������������������������������������ Anticipated receipt of donations to the National Park Service through the National Park Centennial Challenge Fund ����������������������������� Increase fees for Migratory Bird Hunting and Conservation Stamps ��������������������������������������� Transition from the non-foreign cost-of-living adjustment (COLA) to locality pay for employees in non-foreign areas ����������������������� Total, improve tax administration and other miscellaneous proposals 4 ������������� Improve Unemployment Insurance: Strengthen the financial integrity of the unemployment insurance system by reducing improper benefit payments and tax avoidance 4 ��������������������������������������������������������� Extend unemployment insurance surtax 4 ���������� Total, improve unemployment insurance 4 ����� Modify Energy Provisions: Repeal reduced recovery period for natural gas distribution lines ���������������������������������������������� Modify amortization for certain geological and geophysical expenditures ��������������������������������� Total, modify energy provisions ���������������� Promote Trade: Implement free trade agreements and modify other trade-related provisions 4 ������������������������ Extend Expiring Provisions: Minimum tax relief for individuals ��������������������� Research and experimentation (R&E) tax credit First-time homebuyer credit for the District of Columbia ����������������������������������������������������������� Deferral of gains from sales of electric transmission property �������������������������������������� New Markets tax credit ���������������������������������������� Subpart F “active financing” exception ���������������� Subpart F “look-through” exception �������������������� Disclosure of tax return information related to terrorist activity 2 ���������������������������������������������� Excise tax on coal 4 ������������������������������������������������ Total, extend expiring provisions 4 ������������ 2009 2010 2011 13 109 –172 2012 16 115 –122 2013 2009–13 2009–18 ......... ......... ......... 2 64 –156 13 120 –86 11 126 –81 55 534 –617 66 1,267 –1,017 ......... ......... –6,566 –6,962 –7,373 –7,715 –28,616 –73,207 ......... 110 116 128 152 127 633 1,011 ......... 100 100 100 100 100 500 1,000 ......... 14 14 14 14 14 70 140 ......... 1 2 3 4 5 15 50 ......... 135 –6,385 –6,710 –7,058 –7,415 –27,433 –70,707 ......... ......... ......... ......... 1,065 1,065 37 442 479 25 ......... 25 –293 ......... –293 –573 ......... –573 –804 1,507 703 –3,754 499 –3,255 ......... 42 72 77 70 57 318 580 ......... ......... 24 66 86 158 134 211 129 199 100 157 473 791 630 1,210 ......... –930 –1,489 –1,773 –2,034 –2,269 –8,495 –16,172 ......... –73,072 14,503 ......... ......... ......... –58,569 –58,569 –322 –9,970 –9,145 –10,601 –11,799 –12,833 –54,348 –135,949 ......... –21 –19 ......... ......... ......... –40 –40 –10 –86 –61 ......... –132 –194 ......... –1,598 –1,065 ......... –347 –231 –10 –191 ......... ......... 31 –217 ......... ......... 40 –231 ......... ......... –86 –965 –2,663 –578 10 –1,287 –2,663 –578 ......... ......... ......... ......... –332 –85,226 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 1,348 3,788 –10,802 –11,985 –13,024 –117,249 –197,728 33 Summary Tables Table S–6. RECEIPTS PROPOSALS—Continued (In millions of dollars) 2008 Total budget proposals, including proposals assumed in the baseline 4 ���������� Total budget proposals, excluding proposals assumed in the baseline 4 ���������� 2009 2010 2011 2012 2013 2009–13 2009–18 –792 –111,237 –44,425 –190,379 –248,804 –262,058 –856,903 –2,280,296 –370 –108,637 –30,924 –38,980 –34,335 –28,325 –241,201 Affects both receipts and outlays. Only the receipt effect is shown here. For the outlay effect, see Table S-5. 2 No net budgetary impact. 3 “Tax gap”-related proposals. 4 Net of income offsets. 1 –254,920 34 Mid-Session Review Table S–7. BUDGET SUMMARY BY CATEGORY (In billions of dollars) 2007 2008 2009 2010 2011 2012 2013 Outlays: Discretionary: Security ���������������������������������������������������������������������������������� Non-security ��������������������������������������������������������������������������� Total, discretionary ���������������������������������������������������������� 594 654 738 636 620 624 632 448 476 488 456 442 433 431 1,042 1,130 1,226 1,092 1,062 1,057 1,064 Mandatory: Social Security: Current program �������������������������������������������������������������� Personal accounts ������������������������������������������������������������� 581 611 651 691 730 773 ......... ......... ......... ......... ......... ......... 823 30 Medicare ��������������������������������������������������������������������������������� 371 387 406 419 449 445 493 Medicaid & SCHIP ���������������������������������������������������������������� 197 212 226 240 258 277 298 Other �������������������������������������������������������������������������������������� 302 370 396 392 404 383 403 Total, mandatory �������������������������������������������������������������� Net interest ��������������������������������������������������������������������������������� 1,451 1,580 1,679 1,742 1,840 1,879 2,048 237 232 228 260 285 294 299 Total outlays ������������������������������������������������������������������������������������ 2,730 2,942 3,133 3,094 3,187 3,230 3,410 Receipts ������������������������������������������������������������������������������������������� 2,568 2,553 2,651 2,916 3,084 3,288 3,439 Deficit(–)/surplus ������������������������������������������������������������������������� –162 –389 –482 –178 –103 58 29 On-budget deficit ������������������������������������������������������������������������� –343 –574 –663 –378 –321 –168 –172 Off-budget surplus ���������������������������������������������������������������������� 181 184 181 201 218 226 201 35 Summary Tables Table S–8. RECEIPTS BY SOURCE (In billions of dollars) 2007 Actual Estimate 2008 2009 2010 2011 2012 2013 1,259.0 339.2 949.4 68.9 26.3 29.1 47.9 –20.0 2,699.9 1,417.3 338.9 1,004.0 60.7 19.5 30.8 50.0 10.0 2,931.3 1,499.0 356.8 1,059.7 65.9 1.5 32.5 53.2 8.0 3,076.4 1,599.9 391.3 1,111.4 68.5 0.4 35.0 57.4 6.0 3,269.9 1,709.1 379.8 1,168.5 69.7 0.5 37.0 59.5 4.0 3,428.2 February estimates: Individual income taxes �������������������������������������� Corporation income taxes ������������������������������������ Social insurance and retirement receipts ���������� Excise taxes ��������������������������������������������������������� Estate and gift taxes ������������������������������������������� Customs duties ���������������������������������������������������� Miscellaneous receipts ���������������������������������������� Allowance for economic growth package ������������ Total ��������������������������������������������������������������� 1,163.5 1,219.7 370.2 345.3 869.6 910.1 65.1 68.8 26.0 26.8 26.0 29.2 47.8 46.3 ......... –125.0 2,568.2 2,521.2 Mid-Session estimates: Individual income taxes �������������������������������������� Corporation income taxes ������������������������������������ Social insurance and retirement receipts ���������� Excise taxes ��������������������������������������������������������� Estate and gift taxes ������������������������������������������� Customs duties ���������������������������������������������������� Miscellaneous receipts ���������������������������������������� Allowance for economic growth package ������������ Total ��������������������������������������������������������������� 1,163.5 1,169.0 1,250.4 1,432.5 1,526.7 1,626.8 1,734.4 370.2 309.3 304.1 335.3 355.8 399.9 381.8 869.6 901.2 931.5 991.9 1,051.9 1,103.5 1,159.9 65.1 68.1 67.8 59.7 63.9 65.5 66.2 26.0 28.4 26.1 18.8 1.4 0.4 0.5 26.0 27.7 28.3 30.7 33.3 35.7 37.7 47.8 49.3 43.3 46.8 51.0 56.0 58.6 ......... ......... ......... ......... ......... ......... ......... 2,568.2 2,552.9 2,651.4 2,915.8 3,084.1 3,287.8 3,439.0 Difference: Individual income taxes �������������������������������������� Corporation income taxes ������������������������������������ Social insurance and retirement receipts ���������� Excise taxes ��������������������������������������������������������� Estate and gift taxes ������������������������������������������� Customs duties ���������������������������������������������������� Miscellaneous receipts ���������������������������������������� Allowance for economic growth package ������������ Total ��������������������������������������������������������������� ......... ......... ......... ......... ......... ......... ......... ......... ......... –50.7 –36.1 –9.0 –0.7 1.7 –1.5 3.1 125.0 31.8 –8.7 –35.2 –17.9 –1.1 –0.2 –0.8 –4.6 20.0 –48.6 15.2 –3.6 –12.1 –1.0 –0.8 –0.1 –3.1 –10.0 –15.5 27.7 –1.0 –7.8 –2.0 –0.0 0.8 –2.1 –8.0 7.7 27.0 8.6 –7.9 –3.1 0.0 0.7 –1.3 –6.0 17.9 25.3 2.0 –8.6 –3.6 0.0 0.7 –1.0 –4.0 10.8 36 Mid-Session Review Table S–9. OUTLAYS BY AGENCY (In billions of dollars) 2007 Actual Legislative Branch ���������������������������������������������������������������������������� February estimates 2008 4.3 4.6 2009 5.0 Mid-Session estimates 2008 4.6 2009 5.0 Judicial Branch ��������������������������������������������������������������������������������� 6.0 6.2 7.0 6.2 7.0 Agriculture ���������������������������������������������������������������������������������������� 84.4 94.8 94.8 93.4 100.5 Commerce ������������������������������������������������������������������������������������������ 6.5 8.2 9.2 8.3 9.8 Defense—Military ����������������������������������������������������������������������������� 529.9 583.1 651.2 582.2 656.7 Education ������������������������������������������������������������������������������������������� 66.4 68.0 63.5 67.6 64.6 Energy ����������������������������������������������������������������������������������������������� 20.1 23.2 23.3 21.5 24.4 Health and Human Services ������������������������������������������������������������ 672.0 709.4 738.6 706.4 739.2 Homeland Security ��������������������������������������������������������������������������� 39.2 42.3 44.3 39.5 46.1 Housing and Urban Development ���������������������������������������������������� 45.6 52.3 45.6 50.5 45.5 Interior ����������������������������������������������������������������������������������������������� 10.5 11.1 10.2 10.9 9.8 Justice ������������������������������������������������������������������������������������������������ 23.3 25.0 26.5 25.9 26.8 Labor �������������������������������������������������������������������������������������������������� 47.5 49.7 54.2 61.3 69.0 State ��������������������������������������������������������������������������������������������������� 13.7 18.9 22.1 19.1 22.9 Transportation ���������������������������������������������������������������������������������� 61.7 68.7 71.1 67.7 70.5 Treasury �������������������������������������������������������������������������������������������� 490.6 520.2 547.8 536.6 515.1 Veterans Affairs �������������������������������������������������������������������������������� 72.8 86.6 91.8 85.8 94.1 Corps of Engineers-Civil Works ������������������������������������������������������� 3.9 7.2 8.8 6.6 10.3 Other Defense Civil Programs ��������������������������������������������������������� 47.1 49.1 51.2 49.0 52.2 Environmental Protection Agency ��������������������������������������������������� 8.3 7.5 8.0 7.5 8.0 Executive Office of the President ����������������������������������������������������� 3.0 2.1 0.5 1.8 0.7 General Services Administration ����������������������������������������������������� * 0.4 0.7 0.4 0.7 International Assistance Programs ������������������������������������������������� 12.8 15.2 16.5 12.4 16.8 National Aeronautics and Space Administration ���������������������������� 15.9 17.3 18.1 17.3 18.2 National Science Foundation ������������������������������������������������������������ 5.5 6.3 6.4 6.3 6.4 Office of Personnel Management ������������������������������������������������������ 58.4 64.2 67.2 64.6 68.5 Small Business Administration ������������������������������������������������������� 1.2 0.5 0.8 0.7 0.9 Social Security Administration �������������������������������������������������������� 621.8 656.6 692.8 657.1 700.0 Other Independent Agencies ������������������������������������������������������������ 18.0 18.4 19.9 25.7 31.9 Allowances ����������������������������������������������������������������������������������������� ...... ...... – 0.5 ...... – 0.5 Undistributed Offsetting Receipts ��������������������������������������������������� – 260.2 – 285.6 – 289.4 – 294.6 – 287.9 Total ���������������������������������������������������������������������������������������������� 2,730.2 2,931.2 3,107.4 2,942.4 3,133.2 * $50 million or less. 37 Summary Tables Table S–10. OUTLAYS BY FUNCTION (In billions of dollars) 2007 Actual February estimates 2008 2009 Mid–Session estimates 2008 2009 National defense ������������������������������������������������������������������������������ 552.6 607.3 675.1 605.7 682.1 International affairs ������������������������������������������������������������������������ 28.5 34.8 38.0 32.4 39.9 General science, space, and technology ������������������������������������������� 25.6 27.6 29.2 27.6 29.1 Energy ���������������������������������������������������������������������������������������������� –0.9 3.0 3.1 1.3 3.4 Natural resources and environment ����������������������������������������������� 31.8 35.5 35.5 34.3 35.8 Agriculture ��������������������������������������������������������������������������������������� 17.7 21.0 19.1 19.4 20.9 Commerce and housing credit ��������������������������������������������������������� 0.5 7.4 4.2 12.0 16.0 Transportation ��������������������������������������������������������������������������������� 72.9 80.3 83.9 78.9 83.6 Community and regional development ������������������������������������������� 29.6 27.6 23.3 25.5 23.9 Education, training, employment, and social services ������������������� 91.7 93.4 88.3 93.2 89.3 Health ����������������������������������������������������������������������������������������������� 266.4 284.5 299.4 284.9 301.4 Medicare ������������������������������������������������������������������������������������������� 375.4 396.3 413.3 392.5 411.9 Income security �������������������������������������������������������������������������������� 366.0 388.4 401.7 435.7 431.3 Social Security ���������������������������������������������������������������������������������� 586.2 615.3 649.3 615.8 656.1 Veterans benefits and services �������������������������������������������������������� 72.8 86.6 91.9 85.8 94.1 Administration of justice ����������������������������������������������������������������� 41.2 46.2 51.1 45.8 51.2 General government ������������������������������������������������������������������������ 17.5 19.8 21.5 20.0 22.0 Net interest �������������������������������������������������������������������������������������� 237.1 243.9 260.2 231.8 228.0 Allowances ���������������������������������������������������������������������������������������� ......... ......... –0.5 ......... –0.5 Undistributed offsetting receipts ���������������������������������������������������� –82.2 –87.7 –80.4 –100.2 –86.2 Total ������������������������������������������������������������������������������������������� 2,730.2 2,931.2 3,107.4 2,942.4 3,133.2 38 Mid-Session Review Table S–11. CURRENT SERVICES BASELINE CATEGORY TOTALS (In billions of dollars) 2007 Outlays: Discretionary: Security ����������������������������������������������������������������������������������� Non-security ���������������������������������������������������������������������������� Total, discretionary ����������������������������������������������������������� Mandatory: Social Security ������������������������������������������������������������������������ Medicare ���������������������������������������������������������������������������������� Medicaid & SCHIP ����������������������������������������������������������������� Other ��������������������������������������������������������������������������������������� Total, mandatory ��������������������������������������������������������������� Net interest ���������������������������������������������������������������������������������� Total outlays ������������������������������������������������������������������������������������� Receipts �������������������������������������������������������������������������������������������� Deficit(–)/surplus �������������������������������������������������������������������������� On-budget deficit �������������������������������������������������������������������������� Off-budget surplus ����������������������������������������������������������������������� 2008 2009 2010 2011 2012 2013 594 654 718 612 597 605 617 448 476 486 480 485 489 500 1,042 1,130 1,203 1,092 1,082 1,094 1,117 581 611 652 692 731 775 825 371 387 417 445 489 491 547 197 212 225 240 258 277 297 302 370 401 400 409 389 410 1,451 1,580 1,695 1,777 1,887 1,932 2,079 237 232 226 255 280 291 297 2,730 2,942 3,125 3,125 3,249 3,316 3,493 2,568 2,553 2,760 2,947 3,123 3,322 3,467 –162 –389 –365 –178 –126 6 –26 –343 181 –573 184 –547 182 –378 201 –343 217 –218 223 –255 229 39 Summary Tables Table S–12. OUTLAYS FOR MANDATORY PROGRAMS UNDER CURRENT LAW 1 (In billions of dollars) 2007 Actual Human resources programs: Education, training, employment and social services �������������� Health ����������������������������������������������������������������������������������������� Medicare ������������������������������������������������������������������������������������� Income security �������������������������������������������������������������������������� Social Security ���������������������������������������������������������������������������� Veterans’ benefits and services ������������������������������������������������� Subtotal, human resources programs ���������������������������������� 12 214 371 310 581 38 Estimate 2008 11 231 387 376 611 44 2009 9 245 417 372 652 50 2010 11 262 445 373 692 57 2011 12 280 489 385 731 65 2012 12 301 491 380 775 62 2013 12 323 547 393 825 70 1,525 1,660 1,746 1,840 1,963 2,021 2,171 Other mandatory programs: National defense ������������������������������������������������������������������������ International affairs ������������������������������������������������������������������ Energy ���������������������������������������������������������������������������������������� Agriculture ��������������������������������������������������������������������������������� Commerce and housing credit ��������������������������������������������������� Transportation ��������������������������������������������������������������������������� Community and regional development ������������������������������������� Justice ����������������������������������������������������������������������������������������� General government ������������������������������������������������������������������ Undistributed offsetting receipts ���������������������������������������������� Other functions �������������������������������������������������������������������������� 3 –6 –4 12 –1 2 –* 1 2 –82 1 4 –7 –3 11 9 2 –* 3 2 –100 * 4 –3 –2 15 12 3 –* 3 3 –86 –* 4 * –2 16 3 2 * 3 3 –91 * 5 –* –2 15 –3 2 * 2 3 –97 –* 5 –1 –2 10 –7 2 * 1 4 –102 * 5 –1 –3 15 –9 3 * 1 4 –107 1 Subtotal, other mandatory programs ���������������������������������� –74 –80 –51 –63 –76 –89 –92 Total, outlays for mandatory programs under current law �������������������������������������������������������������������������������� 1,451 1,580 1,695 1,777 1,887 1,932 2,079 * $500 million or less. 1 This table meets the requirements of Section 221(b) of the Legislative Reorganization Act of 1970. 40 Mid-Session Review Table S–13. FEDERAL GOVERNMENT FINANCING AND DEBT (In billions of dollars) 2007 Actual Financing: Unified budget deficit (–)/surplus (+) ����������������������������������� Financing other than borrowing from the public: Changes in: 1 Treasury operating cash balance (–) ������������������������ Checks outstanding, etc. 2 ������������������������������������������ Seigniorage on coins ������������������������������������������������������� Credit net financing disbursements (–): Direct loan financing accounts ���������������������������������� Guaranteed loan financing accounts ������������������������ Net purchases of non-Federal securities by the National Railroad Retirement Investment Trust (–) ����� Total, financing other than borrowing from the public. �� Total, requirement to borrow from the public ��������� Change in debt held by the public ��������������������������������������� Changes in Debt Subject to Statutory Limitation: Change in debt held by the public ��������������������������������������� Change in debt held by Government accounts ������������������� Less: change in debt not subject to limit and other adjustments ���������������������������������������������������������������������� Total, change in debt subject to statutory limitation ���� Debt Subject to Statutory Limitation, End of Year: Debt issued by Treasury ������������������������������������������������������ Adjustment for discount, premium, and coverage 3 ������������� Total, debt subject to statutory limitation 4 ������������������� Debt Outstanding, End of Year: Gross Federal debt: 5 Debt issued by Treasury ������������������������������������������������� Debt issued by other agencies ���������������������������������������� Total, gross Federal debt ������������������������������������������� Held by: Debt held by Government accounts ������������������������������� Debt held by the public �������������������������������������������������� As a percent of GDP �������������������������������������������������� Estimate 2008 2009 2010 2011 2012 2013 –162 –389 –482 –178 –103 58 29 –23 –2 1 25 ......... 1 ......... ......... 1 ......... ......... 1 ......... ......... 1 ......... ......... 1 ......... ......... 1 –8 –9 –22 –1 –54 –3 –3 1 –15 2 –15 –2 –15 –2 –3 –44 –206 1 4 –385 * –56 –538 * –1 –178 1 –11 –114 * –15 43 1 –15 14 206 385 538 178 114 –43 –14 206 293 385 287 538 277 178 326 114 368 –43 417 –14 394 2 501 * 673 2 817 1 506 2 484 2 376 2 382 8,926 –4 8,921 9,598 10,413 10,917 11,400 11,774 –4 –2 –* 1 3 9,594 10,411 10,917 11,401 11,777 12,155 4 12,159 8,926 25 8,951 9,598 10,413 10,917 11,400 11,774 25 25 26 26 25 9,623 10,438 10,943 11,425 11,800 12,155 25 12,180 3,916 4,203 4,480 4,806 5,175 5,035 5,421 5,958 6,137 6,251 36.8% 38.0% 40.2% 39.3% 37.9% 5,592 6,208 35.7% 5,986 6,194 34.0% * $500 million or less. 1 A decrease in the Treasury operating cash balance (which is an asset) is a means of financing a deficit and therefore has a positive sign. An increase in checks outstanding (which is a liability) is also a means of financing a deficit and therefore also has a positive sign. 2 Besides checks outstanding, includes accrued interest payable on Treasury debt, uninvested deposit fund balances, allocations of special drawing rights, and other liability accounts; and, as an offset, cash and monetary assets (other than the Treasury operating cash balance), other asset accounts, and profit on sale of gold. 3 Consists mainly of Federal Financing Bank debt (which is not subject to limit), the unamortized discount (less premium) on public issues of Treasury notes and bonds (other than zero-coupon bonds), and the unrealized discount on Government account series securities. 4 The statutory debt limit is $9,815 billion, enacted on September 29, 2007. 5 Treasury securities held by the public and zero-coupon bonds held by Government accounts are almost all measured at sales price plus amortized discount or less amortized premium. Agency debt securities are almost all measured at face value. Treasury securities in the Government account series are otherwise measured at face value less unrealized discount (if any). Glossary Appropriation.—An appropriation provides legal authority for Federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. Appropriations bills, such as the Department of Homeland Security or the Departments of Labor, Health and Human Services, and Education bills, are considered every year by the Congress and supplemental appropriations bills are considered from time to time. Authorization.—An authorization is an act of the Congress that establishes or continues a Federal program or agency and sets forth the guidelines to which it must adhere. Budget Authority.—Budget authority is the authority provided by law to incur financial obligations that will result in outlays. Budget Resolution.—The budget resolution is the Congress’ annual framework that sets targets for total budget authority, total outlays, total revenues, and the deficit (on-budget), as well as discretionary and mandatory allocations within the spending targets. These targets guide the committees’ deliberations. A budget resolution does not become law and is not binding on the Executive Branch. Cap.—A ‘‘cap’’ is a legal limit on annual discretionary spending. Deficit.—A deficit is the amount by which outlays exceed receipts in a fiscal year. Discretionary Spending.—Discretionary spending is spending that the President and the Congress control through annual appropriations bills. Examples include spending for such activities as the FBI, the Coast Guard, education, space exploration, highway construction, defense, and foreign aid. Entitlement.—An entitlement program is one in which the Federal Government is legally obligated to make payments or provide aid to any person who meets the legal criteria for eligibility. Examples include Social Security, Medicare, Medicaid, and Food Stamps. Fiscal Year.—The fiscal year is the Federal Government’s accounting period. It begins on October 1st and ends on September 30th. For example, fiscal year 2009 begins on October 1, 2008, and ends on September 30, 2009. Gross Domestic Product (GDP).—GDP is a measure of the market value of goods and services produced within the United States. It is the standard measure of the size of the economy. Mandatory Spending.—Mandatory spending is controlled by permanent law rather than annual appropriations. Examples are Social Security and the Student Loan Program. The President and the Congress can change the law with respect to the eligibility criteria or the payment formula, and thus change the level of spending on mandatory programs, but annual action is not necessary to ensure the continuation of spending. In addition, budget authority provided in annual appropriations acts for certain programs is treated as mandatory because the authorizing legislation entitles beneficiaries to receive payment or otherwise obligates the Government to make payment. Obligations.—Obligations are binding agreements that result in outlays, immediately or in the future. Outlays.—Outlays are the primary measure of Government spending. Outlays are payments to liquidate obligations, largely measured on a cash basis. Total Federal outlays are a net figure, consisting of gross payments minus the amount of business-like collections and intragovernmental transactions, in a given fiscal year. Receipts.—Governmental receipts (sometimes called receipts or revenues) are the collections of money that primarily result from taxes and similar Government powers to compel payment. Examples of governmental receipts include income taxes, payroll taxes, excise taxes, and customs duties. They do not include offsetting receipts or collections from the Federal Government’s business-like activities, such as the entrance fees at national parks, or collections by one Government account from another. Surplus.—A surplus is the amount by which receipts exceed outlays in a fiscal year. 41 executiv e office of t h e p resident office of management and budget wash ington , d. c . 20503