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) Mid-Session Review Budget of the U.S. Government Fiscal Year 2011 Office of Management and Budget www.budget.gov Mid-Session Review Budget of the U.S. Government Fiscal Year 2011 Office of Management and Budget www.budget.gov EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON D. C. 20503 THE DIRECTOR July 23, 2010 The Honorable Nancy Pelosi Speaker of the House of Representatives Washington, DC 20510 Dear Madam Speaker: Section 1106 of Title 31, United States Code, requests that the President send to the Congress a supplemental update of the Budget that was transmitted to the Congress earlier in the year. This supplemental update of the Budget, commonly known as the Mid-Session Review, contains revised estimates of receipts, outlays, budget authority, and the budget deficit for fiscal years 2010 through 2020. Sincerely, Peter R. Orszag Director Enclosure Identical Letter Sent to the President of the Senate TABLE OF CONTENTS Page List of Tables........................................................................................................................................... iii Summary.................................................................................................................................................. 1 Economic Assumptions............................................................................................................................ 7 Receipts.................................................................................................................................................. 13 Expenditures.......................................................................................................................................... 15 Summary Tables.................................................................................................................................... 19 i LIST OF TABLES Table 1. Page Change in Deficits from the February Budget............................................................... 6 Table 2. Economic Assumptions.................................................................................................... 9 Table 3. Comparison of Economic Assumptions......................................................................... 10 Table 4. Change in Receipts........................................................................................................ 14 Table 5. Change in Outlays......................................................................................................... 18 Table S–1. Budget Totals................................................................................................................. 20 Table S–2. Effect of Budget Proposals on Projected Deficits......................................................... 21 Table S–3. Baseline Projection of Current Policy by Category...................................................... 23 Table S–4. Proposed Budget by Category....................................................................................... 25 Table S–5. Proposed Budget by Category as a Percent of GDP..................................................... 27 Table S–6. Proposed Budget by Category Adjusted for Inflation and Population Growth........... 29 Table S–7. Bridge from Budget Enforcement Act Baseline to Baseline Projection of Current Policy............................................................................................................ 31 Table S–8. Change in the Baseline Projection of Current Policy from Budget to MSR............... 32 Table S–9. Mandatory and Receipt Proposals................................................................................ 34 Table S–10. Funding Levels for Appropriated (“Discretionary”) Programs by Category............... 47 Table S–11. Funding Levels for Appropriated (“Discretionary”) Programs by Agency.................. 49 Table S–12. Outlays for Mandatory Programs Under Current Law............................................... 52 Table S–13. Market Valuation and Balance Sheet of Fannie Mae and Freddie Mac..................... 53 Table S–14. Federal Government Financing and Debt.................................................................... 54 iii SUMMARY The economy now is markedly different from what it was at the beginning of the President’s term, 18 months ago. In January of 2009, the economy was on the brink of a potentially severe depression, precipitated by an era of irresponsibility marked by excessive risk-taking in, lax oversight of, and an eventual meltdown in the country’s credit and capital markets. The result was a severe and rapid economic contraction, the collapse of the financial markets, and damaging and painful job losses. More than 750,000 jobs were lost just in the first month of 2009, 3.7 million were lost in the first half of that year, and 8.4 million were lost between the beginning of the recession, at the end of 2007, and the beginning of the recovery. At its start, then, the Administration faced a gap between what the economy could be producing and what it was producing: a difference of $1 trillion or approximately 7 percent of gross domestic product (GDP). In addition, the country faced historic budget deficits and an unsustainable fiscal trajectory. No longer was the Nation expecting to enjoy the surpluses projected at the beginning of the last decade. Instead, upon taking office, the President was presented with a budget deficit for 2009 estimated to be $1.3 trillion, or 9.2 percent of GDP. The previous Administration’s decisions not to pay for three large domestic initiatives (the tax cuts of 2001 and 2003 and the Medicare prescription drug benefit of 2003), along with the effects of the economic collapse and the steps needed to combat it, produced an historically large ten-year deficit of more than $8 trillion. Even this large amount did not account for the depth or duration of the recession, and the ten-year deficit projections grew by an additional $2 trillion as the severity of the downturn became fully apparent. The Administration moved swiftly to prevent the economy from falling into a second Great Depression. To stimulate demand and jumpstart economic growth, the President signed into law the American Recovery and Reinvestment Act of 2009. The Recovery Act provided tax cuts to small businesses and 95 percent of working families and helped to lay a new foundation for long-term economic growth and prosperity with investments in health care, education, infrastructure, and clean energy. The Recovery Act has had a demonstrable and significant effect on the economy, raising real GDP as of the second quarter of 2010 by an estimated 2.7 to 3.2 percent relative to what it otherwise would have been, and increasing employment by an estimated 2.5 to 3.6 million. The Nation’s economy has grown for three consecutive quarters and created nearly 600,000 private sector jobs in the first half of this year—a stark contrast to the 3.7 million lost over the first half of last year. In fact, after 22 straight months of job loss, the economy has created jobs in the private sector for six months in a row. In addition, other economic indicators are showing signs of improvement. Industrial production (which primarily reflects manufacturing), real disposable income, shipments of capital goods, and U.S. exports have all improved. Despite these hopeful signs, the economy is still struggling; too many Americans are still out of work; and the Nation’s long-term fiscal trajectory is unsustainable, threatening future prosperity. Building on the steps the Administration and the Congress have already taken, the Administration’s proposals, reflected in the Mid-Session Review (MSR), seek to speed the recovery, keep the economy growing, and put the country on more sound fiscal footing. Sparking Job Creation and Economic Growth In order to provide relief and augment the positive effects of the Recovery Act, the 2011 Budget proposed specific recovery measures as well as an allowance for additional recovery efforts. Since the release of the Budget in February, the Administration has worked with the Congress to enact a number of these measures. On March 18, the President signed into law the Hiring Incentives to Restore Employment (HIRE) Act. This Act eliminates the employer’s share of payroll taxes for the remainder of this calendar year for those businesses that hire workers who have been 1 2 unemployed or underemployed for at least two months, provides a credit to those businesses that retain new workers for at least one year, allows small businesses to depreciate immediately the full cost of equipment purchases made this calendar year, allows municipal governments to acquire the needed financing for schools and clean energy projects through Build America Bonds, and provides resources for investments in transportation infrastructure. In addition, the President signed into law the Temporary Extension Act of 2010 on March 2 and the Continuing Extension Act of 2010 on April 15, which, among other things, extended unemployment insurance (UI) benefits and COBRA health insurance premium assistance. To further help the recovery, the Administration is also working with the Congress to quickly pass legislation that will maintain extended UI benefits for those individuals hardest hit by the economic downturn. As of early July, more than 2 million laid-off workers had lost their unemployment benefits due to a lack of Congressional action on a bill to continue unemployment insurance benefits for those experiencing extended episodes of unemployment. Extended unemployment insurance will do more than provide relief to those hardest hit by the recession; it will put money in the hands of those most likely to spend it, leading to increased consumption of goods and services, and subsequent business growth and hiring. That is why the Congressional Budget Office and other independent institutions have identified extended unemployment benefits as among the most effective short-term measures to support the economic recovery. To help states struggling to make ends meet, the Administration supports a sixmonth, $21.7 billion extension of the temporary increases in the Federal matching percentages for State Medicaid expenditures as well as $25 billion to prevent the firing of teachers, firefighters, and police officers along with accountability measures for those funds. To assist small businesses that are still having trouble accessing capital, which is critical to their growth and ability to hire, the Administration supports a $30 billion lending fund, a State Small Business Credit Initiative to bolster innovative State small business programs, and enhancements to Small Business Administration MID-SESSION REVIEW lending programs including higher loan limits. To encourage new investment, the Administration calls for the elimination of capital gains taxes on certain small business investments and the acceleration of the depreciation allowance for new investment for all businesses. To bolster the residential improvement industry and promote energy efficiency, the Administration urges passage of its Home Star program to provide $6 billion in direct rebates to consumers for home weatherization. And to help hard-working families through this difficult time as well as to stimulate the economy, the Administration proposes to extend the Making Work Pay tax credit for one year, which will benefit 95 percent of working families. In addition to the specific proposals to promote job growth detailed above, the MSR reflects an allowance for further jobs initiatives of $50 billion. The February Budget included an allowance of $100 billion. With the subsequent enactment of the HIRE Act, and the specification in the MSR of jobs initiatives that had not been previously specified in February, such as the $25 billion fund to prevent the firing of teachers, firefighters, and police officers, total support in the MSR for jobs initiatives remains at the level of the February Budget. The Administration believes that the remaining $50 billion allowance will provide flexibility to support additional job growth. Restoring Fiscal Responsibility In the short term, the Administration is working to speed up the recovery and keep the economy growing. Looking to the medium and long term as the economy recovers, the Administration is taking steps to strengthen the Government’s fiscal outlook and restore fiscal responsibility to Washington. The 2011 Budget contained more than $1 trillion in deficit reduction over ten years, including a three-year freeze on non-security discretionary spending; an end to subsidies for oil, gas, and coal companies and other tax loopholes; and the expiration of the 2001 and 2003 tax cuts for those making more than $250,000 a year. The Administration also proposed in the Budget to terminate or reduce 126 programs, generating $23 billion in savings in 2011 alone. Augmenting these proposed efficiencies, the Administration has moved aggressively to SUMMARY curtail the $110 billion in improper payments made by the Federal Government each year, save $40 billion through contracting reform by 2012, improve how funds are spent on information technology projects and terminate those that have little prospect for success, and begin to dispose of unneeded Federal real property. Since the release of the Budget in February, the President also has moved to improve the budget process, restoring responsibility and empowering policymakers with the tools to help reduce unnecessary or wasteful spending. On February 12, 2010, the President signed the Statutory Pay-As-You-Go Act, which sets in law the simple proposition that Congress should pay for what it spends. Specifically, it requires that enacted legislation that increases mandatory spending or reduces tax revenues be offset by other legislation that either reduces mandatory spending or increases governmental receipts. This law restores the “pay-as-you-go” requirement that was in place during the 1990s and contributed toward creating the surpluses of that era. On May 24, 2010, the Administration submitted to the Congress the Reduce Unnecessary Spending Act of 2010 to establish a new tool to reduce unnecessary or wasteful spending. Under this new expedited procedure, the President could submit to the Congress a package of rescissions shortly after a spending law is enacted. The Congress would be required to consider these recommendations as a package, without amendment, and with a guaranteed up-or-down vote within a specified timeframe. This new expedited rescission authority would empower the President and the Congress to eliminate unnecessary spending while discouraging waste in the first place. It would be particularly effective in reining in programs that are heavily earmarked or not merit-based as well as those that are clearly wasteful and duplicative. The Administration is also demanding responsibility from the financial sector. As a result of improved financial conditions and careful stewardship, the expected cost of the Troubled Asset Relief Program (TARP) continues to fall. In August 2009, the Administration projected that TARP—which permitted up to $700 billion in Government financial assistance to be outstanding at any given time—would ultimately cost a total of $341 3 billion; today, that cost is over $225 billion lower. While the Administration is pleased that the cost of the TARP program is much less than first estimated, shared responsibility requires that the financial firms pay back the taxpayer for the extraordinary action taken to prevent a deeper financial crisis. When the Congress wrote the legislation authorizing TARP in the fall of 2008, it required that the President propose a way for the financial sector to pay back taxpayers so that not one penny of TARP-related debt is passed on to the next generation of Americans. That is why the President has proposed a Financial Crisis Responsibility Fee on the largest financial firms. The proposed fee would remain in place for at least ten years and is estimated to raise $90 billion over that time. The most recent step toward financial sector reform is enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This law will restrict risky financial activities, hold financial firms accountable for the risks they take, and protect consumers from abusive credit practices. Because this law was enacted so recently, it is not reflected in the MSR’s outlay and receipt estimates; however, the Congressional Budget Office estimates the law to provide $3.2 billion in savings over the ten-year budget window. Finally, since the biggest driver of deficits in the long-term is the rising cost of health care, the most important step taken to contribute to the long-term fiscal sustainability of the Nation has been the enactment of the Patient Protection and Affordable Care Act on March 23, as amended by the Health Care and Education Reconciliation Act of 2010 on March 30, and collectively referred to as the Affordable Care Act. The Affordable Care Act provides middle-class tax credits for health care and reduces health insurance premiums for comparable coverage for both families and small businesses. It also establishes health insurance exchanges to provide health insurance options to Americans that are the same as the options given to Members of Congress, and it ends discrimination against those Americans who have pre-existing health conditions. In addition, the Affordable Care Act helps to prevent excessive premium increases and improper denials of coverage, and prohibits arbitrary rescissions of policies and annual and lifetime benefit limits. 4 MID-SESSION REVIEW From a fiscal standpoint, the Affordable Care Act will—according to the Congressional Budget Office—reduce the deficit by more than $100 billion over the next ten years and more than $1 trillion over the subsequent ten years. Moreover, it puts in place important mechanisms to both improve quality and reduce cost, such as the Independent Payment Advisory Board, the excise tax on expensive health care plans, and reforms that seek to transform the health care system into one that pays for the quality rather than the quantity of treatments. The Affordable Care Act includes the most auspicious set of changes ever enacted to reduce the rate of health care cost growth over the long term, which is critical to the fiscal health of the country. Recent Congressional Budget Office long-term projections indicate that full implementation of the Affordable Care Act would reduce the long-term fiscal gap by between 2 and 3 percent of GDP. The Administration is working both expeditiously and carefully to implement the Affordable Care Act. the Commission’s recommendations will be annual deficits that are approximately equal to 3 percent of GDP. Deficits of this size will stabilize the ratio of debt to GDP. Most economists consider this to be necessary for fiscal sustainability as debt and interest payments rise only as much as economic growth, rather than rising as a share of output and the budget over time. Stabilizing the debt-to-GDP ratio also will allow the United States to fulfill the commitment it made to the G-20 Nations in Toronto in June regarding sovereign debt. Even with the deficit reduction measures that this Administration has enacted and proposed, the Nation remains on an unsustainable fiscal course. In the medium term, the economic recovery and the Administration’s policies will reduce the deficit from 10 percent of GDP today to 4 percent by the middle of the decade. This is the largest and fastest deficit reduction to occur since World War II, but the deficit would still remain undesirably high. And while, over the long term, the Affordable Care Act will help significantly to reduce deficits, health care costs are still expected to continue to consume a growing share of the Federal budget for decades to come. In addition, the aging of the population will add to the fiscal pressure the Government already faces because of the irresponsibility of the past and the fiscal pressure it will continue to face in coming decades. Receipts for 2010 are now projected to be $33 billion lower than projected in February for a total of $2.132 trillion, or 14.5 percent of GDP. For 2011, receipts are now projected to be $141 billion lower than projected in February for a total of $2.426 trillion, or 15.8 percent of GDP. Two-thirds of the reduction in receipts for 2011 result from technical reestimates, which reflect actual tax collections so far in 2010, tax model revisions, and updated taxable wage base data from employer tax returns. The next most significant factor in the downward reestimate of 2011 receipts is the reestimate of Administration policy proposals contained in the MSR. This results largely from the assumption of later enactment of a number of tax relief measures—such as accelerated depreciation for new business investment—than assumed in the Budget, which shifts revenue loss from 2010 to 2011. Because of the unsustainable nature of the Government’s medium- and long-term fiscal outlook and the importance of bringing all sides in Washington together to tackle this serious problem, the President established the bipartisan National Commission on Fiscal Responsibility and Reform. The Commission will make recommendations to balance the Government’s annual program spending with receipts by 2015, achieving what is known as “primary balance.” The result of MID-SESSION UPDATE The Mid-Session Review updates estimates of Federal receipts, outlays, and the deficit to reflect legislation enacted through July 2, 2010, including action on the President’s Budget proposals, and policy, economic, and technical changes that have occurred since the Budget was released. Receipts Just as receipts for the current and budget years are now projected to be somewhat lower than projected in the Budget, receipts for 2012 through 2017 are also projected to be lower. This downward reestimate is generally shrinking over time and ranges from a reduction of $112 billion in 2012 to $11 billion in 2017. For 2018 through 2020, receipts are projected to be slightly higher than projected SUMMARY in the Budget. Overall, total receipts are projected to be $391 billion lower for the 2011 to 2015 budget horizon and $402 billion lower for the 2011 to 2020 budget horizon. Outlays Outlays for 2010 are now projected to be $118 billion lower than projected in February for a total of $3.603 trillion, or 24.6 percent of GDP. The reduction is due in large part to lower outlay estimates for unemployment and deposit insurance, and non-defense discretionary programs. Outlays for 2011 are now projected to be $3.842 trillion, essentially unchanged from the Budget projection, or 25.1 percent of GDP. Starting in 2012 and continuing through the budget horizon, outlays are projected to be slightly lower than projected in February, with the reductions through 2015 resulting primarily from reductions in interest payments and the reductions after 2015 resulting primarily from lower entitlement program spending, including Medicare spending. The size of the downward reestimate in outlays fluctuates over the outyears, with the reduction ranging from $22 billion to $87 billion. Deficits Because of the lower outlays now projected for 2010, the deficit for 2010 is expected to be $1.471 trillion, $84 billion lower than projected in February. The 2010 deficit is projected to be 10.0 percent of GDP, which is 0.6 percentage points lower than projected in February and about the same as the 2009 level. For 2011, the deficit is projected to decline from the 2010 level to $1.416 trillion, or 9.2 percent of GDP, $150 billion higher than projected in February. This reestimate is primarily because of the reduction in projected receipts. For 2012, the deficit is also projected to be slightly higher than projected in 5 February, equal to 5.6 percent of GDP, again because of the reduction in projected receipts. Beginning in 2013, the deficit projections are not significantly different from the February projections, with the deficits ranging from 3.4 to 4.3 percent of GDP for the remaining years. The deficit projections show that the budget is still on track to meet the President’s goal of cutting the deficit, as a percent of GDP, in half by the end of his first term. The deficit the President inherited on January 20, 2009, was equal to 9.2 percent of GDP and the deficit for 2013 is projected to be equal to 4.3 percent of GDP. In addition, the budget is on track to fulfill the United States’ commitment at the G-20 Toronto Summit in June, which was to cut the current deficit (10.0 percent of GDP for 2010) in half by 2013. These MSR deficit projections do not take into account the additional deficit reduction tasked to the Fiscal Commission. Debt held by the public, which can be viewed as the sum of all prior deficits, is projected to be $9.2 trillion at the end of 2010, or 62.7 percent of GDP. Some Government debt that is held by the public was issued to acquire financial assets as part of TARP. Debt held by the public net of these and other financial assets is projected to be $8.1 trillion, or 55.1 percent of GDP, at the end of 2010. For 2011, debt held by the public is projected to rise to $10.6 trillion, or 68.9 percent of GDP, and to continue increasing throughout the ten-year budget horizon to a projected 77.4 percent of GDP in 2020. Similarly, debt net of financial assets is projected to increase to 61.9 percent of GDP in 2011 and to increase gradually each year thereafter to 69.2 percent of GDP in 2020. As noted above for deficit projections, these debt projections do not take into account the additional deficit reduction tasked to the Fiscal Commission. 6 MID-SESSION REVIEW Table 1. CHANGE IN DEFICITS FROM THE FEBRUARY BUDGET (In billions of dollars) 20112010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20112015 2020 February Budget deficit �������������������������������������������� 1,556 1,267 828 727 706 752 778 778 785 908 1,003 Percent of GDP ������������������������������������������������������ 10.6% 8.3% 5.1% 4.2% 3.9% 3.9% 3.9% 3.7% 3.6% 3.9% 4.2% Enacted legislation and policy changes: Affordable Care Act ��������������������������������������� Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act �������� Student Aid and Fiscal Responsibility Act ��� Other legislation and policy changes ����������� Debt service ���������������������������������������������������� 2 26 23 –5 –17 –2 –3 3 –* –4 –8 Subtotal, policy changes ��������������������������������������� 1 –2 –6 –* –5 –* 1 20 * 48 –6 6 –3 1 22 –7 –4 –6 2 –21 –8 –5 –22 1 –51 –8 –5 –1 –1 –17 –9 –6 15 –1 –4 –10 –6 –1 –1 –15 –10 –7 2 –2 –18 –11 –9 –2 –3 –30 –12 –12 8 –5 –28 –29 –82 –7 –46 –11 11 3 –10 –19 –114 Economic and technical reestimates: Receipts ���������������������������������������������������������� Discretionary programs ��������������������������������� 38 –30 124 17 99 11 72 6 32 2 22 1 14 3 5 5 –11 2 –22 2 –33 2 349 37 302 51 –4 –34 –9 –1 –18 –1 –3 –17 10 –11 11 –* 4 –9 1 –7 14 –1 2 –7 2 –5 3 * –8 –7 2 12 –1 1 –4 –6 3 8 –6 2 –17 –6 3 –1 –11 2 –13 –5 3 –5 –16 2 –7 –4 3 –4 21 2 –16 –3 4 –4 3 2 –13 –2 4 –4 * 2 –9 –46 18 –3 21 2 –75 –66 37 –21 18 13 * –10 –8 * –3 5 1 * –4 1 2 6 * 2 39 –1 2 24 –3 2 6 –4 1 –10 –3 –1 –* * ......... ......... –15 –19 –28 1 4 69 –11 7 4 Subtotal, economic and technical reestimates ����� –83 –3 –1 –79 –8 –30 –1 102 1 –49 –* 61 5 –53 –* 30 40 –31 –* 43 21 –16 –* 27 Total, changes ������������������������������������������������������������ –84 150 83 9 –8 10 Mandatory programs: Medicare ����������������������������������������������������� Unemployment compensation ������������������� Veterans Compensation and Pension �������� Medicaid ����������������������������������������������������� Deposit insurance ��������������������������������������� Social Security �������������������������������������������� Supplemental Nutrition Assistance Program �������������������������������������������������� Troubled Asset Relief Program ������������������ Other ����������������������������������������������������������� Subtotal, mandatory programs ��������������� Net interest 1 �������������������������������������������������� Allowance for future disaster costs ��������������� 13 –25 –47 –6 –34 –40 58 –94 –9 –5 –2 –2 –4 –179 –202 –* ......... ......... ......... ......... –2 –2 –16 –42 –17 –56 –75 262 56 –20 –57 –36 –86 –103 Mid-Session Review deficit ��������������������������������������� 1,471 1,416 911 736 698 762 758 721 749 822 900 Percent of GDP ������������������������������������������������������ 10.0% 9.2% 5.6% 4.3% 3.8% 4.0% 3.8% 3.4% 3.4% 3.6% 3.8% Note: positive figures represent higher outlays or lower receipts. * $500 million or less. 1 Includes debt service on all reestimates. 25 243 –58 ECONOMIC ASSUMPTIONS This Mid-Session Review (MSR) updates the economic forecast from the 2011 Budget. The Budget forecast, completed last November and released with the Budget in early February, projected that the increase in output that began in the second half of 2009 would continue during 2010 and 2011 and that unemployment would fall gradually from its elevated levels. Output growth had just begun to appear in the economic data at the time of the previous forecast, but it is now well established. Industrial production, retail sales, and shipments and orders for capital goods are all substantially higher than they were in the worst months of 2009. There have been three consecutive quarters of positive real GDP growth since 2009:Q2, and real GDP almost certainly continued to increase in 2010:Q2. While the economy has begun adding jobs—with private sector employment increasing in each of the past six months— labor market recovery is occurring only gradually. Unemployment has fallen 0.6 percentage points from its peak in October 2009, but remains above 9 percent. While the 147,000 jobs per month that have been added on average over the past six months is a major improvement from the job losses of 750,000 per month the economy was experiencing in early 2009, it will take many months of job growth to offset the 8.4 million jobs that were lost between December 2007 and December 2009. Two policy initiatives are driving this resumption of economic growth and job creation. The Recovery Act provides stimulus in the form of tax reductions, support for State and local government budgets, and increases in Federal spending, all serving to mitigate the severity of the downturn. The Council of Economic Advisers estimates that the Recovery Act has raised real GDP, as of the second quarter of 2010, by between 2.7 and 3.2 percent and employment by between 2.5 and 3.6 million compared with what would have happened in the absence of the recovery measures. These estimates are similar to those of the Congressional Budget Office and other analysts. Also, aggressive actions by the Federal Reserve and the Department of the Treasury have stabilized financial markets while helping to unlock household and business access to credit. The economy has responded to these policy actions. Real GDP, for instance, has expanded at an annual rate of 3.5 percent over the most recent three quarters, and real consumer spending and business fixed investment are both expanding again. So far in 2010, payroll employment in the private sector has increased by 593,000 jobs. Total payroll employment has increased more, but some of this represents hiring for the 2010 Census, which has already begun to unwind. Another indicator of labor market repair is the 2.9 percent annual rate of growth in hours worked since December 2009. Business spending on equipment and software has risen at a 10.4 percent annual rate since the second quarter of 2009, as businesses have responded to the improved sales outlook. Moreover, sales of motor vehicles, after plunging in 2008 and 2009, are up 21 percent from a low in February 2009—and auto companies are making profits once again. Despite these positive developments, the U.S. economy still faces strong headwinds. First, financial market uncertainty has hampered credit creation since 2007. Spreads between private debt, such as commercial paper, and Treasury securities have returned to pre-crisis levels, but commercial banks and other private lenders have tightened credit standards and many credit-worthy borrowers still have difficulty finding credit. Still, after declining in every month since October 2008, commercial and industrial loans at the Nation’s banks increased in June. Second, although the housing market is showing signs of stabilizing, there is a large overhang of unsold property, which is holding back new construction. At current sales rates, the existing supply of new homes would last for 8.5 months, well above the long-run average supply. The median wait to sell a new home is 14.2 months, near the all-time peak. 7 8 Third, most State governments face balanced budget requirements, and the economic downturn has forced fiscal consolidations that have reduced aggregate demand and slowed growth. The Recovery Act has helped ease State fiscal adjustments, and the Administration has proposed additional measures to help ease State budget shortfalls and prevent the firing of employees such as teachers, firefighters, and police officers. However, even with this fiscal support, further consolidation is likely. Finally, several European countries have encountered difficulty in recent months in obtaining credit, and financial markets around the world have responded negatively to these developments. The European Union has acted forcefully, however, to confront these issues, establishing a $1 trillion financial rescue package that may be drawn upon by threatened eurozone nations, and the affected governments have acted to restrain their projected budget deficits. Even with these actions, the European recovery is at risk because of increased uncertainty while government stimulus is withdrawn, and a further slowdown in Europe would pose problems for the rest of the world whose exports to Europe may be reduced. Despite these headwinds, the Administration expects economic growth and job creation to continue for the rest of 2010 and to rise in 2011 and beyond. As the economy expands, the unemployment rate is expected to fall gradually to more normal levels, but the collapse of the housing bubble and the subsequent financial crisis have taken a significant toll on the economy, and many of the after-effects are likely to be felt for years to come. Beyond 2016, the Administration’s forecast is based on the long-run trends expected for real GDP growth, price inflation, and interest rates. Projected real GDP growth in the long run is below the historical average for the United States because of an expected slowdown in the growth of the labor force as the population ages. Long-run economic growth is expected to average 2.5 percent, which is unchanged from the February Budget forecast. ECONOMIC PROJECTIONS The revised MSR economic projections are based on information available through early June 2010. They are summarized in Table 2. MID-SESSION REVIEW Real Gross Domestic Product (GDP) and the Unemployment Rate: Real GDP is expected to rise by 3.1 percent during the four quarters of 2010 and to increase 4.0 percent in 2011. The growth rate is projected to rise to 4.3 percent in 2012 and 4.2 percent in 2013 as the economy returns closer to its potential output level. Beyond 2013, real GDP growth is projected to moderate, declining gradually to 2.5 percent per year in 2018-2020. The unemployment rate is projected to average 9.7 percent in 2010. This is the average level of unemployment that has prevailed during the first six months of the year. Despite the growth in output, unemployment is projected to decline slowly because, as labor market conditions improve, discouraged workers rejoin the labor force, adding temporarily to unemployment, while part-time workers increase their hours of work. With continued healthy growth in 2011 and beyond, the unemployment rate is projected to fall, but it is not projected to fall below 6.0 percent until 2015. The increase in unemployment was unusually steep in this cycle, exceeding what might have been expected based on the decline in real GDP. Conceivably, the outsized rise in unemployment might be followed by an equally rapid decline, but that is not assumed in these projections. Rather, they reflect the close relationship that has prevailed historically between changes in real GDP and unemployment. Inflation: Inflation peaked in 2008 mainly because of a sharp rise in world oil prices, and it has declined since then. Core inflation, excluding food and energy prices, has also declined but much less dramatically than the top-line measure. Core inflation was 2.4 percent between June 2007 and June 2008; it was 1.7 percent over the following 12 months; and from June 2009 through June 2010 it was only 0.9 percent. This is the lowest rate of core inflation since 1963. Core inflation is expected to edge up in coming years as the economy recovers and unemployment declines. In the long run, the CPI inflation rate is projected to be 2.1 percent per year. The other main measure of inflation is the price index for GDP. Year-over-year inflation by this measure is projected to be 0.7 percent in 2010, 1.0 percent in 2011, 1.5 percent in 2012, and ultimately 1.8 percent in 2016-2020. 9 ECONOMIC ASSUMPTIONS Table 2. ECONOMIC ASSUMPTIONS 1 (Calendar years; dollar amounts in billions) Actual 2008 Projections 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Gross Domestic Product (GDP): Levels, dollar amounts in billions: Current dollars ������������������� 14,441 14,256 14,817 15,516 16,412 17,383 18,384 19,369 20,337 21,281 22,204 23,166 24,167 Constant (2005) dollars ������ 13,312 12,987 13,406 13,894 14,474 15,084 15,690 16,248 16,765 17,227 17,659 18,095 18,543 Price index (2005 = 100) ����� 108.5 109.7 110.5 111.6 113.4 115.2 117.1 119.2 121.3 123.5 125.7 128.0 130.3 Percent change, Q4/Q4: Current dollars ������������������� Constant (2005) dollars ������ Price index (2005 = 100) ����� 0.1 –1.9 1.9 0.7 0.1 0.7 4.0 3.1 0.8 5.3 4.0 1.3 6.0 4.3 1.6 5.9 4.2 1.6 5.7 3.9 1.7 5.2 3.4 1.7 4.9 3.1 1.8 4.4 2.6 1.8 4.3 2.5 1.8 4.3 2.5 1.8 4.3 2.5 1.8 Percent change, year over year: Current dollars ������������������� Constant (2005) dollars ������ Price index (2005 = 100) ����� 2.6 0.4 2.1 –1.3 –2.4 1.2 3.9 3.2 0.7 4.7 3.6 1.0 5.8 4.2 1.5 5.9 4.2 1.6 5.8 4.0 1.7 5.4 3.6 1.7 5.0 3.2 1.8 4.6 2.8 1.8 4.3 2.5 1.8 4.3 2.5 1.8 4.3 2.5 1.8 1,428 7,783 6,277 3,102 1,821 7,948 6,398 3,209 1,893 8,395 6,755 3,325 1,902 8,927 7,191 3,563 1,875 1,928 2,003 2,046 2,056 2,049 1,993 2,049 9,506 10,103 10,695 11,282 11,855 12,426 13,028 13,617 7,685 8,194 8,684 9,158 9,630 10,087 10,580 11,058 3,794 4,026 4,210 4,408 4,604 4,790 4,996 5,225 214.5 1.5 –0.3 218.1 1.0 1.6 220.9 1.6 1.3 225.0 1.9 1.8 229.3 1.9 1.9 233.8 2.0 2.0 238.6 2.0 2.0 243.5 2.1 2.1 248.7 2.1 2.1 253.9 2.1 2.1 259.3 2.1 2.1 264.7 2.1 2.1 10.0 9.3 9.6 9.7 8.7 9.0 7.7 8.1 6.8 7.1 6.0 6.3 5.5 5.7 5.2 5.3 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 3.5 3.5 3.9 3.9 3.4 2.0 1.4 1.4 NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA 91-day Treasury bills 6 ���������������� 1.4 0.2 0.2 0.7 1.9 3.3 4.1 4.1 4.1 4.1 4.1 4.1 4.1 10-year Treasury notes �������������� 3.7 3.3 3.5 4.0 4.6 5.0 5.3 5.3 5.3 5.3 5.3 5.3 5.3 Incomes, billions of current dollars: Corporate profits before tax ������� Employee compensation ������������ Wages and salaries ��������������������� Other taxable income 2 ��������������� 1,463 8,037 6,546 3,311 Consumer Price Index (all urban): 3 Level (1982–84 = 100) ���������������� Percent change, Q4/Q4 ��������������� Percent change, year/year ���������� 215.2 1.6 3.8 Unemployment rate, civilian, percent: Fourth quarter level ������������������� Annual average �������������������������� 6.9 5.8 Federal pay raises, January, percent: Military 4 ������������������������������������� Civilian 5 �������������������������������������� Interest rates, percent: NA = Not Available; Q4/Q4 = fourth quarter over fourth quarter 1 Based on information available as of early June 2010. 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 2011 have not yet been determined. 5 Overall average increase, including locality pay adjustments. Percentages to be proposed for years after 2011 have not yet been determined. 6 Average rate, secondary market (bank discount basis). 10 MID-SESSION REVIEW Interest Rates: The projections for interest rates are based on financial market data and market expectations at the time that the forecast was developed. The three-month Treasury bill rate is expected to average only 0.2 percent in 2010 but to begin rising in 2011 and reach 4.1 percent by 2014. The yield on the ten-year Treasury note is projected to average 3.5 percent in 2010 and to rise to 5.3 percent by 2014. In the later years of the forecast, projected real interest rates are close to their historical averages in real terms, given the projected rate of inflation. Incomes and Income Shares: Corporate profits have rebounded more quickly than labor compensation (which consists of wages and salaries and employee fringe benefits such as employer-provided insurance and pensions). As a result, corporate profits have risen as a share of the economy over the past five quarters, while labor compensation as a share of the economy has fallen below its long-run average. As the economy continues to recover, this trend is expected to reverse. Labor compensation is projected to rise somewhat relative to the size of the economy, while the share of corporate profits is projected to fall somewhat. The wage share, excluding fringe benefits, is also expected to recover from its recent low level, in step with the increase in compensation. FORECAST COMPARISONS A comparison with the Blue Chip and Federal Open Market Committee (FOMC) forecasts is shown below in Table 3. For 2010, the projected rate of real GDP growth is similar to that of the June Blue Chip Consensus (an average of about 50 privatesector forecasts). The MSR forecast for 2010 is in the lower half of the forecast range from the most recent public FOMC forecast. The most recent CBO forecast, which dates to last December, was somewhat lower. In 2011, real GDP growth (fourth quarter over fourth quarter) is expected to be 4.0 percent, which is within the FOMC range of 3.5 to 4.2 percent, but is somewhat stronger than the Blue Chip consensus. CBO is required to assume that all of the 2001 and 2003 tax cuts expire as scheduled in 2011, and, under this assumption, projects significantly lower growth than other forecasters for 2011. CBO explained in its Budget and Economic Outlook: Fiscal Years 2010 to 2020 that, absent this required assumption, its forecast would have been similar to that of other forecasters. The Administration projects that unemployment will average 9.7 percent in 2010, 9.0 percent in 2011, and 8.1 percent in 2012. The Blue Chip consensus is quite similar: 9.6 percent in 2010 and 9.0 percent in 2011. The FOMC projects that unemployment will fall more quickly. By the fourth quarter of 2012, the FOMC forecast range extends from 7.1 percent to 7.5 percent, whereas the Administration forecast for that quarter is 7.7 percent. Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS (Calendar years; dollar amounts in billions) Nominal GDP: MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� Blue Chip ����������������������������������������������� 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 14,256 14,252 14,253 14,256 14,817 14,768 14,706 14,839 15,516 15,514 15,116 15,256 16,412 17,383 18,384 19,369 20,337 21,281 22,204 23,166 24,167 16,444 17,433 18,446 19,433 20,408 21,373 22,329 23,312 24,323 15,969 16,918 17,816 18,622 19,425 20,231 21,033 21,882 22,770 Percent change, year over year Real GDP: MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� Blue Chip ����������������������������������������������� –2.4 –2.5 –2.5 –2.4 3.2 2.7 2.2 3.3 3.6 3.8 1.9 3.1 4.2 4.3 4.5 4.2 4.2 4.8 4.0 4.0 3.9 3.6 3.6 2.9 3.2 3.2 2.5 2.8 2.8 2.3 2.5 2.6 2.2 2.5 2.5 2.2 2.5 2.5 2.3 11 ECONOMIC ASSUMPTIONS Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS—Continued (Calendar years; dollar amounts in billions) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Percent change, fourth quarter over fourth quarter Real GDP: MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� FOMC ���������������������������������������������������� Blue Chip ����������������������������������������������� 0.1 –0.5 –0.4 0.1 0.1 3.1 3.0 2.1 3.0–3.5 3.1 4.0 4.3 2.4 3.5–4.2 3.1 4.3 4.3 5.1 3.5–4.5 4.2 4.2 4.7 3.9 3.4 3.1 2.6 2.5 3.9 3.4 3.1 2.7 2.6 3.4 2.7 2.5 2.2 2.3 Longer Run Average: 2.5–2.8 2.5 2.5 2.2 2.5 2.5 2.3 Percent change, year over year GDP Price Index: MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� Blue Chip ����������������������������������������������� 1.2 1.2 1.2 1.2 0.7 0.9 0.9 0.9 1.0 1.2 0.9 1.5 1.5 1.6 1.0 1.6 1.7 1.1 1.7 1.7 1.3 1.7 1.7 1.6 1.8 1.8 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Consumer Price Index (CPI-U): MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� Blue Chip ����������������������������������������������� –0.3 –0.3 –0.2 –0.3 1.6 1.9 2.4 1.8 1.3 1.5 1.3 1.7 1.8 1.9 1.2 1.9 2.0 1.1 2.0 2.0 1.3 2.0 2.0 1.7 2.1 2.1 1.9 2.1 2.1 2.0 2.1 2.1 2.0 2.1 2.1 2.0 2.1 2.1 2.0 Annual average in percent Unemployment Rate: MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� FOMC 1 ��������������������������������������������������� Blue Chip ����������������������������������������������� 9.3 9.3 9.3 10.0 9.3 9.7 10.0 10.1 9.2–9.5 9.6 9.0 9.2 9.5 8.3–8.7 9.0 8.1 8.2 8.0 7.1–7.5 7.1 7.3 6.3 6.3 5.7 5.3 5.2 5.2 6.5 5.9 5.5 5.3 5.2 5.3 5.1 5.0 5.0 5.0 Longer Run Average: 5.0–5.3 5.2 5.2 5.0 5.2 5.2 5.0 91-Day Treasury Bills: MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� Blue Chip ����������������������������������������������� 0.2 0.2 0.1 0.2 0.2 0.4 0.2 0.3 0.7 1.6 0.7 1.4 1.9 3.0 1.9 3.3 4.0 3.0 4.1 4.1 3.9 4.1 4.1 4.2 4.1 4.1 4.4 4.1 4.1 4.7 4.1 4.1 4.8 4.1 4.1 4.8 4.1 4.1 4.8 10-Year Treasury Notes: MSR ������������������������������������������������������� Budget ��������������������������������������������������� CBO ������������������������������������������������������� Blue Chip ����������������������������������������������� 3.3 3.3 3.2 3.3 3.5 3.9 3.6 3.7 4.0 4.5 3.9 4.4 4.6 5.0 4.2 5.0 5.3 4.5 5.3 5.3 4.9 5.3 5.3 5.2 5.3 5.3 5.4 5.3 5.3 5.6 5.3 5.3 5.6 5.3 5.3 5.6 5.3 5.3 5.6 MSR = Mid-Session Review (forecast date June 2010). Budget = 2011 Budget (forecast date November 2009). CBO = Congressional Budget Office (forecast date December 2009). FOMC = Federal Reserve Open Market Committee (forecast central tendency, date June 2010). Blue Chip = June Blue Chip Consensus Forecast. Sources: Administration; CBO, The Budget and Economic Outlook: Fiscal Years 2010 to 2020, January 2010; FOMC, Minutes of the Federal Open Market Committee, June 22-23, 2010; Blue Chip Economic Indicators, June 2010, Aspen Publishers. 1 Fourth quarter levels of unemployment rate. RECEIPTS The Mid-Session Review estimates of receipts are below the February Budget estimates by $33 billion in 2010, $141 billion in 2011, and continue to be lower through 2017, ranging from a reduction of $112 billion in 2012 to $11 billion in 2017. These reductions are partially offset by higher estimates of receipts in 2018 through 2020, for a net reduction of $402 billion over the ten-year budget horizon (2011 through 2020). These changes in receipts are primarily due to the effect of economic and technical revisions, which account for $200 billion and $174 billion, respectively, of the net reduction in receipts over ten years. Policy changes reduce receipts by an additional $100 billion over the ten years. Revisions to Budget proposals attributable to economic and technical factors partially offset these net reductions in receipts, increasing receipts by $71 billion over the ten-year budget horizon. POLICY CHANGES Changes that have resulted from the enactment of legislation and revisions in the Administration’s proposals increase receipts by $5 billion in 2010 and reduce receipts in each subsequent year, for a net reduction in receipts of $100 billion over ten years. The February Budget included a placeholder for the effects of health reform legislation based on the bills that had been passed by the House and Senate at the time. Relative to that placeholder and several other Administration proposals, enactment of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (Affordable Care Act), reduces receipts by $2 billion in 2010, $19 billion in 2011, and $108 billion over the ten years, 2011 through 2020. (Note that the deficit effect of this reduction in receipts is almost entirely offset by the final legislation’s reduction in outlays relative to the placeholder in the Budget.) Other legislated changes in taxes and fees, which include the Hiring Incentives to Restore Employment Act, reduce receipts by a net $7 billion over the ten-year budget horizon relative to the Administration’s February Budget proposals. These net reductions in receipts attributable to legislated tax changes are partially offset by revisions in the Administration’s proposals, which increase receipts by $15 billion over the ten-year budget horizon. These revisions include reduction of the February Budget’s placeholder for further jobs initiatives to reflect the subsequent enactment or proposal of initiatives that had not been previously specified in February. ECONOMIC AND TECHNICAL REVISIONS IN PROPOSALS Revisions in the estimates of the Administration’s proposals that have not been enacted increase receipts by $43 billion in 2010, reduce receipts by $24 billion in 2011, and increase receipts by a net $71 billion over the ten years, 2011 through 2020. Of this, a reduction in the estimated cost of permanently extending alternative minimum tax relief, the 2001 and 2003 tax cuts, and estate and gift taxes at parameters in effect for calendar year 2009 increases receipts by $125 billion over ten years. The lower cost of extending these temporary tax provisions, which are reflected in the Administration’s baseline projection of current policy, is due in large part to reductions in the economic forecast for wages and salaries and other sources of taxable income. The reduction in the estimated cost of permanently extending these provisions is partially offset by a $54 billion reduction in the estimated net receipt gain from the Administration’s other proposals. A reduction in the estimated receipt gain from the Administration’s proposed tax increases on higher-income individuals, attributable in large part to reductions in taxable income, particularly capital gains and dividends, accounts for most of the $54 billion reduction in the estimated receipt gain from the Administration’s other proposals. ECONOMIC CHANGES Revisions in the economic forecast have the greatest effect on individual income taxes and social insurance and retirement receipts. Reductions in the economic forecast for wages and salaries and other sources of taxable personal income reduce individual income taxes by $7 billion in 2010, $8 billion in 2011, and 13 14 MID-SESSION REVIEW $138 billion over ten years. Social insurance and retirement receipts, which include Social Security and Medicare payroll taxes, unemployment insurance receipts, and railroad retirement and other retirement receipts, decline by $3 billion in 2010, $8 billion in 2011, and $134 billion over ten years. Wages and salaries and proprietor’s income are the tax base for Social Security and Medicare payroll taxes, the largest component of this source of receipts. Reductions in wages and salaries, which are based on additional income data, are responsible for the reductions in social insurance and retirement receipts in each year. These reductions are partially offset by increases in proprietor’s income. Reductions in deposits of earnings of the Federal Reserve System, attributable to lower interest rates, reduce receipts by an additional $7 billion over the ten-year budget horizon. These reductions in individual income taxes, social insurance and retirement receipts, and deposits of earnings of the Federal Reserve System are only partially offset by increases in corporation income taxes and other sources of re- ceipts. Changes in GDP and other economic measures that affect the profitability of corporations increase corporation income taxes by $11 billion in 2010, $7 billion in 2011 and $3 billion to $12 billion in each subsequent year, for an increase of $79 billion over ten years. ESTIMATING CHANGES Technical reestimates of receipts reduce collections by $83 billion in 2010, $92 billion in 2011, and a net $174 billion over the tenyear budget horizon. Technical reestimates of individual income taxes and social insurance and retirement receipts account for most of this reduction in receipts. The revisions in individual income taxes are in large part attributable to more recent collections data and revisions in the individual income tax model based primarily on updated tax data for prior years. More recent taxable wage data from employer returns accounts for most of the technical revisions in social insurance and retirement receipts. Table 4. CHANGE IN RECEIPTS (In billions of dollars) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 February Budget estimate ������������������������������� 2,165 2,567 2,926 3,188 3,455 3,634 3,887 4,094 4,299 4,507 4,710 20112015 20112020 15,771 37,268 Changes due to policy: Affordable Care Act �������������������������������������� Other enacted legislation ���������������������������� Changes in proposals ����������������������������������� Total changes due to policy ������������������ –2 –4 11 5 –19 –4 5 –18 –19 1 4 –14 –18 2 3 –14 –2 18 2 18 –15 * * –15 –4 –16 * –20 –7 * * –7 –7 –2 * –9 –8 2 * –6 –8 –9 * –17 –73 17 14 –41 –108 –7 15 –100 Changes due to economic and technical revisions in proposals ���������������������������������� 43 –24 –1 7 13 13 11 11 12 13 16 9 71 –7 11 –3 –8 7 –8 –13 3 –12 –14 6 –12 –14 7 –13 –12 11 –14 –14 12 –17 –15 11 –16 –18 10 –16 –15 7 –14 –14 5 –12 –61 33 –59 –138 79 –134 * 1 1 * –* –* –1 –* –1 –* –1 –* –1 * –1 * –1 * –1 * –1 * –2 –* –7 1 1 –7 –22 –22 –21 –17 –19 –21 –25 –24 –22 –89 –200 Changes due to technical reestimates ������������ –83 –92 –76 –57 –25 –19 –7 6 24 33 39 –269 –174 Total change in receipts ����������������������������������� –33 –141 –112 –86 –14 –37 –35 –11 2 16 16 –391 –402 Mid-Session Review estimate �������������������������� 2,132 2,426 2,814 3,102 3,441 3,597 3,853 4,083 4,301 4,523 4,725 15,380 36,865 Changes due to revised economic assumptions: Individual income taxes ������������������������������� Corporation income taxes ���������������������������� Social insurance and retirement receipts ��� Deposit of earnings, Federal Reserve System ������������������������������������������������������ Other ������������������������������������������������������������� Total changes due to revised economic assumptions �������������������������������������� * $500 million or less. EXPENDITURES Outlays for fiscal year 2010 are now estimated to be $3.603 trillion, a $118 billion decrease from the February Budget estimate, due largely to reduced spending for unemployment compensation and downward revisions in discretionary spending and net outlays for deposit insurance. Relative to the February Budget, total outlays have increased by $8 billion in 2011 and decreased by $461 billion over ten years. These changes are largely the effect of technical and economic revisions in estimates of major programs as well as enactment of major pieces of legislation since the February Budget release, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“Affordable Care Act”). POLICY CHANGES Changes that have resulted from the enactment of legislation and changes in policy since the release of the February Budget have a minimal effect on outlays in 2010, but increase spending by $30 billion in 2011. Yet over the ten-year period, 2011 through 2020, policy changes decrease outlays by $215 billion. The largest of these changes is the enactment of the Affordable Care Act. Health reform. The health reform provisions of the Affordable Care Act expand health insurance coverage through Medicaid and new market-based health insurance exchanges, make health care more affordable, and make numerous other changes in health programs. The February Budget included a placeholder for the effects of health reform legislation, based on the bills that had been passed by the House and Senate at the time. Relative to the February Budget placeholder, enacted health reform reduces outlays by $94 billion over the ten-year window, 2011 through 2020. Student Aid and Fiscal Responsibility Act (SAFRA). SAFRA, included as part of the Reconciliation Act, enacted the Administration’s proposal to eliminate subsidies under the bank-based guaranteed student loan program and originate all new loans under the more efficient Direct Loan Program. The Act also increased funding for Federal Pell Grants and made other changes to education programs. Relative to the education proposals in the February Budget, SAFRA reduces outlays by $46 billion over ten years, largely because SAFRA included more modest increases in the Pell Grant maximum award in future years. Other enacted legislation. Other legislation enacted since February included several temporary extensions of extended unemployment benefits, health subsidies for laid-off workers under COBRA, and relief from scheduled reductions in Medicare physician payments. These extensions were part of the February Budget proposals and therefore the enacted extensions had little effect relative to the outlay estimates in the Budget. The Medicare physician payment legislation enacted in June included a provision to clarify that payment for inpatient hospital care covers certain preadmission services, which reduced Medicare outlays relative to the February estimates. Changes in proposals. Revisions in the Administration’s budget proposals reduce outlays by $4 billion in 2010 and increase outlays by $7 billion over the next ten years. These revisions include new proposals to provide funding for States to prevent layoffs of teachers, firefighters, and police; create a Small Business Lending Fund and State Small Business Credit Initiative to promote access to capital by small businesses; and establish a home energy retrofit rebate program to jumpstart demand and improve energy efficiency. The revisions also include a reduction in the size of the February Budget’s placeholder for further jobs initiatives (from $100 billion to $50 billion, evenly divided between spending and receipts) to reflect the subsequent enactment or proposal of jobs initiatives—such as the new jobs measures described above—that had not been previously specified in the 2011 Budget. ESTIMATING CHANGES Estimating changes are due to factors other than enacted legislation or changes in policy, including changes in economic assumptions, 15 16 discussed earlier in this Review, and changes in technical factors. Relative to the Budget estimate, economic and technical changes decrease estimated outlays for 2010 by $118 billion and by $246 billion from 2011 through 2020. Discretionary appropriations. Outlays for discretionary appropriations fall by $30 billion in 2010 and increase by $51 billion over the next ten years relative to the Budget as a result of technical revisions. These changes re flect higher outlays in 2010 compared to the February Budget for the Department of Housing and Urban Development, with significantly lower spending in the Departments of Defense, Health and Human Services, Education, Energy, Transportation, and Homeland Security. In 2011, the Departments of Defense, Energy, Labor, and the Corps of Engineers show significantly higher outlays than projected in the Budget, while the Department of Health and Human Services is again lower than projected in the Budget due to technical revisions. Medicare. Estimating changes reduce outlays for Medicare by $75 billion over the next ten years, most notably in the later years of the period. Outlays for Medicare Parts A and B are expected to decrease, while those for Medicare Part D are expected to increase. Slower-thanprojected spending growth relative to the February Budget reduces outlays, but the reductions are partially offset by increases due to higher estimated Medicare enrollment. Unemployment compensation. Changes in economic and technical assumptions decrease outlays for unemployment benefits by $34 billion in 2010 and $17 billion in 2011. Over the ten-year period of 2011 through 2020, outlays are down by $66 billion. The reduction is driven by lower-than-expected Unemployment Insurance rates as well as reduced projections of total civilian unemployment over the next several years. Veterans Compensation and Pension. Outlays for Veterans’ Compensation and Pension benefits are $9 billion lower than the February estimates in 2010 but are higher than the February estimates in subsequent years. The reduction in 2010 is due to delays in enacting appropriations and implementing regulations necessary to pay retroactive claims related to Agent Orange exposure. The MID-SESSION REVIEW MSR assumes that these payments will begin later this fiscal year but the bulk of payments will outlay the following year, accounting for most of the $10 billion increase in outlays in 2011. Over the 11-year period 2010 through 2020, compensation and pension outlays rise by $27 billion due to increased caseload estimates, which are only partly offset by reduced outlays from expected lower cost of living adjustments (COLAs). Medicaid. Projected Federal outlays for Med icaid decrease by $21 billion over ten years from the February Budget estimates. The decreases stem primarily from slower projected spending growth in State estimates and actuarial models relative to the baseline estimates in the Budget and lower inflation. Deposit insurance. Deposit insurance outlays fall by $18 billion in 2010 relative to the February estimates, but rise by $18 billion over the following ten years. Much of the reduction in 2010 results from the increased use of loss sharing agreements by the Federal Deposit Insurance Corporation (FDIC) when resolving failed institutions. Loss sharing agreements result in lower upfront payments by the Deposit Insurance Fund (DIF), as partnering institutions take over the insolvent banks but reduce expected future receipts to the DIF from selling assets after bank failures. The revised MSR estimates also reflect an increased forecast of failed bank assets because of weaker conditions in the banking industry following the European debt crisis and a slower-than-expected recovery. National Credit Union Administration (NCUA) spending comprised $6 billion of the reduction in 2010 outlays due primarily to a timing shift from 2010 to 2011. Social Security. Estimating changes reduce outlays for Social Security by $1 billion in 2010 and increase outlays by $13 billion over the next ten years. Spending decreases due to lower COLAs are more than offset by increases in outlays due to recent program experience, lower projected mortality rates for persons ages 65 and older, and revised estimates of the effects of the recession on disability incidence. Supplemental Nutrition Assistance Program (SNAP). Outlays for SNAP, formerly called Food Stamps, decrease by $11 EXPENDITURES billion over the next ten years due to economic and tech nical factors. Technical changes include increased participation assumptions of 300,000 individuals in 2012 and 2013. This increased participation drives up SNAP program costs relative to the Budget. In the long term, however, participation is expected to fall to historical levels more rapidly than estimated in February due to the strengthening economy, which results in out-year participation estimates that are lower than in the Budget, decreasing program costs starting in 2015. Troubled Asset Relief Program (TARP). Relative to the February Budget, outlays for TARP are now expected to be $10 billion lower in 2010 due to technical revisions, and decrease $3 billion over the course of the 11-year period from 2010 to 2020. Outlays for the Home Affordable Modification Program (HAMP) are assumed to occur later than reflected in the 17 Budget, with lower outlays in 2010 and 2011, and higher outlays in 2012 and beyond, with total outlays unchanged. The $3 billion reduction in programs other than HAMP is primarily due to the Administration’s decision to remove a $3 billion placeholder in TARP that was assumed in the Budget for small business initiatives, as the Administration is instead seeking to create a Small Business Lending Fund and State Small Business Credit Initiative outside of TARP. Net interest. Excluding the debt service associated with policy changes, outlays for net interest are projected to decrease by $202 billion over ten years. These reductions are virtually all due to the effect of lower short- and longterm Treasury interest rates over the next few years of the revised MSR economic forecast, partially offset by increased debt service due to estimating changes in receipts and outlays. 18 MID-SESSION REVIEW Table 5. CHANGE IN OUTLAYS (In billions of dollars) 20112010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20112015 2020 February Budget estimate ��������������������������������� 3,721 3,834 3,755 3,915 4,161 4,386 4,665 4,872 5,084 5,415 5,713 Changes due to policy: Affordable Care Act ��������������������������������� ......... Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act����������������������������������������������� 1 Student Aid and Fiscal Responsibility Act �������������������������������������������������������� –2 Other legislation and policy changes ������ 1 Debt service ���������������������������������������������� –* Subtotal, policy changes �������������������������������� –* 7 4 –23 –19 –17 –8 –4 –8 –11 –16 –48 –94 –* –6 –7 –8 –8 –9 –10 –10 –11 –12 –29 –82 1 22 * 30 6 3 1 8 –4 –2 2 –35 –5 –2 1 –33 –5 –* –1 –31 –6 –* –1 –24 –6 –* –1 –22 –7 –* –2 –28 –9 –* –3 –36 –12 –* –5 –45 –7 –46 20 18 3 –10 –61 –215 –8 –22 –4 –34 –9 –1 –18 –1 4 13 –3 –17 10 –11 11 –* 3 8 4 –9 1 –7 14 –1 1 5 2 –7 2 –5 3 * * 2 –8 –7 2 12 –1 1 –* 1 –4 –6 3 8 –6 2 2 1 –17 –6 3 –1 –11 2 2 3 –13 –5 3 –5 –16 2 2 * –7 –4 3 –4 21 2 2 * –16 –3 4 –4 3 2 2 –* –13 –2 4 –4 * 2 7 29 –9 –46 18 –3 21 2 Subtotal, reestimates ������������������������������������� * –10 –8 –3 –118 * –3 4 –30 –22 1 * –4 –49 –37 1 2 6 –53 –42 * 2 38 –31 10 –1 2 24 –16 5 –3 2 6 –9 –31 –4 1 –10 –5 –47 –3 –1 –* 1 –11 * ......... ......... 4 7 –15 –19 –28 68 2 –2 –2 –4 –179 –202 –6 –34 –42 –87 –246 Total change in outlays �������������������������������������� –118 8 –29 –77 –22 –27 –55 –68 –34 Changes due to reestimates: Discretionary appropriations: Security ������������������������������������������������ Non-security ���������������������������������������� Medicare ��������������������������������������������������� Unemployment compensation ����������������� Veterans Compensation and Pension ����� Medicaid ��������������������������������������������������� Deposit insurance ������������������������������������ Social Security ����������������������������������������� Supplemental Nutrition Assistance Program ����������������������������������������������� Troubled Asset Relief Program ��������������� Other mandatory programs �������������������� Net interest 1 �������������������������������������������� –70 –87 –148 –461 Mid-Session Review estimate ���������������������������� 3,603 3,842 3,725 3,838 4,139 4,359 4,610 4,804 5,051 5,345 5,626 * $500 million or less. 1 Includes debt service on all reestimates. 17 34 –75 –66 37 –21 18 13 SUMMARY TABLES 19 20 Table S–1. BUDGET TOTALS (In billions of dollars) Totals 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20112015 20112020 Budget (Without Fiscal Commission) Budget Totals in Billions of Dollars: Receipts ����������������������������������������������������������������� Outlays ������������������������������������������������������������������ Deficit ��������������������������������������������������������������� 2,105 3,518 1,413 2,132 3,603 1,471 2,426 3,842 1,416 2,814 3,725 911 3,102 3,838 736 3,441 4,139 698 3,597 4,359 762 3,853 4,610 758 4,083 4,804 721 4,301 5,051 749 4,523 5,345 822 4,725 15,380 36,865 5,626 19,903 45,339 900 4,523 8,474 Debt held by the public ����������������������������������������� Debt net of financial assets ���������������������������������� 7,545 6,646 9,199 10,550 11,602 12,459 13,264 14,134 14,984 15,795 16,619 17,514 18,505 8,079 9,482 10,393 11,129 11,826 12,588 13,345 14,065 14,814 15,636 16,535 Gross domestic product (GDP) ��������������������������������� 14,230 14,674 15,317 16,176 17,137 18,131 19,128 20,094 21,052 21,970 22,922 23,912 Budget Totals as a Percent of GDP: Receipts ����������������������������������������������������������������� Outlays ������������������������������������������������������������������ Deficit ��������������������������������������������������������������� 14.8% 24.7% 9.9% 14.5% 24.6% 10.0% 15.8% 25.1% 9.2% 17.4% 23.0% 5.6% 18.1% 22.4% 4.3% 19.0% 22.8% 3.8% 18.8% 22.8% 4.0% 19.2% 22.9% 3.8% 19.4% 22.8% 3.4% 19.6% 23.0% 3.4% 19.7% 23.3% 3.6% 19.8% 23.5% 3.8% Debt held by the public ����������������������������������������� Debt net of financial assets ���������������������������������� 53.0% 46.7% 62.7% 55.1% 68.9% 61.9% 71.7% 64.3% 72.7% 64.9% 73.2% 65.2% 73.9% 65.8% 74.6% 66.4% 75.0% 66.8% 75.6% 67.4% 76.4% 68.2% 77.4% 69.2% 17.8% 23.2% 5.4% 18.7% 23.2% 4.5% FISCAL COMMISSION MID-SESSION REVIEW On February 18, 2010, the President signed Executive Order 13531, creating the National Commission on Fiscal Responsibility and Reform. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission is charged with proposing recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. This result is projected to stabilize the debt-to-GDP ratio at an acceptable level once the economy recovers. The magnitude and timing of the policy measures necessary to achieve this goal are subject to considerable uncertainty and will depend on the evolution of the economy. In addition, the Commission is charged with proposing recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government. (Deficit increases (+) or decreases (–) in billions of dollars) Totals 2010 Projected deficits in the baseline projection of current policy 1 ���������������������������������������������������������� Percent of GDP ������������������������������������������������������������� Temporary recovery measures: Tax cuts ������������������������������������������������������������������������ Mandatory proposals ��������������������������������������������������� Allowance for other jobs initiatives ����������������������������� Subtotal, temporary recovery measures �������������� Allowance for climate policy 2 ������������������������������������������ Tax cuts for families and businesses 3, 4 ��������������������������� Other revenue changes and loophole closers 3, 5 �������������� Proposed changes in mandatory programs and user fees ������������������������������������������������������������������������������� 2011 1,405 9.6% 2012 2013 2014 2015 1,233 8.0% 967 6.0% 904 5.3% 896 4.9% 985 5.2% 2016 1,003 5.0% 2017 987 4.7% 2018 1,037 4.7% 2019 1,132 4.9% 2020 1,230 5.1% 2011– 2020 4,986 10,375 5.9% 5.4% 12 55 22 –5 –3 –3 –2 –2 –1 –1 –1 67 59 38 2 52 ......... * ......... 64 40 159 ......... 40 –28 8 8 38 ......... 32 –56 1 ......... –4 ......... 22 –65 1 ......... –3 ......... 22 –71 * ......... –3 ......... 24 –74 ......... ......... –2 ......... 25 –77 ......... ......... –2 ......... 27 –79 ......... ......... –1 ......... 28 –80 ......... ......... –1 ......... 30 –84 ......... ......... –1 ......... 31 –87 74 48 188 ......... 140 –294 74 48 180 ......... 281 –702 –4 –77 2 4 2 –1 –3 –7 –10 –13 –15 –17 –19 Proposed changes in appropriated (“discretionary”) programs: 9 Overseas contingency operations (OCO) �������������������� Security (except OCO) ������������������������������������������������� 3 Non-security ���������������������������������������������������������������� * Subtotal, appropriated programs ������������������������� 12 Subtotal, policy proposals �������������������������������������� 67 36 13 –11 39 214 –42 20 –16 –38 –22 –75 22 –25 –78 –126 –83 25 –28 –87 –141 –88 28 –30 –89 –149 –91 31 –31 –90 –154 –93 33 –31 –91 –158 –96 35 –32 –93 –161 –98 36 –31 –94 –165 –101 37 –26 –90 –166 Upper-income tax provisions devoted to deficit reduction �������������������������������������������������������������������� ......... –30 –36 –45 –54 –62 –69 –75 –80 –86 –91 Credit and other indirect interest effects ����������������������� Debt service ���������������������������������������������������������������������� Total reduction in projected deficits ������������������� –* * 66 –1 1 183 –1 3 –56 –1 3 –168 –* –3 –198 –* –12 –224 –* –23 –245 –* –34 –266 –* –46 –287 * –59 –310 * –73 –330 Resulting deficits in Mid-Session Review ��������������� 1,471 10.0% 1,416 9.2% 911 5.6% 736 4.3% 698 3.8% 762 4.0% 758 3.8% 721 3.4% 749 3.4% 822 3.6% 900 3.8% Percent of GDP ������������������������������������������������������������� 2011– 2015 SUMMARY TABLES Table S–2. EFFECT OF BUDGET PROPOSALS ON PROJECTED DEFICITS –251 –731 107 279 –109 –259 –253 –711 –224 –1,028 –228 –629 –3 –3 –8 –241 –463 –1,901 4,523 5.4% 8,474 4.5% 21 22 Table S–2. EFFECT OF BUDGET PROPOSALS ON PROJECTED DEFICITS—Continued (Deficit increases (+) or decreases (–) in billions of dollars) Totals 2010 2011 2012 2013 Memorandum, proposed changes in appropriated (“discretionary”) budgetary resources: Overseas contingency operations ������������������������������� 33 28 –84 –86 Security (except OCO) ������������������������������������������������� 7 16 27 30 Non-security ���������������������������������������������������������������� 1 –14 –19 –31 Total, appropriated funding ������������������������������ 41 30 –75 –86 Memorandum, deficit reduction exclusive of OCO savings and related debt service ��������������������������������� 58 147 –15 –92 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 –88 33 –29 –85 –90 37 –27 –80 –93 38 –32 –87 –95 39 –34 –91 –98 39 –34 –93 –101 40 –32 –93 –103 41 –25 –87 –320 144 –120 –296 –810 341 –278 –747 –110 –127 –141 –155 –169 –183 –195 –197 –1,039 Note: Figures displayed in the table do not reflect the impact of any recommendations from the Fiscal Commission. * $500 million or less. 1 See tables S-3 and S-7 for information on the baseline projection of current policy. 2 A comprehensive market-based climate change policy will be deficit neutral because proceeds from emissions allowances will be used to compensate vulnerable families, communities, and businesses during the transition to a clean energy economy. Receipts will also be reserved for investments to reduce greenhouse gas emissions, including support of clean energy technologies, and in adapting to the impacts of climate change, both domestically and in developing countries. 3 Includes refundable tax credits. 4 Includes the effects of continuing certain expiring provisions through calendar year 2011. 5 Includes limiting itemized deductions, trade initiatives, and other tax initiatives on Table S-10. MID-SESSION REVIEW (In billions of dollars) Totals 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20112015 20112020 Outlays: Appropriated (“discretionary”) programs: Security ���������������������������������������������������������� Non-security �������������������������������������������������� 782 437 1,219 837 528 1,364 850 544 1,394 852 502 1,354 865 487 1,352 883 487 1,371 903 495 1,399 923 507 1,429 946 521 1,466 970 530 1,499 995 542 1,537 1,021 555 1,576 678 425 251 151 607 2,112 187 ......... 3,518 702 450 274 –82 653 1,997 185 1 3,547 729 489 263 7 605 2,094 221 2 3,711 761 491 265 10 538 2,066 292 4 3,715 802 534 287 10 530 2,163 382 4 3,901 847 565 351 8 588 2,359 482 4 4,216 896 592 394 5 592 2,480 565 5 4,448 949 643 433 3 610 2,639 638 5 4,711 1,007 666 464 1 599 2,738 707 5 4,916 1,069 694 497 * 641 2,901 772 5 5,177 1,136 759 535 ......... 677 3,107 836 5 5,486 1,207 4,035 9,404 815 2,672 6,250 576 1,560 4,064 ......... 40 46 696 2,854 6,078 3,295 11,162 25,841 901 1,942 5,796 5 19 44 5,776 19,991 46,057 915 138 889 185 1,047 291 1,207 342 1,353 376 1,483 456 1,618 388 1,744 424 1,867 454 1,984 464 2,104 478 2,222 480 6,708 16,629 1,853 4,152 Excise taxes ����������������������������������������������������������� Estate and gift taxes ��������������������������������������������� Customs duties ������������������������������������������������������ Deposits of earnings, Federal Reserve System ���� Other miscellaneous receipts ������������������������������� Total receipts ������������������������������������������������� 654 191 38 8 62 23 22 34 18 631 180 45 9 70 19 23 73 18 661 191 54 8 82 25 28 73 17 709 206 60 9 85 21 31 61 18 754 223 67 9 89 21 34 54 18 799 242 71 9 98 23 37 51 52 843 257 73 9 103 25 40 47 59 896 274 73 9 105 27 44 49 64 938 287 71 9 109 29 47 52 66 982 301 71 9 124 31 51 54 69 1,028 316 70 9 131 33 55 56 74 1,068 329 71 10 135 36 60 57 78 3,766 1,119 325 43 456 115 170 286 163 2,105 2,142 2,478 2,748 2,997 3,320 3,463 3,708 3,929 4,140 4,353 4,546 15,006 35,682 Deficit ����������������������������������������������������������������������� 1,413 1,405 1,233 967 904 896 985 1,003 987 1,037 1,132 1,230 Subtotal, appropriated programs �������������� Mandatory programs: Social Security ����������������������������������������������� Medicare ��������������������������������������������������������� Medicaid ��������������������������������������������������������� Troubled Asset Relief Program (TARP)2 ����� Other mandatory programs �������������������������� Subtotal, mandatory programs ������������������ Net interest ����������������������������������������������������������� Disaster costs 3 ������������������������������������������������������� Total outlays �������������������������������������������������� SUMMARY TABLES Table S–3. BASELINE PROJECTION OF CURRENT POLICY BY CATEGORY 1 4,354 9,208 2,515 5,169 6,869 14,377 Receipts: Individual income taxes ���������������������������������������� Corporation income taxes ������������������������������������� Social insurance and retirement receipts: Social Security payroll taxes ������������������������ Medicare payroll taxes ��������������������������������� Unemployment insurance ����������������������������� Other retirement ������������������������������������������� 8,680 2,626 681 89 1,060 271 426 554 514 23 4,986 10,375 24 Table S–3. BASELINE PROJECTION OF CURRENT POLICY BY CATEGORY 1—Continued (In billions of dollars) Totals 2009 On-budget deficit ��������������������������������������������������� Off-budget surplus (–) ������������������������������������������� 1,550 –137 2010 1,479 –74 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20112015 20112020 1,312 –79 1,071 –104 1,019 –115 1,021 –125 1,118 –132 1,148 –145 1,129 –141 1,174 –138 1,262 –130 1,343 –113 5,541 11,598 –556 –1,223 Memorandum, funding (“budgetary resources”) for appropriated programs: Security ������������������������������������������������������������������ 824 814 834 Non-security ��������������������������������������������������������� 689 446 456 Total, appropriated funding �������������������������� 1,513 1,260 1,291 854 466 1,320 874 478 1,352 895 489 1,384 917 500 1,417 939 512 1,451 963 524 1,487 988 537 1,525 1,013 550 1,563 1,040 564 1,604 4,374 9,318 2,390 5,076 6,764 14,395 * $500 million or less. 1 See Table S-7 for information on adjustments to the Budget Enforcement Act (BEA) baseline. 2 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program, and other estimated TARP obligations incurred through October 3, 2010. 3 These amounts represent a placeholder for major disasters requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. MID-SESSION REVIEW (In billions of dollars) Totals 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 Outlays: Appropriated (“discretionary”) programs: Security ���������������������������������������������� Non-security �������������������������������������� Subtotal, appropriated programs � 782 437 1,219 849 528 1,377 900 533 1,433 830 485 1,316 812 462 1,274 825 459 1,284 844 466 1,309 863 476 1,339 886 490 1,375 909 498 1,406 932 511 1,443 956 529 1,486 4,210 2,406 6,616 8,756 4,910 13,665 Mandatory programs: Social Security ����������������������������������� Medicare ��������������������������������������������� Medicaid ��������������������������������������������� Troubled Asset Relief Program (TARP)1 ������������������������������������������ Allowance for jobs initiatives ������������ Other mandatory programs �������������� Subtotal, mandatory programs ����� Net interest ���������������������������������������������� Disaster costs2 ������������������������������������������� Total outlays �������������������������������������� 678 425 251 714 450 274 730 488 284 761 490 265 801 533 287 846 563 351 894 590 393 947 640 432 1,005 663 463 1,066 690 496 1,133 756 533 1,203 812 574 4,032 2,665 1,580 9,386 6,226 4,079 151 ......... 607 2,112 187 ......... 3,518 –82 1 683 2,041 185 1 3,603 7 20 657 2,186 221 2 3,842 10 4 582 2,112 294 4 3,725 10 ......... 545 2,175 385 4 3,838 8 ......... 603 2,371 480 4 4,139 5 ......... 608 2,491 554 5 4,359 3 ......... 626 2,649 617 5 4,610 1 ......... 616 2,749 675 5 4,804 * ......... 658 2,911 728 5 5,051 ......... ......... 695 3,117 780 5 5,345 ......... 40 ......... 24 715 2,993 3,304 11,335 831 1,934 5 19 5,626 19,903 46 24 6,303 26,064 5,566 44 45,339 Receipts: Individual income taxes ��������������������������� Corporation income taxes ������������������������ 915 138 885 180 1,032 280 1,253 366 1,429 402 1,574 482 1,723 414 1,858 450 1,991 478 2,117 486 2,246 500 2,373 502 7,010 1,944 17,595 4,359 654 191 38 8 62 23 22 631 180 45 9 70 19 23 662 192 54 8 76 25 27 709 206 62 9 83 22 30 753 224 69 9 89 23 33 799 243 73 9 99 25 36 843 258 75 9 104 27 39 896 275 75 9 106 29 43 938 289 73 9 110 32 46 982 303 73 9 126 34 50 1,028 317 71 9 132 37 54 1,068 331 74 10 136 39 59 3,766 1,123 333 43 451 123 166 8,680 2,638 699 89 1,061 294 417 34 ......... 18 2,105 73 –1 18 2,132 73 –20 16 2,426 61 –4 17 2,814 54 ......... 17 3,102 51 ......... 51 3,441 47 ......... 58 3,597 49 ......... 63 3,853 52 ......... 65 4,083 54 ......... 68 4,301 56 ......... 72 4,523 57 286 ......... –24 77 159 4,725 15,380 554 –24 504 36,865 Deficit ���������������������������������������������������������� 1,413 1,471 1,416 911 736 698 762 758 721 749 822 900 4,523 8,474 25 Social insurance and retirement receipts: Social Security payroll taxes ������������ Medicare payroll taxes ��������������������� Unemployment insurance ����������������� Other retirement ������������������������������� Excise taxes ���������������������������������������������� Estate and gift taxes �������������������������������� Customs duties ����������������������������������������� Deposits of earnings, Federal Reserve System �������������������������������������������������� Allowance for jobs initiatives ������������������ Other miscellaneous receipts ������������������ Total receipts ������������������������������������� SUMMARY TABLES Table S–4. PROPOSED BUDGET BY CATEGORY 26 Table S–4. PROPOSED BUDGET BY CATEGORY—Continued (In billions of dollars) Totals 2009 On-budget deficit �������������������������������������� Off-budget surplus (–) ������������������������������ Primary deficit ����������������������������������������� Net interest ���������������������������������������������� 1,550 –137 1,226 187 2010 1,545 –74 1,287 185 2011 1,495 –79 1,195 221 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 1,015 –104 617 294 851 –115 351 385 823 –126 218 480 895 –133 208 554 904 –146 140 617 865 –144 46 675 890 –141 21 728 956 –133 42 780 1,017 –117 69 831 5,080 –556 2,589 1,934 9,711 –1,237 2,908 5,566 Memorandum, funding (“budgetary resources”) for appropriated programs: Security ����������������������������������������������������� 824 859 879 796 Non-security �������������������������������������������� 689 447 441 446 1,513 1,306 1,320 1,242 Total, appropriated funding �������������� 817 446 1,263 838 459 1,297 862 472 1,335 884 479 1,362 906 489 1,395 929 502 1,430 952 517 1,469 977 538 1,515 4,192 2,265 6,457 8,839 4,789 13,628 Note: Figures displayed in the table do no reflect the impact of any recommendations from the Fiscal Commission. * $500 million or less. 1 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program, and other estimated TARP obligations incurred through October 3, 2010. 2 These amounts represent a placeholder for major disasters requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. MID-SESSION REVIEW (As a percent of GDP) Averages 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 Outlays: 5.5 3.1 8.6 5.8 3.6 9.4 5.9 3.5 9.4 5.1 3.0 8.1 4.7 2.7 7.4 4.6 2.5 7.1 4.4 2.4 6.8 4.3 2.4 6.7 4.2 2.3 6.5 4.1 2.3 6.4 4.1 2.2 6.3 4.0 2.2 6.2 4.9 2.8 7.8 4.5 2.6 7.1 Mandatory programs: Social Security �������������������������������������������������� Medicare ������������������������������������������������������������ Medicaid ������������������������������������������������������������ Troubled Asset Relief Program (TARP) 1 ��������� Allowance for jobs initiatives ��������������������������� Other mandatory programs ����������������������������� Subtotal, mandatory programs ��������������������� Net interest �������������������������������������������������������������� Disaster costs 2����������������������������������������������������������� Total outlays ����������������������������������������������������� 4.8 3.0 1.8 1.1 ......... 4.3 14.8 1.3 ......... 24.7 4.9 3.1 1.9 –0.6 * 4.6 13.9 1.3 * 24.6 4.8 3.2 1.8 * 0.1 4.3 14.3 1.4 * 25.1 4.7 3.0 1.6 0.1 * 3.6 13.1 1.8 * 23.0 4.7 3.1 1.7 0.1 ......... 3.2 12.7 2.2 * 22.4 4.7 3.1 1.9 * ......... 3.3 13.1 2.6 * 22.8 4.7 3.1 2.1 * ......... 3.2 13.0 2.9 * 22.8 4.7 3.2 2.2 * ......... 3.1 13.2 3.1 * 22.9 4.8 3.2 2.2 * ......... 2.9 13.1 3.2 * 22.8 4.8 3.1 2.3 * ......... 3.0 13.2 3.3 * 23.0 4.9 3.3 2.3 ......... ......... 3.0 13.6 3.4 * 23.3 5.0 3.4 2.4 ......... ......... 3.0 13.8 3.5 * 23.5 4.7 3.1 1.8 * * 3.5 13.2 2.2 * 23.2 4.8 3.2 2.0 * * 3.3 13.3 2.8 * 23.2 Receipts: Individual income taxes ������������������������������������������� Corporation income taxes ���������������������������������������� 6.4 1.0 6.0 1.2 6.7 1.8 7.7 2.3 8.3 2.3 8.7 2.7 9.0 2.2 9.2 2.2 9.5 2.3 9.6 2.2 9.8 2.2 9.9 2.1 8.1 2.2 8.9 2.2 Social insurance and retirement receipts: Social Security payroll taxes ��������������������������� Medicare payroll taxes ������������������������������������ Unemployment insurance �������������������������������� Other retirement ���������������������������������������������� Excise taxes �������������������������������������������������������������� Estate and gift taxes ������������������������������������������������ Customs duties ��������������������������������������������������������� Deposits of earnings, Federal Reserve System ������� Allowance for jobs initiatives ���������������������������������� Other miscellaneous receipts ���������������������������������� Total receipts ���������������������������������������������������� 4.6 1.3 0.3 0.1 0.4 0.2 0.2 0.2 ......... 0.1 14.8 4.3 1.2 0.3 0.1 0.5 0.1 0.2 0.5 –* 0.1 14.5 4.3 1.2 0.4 0.1 0.5 0.2 0.2 0.5 –0.1 0.1 15.8 4.4 1.3 0.4 * 0.5 0.1 0.2 0.4 –* 0.1 17.4 4.4 1.3 0.4 * 0.5 0.1 0.2 0.3 ......... 0.1 18.1 4.4 1.3 0.4 * 0.6 0.1 0.2 0.3 ......... 0.3 19.0 4.4 1.4 0.4 * 0.5 0.1 0.2 0.2 ......... 0.3 18.8 4.5 1.4 0.4 * 0.5 0.2 0.2 0.2 ......... 0.3 19.2 4.5 1.4 0.4 * 0.5 0.2 0.2 0.2 ......... 0.3 19.4 4.5 1.4 0.3 * 0.6 0.2 0.2 0.2 ......... 0.3 19.6 4.5 1.4 0.3 * 0.6 0.2 0.2 0.2 ......... 0.3 19.7 4.5 1.4 0.3 * 0.6 0.2 0.2 0.2 ......... 0.3 19.8 4.4 1.3 0.4 * 0.5 0.1 0.2 0.3 –* 0.2 17.8 4.4 1.3 0.4 * 0.5 0.2 0.2 0.3 –* 0.2 18.7 Deficit �������������������������������������������������������������������������� 9.9 10.0 9.2 5.6 4.3 3.8 4.0 3.8 3.4 3.4 3.6 3.8 5.4 4.5 27 Appropriated (“discretionary”) programs: Security ������������������������������������������������������������� Non-security ����������������������������������������������������� Subtotal, appropriated programs ����������������� SUMMARY TABLES Table S–5. PROPOSED BUDGET BY CATEGORY AS A PERCENT OF GDP 28 Table S–5. PROPOSED BUDGET BY CATEGORY AS A PERCENT OF GDP—Continued (As a percent of GDP) Averages 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 On-budget deficit ������������������������������������������������������ Off-budget surplus (–) ���������������������������������������������� 10.9 –1.0 10.5 –0.5 9.8 –0.5 6.3 –0.6 5.0 –0.7 4.5 –0.7 4.7 –0.7 4.5 –0.7 4.1 –0.7 4.0 –0.6 4.2 –0.6 4.2 –0.5 6.0 –0.6 5.1 –0.6 Primary deficit ��������������������������������������������������������� Net interest �������������������������������������������������������������� 8.6 1.3 8.8 1.3 7.8 1.4 3.8 1.8 2.0 2.2 1.2 2.6 1.1 2.9 0.7 3.1 0.2 3.2 0.1 3.3 0.2 3.4 0.3 3.5 3.2 2.2 1.7 2.8 Memorandum, funding (“budgetary resources”) for appropriated programs: Security ��������������������������������������������������������������������� 5.8 5.8 5.7 Non-security ������������������������������������������������������������ 4.8 3.0 2.9 Subtotal, appropriated programs ��������������������� 10.6 8.9 8.6 4.9 2.8 7.7 4.8 2.6 7.4 4.6 2.5 7.2 4.5 2.5 7.0 4.4 2.4 6.8 4.3 2.3 6.6 4.2 2.3 6.5 4.2 2.3 6.4 4.1 2.2 6.3 4.9 2.6 7.6 4.6 2.5 7.0 Note: Figures displayed in the table do not reflect the impact of any recommendations from the Fiscal Commission. * 0.05 percent of GDP or less. 1 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program, and other estimated TARP obligations incurred through October 3, 2010. 2 These amounts represent a placeholder for major disasters requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. MID-SESSION REVIEW (In billions of dollars, based on 2011 prices and population) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Outlays: Appropriated (“discretionary”) programs: Security ��������������������������������������������������������������������� Non-security ������������������������������������������������������������� Subtotal, appropriated programs ��������������������� 900 533 1,433 808 473 1,281 768 437 1,205 757 422 1,179 752 415 1,168 747 412 1,159 744 411 1,155 740 405 1,146 737 404 1,140 733 406 1,139 Mandatory programs: Social Security ���������������������������������������������������������� Medicare �������������������������������������������������������������������� Medicaid �������������������������������������������������������������������� Troubled Asset Relief Program (TARP) 1 ����������������� Allowance for jobs initiatives ����������������������������������� Other mandatory programs ������������������������������������� Subtotal, mandatory programs ������������������������� Net interest �������������������������������������������������������������������������� Disaster costs 2 ���������������������������������������������������������������������� Total outlays �������������������������������������������������������������� 730 488 284 7 20 657 2,186 221 2 3,842 741 477 258 10 4 566 2,055 286 4 3,626 758 504 271 9 ......... 515 2,057 364 4 3,630 777 517 323 7 ......... 554 2,178 441 4 3,802 798 526 351 5 ......... 542 2,221 494 4 3,887 820 554 374 3 ......... 542 2,293 534 4 3,990 843 557 389 1 ......... 517 2,307 566 4 4,033 868 562 404 * ......... 536 2,371 593 4 4,114 895 597 421 ......... ......... 549 2,463 617 4 4,224 922 622 440 ......... ......... 548 2,533 637 4 4,313 Receipts: Individual income taxes ������������������������������������������������������� Corporation income taxes ���������������������������������������������������� 1,032 280 1,219 356 1,351 380 1,446 443 1,536 369 1,609 389 1,672 401 1,725 396 1,775 395 1,819 385 Social insurance and retirement receipts: Social Security payroll taxes ����������������������������������� Medicare payroll taxes �������������������������������������������� Unemployment insurance ���������������������������������������� Other retirement ������������������������������������������������������ Excise taxes �������������������������������������������������������������������������� Estate and gift taxes ������������������������������������������������������������ Customs duties ��������������������������������������������������������������������� Deposits of earnings, Federal Reserve System ������������������� Allowance for jobs initiatives ����������������������������������������������� Other miscellaneous receipts ���������������������������������������������� Total receipts ������������������������������������������������������������� 662 192 54 8 76 25 27 73 –20 16 2,426 690 201 60 8 81 22 29 59 –4 16 2,739 712 212 65 8 85 22 32 51 ......... 16 2,934 734 224 67 8 91 23 33 46 ......... 47 3,161 752 230 67 8 93 24 35 42 ......... 52 3,207 776 238 65 8 91 25 37 43 ......... 54 3,335 788 242 62 7 92 27 39 43 ......... 54 3,427 800 247 59 7 102 28 40 44 ......... 55 3,504 812 251 56 7 105 29 43 44 ......... 57 3,574 819 254 56 7 104 30 45 44 ......... 59 3,622 Deficit ������������������������������������������������������������������������������������������ 1,416 887 696 641 679 656 605 610 650 690 SUMMARY TABLES Table S–6. PROPOSED BUDGET BY CATEGORY ADJUSTED FOR INFLATION AND POPULATION GROWTH 29 30 Table S–6. PROPOSED BUDGET BY CATEGORY ADJUSTED FOR INFLATION AND POPULATION GROWTH—Continued (In billions of dollars, based on 2011 prices and population) 2011 On-budget deficit ������������������������������������������������������������������ Off-budget surplus (–) ���������������������������������������������������������� Primary deficit ��������������������������������������������������������������������� Net interest �������������������������������������������������������������������������� 1,495 –79 1,195 221 Memorandum, funding (“budgetary resources”) for appropriated programs: Security ��������������������������������������������������������������������������������� 879 Non-security ������������������������������������������������������������������������ 441 1,320 Subtotal, appropriated programs ����������������������������� 2012 2013 2014 2015 2016 2017 2018 2019 2020 988 –101 601 286 805 –109 332 364 756 –115 200 441 798 –119 185 494 782 –126 122 534 726 –121 39 566 725 –114 17 593 755 –105 33 617 780 –90 53 637 775 434 1,209 773 422 1,195 770 422 1,192 769 421 1,190 765 414 1,179 760 410 1,171 756 409 1,165 752 409 1,161 749 412 1,161 Note: Figures displayed in the table do not reflect the impact of any recommendations from the Fiscal Commission. * $500 million or less. 1 Outlays for TARP in 2011 and subsequent years result from obligations for the Home Affordable Modification Program, and other estimated TARP obligations incurred through October 3, 2010. 2 These amounts represent a placeholder for major disasters requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. MID-SESSION REVIEW (Deficit increases (+) or decreases (–) in billions of dollars) Totals 2009 2010 2011 BEA baseline deficit ���������������������������������������������� 1,413 1,404 Adjustments to reflect current policies: Index to inflation the 2009 parameters of the AMT ������������������������������������������������������������������� 2012 1,012 2013 668 2014 546 2015 481 2016 514 2017 478 2018 408 2019 401 20112015 2020 433 464 3,221 20112020 SUMMARY TABLES Table S–7. BRIDGE FROM BUDGET ENFORCEMENT ACT BASELINE TO BASELINE PROJECTION OF CURRENT POLICY 5,404 ......... ......... 75 31 36 42 50 59 68 78 90 103 235 633 Continue the 2001 and 2003 tax cuts 1 ���������������� Prevent reduction in Medicare physician payments ����������������������������������������������������������� ......... * 130 229 255 278 303 325 343 360 376 392 1,196 2,992 ......... ......... 14 28 33 35 37 39 42 45 51 56 148 382 Correct baseline growth rates for pay increases � Subtotal ���������������������������������������������������������� ......... ......... –2 –3 –3 –3 –3 –3 –3 –4 –4 –4 –14 –32 ......... * 216 287 321 353 387 419 450 480 514 548 1,564 3,975 Adjustment to reflect costs of possible emergencies 2 ����������������������������������������������������� ......... 1 2 4 4 4 5 5 5 5 5 5 19 44 Adjustments to Pell Grants: Reflect cost of funding existing maximum grant award ����������������������������������������������������������������� ......... ......... 2 3 12 13 13 13 13 13 13 13 42 108 Remove Pell Grants from appropriated category ���� –19 –28 –25 –21 –31 –31 –31 –32 –32 –33 –33 –34 –138 –303 Add Pell Grants to mandatory category �������������� Subtotal ���������������������������������������������������������� 19 28 25 21 31 31 31 32 32 33 33 34 138 303 ......... ......... 2 3 12 13 13 13 13 13 13 13 42 108 Total program adjustments ���������������������������������� ......... 1 221 293 338 370 405 437 468 498 532 566 1,625 4,126 Debt service on adjustments �������������������������������� Total adjustments ������������������������������������������ ......... * 1 6 21 45 66 88 112 138 167 200 139 845 ......... 1 221 299 359 415 471 525 580 636 699 766 1,765 4,971 Baseline projection of current policy deficit ���� 1,413 1,405 1,233 967 904 896 985 1,003 987 1,037 1,132 1,230 4,986 10,375 *$500 million or less. 1 In continuing the 2001 and 2003 tax cuts, the estate tax is maintained at its 2009 parameters. 2 These amounts represent a placeholder for major disasters requiring Federal assistance for relief and reconstruction. Such assistance might be provided in the form of discretionary or mandatory outlays or tax relief. These amounts are included as outlays for convenience. 31 32 Table S–8. CHANGE IN THE BASELINE PROJECTION OF CURRENT POLICY FROM BUDGET TO MSR (In billions of dollars) Totals 2010 February deficits in the baseline projection of current policy ���������������� Percent of GDP ������������������������������������������ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011– 2015 2020 2011– 2020 1,145 7.5% 934 5.8% 940 5.5% 934 5.1% 983 5.1% 1,013 5.0% 1,042 4.9% 1,077 4.9% 1,227 5.3% 1,346 5.6% 4,936 10,640 7 –3 –20 –50 –48 –8 7 3 –8 –18 –29 –130 –174 –2 –4 5 –3 2 –* * 1 2 2 2 –* 6 20 2 * ......... ......... ......... ......... ......... ......... ......... ......... 3 3 5 –3 1 * 28 4 –* 1 * –* –2 2 –5 * –20 –3 * –7 –* –62 –19 –1 –7 –2 –76 –1 –1 –8 –3 –20 15 –1 –9 –1 11 –1 –1 –9 –1 –8 1 –1 –10 –2 –18 –3 –1 –11 –4 –34 8 –1 –12 –6 –39 –21 * –26 –5 –179 * –3 –77 –19 –265 Revisions due to updated economic assumptions: Receipts ���������������������������������������������� –6 Mandatory outlays ����������������������������� –14 Net interest ���������������������������������������� –6 Subtotal, economic revisions �������������������� –26 9 –1 –29 –22 20 –3 –48 –31 19 –5 –52 –39 16 –7 –40 –31 12 –6 –29 –23 16 –7 –23 –14 18 –7 –19 –7 21 –6 –15 1 20 –5 –11 4 18 –5 –10 3 76 –23 –199 –146 168 –52 –276 –160 Revisions due to updated technical assumptions: Receipts ����������������������������������������������� 70 96 70 48 10 6 –4 –15 –35 –45 –52 230 80 –7 –22 4 15 2 10 1 8 * 5 –* 4 2 4 2 6 2 2 2 2 2 2 7 41 16 57 –* –2 –24 –7 –8 –12 1 –6 –5 –1 –4 –4 –11 13 –3 –9 10 –2 –21 1 –2 –17 –4 –2 –11 –3 –1 –21 –3 –* –18 –3 –* –27 5 –26 –115 –7 –32 –9 10 2 2 3 3 3 4 4 4 5 19 39 Revisions due to enacted legislation: Affordable Care Act ���������������������������� Student Aid and Fiscal Responsibility Act ��������������������������������������������������� Temporary extensions of unemployment benefits������������������� Other legislative changes: Receipts �������������������������������������������� Discretionary outlays ��������������������� Mandatory outlays ������������������������� Debt service on legislative changes ������� Subtotal, enacted legislation �������������������� Discretionary outlays: Security �������������������������������������������� Non-security ������������������������������������ Mandatory outlays: Medicare ������������������������������������������ Medicaid ������������������������������������������ Unemployment compensation ������� Veterans Compensation and Pension ����������������������������������������� MID-SESSION REVIEW 1,430 9.8% (In billions of dollars) Totals 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011– 2015 2020 2011– 2020 Other ������������������������������������������������ Net interest ���������������������������������������� Disaster costs ������������������������������������� Subtotal, technical revisions �������������������� Total changes since February �������������������� –35 3 –1 –28 –25 12 1 –1 110 87 12 –1 –* 84 33 15 * –* 65 –35 44 9 –* 70 –38 24 11 –* 46 2 –1 11 –* –7 –10 –23 10 ......... –39 –54 10 10 ......... –23 –40 –11 7 ......... –65 –95 –20 4 ......... –80 –116 108 20 –2 375 50 63 62 –2 161 –265 MSR deficits in the baseline projection of current policy ������������������������������������ Percent of GDP ������������������������������������������ 1,405 9.6% 1,233 8.0% 967 6.0% 904 5.3% 896 4.9% 985 5.2% 1,003 5.0% 987 4.7% 1,037 4.7% 1,132 4.9% 1,230 5.1% 4,986 10,375 Memorandum: February funding (“budgetary resources”) for appropriated programs �������������������� 1,260 1,290 1,319 1,351 1,383 1,416 1,450 1,486 1,524 1,562 1,602 6,760 14,385 Change in funding: Security �������������������������������������������� Non-security ������������������������������������ ......... –1 ......... 1 ......... 1 ......... 1 * 1 ......... 1 ......... 1 –* 1 –* 1 –* 1 –* 1 * 5 –* 10 –1 1,260 1 1,291 1 1,320 1 1,352 1 1,384 1 1,417 1 1,451 1 1,487 1 1,525 1 1,563 1 1,604 5 6,764 10 14,395 Total change in funding �������������� MSR funding for appropriated programs: SUMMARY TABLES Table S–8. CHANGE IN THE BASELINE PROJECTION OF CURRENT POLICY FROM BUDGET TO MSR—Continued * $500 million or less. 33 34 Table S–9. MANDATORY AND RECEIPT PROPOSALS (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 Temporary Recovery Measures (emergency): Tax Cuts: Extend making work pay tax credit in 2011 1 ��� Extend COBRA health insurance premium assistance 1 ������������������������������������������������� Provide additional tax credits for investment in qualified property used in a qualified advanced energy manufacturing project ��������������������������������������������������������� Extend temporary bonus depreciation for certain property ����������������������������������������� Extend option for grants to States in lieu of housing tax credits 1 ����������������������������������� Total, tax cuts ��������������������������������������������� ......... 29,668 30,447 ......... ......... ......... ......... ......... ......... ......... ......... 60,115 60,115 725 1,918 821 ......... ......... ......... ......... ......... ......... ......... ......... 2,739 2,739 ......... 284 731 1,145 1,114 539 122 –72 –114 –62 –26 3,813 3,661 9,046 21,370 –9,424 –5,786 –3,884 –2,876 –1,838 –1,157 –698 –494 –453 –600 –5,240 2,435 1,798 –91 –269 –429 –511 –538 –538 –538 –538 –538 12,206 55,038 22,484 –4,910 –3,199 –2,848 –2,254 –1,767 –1,350 –1,094 –1,017 498 66,565 –2,192 59,083 Mandatory Initiatives: 21,671 200 ......... 17 ......... 4 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 21,671 221 21,671 221 15,000 4,000 ......... ......... ......... ......... ......... ......... ......... ......... 19,000 19,000 23,000 1,357 ......... 1,363 ......... 273 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 23,000 2,993 23,000 2,993 29 762 36 95 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 65 857 65 857 –1,888 –2 ......... ......... ......... ......... ......... ......... ......... ......... –1,890 –1,890 1,800 2,000 63,931 2,100 ......... 7,609 1,020 ......... 1,297 600 ......... 600 180 ......... 180 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 5,700 2,000 73,617 5,700 2,000 73,617 40,000 7,500 ......... ......... ......... ......... ......... ......... ......... ......... 47,500 47,500 MID-SESSION REVIEW Provide 6-month extension of FMAP relief to States: Medicaid impact ����������������������������������������� ......... ......... Foster care impact �������������������������������������� Establish funds to prevent firing of teachers, firefighters, and police officers ������������������ 6,000 Extend EUC/EB unemployment insurance benefits ������������������������������������������������������� 17,000 Enhance TANF emergency fund ������������������� 508 Extend ARRA suspension of SNAP time limits ���������������������������������������������������������� ......... Provide $250 Economic Recovery Payments 2 ��� 13,611 Interaction with the making work pay tax credit ������������������������������������������������������� –866 Provide rebates for energy efficiency home retrofits ������������������������������������������������������� 300 Enhance small business lending ������������������� 1,000 Total, mandatory initiatives ���������������������� 37,553 Allowance for other jobs initiatives 2, 3���������� 2,500 (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Climate policy (deficit-neutral reserve) 4 ��������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 81 1,611 1,576 1,553 1,544 1,554 1,571 1,596 1,625 1,649 6,365 14,360 ......... 382 1,340 1,355 1,366 1,364 1,364 1,358 1,351 1,325 1,323 5,807 12,528 ......... ......... ......... ......... 323 103 506 2,683 5,386 825 2,996 5,844 876 3,029 6,151 982 3,109 6,644 1,113 3,195 7,097 1,261 3,323 7,159 1,423 3,490 7,025 1,604 3,716 7,068 1,801 3,910 7,158 3,189 12,140 24,128 10,391 29,774 59,635 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 889 11,526 12,596 12,975 13,643 14,323 14,672 14,885 15,338 15,841 ......... 51,629 ......... 126,688 ......... ......... ......... ......... 55 280 2,248 335 8,055 ......... ......... ......... 8,408 354 8,762 5,963 230 6,193 6,608 241 6,849 7,265 252 7,572 7,922 269 8,471 8,571 9,211 9,843 10,476 11,120 285 301 317 334 353 9,587 10,729 11,751 12,743 13,721 36,166 1,346 37,847 85,387 2,936 96,378 66 30,500 14,685 2,140 1,720 1,601 1,424 50,646 58,001 –43,000 –90,000 –96 –296 –1,029 –2,550 –71 –171 –44,196 –93,017 SUMMARY TABLES Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued Other Tax Provisions: 5 Tax Cuts for Families and Individuals: 6 Expand earned income tax credit 1 ��������������� Expand the child and dependent care tax credit 1 ��������������������������������������������������������� Provide for automatic enrollment in IRAs and double the tax credit for small employer plan startup costs 1 �������������������� Expand saver’s credit 1 ����������������������������������� Extend American opportunity tax credit 1 ���� Provide exclusion from income for student loan forgiveness ���������������������������������������� Total, tax cuts for families and individuals ��� Tax Cuts for Businesses: Eliminate capital gains taxation on small businesses �������������������������������������������������� Make research and experimentation tax credit permanent ��������������������������������������� Remove cell phones from listed property ����� Total, tax cuts for businesses ��������������������� Continue certain expiring provisions through calendar year 2011 1 ���������������������� 731 1,217 1,201 1,591 1,350 1,933 1,647 1,733 Other Revenue Changes and Loophole Closers: Subtotal, reform treatment of financial institutions and products ������������������� ......... –8,107 –8,241 –9,261 –9,283 –9,304 –9,324 –9,343 –9,363 –10,384 –10,407 35 Reform treatment of financial institutions and products: Impose a financial crisis responsibility fee ��� ......... –8,000 –8,000 –9,000 –9,000 –9,000 –9,000 –9,000 –9,000 –10,000 –10,000 Require accrual of income on forward sale ......... –6 –12 –19 –26 –33 –36 –38 –40 –42 –44 of corporate stock ����������������������������������� Require ordinary treatment of income from day-to-day dealer activities for certain dealers of equity options and commodities �������������������������������������������� ......... –95 –214 –226 –240 –254 –270 –286 –303 –321 –341 Modify the definition of “control” for purposes of Section 249 �������������������������� ......... –6 –15 –16 –17 –17 –18 –19 –20 –21 –22 36 Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Reinstate Superfund taxes ���������������������������� Increase Oil Spill Liability Trust Fund financing rate by one cent ������������������������� Repeal LIFO method of accounting for inventories ������������������������������������������������� Repeal gain limitation for dividends received in reorganization exchanges ������� Reform U.S. international tax system: Defer deduction of interest expense related to deferred income ��������������������� Reform foreign tax credit: Determine the foreign tax credit on a pooling basis ������ Reform foreign tax credit: Prevent splitting of foreign income and foreign taxes �������������������������������������������������������� Tax currently excess returns associated with transfers of intangibles offshore ��� Limit shifting of income through intangible property transfers ���������������� Disallow the deduction for excess nontaxed reinsurance premiums paid to affiliates �������������������������������������������������� Limit earnings stripping by expatriated entities ���������������������������������������������������� Repeal 80/20 company rules ���������������������� Modify tax rules for dual capacity taxpayers ������������������������������������������������ Subtotal, reform U.S. international tax system ����������������������������������������������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ......... –1,173 –1,619 –1,749 –1,859 –1,953 –2,034 –2,097 –2,155 –2,208 –2,249 ......... ......... ......... 2011– 2015 2011– 2020 –8,353 –19,096 –46 –234 –471 ......... –2,667 –6,007 –7,070 –7,120 –7,162 –7,224 –7,207 –7,278 –7,350 –22,864 –59,085 –46 –46 –669 –673 –17,317 –28,715 ......... –2,128 –3,559 –3,535 –3,574 –3,698 –3,803 –3,846 –3,846 –3,778 –3,798 –16,494 –35,565 ......... –1,147 –2,016 –2,180 –2,310 –2,402 –2,453 –2,461 –2,438 –2,395 –2,363 –10,055 –22,165 –277 –305 –1,343 –620 –1,554 –1,543 –1,560 –1,614 –1,660 –1,679 –1,679 –1,649 –1,659 –6,891 –15,217 ......... –142 –33 –47 ......... –2,235 –3,737 –3,711 –3,752 –3,882 –3,992 –4,038 –2,026 –113 –33 –50 –309 –85 –32 –48 –144 –59 –31 –48 –33 –35 –31 –47 –33 –13 –31 –47 –33 ......... –19 –46 –173 –206 –240 ......... –22 –53 –54 –53 –49 –50 –53 –57 –60 –64 –231 –515 ......... ......... –211 –83 –352 –111 –350 –111 –354 –112 –366 –116 –376 –120 –381 –122 –380 –123 –374 –124 –376 –127 –1,633 –533 –3,520 –1,149 ......... –436 –750 –795 –841 –888 –933 –977 –1,021 –1,065 –1,112 –3,710 –8,818 –57,169 –117,007 Eliminate fossil fuel tax preferences: Oil and gas company preferences: Repeal enhanced oil recovery credit 7 ���� ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Repeal credit for oil and gas produced from marginal wells 7 ������������������������ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Repeal expensing of intangible drilling costs ��������������������������������������������������� ......... –1,336 –1,788 –1,276 –1,087 –997 –812 –569 –446 –409 –372 –6,484 –9,092 MID-SESSION REVIEW ......... –6,895 –12,167 –12,338 –12,641 –13,128 –13,529 –13,730 –11,776 –10,354 –10,449 (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 Repeal deduction for tertiary injectants ������������������������������������������ ......... –5 –9 –9 –8 –7 –6 –6 –5 –6 –6 –38 –67 Repeal exception to passive loss limitations for working interests in oil and natural gas properties ���������� ......... –20 –24 –19 –18 –17 –17 –17 –16 –16 –16 –98 –180 Repeal percentage depletion for oil and natural gas wells ����������������������� ......... –582 –989 –1,014 –1,032 –1,049 –1,070 –1,093 –1,117 –1,140 –1,160 –4,666 –10,246 Repeal domestic manufacturing tax deduction for oil and natural gas companies ����������������������������������������� ......... –755 –1,303 –1,381 –1,462 –1,543 –1,623 –1,702 –1,779 –1,858 –1,939 –6,444 –15,345 Increase geological and geophysical amortization period for independent producers to seven years ������������������ ......... –16 –871 –1,118 ......... –2,742 –4,274 –3,949 –3,843 –3,793 –3,652 –3,453 –3,389 –3,444 –3,509 –18,601 –36,048 Subtotal, oil and gas company preferences ������������������������������������� Coal tax preferences: –44 –161 –250 –236 –180 –124 –66 –26 –15 Repeal expensing of exploration and development costs ����������������������������� ......... –34 –60 –52 –47 –46 –44 –40 –36 –34 –31 –239 –424 Repeal percentage depletion for hard mineral fossil fuels ��������������������������� ......... –57 –98 –102 –106 –109 –111 –115 –119 –122 –123 –472 –1,062 Repeal capital gains treatment for royalties �������������������������������������������� ......... –28 –25 –48 –67 –78 –87 –95 –103 –111 –119 –246 –761 ......... ......... –10 –129 –17 –200 –18 –220 –19 –239 –20 –253 –21 –263 –22 –272 –23 –281 –24 –291 –26 –299 –84 –1,041 –200 –2,447 ......... –2,871 –4,474 –4,169 –4,082 –4,046 –3,915 –3,725 –3,670 –3,735 –3,808 ......... –878 –2,051 –2,654 –2,829 –2,654 –2,304 –1,935 –1,605 –1,527 –1,204 –19,642 –11,066 –38,495 –19,641 Repeal domestic manufacturing deduction for hard mineral fossil fuels ��������������������������������������������������� ......... ......... –106 ......... ......... ......... ......... –64 –23 –62 –33 –61 –34 –60 –35 –61 –35 –61 –36 –63 –36 –65 –37 –68 –37 –353 –125 –671 –306 –286 –1,423 –2,045 –1,402 –1,127 –283 –296 –309 –323 –5,156 –7,494 ......... –1,437 –1,480 –1,516 –1,558 –1,586 –1,604 –1,616 –1,624 –1,628 –5,991 –14,049 37 Subtotal, coal tax preferences ������������ Subtotal, eliminate fossil fuel tax preferences ������������������������������������ Tax carried interest as ordinary income ������ Eliminate advanced earned income tax credit 1 ��������������������������������������������������������� Deny deduction for punitive damages ���������� Repeal lower-of-cost-or-market inventory accounting method ������������������������������������� Make unemployment insurance surtax permanent �������������������������������������������������� SUMMARY TABLES Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued 38 Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 Reduce the tax gap and make reforms: Expand information reporting: ......... –114 –249 –295 –309 –323 –336 –348 –362 –373 –384 –1,290 –3,093 Require information reporting for private separate accounts of life insurance companies ������������������������ ......... –1 –2 –3 –4 –4 –6 –7 –8 –10 –12 –14 –57 Require a certified Taxpayer Identification Number for contractors ���������������������������������������� ......... –17 –44 –63 –72 –76 –79 –83 –86 –90 –94 –272 –704 Require increased information reporting for certain government payments ������������������������������������������� ......... –25 –70 –58 –28 –30 –32 –34 –35 –37 –39 –211 –388 Increase information return penalties ......... –20 –34 –35 –35 –36 –42 –43 –43 –44 –44 –160 –376 Subtotal, expand information reporting ����������������������������������������� Improve compliance by businesses: ......... –177 –399 –454 –448 –469 –495 –515 –534 –554 –573 –1,947 –4,618 Require electronic filing by certain large organizations ��������������������������� ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Implement standards clarifying when employee leasing companies can be held liable for their clients’ Federal employment taxes ����������������������������� ......... –4 –6 –6 –7 –7 –7 –8 –8 –9 –9 –30 –71 Strengthen rules pertaining to classification of employees as independent contractors ������������������� ......... –11 –211 –537 –681 –758 –839 –923 –1,011 –1,103 –1,201 –2,198 –7,275 ......... –15 –217 –543 –688 –765 –846 –931 –1,019 –1,112 –1,210 –2,228 –7,346 Allow assessment of criminal restitution as tax ������������������������������ ......... ......... –2 –3 –3 –4 –4 –4 –4 –4 –4 –12 –32 Revise offer-in-compromise application rules ��������������������������������������������������� ......... –2 –2 –2 –2 –2 –2 –3 –3 –3 –3 –10 –24 Subtotal, improve compliance by businesses ��������������������������������������� Strengthen tax administration: MID-SESSION REVIEW Require information reporting for rental property expense payments �� (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 Expand IRS access to information in the National Directory of New Hires for tax administration purposes ������ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Make repeated willful failure to file a tax return a felony ��������������������������� ......... ......... ......... ......... –1 –1 –1 –1 –2 –2 –2 –2 –10 Facilitate tax compliance with local jurisdictions ������������������������������������� ......... ......... ......... ......... ......... –1 –1 –1 –1 –1 –1 –1 –6 Extend statute of limitations where State adjustment affects Federal tax liability ���������������������������������������� ......... ......... ......... ......... –2 –4 –4 –4 –4 –4 –4 –6 –26 Improve investigative disclosure statute ���������������������������������������������� ......... ......... ......... ......... –1 –1 –1 –1 –2 –2 –2 –2 –10 ......... –2 –4 –5 –9 –13 –13 –14 –16 –16 –16 –33 –108 ......... –1 –2 –2 –2 –3 –3 –3 –3 –4 –4 –10 –27 ......... ......... ......... –1 ......... –2 ......... –2 ......... –2 –1 –4 –1 –4 –1 –4 –2 –5 –2 –6 –2 –6 –1 –11 –9 –36 –182 –192 –204 –216 –229 –243 –258 –273 –829 –2,048 –222 –1,403 –1,510 –1,650 –1,797 –1,952 –2,114 –2,284 –2,464 –2,651 –6,582 –18,047 –651 –467 –2,784 ......... –307 –1,610 –1,766 –1,982 –2,213 –2,456 –2,713 –2,984 –3,273 –3,575 –7,878 –22,879 ......... –502 –2,232 –2,770 –3,129 –3,464 –3,814 –4,177 –4,558 –4,961 –5,380 –12,097 –34,987 Subtotal, strengthen tax administration �������������������������������� Expand penalties: Clarify the bad check penalty applies to electronic checks and other payment forms ���������������������������������� Impose a penalty on failure to comply with electronic filing requirements ��� Subtotal, expand penalties ���������������� SUMMARY TABLES Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued Modify estate and gift tax valuation discounts and make other reforms: Require consistent valuation for transfer and income tax purposes ��� ......... Modify rules on valuation discounts ��� ......... Require a minimum term for grantor retained annuity trusts (GRATs) ����� ......... Subtotal, modify estate and gift tax valuation discounts and make other reforms ���������������������������������� Subtotal, reduce the tax gap and make reforms ������������������������������ Reform treatment of insurance institutions and products: –80 –5 –171 –36 –74 –140 –212 –288 –370 –457 –551 39 40 Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Modify rules that apply to sales of life insurance contracts �������������������������������� Modify dividends-received deduction for life insurance company separate accounts �������������������������������������������������� Expand pro rata interest expense disallowance for corporate-owned life insurance ������������������������������������������������ Permit partial annuitization of a nonqualified annuity contract ��������������� Subtotal, reform treatment of life insurance and products ����������������� Total, other revenue changes and loophole closers ������������������������������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 ......... –22 –71 –84 –101 –117 –136 –156 –179 –204 –233 –395 –1,303 ......... –142 –361 –389 –420 –438 –463 –469 –469 –455 –444 –1,750 –4,050 ......... –20 –87 –183 –276 –437 –659 –910 –1,293 –1,731 –2,188 –1,003 –7,784 ......... –5 –21 –39 –59 –81 –105 –132 –226 –205 –1,020 ......... –189 –540 –695 –856 –1,073 –1,363 –1,667 –2,101 –2,582 –3,091 –3,353 –14,157 –160 –192 ......... –20,786 –35,878 –42,719 –45,483 –45,877 –46,335 –45,965 –44,526 –45,143 –46,073 –190,743 –418,785 Upper-Income Tax Provisions: Upper-income tax provisions devoted to deficit reduction: Expand the 28-percent rate and reinstate the 36-percent and 39.6-percent rates for those taxpayers with income over $250,000 (married) and $200,000 ......... –12,822 –23,969 –27,502 –31,249 –34,757 –38,105 –41,442 –44,559 –47,839 –51,214 –130,299 –353,458 (single) ���������������������������������������������������� Reinstate the personal exemption phaseout and limitation on itemized deductions for those taxpayers with income over $250,000 (married) and ......... –6,201 –13,827 –16,102 –18,078 –20,198 –22,238 –24,253 –26,128 –27,965 –29,825 –74,406 –204,815 $200,000 (single) ������������������������������������ Impose 20-percent tax rate on capital gains and dividends for those taxpayers with income over $250,000 (married) ......... –11,452 1,457 –1,035 –4,409 –7,430 –8,390 –9,138 –9,640 –10,030 –10,335 –22,869 –70,402 and $200,000 (single) ����������������������������� Limit the tax rate at which itemized deductions reduce tax liability to 28 percent �������������������������������������������������������� Total, upper-income tax provisions ����������� Trade Initiatives: Promote trade ������������������������������������������������ ......... –30,475 –36,339 –44,639 –53,736 –62,385 –68,733 –74,833 –80,327 –85,834 –91,374 –227,574 –628,675 ......... –7,456 –20,481 –23,566 –26,459 –29,234 –31,819 –34,471 –37,033 –39,534 –42,192 –107,196 –292,245 ......... –37,931 –56,820 –68,205 –80,195 –91,619–100,552–109,304–117,360–125,368–133,566 –334,770 –920,920 ......... 145 430 552 606 647 680 705 729 753 777 2,380 6,024 MID-SESSION REVIEW Subtotal, upper-income provisions devoted to deficit reduction �������������� (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Other Initiatives: Extend and modify the New Markets tax credit ���������������������������������������������������������� Reform and extend build America bonds 1 ���� 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 ......... ......... ......... 113 –7 106 229 3 232 345 4 349 430 4 434 480 3 483 511 3 514 510 3 513 441 3 444 279 3 282 103 3 106 1,597 7 1,604 3,441 22 3,463 ......... –20 –27 –27 –28 –29 –30 –31 –32 –33 –34 –131 –291 ......... –11 –13 –13 –13 –14 –14 –14 –14 –15 –15 –64 –136 ......... –29 –30 –31 –31 –31 –32 –32 –32 –33 –34 –152 –315 ......... ......... ......... ......... ......... ......... –19 –2 –1 860 –8 770 –19 ......... –172 1,000 –38 701 –19 ......... –201 1,000 –40 669 –19 ......... –241 1,000 –40 628 –19 ......... –245 1,000 –40 622 –19 ......... –258 1,000 –40 607 –19 ......... –262 1,000 –40 602 –19 ......... –277 1,000 –40 586 –19 ......... –297 1,000 –40 563 –19 ......... –309 1,000 –40 549 –95 –2 –860 4,860 –166 3,390 –190 –2 –2,263 9,860 –366 6,297 Commerce: Eliminate grants to manufacturers of worsted wool ����������������������������������������������������� ......... –5 –5 –5 –5 –5 ......... ......... ......... ......... ......... –25 –25 Corps of Engineers: Support capital investment in the inland waterways (receipt effect) 2 ������������������������������� ......... ......... –196 –163 –187 –129 –100 –72 –70 –68 –68 –675 –1,053 ......... 217 346 435 511 531 541 550 560 570 581 2,040 4,842 ......... 408 395 406 416 426 440 455 470 486 503 2,051 4,405 ......... ......... –408 469 –395 487 –406 505 –416 524 –426 604 –440 627 –455 651 –470 675 –486 700 –503 727 –2,051 2,589 –4,405 5,969 Total, other initiatives �������������������������������� SUMMARY TABLES Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued Mandatory Initiatives and Savings: 8 Agriculture: Enact Animal Plant and Health Inspection Service (APHIS) fees ����������������������������������������� Enact Food Safety and Inspection Service (FSIS) performance fee ������������������������������������������������� Enact Grain Inspection, Packers, and Stockyards Administration (GIPSA) fees ���������������������������� Enact Natural Resources Conservation Service (NRCS) fee ��������������������������������������������������������� Eliminate Commodity Storage payments ������������ Reduce commodity payments to wealthy farmers ��� Reauthorize Child Nutrition Programs ��������������� Reform Market Access Program ��������������������������� Total, Agriculture ������������������������������������������� Defense: 41 Implement concurrent receipt policy: Effect on military retirement ������������������������ Accrual payments to the Military Retirement Fund ��������������������������������������� Military Retirement Fund offsetting receipts for concurrent receipt accruals ����������������� Payments to Military Retirement Fund ������� 42 Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Military Retirement Fund offsetting receipts ��� ......... 2011 2012 –469 2013 –487 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 –505 –524 –604 –627 –651 –675 –700 –727 –2,589 –5,969 Provide additional accrual payments to Medicare-Eligible Retiree Health Care Fund ��������������������������������������������������������������� ......... –143 ......... ......... Total, Defense ������������������������������������������������ ......... 74 346 435 ......... 511 ......... 531 ......... 541 ......... 550 ......... 560 ......... 570 ......... 581 –143 1,897 –143 4,699 Energy: Repeal ultra-deepwater oil and gas research and development program ��������������������������������������� ......... –20 –40 –50 –50 –30 –10 ......... ......... ......... ......... –190 –200 Environmental Protection Agency: Enact pesticide and pre-manufacture notification (PMN) fees ��������������������������������������������������������� ......... –50 –54 –80 –83 –89 –89 –92 –92 –95 –95 –356 –819 ......... 502 753 961 1,115 1,106 1,142 1,226 1,314 1,403 1,493 4,437 11,015 ......... ......... ......... ......... ......... 555 1,460 3 –58 251 114 1,475 2 –139 61 ......... 1,115 1 –884 7 ......... 690 ......... –966 ......... ......... ......... ......... 373 285 258 ......... ......... ......... –993 –1,001 –1,004 ......... ......... ......... ......... 250 ......... –973 ......... ......... 250 ......... –972 ......... ......... 250 ......... –993 ......... 669 5,113 6 –3,040 319 669 6,406 6 –7,983 319 ......... ......... ......... 1 175 –2 105 –2 70 –2 ......... –2 ......... –2 ......... –2 ......... –2 ......... –2 ......... –2 350 –7 350 –17 ......... ......... ......... ......... ......... 1 20 2,735 251 4 42 2,736 315 16 48 1,682 319 18 49 1,293 319 20 50 873 319 19 50 812 319 16 50 863 319 4 50 962 319 2 50 1,050 319 ......... 50 1,117 1,204 59 209 9,319 2,799 100 459 14,123 Homeland Security: Eliminate grants to manufacturers of worsted wool �������������������������������������������������������������������� ......... 5 5 5 5 ......... ......... ......... ......... ......... ......... 20 20 Housing and Urban Development: Provide funding for the Affordable Housing Trust Fund �������������������������������������������������������� ......... 20 140 250 250 240 100 ......... ......... ......... ......... 900 1,000 Health and Human Services (HHS): MID-SESSION REVIEW Expand child care entitlement to states �������������� Extend ARRA child support enforcement incentive match provision ��������������������������������� Create a LIHEAP trigger ������������������������������������� Continue child welfare study ������������������������������� Expand CMS program integrity authority ���������� Extend TANF supplemental grants ��������������������� Establish Fatherhood, Marriage, and Families Innovation Fund ����������������������������������������������� Improve child support enforcement tools ������������ Outyear costs of extending TANF supplemental grants ����������������������������������������������������������������� Reauthorize the Court Improvement Program ��� Support teen pregnancy prevention ��������������������� Total, HHS ����������������������������������������������������� (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Interior: Increase fees for migratory bird hunting and conservation stamps 2 ���������������������������������������� 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 ......... –4 ......... ......... ......... ......... ......... ......... ......... ......... ......... –4 –4 ......... –115 –171 –177 –176 –97 –72 –75 –123 –140 –95 –736 –1,241 ......... –8 –22 –38 –53 –68 –81 –98 –115 –134 –152 –189 –769 ......... ......... –22 –22 –21 –20 ......... ......... ......... ......... ......... –85 –85 ......... –4 –6 –11 –12 –3 ......... ......... ......... ......... ......... –36 –36 ......... –8 –8 –8 –8 –8 –8 –8 –8 –8 –8 –40 –80 ......... ......... ......... ......... 21 –118 –38 21 –246 –40 21 –275 –44 21 –293 –50 16 –230 –49 16 –194 –51 16 –216 –52 16 –282 –55 16 –321 –57 15 –297 –172 100 –1,162 –436 179 –2,472 Labor: Implement unemployment insurance integrity legislation 2, 9 ������������������������������������������������������ Reform FECA program ����������������������������������������� Extend foreign labor certification fees ����������������� Reform Trade Adjustment Assistance ������������������ Total, Labor ���������������������������������������������������� ......... ......... ......... ......... ......... ......... –10 ......... 139 129 –246 –14 ......... 532 272 –343 –7 1 796 447 –281 –10 17 1,033 759 –210 –20 18 938 726 –235 –29 18 856 610 –286 –39 20 807 502 –61 –50 20 799 708 5 –60 20 816 781 –264 –71 21 847 533 –1,080 –61 36 3,438 2,333 –1,921 –310 135 7,563 5,467 State: Change retention policy for consular fees (receipt effect) 2 ���������������������������������������������������������������� ......... 782 1,108 1,123 1,138 1,155 1,171 1,189 1,207 1,225 1,244 5,306 11,342 –115 –119 –124 –109 –113 –118 –122 –127 –132 –531 –1,143 –87 –5 –86 –126 –90 –150 –78 –56 –82 88 –85 186 –88 –62 –92 –13 –96 –8 –392 –323 –835 –132 Increase return from minerals on Federal lands: End Abandoned Mine Lands (AML) payments to certified States ��������������������� Impose fee on nonproducing oil and gas leases ���������������������������������������������������������� Repeal Energy Policy Act fee prohibition and mandatory permit funds ��������������������������� Reauthorize Federal land sales/acquisition law (FLTFA) ������������������������������������������������������������� Repeal geothermal payments to counties under EPAct ����������������������������������������������������������������� Return to net receipts sharing for energy minerals ������������������������������������������������������������� Reserve funds for insular affairs assistance �������� Total, Interior ������������������������������������������������� SUMMARY TABLES Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued Treasury: 43 Levy payments to Federal contractors with delinquent tax debt: Authorize post-levy due process (receipt effect) 2 ���������������������������������������������������������� ......... –64 Increase levy authority to 100 percent for vendor payments (receipt effect) 2 ������������� ......... –51 Revise terrorism risk insurance program 2 ���������� ......... 14 44 Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 Offset tax refunds to collect deliquent taxes for out-of-state residents ���������������������������������������� Establish FMS debt collection fee ������������������������ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Restructure assistance to New York City: Provide tax incentives for transportation infrastructure (receipt effect) 2 ������������������������� Total, Treasury ����������������������������������������������� ......... ......... 200 99 200 –7 200 –131 200 –164 200 –43 200 93 200 183 200 –72 200 –32 200 –36 1,000 –246 2,000 –110 ......... ......... ......... ......... ......... ......... ......... ......... 47 ......... ......... –3 ......... ......... ......... 44 49 –559 313 –6 2 20 –86 –267 51 –571 326 –10 1 –7 –99 –309 53 –584 339 –13 ......... –13 –5 –223 54 –597 353 –16 –1 –20 ......... –227 54 –611 367 –20 –2 –27 ......... –239 54 ......... ......... –23 –3 ......... ......... 28 53 ......... ......... –27 –4 ......... ......... 22 53 ......... ......... –30 –5 ......... ......... 18 52 ......... ......... –33 –5 ......... ......... 14 254 –2,311 1,331 –48 2 –20 –190 –982 520 –2,922 1,698 –181 –17 –47 –190 –1,139 ......... ......... –50 –100 ......... –200 –75 ......... –300 –25 –200 –425 ......... –200 –550 ......... –200 –550 ......... –200 –550 ......... –200 –550 ......... –200 –550 ......... –200 –550 ......... –200 –550 –200 –600 –2,025 –200 –1,600 –4,775 –3 –53 –7 –307 –7 –382 –7 –657 –6 –756 –6 –756 –6 –756 –6 –756 –6 –756 –6 –756 –6 –756 –33 –2,858 –63 –6,638 Social Security Administration: Require States and localities to provide pension information �������������������������������������������������������� Revert to Quarterly Wage Reporting ������������������� Total, Social Security Administration ���������� ......... ......... ......... ......... 20 20 ......... 30 30 ......... 100 100 –172 ......... –172 –375 ......... –375 –492 ......... –492 –523 ......... –523 –478 ......... –478 –452 ......... –452 –417 ......... –417 –547 150 –397 –2,909 150 –2,759 Other Independent Agencies: Reform financial regulatory system ��������������������� ......... 867 1,595 2,204 2,583 2,893 3,052 2,397 1,855 1,433 1,141 10,142 20,020 Veterans Affairs: Implement concurrent receipt policy: Effect on Veterans disability payments �������� Extend VBA pension limitation ��������������������������� Medicaid impact �������������������������������������������� Reform criteria for special monthly pension ������� Extend VBA authority for use of HHS data �������� Extend veterans income verification �������������������� Provide authority for vendee loan pooling ����������� Total, Veterans Affairs ����������������������������������� Federal Communications Commission (FCC): Auction domestic satellite spectrum �������������������� Provide permanent auction authority ������������������ Enact spectrum license user fee ��������������������������� Eliminate Telecommunications Development Fund ������������������������������������������������������������������� Total, FCC ������������������������������������������������������ MID-SESSION REVIEW (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Reflect discrimination claims settlement ������������ Total, other independent agencies ���������������� Multi-Agency: Fund Cobell settlement costs ������������������������������� Implement program integrity allocation adjustments 2 ����������������������������������������������������� Exclude refundable tax credits from meanstested programs ������������������������������������������������ Reform asset limits in means-tested programs ��� Total, multi-agency ���������������������������������������� Total, mandatory and receipt proposals ������ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 690 690 230 1,097 230 1,825 ......... 2,204 ......... 2,583 ......... 2,893 ......... 3,052 ......... 2,397 ......... 1,855 ......... 1,433 ......... 1,141 460 10,602 460 20,480 1,512 400 400 200 200 200 200 200 100 ......... ......... 1,400 1,900 ......... –1,866 –4,561 –7,011 –9,459 –12,517 –15,821 –17,955 –19,465 –21,157 –22,527 –35,414 –132,339 21 21 21 20 15 15 14 13 13 12 12 ......... 233 464 672 640 595 555 523 501 497 499 1,533 –1,212 –3,676 –6,119 –8,604 –11,707 –15,052 –17,219 –18,851 –20,648 –22,016 92 156 2,604 5,179 –31,318 –125,104 SUMMARY TABLES Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued 54,495 144,717 –19,750 –92,924–108,340–121,870–132,559–141,780–148,778–157,574–166,984 –198,167 –945,842 Note: For receipt effects, positive figures indicate lower receipts. For outlay effects, positive figures indicate higher outlays. For net costs, positive figures indicate higher deficits. Note: Figures displayed in the table do not reflect the impact of any recommendations from the Fiscal Commission. 1 The estimates for this proposal include effects on outlays. The outlay effects included in the totals above are listed below: 2010 ......... 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 703 20,792 ......... ......... ......... ......... ......... ......... ......... ......... 21,495 21,495 72 191 83 ......... ......... ......... ......... ......... ......... ......... ......... 274 274 2,435 ......... ......... 1,815 80 ......... ......... 1,605 385 ......... 1,566 395 ......... 1,546 396 ......... 1,539 390 ......... 1,549 390 ......... 1,568 392 1,593 394 ......... 1,622 395 ......... 1,645 393 1,815 6,336 1,566 1,815 14,313 3,530 ......... ......... ......... ......... 570 ......... 83 3,715 4,667 146 1,402 4,924 149 1,369 5,187 158 1,366 5,477 177 1,349 5,738 200 1,337 5,781 223 1,339 5,826 250 1,340 5,893 281 1,353 5,951 536 8,422 20,255 1,667 15,140 49,444 66 ......... ......... 177 –106 225 170 –64 1,031 150 –62 2,238 143 –61 3,519 142 –60 4,844 142 –61 6,181 142 –61 7,513 142 142 142 –63 –65 –68 8,839 10,159 11,473 782 –353 11,857 1,492 –671 56,022 45 Extend making work pay tax credit in 2011 ������� Extend COBRA health insurance premium assistance ���������������������������������������������������������� Extend option for grants to States in lieu of housing tax credits �������������������������������������������� Expand earned income tax credit ������������������������ Expand child and dependent care tax credit ������� Provide for automatic enrollment in IRAs and double the tax credit for small employer plan startup costs ������������������������������������������������������ Expand saver’s credit �������������������������������������������� Provide American opportunity tax credit ������������ Continue certain expiring provisions through calendar year 2011 �������������������������������������������� Eliminate advanced earned income tax credit ���� Reform and extend build America bonds ������������� 2011 46 Table S–9. MANDATORY AND RECEIPT PROPOSALS—Continued (Deficit increases (+) or decreases (–) in millions of dollars) Totals 2010 Total outlay effects of receipt proposals ������� 2 2,573 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 3,655 32,467 10,759 12,248 13,856 15,465 16,872 18,293 19,736 21,170 2011– 2015 72,985 2011– 2020 164,521 The estimates for this proposal include effects on receipts. The receipt effects included in the totals above are listed below. 2010 Provide $250 economic recovery payments ��������� Jobs initiatives allowance ������������������������������������� Preserve cost-sharing of inland waterways capital costs ������������������������������������������������������� Increase fees for migratory bird hunting and conservation stamps ����������������������������������������� Implement unemployment insurance integrity legislation ���������������������������������������������������������� Change retention policy for consular fees ������������ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011– 2015 2011– 2020 –454 –1,360 1,250 20,000 ......... 3,750 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... –1,360 23,750 –1,360 23,750 ......... ......... –196 –163 –187 –129 –100 –72 –70 –68 –68 –675 –1,053 ......... –14 –14 –14 –14 –14 –14 –14 –14 –14 –14 –70 –140 ......... ......... ......... 782 –37 1,108 –37 1,123 –10 1,138 63 1,155 42 1,171 –2 1,189 234 1,207 313 1,225 58 1,244 –21 5,306 624 11,342 Levy payments to Federal contractors with delinquent tax debt: Authorize post-levy due process ������������������� Increase levy authority to 100 percent for vendor payments ��������������������������������������� ......... –64 –115 –119 –124 –109 –113 –118 –122 –127 –132 –531 –1,143 Revise terrorism risk insurance program ������������ Restructure assistance to New York City: Provide tax incentives for transportation infrastructure ���������������������������������������������������� Implement program integrity allocation adjustments—IRS ��������������������������������������������� Total receipt effects of mandatory proposals ......... ......... –51 44 –87 68 –86 4 –90 40 –78 110 –82 211 –85 260 –88 –15 –92 18 –96 19 –392 266 –835 759 ......... 200 200 200 200 200 200 200 200 200 200 1,000 2,000 ......... –385 –1,164 –2,355 –3,955 –6,015 –7,987 –9,238 –9,931 –10,378 –10,809 796 19,152 3,513 –1,447 –3,002 –4,817 –6,672 –7,880 –8,599 –8,923 –9,598 –13,874 13,399 –62,217 –28,273 MID-SESSION REVIEW 3 Relative to the February Budget, the allowance for other jobs initiatives has been reduced to reflect the subsequent proposal or enactment of jobs initiatives that had not been previously specified. 4 A comprehensive market-based climate change policy will be deficit neutral because proceeds from emissions allowances will be used to compensate vulnerable families, communities, and businesses during the transition to a clean energy economy. Receipts will also be reserved for investments to reduce greenhouse gas emissions, including support of clean energy technologies, and in adapting to the impacts of climate change, both domestically and in developing countries. 5 Receipt effects unless otherwise noted. 6 The Administration continues to support expanding refundability of the child tax credit by lowering the refundability threshold to $3,000, as well as the expansion of the earned income tax credit for married couples by increasing the phase-out threshold by $5,000 compared to other filers. These policies are incorporated in the baseline projection of current policy. 7 This provision is estimated to have zero receipt effects under the Administration’s current projections for energy prices. 8 Outlay effects unless otherwise noted. 9 Net of income offsets. (Budgetary resources in billions of dollars) 2009 Actual NonARRA Discretionary Policy by Category: Security Agencies ���������������������� Non-Security Agencies ������������� 650.1 407.8 Total, Base Discretionary Funding ��� 1,057.9 Other Discretionary Funding (not included above): Overseas Contingency Operations 2 ��������������������������� Other Supplemental/ Emergency Funding ������������� Proposed 2010 Supplemental Funding 3 �������������������������������� Totals 2010 2011 ARRA 1 Enacted Request 2012 12.0 253.1 683.7 445.7 719.2 441.4 745.9 446.4 2013 2014 767.1 446.2 2015 788.0 459.2 2016 812.4 472.3 2017 833.7 478.8 2018 855.8 488.9 2019 878.5 501.6 2011– 2015 2020 902.1 517.0 2011– 2020 927.0 3,832.6 8,229.7 537.5 2,265.5 4,789.3 265.1 1,129.4 1,160.6 1,192.3 1,213.3 1,247.2 1,284.7 1,312.5 1,344.6 1,380.1 1,419.2 1,464.6 6,098.1 13,019.0 146.0 ......... 130.0 159.3 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 359.3 609.3 44.1 ......... 0.5 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 46.2 –* –* * * * * * * * * –* –* Grand Total, Discretionary Budgetary Resources ������������������ 1,247.9 Memorandum: Base Security Budget Authority adjusted for Inflation and Population ������������������������������������ 682.2 Base Non-Security Budgetary Resources adjusted for Inflation and Population ����������������������������� 427.9 Grand Total, Discretionary Budgetary Resources adjusted for Inflation and Population ������������� 1,309.5 Grand Total, Discretionary Budgetary Resources as a Percent of GDP ����������������������������� 8.8% SUMMARY TABLES Table S–10. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY CATEGORY 265.1 1,306.1 1,319.9 1,242.3 1,263.3 1,297.2 1,334.7 1,362.5 1,394.6 1,430.1 1,469.2 1,514.6 6,457.4 13,628.3 12.6 696.7 719.2 726.0 725.5 724.0 724.4 721.6 718.4 715.5 712.8 710.6 3,619.0 7,198.0 265.6 454.2 441.4 434.5 422.0 421.8 421.1 414.4 410.4 408.6 408.5 412.1 2,140.9 4,194.8 278.1 1,331.0 1,319.9 1,209.1 1,194.8 1,191.8 1,190.1 1,179.3 1,170.7 1,164.8 1,160.8 1,161.0 6,105.7 11,942.4 1.9% 8.9% 8.6% 7.7% 7.4% 7.2% 7.0% 6.8% 6.6% 6.5% 6.4% 6.3% 7.6% 7.0% * $50 million or less. 1 “ARRA” refers to the American Recovery and Reinvestment Act of 2009 (P.L. 111–5). 2 The Budget includes placeholder estimates of $50 billion per year for Overseas Contingency Operations in 2012 and beyond. These estimates do not reflect any specific policy decisions. 47 48 Table S–10. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY CATEGORY—Continued (Budgetary resources in billions of dollars) 3 At the time the 2011 Mid-Session Report was prepared, a 2010 Supplemental had not been enacted. Therefore, the Administration’s 2010 Requested Supplemental from the 2011 Budget, as amended, is included in the estimates. This estimate is updated to include budget amendments and other new requests for FEMA’s Disaster Relief Fund, the earthquake response in Haiti, the Port of Guam, the BP Deepwater Horizon Oil Spill, the Title 17 Loan Guarantee Program, security enhancements for the Southwest Border, and Mine Safety. Although transmitted as a discretionary budget amendment, the requested supplemental does not include funding for 2010 to implement the settlement of a case involving the management of individual Indian trust accounts related to Indian lands (Cobell) or funding to settle claims of prior discrimination brought by black farmers against the Department of Agriculture (Pigford). It is assumed that this funding will be enacted in a mandatory authorization bill. The 2011 to 2020 levels for the supplemental (all estimated to be under $50 million per year) are for spending and reimbursement for oil spill employment assistance, oil spill unemployment assistance, oil spill supplemental nutrition assistance, and oil spill Section 32 response and reflect a probabilistic score that captures any potential Oil Spill of National Significance. MID-SESSION REVIEW (Budgetary resources in billions of dollars) 2009 Actual Totals 2011 Non- ARRA 1 2010 Enacted Request 2012 ARRA 2013 2014 2015 20112015 20112020 SUMMARY TABLES Table S–11. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY AGENCY Base Discretionary Resources by Agency: Security Agencies: Defense (DOD) ����������������������������������������������������������������������������������������������� Energy—National Nuclear Security Administration ���������������������������������� Homeland Security (DHS) 2 �������������������������������������������������������������������������� Veterans Affairs 3 ������������������������������������������������������������������������������������������� State and Other International Programs 4 �������������������������������������������������� Subtotal, Security Agencies ���������������������������������������������������������������������������� 513.2 9.1 42.1 47.6 38.1 650.1 7.4 ......... 2.8 1.4 0.4 12.0 530.8 9.9 39.4 53.1 50.6 683.7 548.9 11.2 43.6 57.0 58.5 719.2 566.4 11.1 44.2 59.7 64.6 745.9 581.8 11.4 44.8 61.3 67.8 767.1 597.8 11.9 45.3 63.0 70.1 788.0 22.6 9.4 3.1 41.4 16.9 77.6 40.0 11.2 26.0 12.9 0.1 70.5 16.8 53.7 12.6 5.3 7.6 6.9 7.8 1.0 81.1 36.7 22.4 13.6 3.0 4.0 4.8 0.2 48.1 48.1 ......... 0.3 4.6 7.2 25.0 13.9 7.2 46.8 16.5 84.1 42.9 12.1 27.6 14.3 0.1 76.0 21.8 54.2 13.6 5.4 10.3 23.9 9.0 1.3 49.7 17.2 83.6 41.6 12.0 24.1 14.0 0.1 77.6 22.8 54.8 13.9 4.9 10.0 24.6 9.1 1.1 50.1 17.2 82.4 41.3 11.8 28.5 13.5 0.1 79.2 70.0 9.3 14.1 4.7 9.4 24.5 8.8 1.2 50.2 17.3 80.7 42.0 11.8 28.0 13.1 0.1 80.6 33.8 46.8 14.5 4.6 8.8 25.2 8.5 1.3 51.4 17.8 83.1 44.1 12.2 29.0 13.3 0.1 82.1 39.0 43.1 15.1 4.7 8.6 616.0 2,910.9 6,255.3 12.4 57.9 124.4 46.7 224.6 481.4 64.7 305.6 659.7 72.5 333.5 709.0 812.4 3,832.6 8,229.7 Non-Security Agencies: Agriculture 4 ��������������������������������������������������������������������������������������������������� Commerce ������������������������������������������������������������������������������������������������������ Census Bureau �������������������������������������������������������������������������������������������� Education 5 ����������������������������������������������������������������������������������������������������� Energy (excluding National Nuclear Security Administration) ������������������ Health and Human Services (HHS) 6 ������������������������������������������������������������ Housing and Urban Development ���������������������������������������������������������������� Interior ����������������������������������������������������������������������������������������������������������� Justice ������������������������������������������������������������������������������������������������������������ Labor �������������������������������������������������������������������������������������������������������������� State and Other International Programs 4 ��������������������������������������������������� Transportation ����������������������������������������������������������������������������������������������� Budget Authority (BA) �������������������������������������������������������������������������������� Obligation Limitations ������������������������������������������������������������������������������� Treasury ��������������������������������������������������������������������������������������������������������� Corps of Engineers ���������������������������������������������������������������������������������������� Environmental Protection Agency ���������������������������������������������������������������� 26.0 8.8 1.5 52.7 18.3 85.5 45.3 12.4 29.9 13.5 0.1 84.7 41.2 43.6 15.9 4.8 8.5 124.2 44.2 6.4 254.1 87.7 415.2 214.3 60.3 139.5 67.4 0.6 404.2 206.6 197.6 73.6 23.6 45.4 266.1 101.1 29.1 537.5 186.6 881.2 464.1 126.6 291.8 138.5 1.3 824.5 418.1 406.4 159.0 49.3 89.0 49 50 Table S–11. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY AGENCY—Continued (Budgetary resources in billions of dollars) 2009 Actual Totals 2011 Non- ARRA 1 2010 Enacted Request 2012 ARRA General Services Administration ������������������������������������������������������������������ National Aeronautics and Space Administration ���������������������������������������� National Science Foundation ������������������������������������������������������������������������ Small Business Administration �������������������������������������������������������������������� Social Security Administration 6 ������������������������������������������������������������������� Corporation for National and Community Service �������������������������������������� Other Agencies ����������������������������������������������������������������������������������������������� 2013 2014 2015 20112015 20112020 0.6 17.8 6.5 0.6 8.5 0.9 18.6 354.0 407.8 5.9 1.0 3.0 0.7 1.1 0.2 0.3 253.1 253.1 0.6 18.7 6.9 0.8 9.3 1.2 19.5 391.4 445.7 0.7 18.9 7.4 1.0 10.1 1.4 20.2 386.6 441.4 0.6 19.4 7.8 1.0 10.5 1.7 19.2 437.1 446.4 0.6 20.0 8.3 0.9 10.9 2.0 18.6 399.4 446.2 0.6 20.6 8.9 0.9 11.4 2.3 19.1 416.0 459.2 0.7 3.2 6.8 21.0 99.9 212.6 9.5 41.9 96.9 1.0 4.8 9.9 11.7 54.7 117.6 2.6 10.0 26.9 19.5 96.7 202.0 428.7 2,067.9 4,382.9 472.3 2,265.5 4,789.3 Overseas Contingency Operations 7 �������������������������������������������������������������� Defense ����������������������������������������������������������������������������������������������������������� Homeland Security ���������������������������������������������������������������������������������������� Justice ������������������������������������������������������������������������������������������������������������ 146.0 145.7 0.3 ......... ......... ......... ......... ......... 130.0 129.6 0.2 0.1 159.3 159.1 0.3 ......... 50.0 50.0 ......... ......... 50.0 50.0 ......... ......... 50.0 50.0 ......... ......... 50.0 50.0 ......... ......... 359.3 359.1 0.3 ......... 609.3 609.1 0.3 ......... Other Enacted Supplemental or Emergency Funding ����������������������������� Agriculture ����������������������������������������������������������������������������������������������������� Energy (excluding National Nuclear Security Administration) ������������������ Health and Human Services ������������������������������������������������������������������������� State and Other International Programs ����������������������������������������������������� Department of Transportation ����������������������������������������������������������������������� Corps of Engineers-Civil Works ��������������������������������������������������������������������� Other Agencies ����������������������������������������������������������������������������������������������� 44.1 1.4 7.9 10.5 13.8 3.0 6.6 0.9 ......... ......... ......... ......... ......... ......... ......... ......... 0.5 0.4 ......... ......... ......... ......... ......... 0.1 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Proposed 2010 Supplemental Funding 8 ������������������������������������������������������� Defense (includes Overseas Contingency Operations) ���������������������������������� Homeland Security ���������������������������������������������������������������������������������������� ......... ......... ......... ......... ......... ......... 46.2 33.6 5.5 –* ......... ......... –* ......... ......... * ......... ......... * ......... ......... * ......... ......... –* ......... ......... –* ......... ......... Subtotal, Non-Security Discretionary Budget Authority ������������������������ Subtotal, Non-Security Discretionary Budgetary Resources ����������������� Other Discretionary Funding (not included above): MID-SESSION REVIEW (Budgetary resources in billions of dollars) 2009 Actual Totals 2011 Non- ARRA 1 2010 Enacted Request 2012 ARRA State and Other International Programs ����������������������������������������������������� Other Agencies ����������������������������������������������������������������������������������������������� ......... ......... ......... ......... 6.2 0.9 ......... –* ......... –* 2013 ......... * 2014 ......... * 2015 ......... * 20112015 ......... –* 20112020 SUMMARY TABLES Table S–11. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY AGENCY—Continued ......... –* Grand Total, Discretionary Budget Authority ����������������������������������������������� 1,194.2 265.1 1,251.8 1,265.1 1,233.0 1,216.5 1,254.1 1,291.1 6,259.8 13,221.9 Grand Total, Discretionary Budgetary Resources ���������������������������������������� 1,247.9 265.1 1,306.1 1,319.9 1,242.3 1,263.3 1,297.2 1,334.7 6,457.4 13,628.3 * $50 million or less. “ARRA” refers to the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). 2 The DHS level includes $1.8 billion for BioShield in 2009 and a -$3.0 billion transfer in 2010 of BioShield balances to HHS. 3 The Veterans Affairs total is net of medical care collections. 4 The Security category for State and Other International Programs consists entirely of International Function 150. This includes funding for International Food Aid programs in the Department of Agriculture. 5 Adjusted for advance appropriations, 2009 funding for the Department of Education is $46.2 billion. All numbers exclude funding for Pell Grants. 6 Funding from the Hospital Insurance and Supplementary Medical Insurance trust funds for administrative expenses incurred by the Social Security Administration that support the Medicare program is included in the HHS total and not in the Social Security Administration total. Additionally, the HHS total includes $0.4 billion and $3.0 billion in 2009 and 2010, respectively, for transfer of the BioShield program in DHS. 7 The Budget includes placeholder estimates of $50 billion per year for Overseas Contingency Operations in 2012 and beyond. These estimates do not reflect any specific policy decisions. 8 At the time the 2011 Mid-Session Report was prepared, a 2010 Supplemental had not been enacted. Therefore, the Administration’s 2010 Requested Supplemental from the 2011 Budget, as amended, is included in the estimates. This estimate is updated to include budget amendments and other new requests for FEMA’s Disaster Relief Fund, the earthquake response in Haiti, the Port of Guam, the BP Deepwater Horizon Oil Spill, the Title 17 Loan Guarantee Program, security enhancements for the Southwest Border, and Mine Safety. Although transmitted as a discretionary budget amendment, the requested supplemental does not include funding for 2010 to implement the settlement of a case involving the management of individual Indian trust accounts related to Indian lands (Cobell) or funding to settle claims of prior discrimination brought by black farmers against the Department of Agriculture (Pigford). It is assumed that this funding will be enacted in a mandatory authorization bill. The 2011 to 2020 levels for the supplemental (all estimated to be under $50 million per year) are for spending and reimbursement for oil spill employment assistance, oil spill unemployment assistance, oil spill supplemental nutrition assistance, and oil spill Section 32 response and reflect a probabilistic score that captures any potential Oil Spill of National Significance. 1 51 52 Table S–12. OUTLAYS FOR MANDATORY PROGRAMS UNDER CURRENT LAW 1, 2 (In billions of dollars) 2009 Actual Estimate 2010 2011 2012 2013 2014 2015 Human resources programs: Education, training, employment and social services �������������������������������������������������������������������������� Health ����������������������������������������������������������������������������������������������������������������������������������������������������� Medicare ������������������������������������������������������������������������������������������������������������������������������������������������� Income security �������������������������������������������������������������������������������������������������������������������������������������� Social Security ���������������������������������������������������������������������������������������������������������������������������������������� Veterans’ benefits and services ������������������������������������������������������������������������������������������������������������� Subtotal, human resources programs �������������������������������������������������������������������������������������������� –3 278 425 470 678 49 1,896 –6 306 450 555 702 62 2,069 9 305 475 477 729 78 2,074 15 303 463 428 761 66 2,036 9 324 501 434 802 76 2,145 11 452 530 431 847 82 2,354 12 507 556 429 896 87 2,486 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 �������������������������������������������������������������������������������������������������������������������������������������� Subtotal, other mandatory programs �������������������������������������������������������������������������������������������� 4 –6 –1 16 284 2 3 2 4 –93 1 216 5 –3 4 18 –56 3 1 2 4 –80 1 –100 5 –2 3 17 29 3 1 5 5 –89 3 –19 5 –2 2 9 11 2 1 4 6 –89 3 –48 5 –2 –1 17 –14 2 * 3 5 –93 3 –74 5 –2 –2 14 –22 2 * 2 5 –95 3 –88 5 –2 –3 13 –30 2 * 2 5 –99 3 –102 Total, outlays for mandatory programs under current law ������������������������������������������������������ 2,112 1,969 2,055 1,988 2,071 2,265 2,384 MID-SESSION REVIEW *$500 million or less. This table meets the requirements of Section 221(b) of the Legislative Reorganization Act of 1970. 2 Estimates are based on the Budget Enforcement Act (BEA) baseline. The BEA baseline differs in some instances from current law (see the chapter on “Current Services Estimates” in the Analytical Perspectives volume of the 2011 Budget) and also from the baseline projection of current policy (see Table S–7). 1 (In billions of dollars) Totals 2008 Transactions between Treasury and Fannie Mae/Freddie Mac: Senior Preferred Liquidity Payments to Fannie Mae/Freddie Mac������������������������������������������������ Senior Preferred Dividend Payments from Fannie Mae/Freddie Mac ����������������������������������������������� Net Payments �������������������������������������������������� 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011- 20112015 2020 ......... 96 69 23 ......... ......... ......... ......... ......... ......... ......... ......... ......... 23 23 ......... ......... –4 91 –12 57 –18 5 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –7 –44 –21 –78 –55 –18 –3 –18 –3 SUMMARY TABLES Table S–13. MARKET VALUATION AND BALANCE SHEET OF FANNIE MAE AND FREDDIE MAC Market Valuation of Fannie Mae and Freddie Mac: Market Value of Net Liability ������������������������������� Value of Private Equity Shares ����������������������������� Net Position of Fannie Mae and Freddie Mac: Assets: U.S. Treasury Securities ��������������������������������� Other Financial Assets ����������������������������������� Cash ����������������������������������������������������������������� Other ��������������������������������������������������������������� ......... 12 1,524 1,579 115 110 63 54 Liabilities: Debt Outstanding ������������������������������������������� Other Financial Liabilities ����������������������������� 1,615 90 1,607 155 ......... –4 –4 96 –101 –5 Equity: Treasury Senior Preferred Stock ������������������ Private Equity ����������������������������������������������� Net Position ������������������������������������������������ 53 54 Table S–14. FEDERAL GOVERNMENT FINANCING AND DEBT (In billions of dollars) Actual 2009 Financing: Unified budget deficit ���������������������������������������������������������������������������������� Estimate 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1,413 1,471 1,416 911 736 698 762 758 721 749 822 900 –96 –5 –200 ......... ......... ......... ......... ......... ......... ......... ......... ......... Direct loan accounts ������������������������������������������������������������������ 293 200 142 131 114 107 110 96 99 90 103 114 Guaranteed loan accounts ��������������������������������������������������������� 7 –7 8 11 10 6 4 3 1 -2 -4 -6 Troubled Asset Relief Program (TARP) equity purchase accounts ��������������������������������������������������������������������������������� 105 –3 –15 * –2 –5 –4 –5 -9 -11 -25 -16 –3 22 –1 ......... –1 ......... –1 ......... –1 ......... –1 ......... –1 ......... –1 ......... -1 ......... -1 ......... -1 ......... -1 ......... 329 –* 329 184 –* 183 –66 –* –66 141 –* 141 122 –* 121 108 –* 108 109 –* 108 93 –1 92 90 -1 89 76 -1 75 73 -1 72 91 -1 90 1,742 1,655 1,350 1,052 857 805 870 850 810 824 895 991 1,742 148 4 1,893 1,655 248 –2 1,901 1,350 137 –1 1,486 1,052 201 1 1,255 857 261 1 1,120 805 306 1 1,111 870 350 1 1,221 850 375 1 1,226 810 395 1 1,206 824 377 1 1,202 895 370 1 1,265 991 364 –* 1,355 Other transactions affecting borrowing from the public: Changes in financial assets and liabilities: 1 Change in Treasury operating cash balance 2 ��������������������������������� Net disbursements of credit financing accounts: Net purchases of non-Federal securities by the National Railroad Retirement Investment Trust (NRRIT) �������������������������������������� Net change in other financial assets and liabilities 3 ���������������������� Subtotal, changes in financial assets and liabilities ���������������� Seigniorage on coins ���������������������������������������������������������������������������� Total, other transactions affecting borrowing from the public ������ Total, requirement to borrow from the public (equals 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 ������������������������������������������ Change in other factors ������������������������������������������������������������������������������ Total, change in debt subject to statutory limitation ������������������������� Debt Outstanding, End of Year: Gross Federal debt: 6 Debt issued by Treasury ���������������������������������������������������������������������� 11,850 13,752 15,238 16,491 17,610 18,720 19,940 21,165 22,371 23,572 24,837 26,192 MID-SESSION REVIEW Debt Subject to Statutory Limitation, End of Year: Debt issued by Treasury ����������������������������������������������������������������������������� 11,850 13,752 15,238 16,491 17,610 18,720 19,940 21,165 22,371 23,572 24,837 26,192 Adjustment for discount, premium, and coverage 4 ����������������������������������� 3 2 2 4 5 6 7 8 8 9 9 9 Total, debt subject to statutory limitation 5 ���������������������������������������� 11,853 13,754 15,240 16,495 17,614 18,726 19,947 21,173 22,379 23,581 24,846 26,200 (In billions of dollars) Actual 2009 Estimate 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Debt issued by other agencies ������������������������������������������������������������� 26 27 27 27 27 28 28 28 27 26 26 26 Total, gross Federal debt ������������������������������������������������������������������ 11,876 13,779 15,265 16,518 17,637 18,748 19,968 21,192 22,398 23,598 24,863 26,218 Held by: Debt held by Government accounts ���������������������������������������������������� Debt held by the public 7 ���������������������������������������������������������������������� 4,331 7,545 4,579 4,716 4,917 5,178 5,483 5,833 6,208 6,603 6,979 7,349 7,713 9,199 10,550 11,602 12,459 13,264 14,134 14,984 15,795 16,619 17,514 18,505 Debt Held by the Public Net of Financial Assets: Debt held by the public ������������������������������������������������������������������������������� 7,545 9,199 10,550 11,602 12,459 13,264 14,134 14,984 15,795 16,619 17,514 18,505 Less financial assets net of liabilities: Treasury operating cash balance 2 ������������������������������������������������������ 275 270 70 70 70 70 70 70 70 70 70 70 Credit financing account balances: Direct loan accounts ������������������������������������������������������������������������� Guaranteed loan accounts ��������������������������������������������������������������� TARP equity purchase accounts ������������������������������������������������������ Government-sponsored enterprise preferred stock ��������������������������� Non-Federal securities held by NRRIT ���������������������������������������������� Other assets net of liabilities �������������������������������������������������������������� Total, financial assets net of liabilities �������������������������������������������� 489 –35 105 65 22 –22 899 689 –42 102 102 21 –22 1,121 831 –34 87 115 20 –22 1,067 962 –23 88 115 19 –22 1,208 1,076 –13 86 115 18 –22 1,330 1,183 –7 82 115 17 –22 1,438 1,293 –2 77 115 16 –22 1,547 1,389 1 73 115 15 –22 1,639 1,488 2 64 115 13 -22 1,730 1,578 –* 53 115 12 -22 1,805 1,681 -4 28 115 11 -22 1,878 1,795 -10 12 115 10 -22 1,969 6,646 8,079 9,482 10,393 11,129 11,826 12,588 13,345 14,065 14,814 15,636 16,535 Debt held by the public net of financial assets ������������������������ 55 * $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 negative sign; that is, the reduction in cash balances reduces the amount that would otherwise be borrowed from the public. An increase in checks outstanding (which is a liability) is also a means of financing a deficit and therefore also has a negative sign. 2 Includes assumed Supplementary Financing Program balance of $200 billion on September 30, 2010, and zero on September 30, 2011, and beyond. 3 Includes checks outstanding, 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. 4 Consists mainly of debt issued by the Federal Financing Bank (which is not subject to limit), debt held by the Federal Financing Bank, 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. 5 The statutory debt limit is $14,294 billion, as enacted on February 12, 2010. 6 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). 7 At the end of 2009, the Federal Reserve Banks held $769.2 billion of Federal securities and the rest of the public held $6,775.5 billion. Debt held by the Federal Reserve Banks is not estimated for future years. SUMMARY TABLES Table S–14. FEDERAL GOVERNMENT FINANCING AND DEBT—Continued ) Executive Office of the President Office of Management and Budget Wa s h i n g t o n , D. C . 2 0 5 0 3