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FISCAL YEAR 2012 MID-SESSION REVIEW BUDGET OF THE U.S. GOVERNMENT OFFICE OF MANAGEMENT AND BUDGET BUDGET.GOV FISCAL YEAR 2012 MID-SESSION REVIEW BUDGET OF THE U.S. GOVERNMENT OFFICE OF MANAGEMENT AND BUDGET EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON D. C. 20503 THE DIRECTOR September 1, 2011 The Honorable John A. Boehner Speaker of the House of Representatives Washington, DC 20510 Dear Mr. 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 2011 through 2021. Sincerely, Jacob J. Lew 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�����������������������������������������������������������������������������������������������������������������������������������������������������15 Expenditures���������������������������������������������������������������������������������������������������������������������������������������������19 Summary Tables���������������������������������������������������������������������������������������������������������������������������������������23 i LIST OF TABLES Page Table 1. Changes in Deficits from the February Budget �����������������������������������������������������������������6 Table 2. Economic Assumptions ������������������������������������������������������������������������������������������������������9 Table 3. Comparison of Economic Assumptions ����������������������������������������������������������������������������12 Table 4. Alternative Economic Forecast �����������������������������������������������������������������������������������������13 Table 5. Change in Receipts ������������������������������������������������������������������������������������������������������������17 Table 6. Change in Outlays �������������������������������������������������������������������������������������������������������������22 Table S–1. Budget Totals ���������������������������������������������������������������������������������������������������������������������24 Table S–2. Effect of Budget Proposals on Projected Deficits �������������������������������������������������������������25 Table S–3. Adjusted Baseline by Category �����������������������������������������������������������������������������������������26 Table S–4. Proposed Budget by Category �������������������������������������������������������������������������������������������28 Table S–5. Proposed Budget by Category as a Percent of GDP ��������������������������������������������������������30 Table S–6. Proposed Budget in Population- and Inflation-Adjusted Dollars �����������������������������������32 Table S–7. Bridge from Budget Enforcement Act Baseline to Adjusted Baseline ����������������������������34 Table S–8. Change in the Adjusted Baseline from Budget to MSR ��������������������������������������������������35 Table S–9. Mandatory and Receipt Proposals from the February Budget ���������������������������������������37 Table S–10. Outlays for Mandatory Programs under Current Law ���������������������������������������������������51 Table S–11. Funding Levels for Appropriated (“Discretionary”) Programs by Category ������������������52 Table S–12. Federal Government Financing and Debt ������������������������������������������������������������������������53 iii SUMMARY This Mid-Session Review (MSR) updates the Administration’s estimates for outlays, receipts, and the deficit for economic, legislative, and other changes that have occurred since the President’s 2012 Budget was released in February. The 2011 deficit is now projected to be $1.316 trillion, $329 billion or 20 percent lower than the $1.645 trillion deficit projected in February, due to a combination of higher-than-expected receipts and lower-thanexpected outlays. As a percentage of gross domestic product (GDP), the deficit is now projected to equal 8.8 percent, down from 10.9 percent projected in February. The deficits for each of the following 10 years are also projected to be lower than previously projected, with a total reduction of $1.45 trillion over the 10year period. This reduction results primarily from the terms of the Budget Control Act of 2011, which the President signed on August 2. The Budget Control Act lowers future deficits by establishing caps on annually appropriated (“discretionary”) spending each year from 2012 through 2021. It also established a process for achieving further deficit reduction with the creation of a bipartisan, bicameral congressional committee (the Joint Select Committee on Deficit Reduction) tasked with recommending spending and revenue proposals that yield $1.5 trillion in deficit reduction over the 10-year period, about $500 billion in deficit reduction beyond the proposals laid out in the President’s Budget. As described more fully below, the work of the Joint Committee is critical to achieving fiscal sustainability. What is more, the Committee’s already difficult task will be made even more challenging by the fact that its recommendations will need to take into consideration the current economic climate. On the one hand, due to extraordinary policy efforts, the economy already has made substantial progress recovering ground lost during the financial crisis and subsequent 18-month recession. Between the middle of 2009 and the end of 2010, the economy grew for six consecutive quarters, with real GDP rising at an average annual rate of 3 percent; after shedding 8.8 million jobs over the previous two years, the private sector created 1.3 million new jobs in 2010; the financial system is no longer in crisis; credit and capital markets have returned to normal levels; and the cost of stabilizing the financial and automobile sectors has amounted to a fraction of initial estimates. On the other hand, the recession was deeper than originally reported, and the headwinds the economy has encountered are stronger than anticipated. First, revised estimates showed that the recession included the worst six-month period of contraction since quarterly data has been collected, falling at an average annualized rate of 7.8 percent in the fourth quarter of 2008 and the first quarter of 2009. Second, 2011 has seen drags on the economy in the form of a sharp rise in oil prices, the disruption to global supply chains as a result of the earthquake in Japan, a slowdown of growth in Europe, a sluggish rebound in the housing market, and uncertainty surrounding congressional action on the debt ceiling, all of which have delayed the recovery further. In sum, economic growth and job creation, while positive, have not been strong enough to bring down the unemployment rate to an acceptable level. That is why, in addition to the actions that were taken at the depth of the financial crisis, the Administration has taken significant steps to strengthen the recovery. On December 17, 2010, the President signed into the law the bipartisan Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, which prevented a tax increase on middle-class Americans, cut payroll taxes for 159 million workers, extended unemployment benefits for 7 million unemployed Americans, and provided a series of tax incentives to businesses to spur growth. These measures have helped buffer the economy against recent headwinds—for example, by providing households with a significant boost to their income that has helped to offset the increase in gasoline prices. Moreover, in constructing the 2012 Budget, the President laid out a plan for significant deficit reduction even while ensuring that these efforts did not threaten the recovery and maintaining investments in the elements critical to long-term economic growth: clean energy, innovation, education, and in1 2 frastructure. In the long run, only by living within our means will we be able to make the investments necessary to win the future in a competitive global economy. THE 2012 BUDGET AND SUBSEQUENT DEVELOPMENTS Accordingly, in February, the President’s 2012 Budget provided a significant down payment on the deficit reduction that we need to take, including proposing $1 trillion in deficit reduction over the next 10 years on top of the $2 trillion in projected savings from winding down operations in Afghanistan and Iraq and the expiration of the high-income tax cuts passed in 2001 and 2003. That Budget would have reduced the deficit to 3 percent of GDP by the middle of the decade and sustained that level for many years thereafter. By reducing the deficit to this size in relation to the economy, we no longer would be adding to the Government’s debt burden through additional Federal spending, but would instead be achieving what economists call “primary balance.” At the same time, the 2012 Budget included investments in areas critical to winning the future: education, innovation, clean energy, and infrastructure. Since the 2012 Budget was released, there have been three significant developments that affect both the budget itself and fiscal policy generally. First, on April 15, 2011, the President signed into law the Department of Defense and Full-Year Continuing Appropriations Act, 2011, to provide for appropriations for the rest of fiscal year 2011. This legislation cut discretionary spending by roughly $80 billion relative to the President’s 2011 Budget request. In nominal terms, these were the largest one-year cuts in history. Cuts of this magnitude entailed not only eliminating wasteful and duplicative programs, but also making cuts to programs that the Administration supports and would not have made if not for the fiscal situation. For instance, the new funding levels set in this agreement mean delaying the goal of doubling funding for key research and development (R&D) agencies along with ambitious goals set for the Nation in the President’s Budget in the areas of global health and international development. At the same time, this legislation allowed for continued investments in education, inno- MID-SESSION REVIEW vation, and critical health programs and did not include many extraneous, ideological provisions that many in Congress desired that would have, for example, damaged important efforts to reform our financial system and improve the quality and accessibility of affordable health care. Second, after the 2011 appropriations were finally completed, the President looked again to the future and presented a revised fiscal framework, building on the Budget request, that laid out a comprehensive and balanced strategy to cut spending, bring down Government debt, increase confidence in our Nation’s fiscal strength, and support our economic recovery while making the investments we need to win the future. Altogether, the plan would have reduced the deficit by $4 trillion over 12 years. The framework would have saved approximately $770 billion over 12 years in non-security discretionary spending and sought to save $400 billion in security discretionary spending after a comprehensive review of our military’s role, missions, and capabilities. In health care—a key driver of our long-term deficits—the framework identified changes to Medicare and Medicaid that would build on the efficiencies in the Affordable Care Act (ACA), saving $340 billion by 2021 and at least $1 trillion in the subsequent decade, while strengthening these programs for future generations. The framework also included a target of $360 billion in other mandatory savings by 2023. With respect to taxes, the plan called for cutting tax expenditures in order to lower tax rates while still reducing the deficit. The framework also reiterated the President’s position that the 2001 and 2003 tax cuts for those in the top 2 percent of earners should expire. Finally, the President called for a “debt failsafe” trigger to ensure a decline in Government debt as a share of the economy. Specifically, the President proposed a trigger that would require, by the second half of the decade, our Nation’s debt to be on a declining path as a share of our economy. If that target were not met by 2014, there would be automatic spending cuts (both in direct spending and spending through the tax code) as insurance against inaction. The President’s fiscal framework set the stage for the third significant development that has occurred since the release of the 2012 Budget, negotiations this summer between SUMMARY the Administration and Congress on deficit reduction and raising the statutory debt limit. Considering that both parties had agreed on the size of the deficit reduction necessary—$4 trillion over the next decade—there was hope that a balanced package of that size, which included both spending cuts and revenue measures, could be agreed to. In pursuit of this goal, the President called for an agreement on a bold plan that would have included many significant compromises for him and his party. Unfortunately, congressional Republicans would not agree to a package that included revenue increases. Agreement on a smaller package limited to spending cuts was finally reached over the last weekend in July, just before the Government exhausted its options for continuing to finance obligations under the existing debt limit. The President signed the resulting agreement, the Budget Control Act of 2011, into law on August 2. According to the Congressional Budget Office, the provisions of the Act would reduce the deficit by at least $2.1 trillion over the next decade. The first step toward this goal consists of approximately $900 billion in deficit reduction achieved through tight caps on discretionary spending. These caps will bring discretionary spending to its lowest level as a share of the economy since Dwight D. Eisenhower was President. The caps were designed to ensure that spending cuts were balanced between security and non-security programs by setting specific targets for each category during the first two years. Assuming that the reductions continue to be shared across security and non-security programs over the remainder of the 10-year period, the caps would generate $420 billion savings on security programs, an amount that includes a projected $350 billion in defense savings. The second step toward the $2.1 trillion in deficit reduction is the establishment of the bipartisan, bicameral Joint Select Committee charged with finding $1.5 trillion in additional deficit reduction by the end of November 2011. Under the Act, if the Joint Committee is unsuccessful or if Congress fails to pass the Joint Committee’s plan, then a sequester would be triggered that would cut $1.2 trillion in spending over 10 years, split evenly between defense and non-defense programs. This trigger is modeled on those devised for the Gramm-Rudman-Hollings legislation in 3 the 1980s—legislation that created automatic consequences based on congressional action or inaction that led to a period of significant deficit reduction. In addition to the deficit reduction included in the Budget Control Act, further deficit reduction can be achieved if the 2001 and 2003 tax cuts for the wealthiest Americans are allowed to expire at the end of calendar year 2012. The President has consistently said that he will refuse to let these tax cuts be extended. Allowing these tax cuts to expire as scheduled and returning the estate tax to its 2009 levels will increase revenue by $866 billion over the next 10 years. Moreover, by reducing the amount that the Government needs to borrow, this additional revenue will lead to $160 billion in lower interest costs, bringing total deficit reduction from this change in the tax code to more than $1 trillion over the next 10 years. Depending on whether the Joint Committee succeeds or the fallback spending trigger is activated, the Budget Control Act of 2011 will reduce deficits by $2.1 to $2.4 trillion over the coming 10 years. Allowing the 2001 and 2003 tax cuts for the wealthiest Americans to expire further increases the total deficit reduction to $3.1 to $3.4 trillion, equivalent to about 1.5 percent of 10-year GDP. As shown in this Mid-Session Review, the deficit reduction from the new discretionary caps, the pending recommendations of the Joint Committee, and the expiration of the upper-income tax cuts, combined with winding down operations in Afghanistan and Iraq, will bring deficits down to approximately 2.2 percent of GDP toward the end of the 10-year budget window. These policy changes would be sufficient to put the debt on a declining path as a share of the economy and would therefore place the budget in a fiscally sustainable position. The recommendations of the Joint Committee are the key to achieving this, which is why the President will recommend an ambitious, comprehensive, and balanced deficit reduction plan to Congress in September that would place the country on firm fiscal footing by the middle of this decade. At the same time, Congress must appreciate that the economy is still wrestling with the after-effects of a very severe recession. Thus, in addition to focusing on long-term deficit reduction, the President will introduce after 4 Labor Day a package of meaningful, new initiatives to promote economic growth and create jobs. These will build on the actions the President has been urging Congress to complete that will strengthen the economy and create jobs, but also include new measures that will accelerate job growth in the short term. These could include a mix of tax cuts to create jobs and provide economic security to the middle class, innovative infrastructure ideas to put people back to work, and some measures specifically targeted at the longterm unemployed and other specific sectors of the economy that are in particular need. MID-SESSION UPDATE The Mid-Session Review updates estimates of Federal receipts, outlays, and the deficit for legislation enacted through August 3, 2011— principally the Budget Control Act of 2011— and for a revised economic forecast, technical re-estimates, and other policy changes that have occurred since the February Budget was released. The economic forecast, like the one in the Congressional Budget Office’s August update, is based on economic data available through late June. In addition, reflecting the substantial data revisions since that date, the Mid-Session Review presents an alternative economic forecast using the latest available data along with estimates of the associated budgetary consequences of this forecast revision. As shown in Table 4, the budgetary effects of the latest economic data are generally similar to the forecast based on data from late June. Revised Deficit and Debt Outlook The deficit for 2011 is now expected to be $1.316 trillion, down $329 billion from the deficit of $1.645 trillion deficit estimated in February. As a percentage of GDP, the 2011 deficit is projected to be 8.8 percent of GDP, as compared to 10.9 percent of GDP projected in February. This latest projection also represents a slight decline in the deficit as a percent of GDP from 9.0 percent in 2010. A little less than half of the reduction in the estimated 2011 deficit from February is due to higher receipts. The remainder is due to a combination of lower discretionary appropriations for 2011 than in the February Budget, as provided in the full-year continuing appropriations enacted in April, and slower-than- MID-SESSION REVIEW expected spending across a range of Federal programs, including defense discretionary spending, purchases of GSE preferred stock, and unemployment benefits. The lower projected deficit this year means that the Federal Government’s borrowing needs should be lower as well. Relative to the February estimate, deficits are also expected to be lower in 2012 and in each subsequent year of the 10-year budget window, amounting to a total reduction of $1.450 trillion over 2012 through 2021. In 2012, deficits are expected to be $145 billion lower as a result of a combination of enacted legislation and policy changes ($91 billion) and economic and technical re-estimates ($54 billion, chiefly from higher receipts). Over the 10-year horizon, the total of $1.450 trillion deficit reduction from February is more than accounted for by the effect of enacted legislation and policy changes ($1.490 trillion). The revised Mid-Session Review economic forecast, discussed in detail in the next section, increases deficits by $696 billion over the 10-year period while technical revisions to revenue and spending estimates reduce deficits by a nearly offsetting amount. Taken together, the combined effect of the revisions to the economic projections and the technical re-estimation produces a deficit increase of $40 billion over the 10-year horizon. Using the alternative economic forecast that reflects data through late August, the economic and technical re-estimate would produce a $220 billion increase in the deficit over the next decade. Federal Government debt held by the public can be viewed as the sum of all prior deficits less prior surpluses and is an important indicator of the extent to which Government activity affects the financial markets. Debt held by the public is projected to be $10.264 trillion at the end of 2011, or 68.6 percent of GDP, lower than the 72.0 percent of GDP projected in February. Some debt held by the public was used to issue direct loans or to purchase financial assets as part of the Troubled Asset Relief Program (TARP). Debt held by the public excluding these and other financial assets is projected to be $9.194 trillion at the end of 2011, or 61.4 percent of GDP, down from February’s estimate of 63.0 percent of GDP. 5 SUMMARY For 2012, debt held by the public is projected to increase to $11.307 trillion, or 72.1 percent of GDP, and to increase further to 73.5 percent of GDP in 2013. After 2013, however, the deficit is projected to decline to levels that result in a declining debt-toGDP ratio, with debt reaching 70.5 percent of GDP by the end of the 10-year budget window. Debt net of financial assets is also projected to increase in 2012 and 2013, but then to begin declining, reaching 61.3 percent of GDP in 2021. Enacted Legislation Full-year appropriations. The full-year appropriations act, enacted on April 15, extended continuing appropriations at a level that was roughly $80 billion below the level proposed in the February Budget. The act also made changes to the Pell Grant program and repealed the Free Choice Voucher program originally enacted under the Affordable Care Act. Relative to the February Budget, the full-year appropriations act reduces the deficit by $51 billion in 2011 and by $49 billion over the subsequent 10 years, 2012 through 2021. Budget Control Act. The Budget Control Act of 2011, enacted on August 2, authorized increases in the debt ceiling and included a number of provisions that reduce budget deficits over the next 10 years. Incorporating the caps on discretionary budget authority enacted in the Act in the MidSession Review reduces spending relative to the February Budget by $740 billion over the next 10 years. Additional provisions in the Act that relate to program integrity initiatives and higher education financial assistance bring the reduction in spending to a total of $753 billion. This total does not include the effects of future deficit reduction recommended by the Joint Committee, as discussed below. Other enacted legislation and debt service. Other enacted legislation, including the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, has a minimal effect on the deficit. Debt service on the effects of enacted legislation brings the total deficit reduction due to enacted legislation to $989 billion over 10 years. Estimating Changes New estimates of receipts and outlays due to revisions to the economic forecast and technical revisions reduce the deficit significantly in 2011. These changes reduce the deficit by a smaller amount in 2012 and raise the deficit slightly over the 10-year period as a whole. In 2011, revisions to the economic projection and technical changes reduce the deficit by $261 billion, largely because of updated information about actual tax collections since February and actual spending trends. Higher receipts account for $141 billion of this improvement, with lower current-year spending accounting for the remainder. The reduction in spending is split roughly evenly between discretionary programs (largely slower-thananticipated spending for defense programs) and mandatory programs (including lower payments for GSE preferred stock purchases and lower spending for unemployment and veterans benefits). Over the 10-year period, revisions to the economic projection and technical re-estimates increase the deficit by $40 billion. Receipts are reduced by $46 billion, as lower tax collections due to revisions in the economic forecast, chiefly lower near-term GDP growth and lower projected wage and salary income, are partially offset by increases due to technical factors, such as new data available from 2010 tax returns. Increases in outlays due to the new economic forecast, mostly the result of higher cost-of-living adjustments and debt service on all economic changes, are very nearly offset by reductions in outlays due to technical changes. More detail about changes in receipt and outlay projections can be found in the receipt and spending sections of the Mid-Session Review. Deficit Reduction Allowance The Joint Select Committee on Deficit Reduction established by the Budget Control Act is tasked with developing legislative proposals for reducing the deficit, with a target of $1.5 trillion in deficit reduction. The Administration will be recommending a balanced array of options for reducing the deficit that encompasses the entire budget including spending and revenue measures. In light of the ongoing Joint Committee process, the Mid-Session Review includes a deficit reduc- 6 MID-SESSION REVIEW tion allowance of $1.5 trillion over 10 years. The February Budget included specific mandatory and receipt proposals that reduce the deficit by $1.0 trillion. The deficit allowance in the Mid-Session Review substitutes for the specific mandatory and receipt proposals detailed in the February Budget, and is not meant to prejudge any specific spending or receipt proposals to be recommended by the Administration and considered by the Committee. The Administration will release its recommendations for proposals to be considered by the Joint Committee in September. Relative to the policies already proposed in February, the Mid-Session Review’s allowance for Joint Committee deficit reduction reduces the deficit by $501 billion over 10 years, including debt service. Table 1. CHANGES IN DEFICITS FROM THE FEBRUARY BUDGET (In billions of dollars) 20122011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20122016 2021 February Budget deficit ������������������������������������������ 1,645 1,101 768 645 607 649 627 619 681 735 774 Percent of GDP ���������������������������������������������������� 10.9% 7.0% 4.6% 3.6% 3.2% 3.3% 3.0% 2.9% 3.0% 3.1% 3.1% Enacted legislation: Budget Control Act of 2011 ��������������������������� 2011 full-year appropriations ������������������������ Other legislation �������������������������������������������� Debt service ���������������������������������������������������� Subtotal, enacted legislation ������������������������������ –* –51 1 –* –50 –32 –21 –1 –* –54 –51 –6 1 –2 –58 –72 –3 1 –6 –80 –75 –2 1 –11 –88 Economic and technical re-estimates: Receipts ���������������������������������������������������������� Discretionary programs ��������������������������������� –141 –58 –65 13 –7 22 11 9 22 –1 20 –5 17 –6 17 –8 14 –6 10 –6 7 –6 8 –11 –1 –3 6 –17 9 –3 7 –14 11 –3 10 –11 12 –6 14 –10 13 –8 16 –10 13 –10 16 –10 13 –10 15 –11 12 –12 16 –11 11 –13 16 –11 10 –14 17 –12 8 –19 Mandatory: Refundable tax credits ������������������������������� Unemployment compensation ������������������� Social Security ��������������������������������������������� Medicaid ����������������������������������������������������� Supplemental Nutrition Assistance Program �������������������������������������������������� Foreign Military Sales Trust Fund ������������ Purchases of GSE preferred stock �������������� Veterans benefits ����������������������������������������� Civilian and military retirement ��������������� Medicare ������������������������������������������������������ Other ������������������������������������������������������������ Total mandatory �������������������������������������� Net interest1 �������������������������������������������������� Allowances for costs of future emergencies ������ Subtotal, economic and technical re-estimates � Change due to moving the February Budget proposals to the deficit reduction allowance2 ����� Total, changes ���������������������������������������������������������� Mid-Session Review deficit ������������������������������������� Percent of GDP ���������������������������������������������������� –79 –82 –87 –89 –95 –90 –309 –753 –2 –2 –2 –3 –4 –4 –35 –49 * * * * * * 2 3 –16 –21 –26 –31 –36 –42 –35 –190 –97 –105 –115 –123 –135 –135 –376 –989 –19 37 46 6 53 133 –62 –117 59 112 –29 –98 * 5 3 4 7 8 8 8 7 5 7 28 62 –* –1 1 1 * –1 –4 –4 –4 –4 –5 * –20 –25 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... –10 3 2 2 2 2 2 2 3 3 2 11 24 –* 2 2 2 2 2 2 2 2 2 2 10 21 –4 –8 –6 –5 –4 –3 2 3 4 4 8 –25 –4 –24 10 7 2 3 1 * –* –* –2 * 23 21 –70 10 –2 –261 6 –5 –3 –54 11 –23 –1 2 12 –29 –* 3 18 –13 –* 25 19 –11 –* 22 19 17 14 8 9 –8 –9 –12 –13 –16 –* ......... ......... ......... ......... 21 16 11 –1 –6 67 134 –81 –140 –6 –6 –1 40 –19 –37 –63 –95 –23 8 –43 –53 –71 –60 –64 –211 –501 –329 –145 –120 –171 –86 –66 –126 –152 –183 –195 –205 –588 –1,450 1,316 956 648 473 521 583 501 467 498 540 568 8.8% 6.1% 3.9% 2.7% 2.8% 3.0% 2.4% 2.2% 2.2% 2.3% 2.3% Note: positive figures represent higher outlays or lower receipts. *$500 million or less. 1 Includes debt service on all re-estimates. 2 Includes debt service. ECONOMIC ASSUMPTIONS This Mid-Session Review (MSR) updates the economic forecast that was completed last November and released with the 2012 Budget in early February. The 2012 Budget forecast projected that the economic recovery which began in 2009 would continue and that unemployment would fall gradually from its elevated levels. As the economy recovered, the 2012 Budget forecast inflation to remain moderate, and interest rates to rise gradually. In general terms, the forecast for the MSR maintains these assumptions but with modifications to take account of information on changing conditions available at the time of the completion of the MSR forecast, in late June. In addition, to reflect the substantial amount of economic turbulence over the past two months, the MSR includes an alternative economic forecast that incorporates the latest data through the end of August along with a presentation of its associated budgetary effects. Real GDP has risen for eight straight quarters since economic growth resumed in mid2009. Revisions to GDP growth published in late July, after the MSR forecast was completed, showed growth slowing sharply in the first half of 2011. The unemployment rate has declined from its peak above 10 percent in October 2009 to 9.1 percent in July 2011. Following the resumption of real GDP growth, the economy began adding jobs, and private sector employment has increased in each of the past 17 months. The labor market recovery, however, is occurring only gradually. It will take several years of healthy job growth to offset the nearly 9 million jobs that were lost between January 2008 and February 2010. Administration policies, as well as the automatic fiscal stabilizers such as the unemployment insurance system, contributed to the turnaround in 2009. The American Recovery and Reinvestment Act (Recovery Act) was passed soon after the President took office at a time when jobs were declining by 700,000 per month. Recent revisions showed GDP falling at that time at a rate even faster than previously estimated when the President took office, declining at an average annualized rate of 7.8 percent in the fourth quarter of 2008 and the first quarter of 2009, the worst six- month period since quarterly data has been collected. The Administration’s prompt action helped to reverse this precipitous decline, and the turnaround in real GDP growth, and later in jobs, opened the way to an economic recovery. Further actions by the Administration and Congress, culminating in the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act in December 2010, have helped sustain demand and foster growth as the Recovery Act has phased out and as the economy has faced further, unanticipated challenges. For example, the steep decline in the housing market ended in 2009, but the housing sector has struggled to recover from the recession. Almost 3 million homes have been repossessed since 2006, but even so, at the beginning of 2011, there were estimated to be 5 million seriously delinquent mortgage loans, many of which will eventually result in foreclosure. Government programs and the private sector HOPE Now alliance have helped nearly 5 million affected homeowners with their mortgages, either by helping negotiate new terms for their loans or by reducing outstanding balances, but the remaining problems are still significant. Until more loans are resolved, house prices are not likely to recover, and housing investment will probably remain sluggish. Likewise, 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 continue to have difficulty accessing credit, making it difficult for businesses to expand, entrepreneurs to launch ventures, and families to borrow to buy a new home or send a child to college. This is a common experience following a financial crisis in which banks and other credit market institutions have suffered severe losses. If past experience is a guide, credit will eventually become more available, but that will take more time. A second drag on the recovery has been fiscal consolidation at the State and local government level. Driven by balanced budget requirements and decreased tax revenue, this fiscal 7 8 tightening has reduced aggregate demand and slowed growth nationally. Over the last 12 months, employment in State and local government has declined by 340,000 jobs. Third, globally, a combination of events has weighed on economic growth. Political uncertainty in the Middle East caused world oil markets to tighten, especially for the highquality crude oil that is most useful in refining gasoline. The price of oil rose by 16 percent between September and December 2010 and then rose another 20 percent in March and April of this year, placing a burden on American consumers. Although the U.S. economy is less sensitive to oil price shocks than it was in the 1970s, higher fuel prices still exact a toll, and this was one of the main factors in holding growth below expectations in the first half of 2011. Also, on March 11, a severe earthquake followed by a tsunami seriously damaged the coastal regions of northeastern Japan. These natural disasters have had a worldwide impact because they curtailed production of parts needed for Japanese automobiles manufactured both in Japan and abroad. In the United States, for example, production of motor vehicles fell 6.3 percent (0.53 million units at an annual rate) in the second quarter, with most of the decline occurring at the American facilities of Japanese automakers. Moreover, the sovereign debt crisis that began in 2010 in Europe has intensified in recent weeks, causing a selloff in global equity markets that threatens to place a new drag on consumer confidence and the global recovery. Last year, several European countries encountered difficulty in obtaining credit, and financial markets around the world responded negatively to these developments spreading the effects of the crisis to the United States and elsewhere. The European Union acted forcefully to confront these issues when they first emerged, and the affected governments have attempted to restrain their budget deficits. Even with these actions, however, the European recovery remains at risk because of increased uncertainty and because the measures taken to address the fiscal crisis have had the effect in some cases of limiting demand and hampering recovery. Concerns over sovereign debt returned in recent weeks and spread to larger countries in the European Union, creating volatility in global financial markets. MID-SESSION REVIEW Although the effects of these events are expected to be temporary in most cases and the Administration remains confident about medium-term prospects for growth in the United States, the unexpected slowdown in 2011 led the Administration to reduce projections in its MSR forecast for near-term growth in 2011 and 2012. Meanwhile, new data released since those projections were locked in late June, including significant revisions to previously released GDP data, together with other analysis have led both private and public forecasters to reduce their projections for growth and employment even further over the past two months. To present a fuller picture, this section also includes an alternative forecast in Table 4 below that reflects the latest economic data and outlook. While the effects of the economic turbulence are great on individuals, the cumulative impact on the fiscal condition of the country is relatively minor over the course of the budget window. Despite recent setbacks, the Administration expects the economy to grow at increasing rates in the months and years to come. One reason for this is that the U.S. economy is operating well below its capacity, with higher levels of unemployment and more unused resources than at any time in over a quarter century. The potential for a sharp recovery is present in this low level of resource utilization. The normal limits to growth are not binding when there is so much unused capacity available. With rapid growth projected in 2013-2017, the unemployment rate is projected to decline and real GDP is projected to return to its potential level. Beyond 2017, 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 somewhat below the historical average for the United States because of an expected slowdown in the growth of the labor force as the population ages. Economic growth is expected to average 2.5 percent in the long run, which is unchanged from previous forecasts. ECONOMIC PROJECTIONS Given the substantial amount of economic turbulence that the country experienced since the MSR economic projections were finalized in June, this section also includes an alternative projection that takes into ac- 9 ECONOMIC ASSUMPTIONS count more recent data. These more recent data include both revised historical data for the National Income and Product Accounts (NIPA) released in July, and updated data on current economic conditions and the outlook that were not available in June. Table 2 presents a summary of the original projection in June and, in the Addendum, the adjustments to that original projection related to the NIPA revision. These adjustments generally maintain the same quarterly growth rates for GDP and incomes as the original forecast but start from the revised historical levels in 2011 Q1. In other words, they adjust the MSR forecast for the revisions to historical data, but do not reflect how the outlook might have changed as a result of the revisions or other more recent data. The alternative forecast, shown in Table 4, is an update of the projection based on information available through late August. Since June, there have been significant changes to the economic outlook, including the annual revision of the NIPA which showed a large downward adjustment in growth in the first quarter, a subsequent downward revision of growth in the second quarter, and other economic indicators suggesting slower growth than originally projected in the second half. In addition, the Federal Open Market Committee (FOMC) statement in August suggested that interest rates will remain at their current low level for longer than had previously been anticipated. Real Gross Domestic Product (GDP) and the Unemployment Rate: Real GDP is expected to rise by 2.8 percent during the four quarters of 2011 (2.4 percent in the adjusted forecast) and to increase 3.2 percent in the four quarters of 2012. The growth rate is projected to rise to 4.0 percent in 2013 and 2014. Beyond 2014, real GDP growth is projected to moderate as the level of real GDP approaches its potential. The growth rate is steady at 2.5 percent per year in 2018-2021. The unemployment rate is projected to average 8.8 percent in 2011, slightly below its level in July. Unemployment is projected to decline slowly because of the moderate pace of expected real GDP growth and because, as labor market conditions improve, discouraged workers rejoin the labor force, adding temporarily to unemployment. With continued growth, the unemployment rate is projected to fall, but it is not projected to fall below 6.0 percent until 2016. These projections reflect the close relationship that has prevailed historically between changes in real GDP and unemployment. Table 2. ECONOMIC ASSUMPTIONS 1 (Calendar years; dollar amounts in billions) Actual 2009 Projections 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Gross Domestic Product (GDP): Levels, dollar amounts in billions: Current dollars ��������������������� 14,119 14,660 15,281 16,019 16,889 17,851 18,863 19,893 20,906 21,852 22,807 23,798 24,830 Constant (2005) dollars ������� 12,881 13,248 13,586 14,030 14,549 15,131 15,717 16,294 16,820 17,272 17,703 18,146 18,600 Price index (2005 = 100) ������ 109.6 110.7 112.5 114.2 116.1 118.0 120.0 122.1 124.3 126.5 128.8 131.1 133.5 Percent change, Q4/Q4: Current dollars ��������������������� Constant (2005) dollars ������� Price index (2005 = 100) ������ 0.6 0.2 0.5 4.2 2.8 1.3 4.6 2.8 1.8 4.8 3.2 1.6 5.7 4.0 1.6 5.8 4.0 1.7 5.6 3.8 1.7 5.4 3.6 1.8 4.8 3.0 1.8 4.4 2.5 1.8 4.4 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) ������ –1.7 –2.6 0.9 3.8 2.9 1.0 4.2 2.6 1.6 4.8 3.3 1.5 5.4 3.7 1.7 5.7 4.0 1.6 5.7 3.9 1.7 5.5 3.7 1.7 5.1 3.2 1.8 4.5 2.7 1.8 4.4 2.5 1.8 4.3 2.5 1.8 4.3 2.5 1.8 Incomes, billions of current dollars: 10 MID-SESSION REVIEW Table 2. ECONOMIC ASSUMPTIONS 1—Continued (Calendar years; dollar amounts in billions) Actual 2009 Projections 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Domestic corporate profits ��� Employee compensation ������ Wages and salaries �������������� Other taxable income2 ���������� 906 7,812 6,274 3,206 1,241 7,985 6,399 3,264 1,322 8,264 6,624 3,427 1,505 8,625 6,931 3,563 1,575 9,112 7,352 3,753 1,622 1,681 1,723 1,759 1,700 1,647 1,627 1,632 9,669 10,270 10,902 11,528 12,127 12,731 13,338 13,935 7,804 8,296 8,817 9,348 9,847 10,353 10,848 11,327 3,973 4,187 4,423 4,673 4,898 5,108 5,305 5,496 Consumer Price Index (all urban):3 Level (1982–84 = 100) ���������� Percent change, Q4/Q4 ��������� Percent change, year/year ���� 214.5 1.4 –0.3 218.1 1.2 1.6 224.3 2.8 2.8 228.4 1.9 1.8 232.8 1.9 1.9 237.4 2.0 2.0 242.2 2.0 2.0 247.2 2.1 2.1 252.5 2.1 2.1 257.7 2.1 2.1 263.2 2.1 2.1 268.7 2.1 2.1 274.4 2.1 2.1 Unemployment rate, civilian, percent: Fourth quarter level ������������� Annual average �������������������� 10.0 9.3 9.6 9.6 8.6 8.8 8.2 8.3 7.4 7.7 6.7 6.9 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 Federal pay raises, January, percent: Military4 �������������������������������� Civilian5 �������������������������������� 3.9 3.9 3.4 2.0 1.4 0.0 1.6 0.0 NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA Interest rates, percent: 91-day Treasury bills6 ���������� 10-year Treasury notes �������� 0.2 3.3 0.1 3.2 0.1 3.4 0.5 3.8 1.8 4.3 3.2 4.7 3.8 5.0 4.0 5.2 4.1 5.3 4.1 5.3 4.1 5.3 4.1 5.3 4.1 5.3 ADDENDUM:7 Gross Domestic Product (GDP), revised: Levels, dollar amounts in billions: Current dollars ��������������������� 13,939 14,527 15,128 15,859 16,720 17,672 18,674 19,694 20,697 21,633 22,578 23,559 24,582 Constant (2005) dollars ������� 12,703 13,088 13,368 13,804 14,314 14,887 15,464 16,032 16,549 16,993 17,418 17,854 18,300 Price index (2005 = 100) ������ 109.7 111.0 113.2 114.9 116.8 118.7 120.7 122.8 125.0 127.3 129.6 131.9 134.3 Percent change, Q4/Q4: Current dollars ��������������������� Constant (2005) dollars ������� Price index (2005 = 100) ������ 0.0 –0.5 0.7 4.7 3.1 1.6 4.4 2.4 1.9 4.8 3.2 1.6 5.7 4.0 1.6 5.8 4.0 1.7 5.6 3.8 1.7 5.4 3.6 1.8 4.8 3.0 1.8 4.4 2.5 1.8 4.4 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) ������ –2.5 –3.5 1.1 4.2 3.0 1.2 4.1 2.1 1.9 4.8 3.3 1.5 5.4 3.7 1.7 5.7 4.0 1.6 5.7 3.9 1.7 5.5 3.7 1.7 5.1 3.2 1.8 4.5 2.7 1.8 4.4 2.5 1.8 4.3 2.5 1.8 4.3 2.5 1.8 Incomes, billions of current dollars, revised: Domestic corporate profits ��� Employee compensation ������ Wages and salaries �������������� Other taxable income2 ���������� 1,002 7,806 6,270 2,955 1,418 7,971 6,408 3,108 1,511 8,251 6,634 3,266 1,719 8,611 6,940 3,396 1,800 9,097 7,362 3,573 1,853 1,921 1,969 2,010 1,942 1,882 1,859 1,865 9,653 10,253 10,884 11,509 12,107 12,710 13,316 13,913 7,815 8,308 8,830 9,361 9,862 10,368 10,863 11,343 3,777 3,980 4,201 4,432 4,638 4,828 5,008 5,182 NA = Not Available; Q4/Q4 = fourth quarter over fourth quarter Based on information available as of June 2011. 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 2012 have not yet been determined. 5 Overall average increase, including locality pay adjustments. Percentages to be proposed for years after 2012 have not yet been determined. 6 Average rate, secondary market (bank discount basis). 7 June assumptions adjusted for July 29, 2011 revisions to the National Income and Product Accounts. 1 11 ECONOMIC ASSUMPTIONS Inflation: Consumer price inflation rose in late 2010 and in the earlier part of this year mainly because of a sharp rise in world oil prices. Rising food prices also contributed to the increase. Inflation has moderated since then as oil prices have declined. Core inflation, which excludes food and energy prices, also rose, but much less dramatically than the top-line measure. As measured by the CPI, core inflation was 1.8 percent between July 2010 and July 2011; it had been only 0.9 percent over the preceding 12 months. Looking ahead, core inflation is expected to edge up somewhat 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 chained price index for Gross Domestic Product. Year-over-year inflation by this measure is projected at 1.6 percent in 2011 (1.9 percent adjusted), 1.5 percent in 2012, and ultimately 1.8 percent in 2017-2021. Interest Rates: The projections for interest rates are based on financial market data as of June, including market expectations at that time. Consequently, the forecast does not incorporate the latest market data, the Federal Reserve’s statement in August that short-term rates would remain at their current low levels through mid-2013, or the dramatic reduction in long-term Treasury rates that occurred in early August as a result of the “flight to quality” caused by the crisis in Europe. The MSR forecast projects the three-month Treasury bill rate to average 0.1 percent in 2011, which is still likely to be true, but to begin rising in 2012 and to reach 4.1 percent by 2017. In light of the Federal Reserve’s statement, the rise in rates in 2012 now seems unlikely. Similar caveats hold for the projection of long-term interest rates. The yield on the 10year Treasury note is projected to average 3.4 percent in 2011 and to rise to 5.3 percent by 2017. Now that long-term yields have fallen well below their June values, the forecast for 2011 appears to be too high. In the later years of the forecast, however, when interest rates are expected to be close to their historical averages in real terms given the projected rate of inflation there is no reason to believe the forecast would change based on recent data. Incomes and Income Shares: Corporate profits have rebounded more quickly than labor compensation (which consists of wages and salaries and employee fringe benefits). As a result, corporate profits have risen as a share of the economy over the past 12 quarters, while labor compensation as a share of the economy has fallen below its long-run average. As the economy recovers, this situation 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. 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 most recent Congressional Budget Office (CBO), Blue Chip, and FOMC forecasts is shown below in Table 3. For 2011, the projected rate of real GDP growth is above that of the Blue Chip Consensus (an average of about 50 privatesector forecasts) although when the MSR forecast was determined in June, the difference was smaller. The CBO forecast, which was completed around the same time as the Administration’s projections, is similar for real GDP in 2011. The FOMC forecast, which also dates from June, is slightly higher, mainly because the Administration updated its 2011 forecast for the revisions to the historical data for GDP released in late July by the Bureau of Economic Analysis. Neither the FOMC nor the CBO forecasts were adjusted for these new data, which showed lower growth in the first half of 2011. The consensus forecast has shifted down in the last two months. In 2012, real GDP growth (fourth quarter over fourth quarter) is expected to be 3.2 percent, which is just below the June FOMC central tendency of 3.3 to 3.7 percent, but it is well above the latest Blue Chip consensus of 2.7 percent, which is the same growth rate that CBO projects for 2012. In 2013, CBO expects a relatively sharp slowdown in the growth rate, because its current-law policy assumptions imply that all of the 2001-2003 tax cuts will expire at the end of 2012. In turn, CBO expects a relatively rapid growth rate in 2014-2015. Looking further into the future, the Administration expects the economy eventually to recover much of the ground lost to 12 MID-SESSION REVIEW the 2008-2009 recession. This will require a phase of relatively rapid growth, which in the current forecast is projected to occur in 2013-2016. The FOMC anticipates a similar catch-up. While CBO also expects a catch-up during this time frame, it is not as much as the Administration or the FOMC is project- ing. Meanwhile, the Blue Chip consensus expects to make up relatively little of this lost output. This is a major difference in the forecasts for real GDP. All the forecasters have a similar expectation for the long-run growth rate, which is expected to be around 2-1/2 percent per year. Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS (Calendar years; dollar amounts in billions) Nominal GDP: MSR �������������������������������������������������� Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 14,527 14,651 14,660 14,527 15,128 15,240 15,238 15,079 15,859 16,032 15,817 15,727 16,720 17,006 16,301 16,560 17,672 18,043 17,261 17,438 18,674 19,052 18,406 18,327 19,694 20,037 19,333 19,225 20,697 20,986 20,260 20,148 21,633 21,910 21,183 21,095 22,578 22,866 22,140 22,087 23,559 23,860 23,096 23,125 24,582 24,896 24,082 24,212 3.1 2.4 3.2 4.0 4.0 3.8 3.6 3.0 2.5 2.5 2.5 2.5 3.1 4.0 4.5 4.2 3.6 3.2 2.7 2.5 2.5 2.5 2.8 2.3 2.7 2013-2016 Average: 3.6 2017-2021 Average: 2.4 3.1 1.6 2.7 2.8 2.7–2.9 3.3–3.7 3.5–4.2 Longer Run Average: 2.5–2.8 2.5 2.5 Percent change, fourth quarter over fourth quarter Real GDP: MSR �������������������������������������������������� Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ FOMC Central Tendency ����������������� Percent change, year over year Real GDP: MSR �������������������������������������������������� Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ 3.0 2.7 2.9 3.0 2.1 2.7 2.4 1.8 3.3 3.6 2.6 2.5 3.7 4.4 1.7 3.2 4.0 4.3 4.4 3.1 3.9 3.8 5.0 2.9 3.7 3.3 3.2 2.8 3.2 2.9 2.8 2.7 2.7 2.6 2.5 2.6 2.5 2.5 2.5 2.6 2.5 2.5 2.3 2.6 2.5 2.5 2.3 2.6 GDP price index: MSR �������������������������������������������������� Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ 1.2 1.0 1.0 1.2 1.9 1.3 1.5 2.1 1.5 1.5 1.2 1.9 1.7 1.6 1.4 2.0 1.6 1.7 1.4 2.1 1.7 1.7 1.6 2.1 1.7 1.8 1.8 2.1 1.8 1.8 1.9 2.1 1.8 1.8 2.0 2.1 1.8 1.8 2.0 2.1 1.8 1.8 2.0 2.1 1.8 1.8 2.0 2.1 Consumer Price Index (CPI-U): MSR �������������������������������������������������� Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ 1.6 1.6 1.6 1.6 2.8 1.3 2.9 3.0 1.8 1.8 1.5 2.2 1.9 1.9 1.3 2.3 2.0 2.0 1.3 2.4 2.0 2.0 1.8 2.4 2.1 2.1 2.1 2.4 2.1 2.1 2.3 2.4 2.1 2.1 2.3 2.4 2.1 2.1 2.3 2.4 2.1 2.1 2.3 2.4 2.1 2.1 2.3 2.4 5.7 5.3 5.2 5.2 5.5 5.3 5.3 5.3 5.3 5.3 5.2 5.2 6.0 5.8 5.6 5.6 Longer Run Average:5.2–5.6 5.2 5.3 5.2 5.6 5.2 5.3 5.2 5.6 Annual average in percent Unemployment rate: MSR �������������������������������������������������� Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ FOMC Central Tendency 1 ���������������� 9.6 8.8 8.3 7.7 9.6 9.3 8.6 7.5 9.6 9.4 8.4 7.6 9.6 9.0 8.7 7.5 9.6 8.6–8.9 7.8–8.2 7.0–7.5 6.9 6.6 6.8 6.8 6.3 5.9 5.9 6.3 91-day Treasury bills: MSR �������������������������������������������������� Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.5 0.9 0.1 0.5 1.8 2.6 0.2 2.9 3.2 3.7 0.8 3.6 3.8 4.0 1.9 3.8 4.0 4.1 3.2 3.9 4.1 4.1 4.0 4.0 4.1 4.1 4.0 3.9 4.1 4.1 4.0 3.9 4.1 4.1 4.0 3.9 4.1 4.1 4.0 3.9 10-year Treasury notes: MSR �������������������������������������������������� 3.2 3.4 3.8 4.3 4.7 5.0 5.2 5.3 5.3 5.3 5.3 5.3 13 ECONOMIC ASSUMPTIONS Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS—Continued (Calendar years; dollar amounts in billions) 2010 Budget ���������������������������������������������� CBO �������������������������������������������������� Blue Chip ������������������������������������������ 3.2 3.2 3.2 2011 3.0 3.3 3.2 2012 2013 3.6 3.2 3.6 2014 4.2 3.3 4.9 2015 4.6 3.8 5.2 4.9 4.3 5.4 2016 5.2 4.9 5.4 2017 5.3 5.3 5.4 2018 2019 5.3 5.3 5.4 2020 5.3 5.3 5.4 2021 5.3 5.3 5.4 5.3 5.3 5.4 MSR = Mid-Session Review (forecast date June 2011 adjusted for July 2011 National Income and Product Account revisions) Budget = 2012 Budget (forecast date November 2010) CBO = Congressional Budget Office (forecast date July 2011) FOMC = Federal Reserve Open Market Committee (forecast central tendency, date June 2011) Blue Chip = August 2011 Blue Chip Consensus Forecast extended with March 2011 Blue Chip long-run survey Sources: Administration; CBO, The Budget and Economic Outlook: an Update, August 2011 FOMC, Minutes of the Federal Open Market Committee, June 21–22, 2011; Blue Chip Economic Indicators, March and August 2011, Aspen Publishers. 1 Fourth quarter levels of unemployment rate. The Administration projects that unemployment will average 8.8 percent in 2011, 8.3 percent in 2012, and 7.7 percent in 2013. CBO expects unemployment to remain high for a longer period. It projects an unemployment rate of 8.9 percent in 2011 and 8.7 percent in 2012-2013. The latest Blue Chip consensus is: 9.0 percent in 2011 and 8.7 percent in 2012. The semiannual long-run extension of the Blue Chip forecast was released in March 2011, and the next extension will not be available until October. In March, the Blue Chip had expected a larger decline in the unemployment rate, which can be seen in Table 3 in the values shown for 2013 through 2021. The June FOMC projections also show unemployment falling by more than the latest consen- sus projections. In the long run, all of the forecasts expect the unemployment rate to reach a level of between 5 and 6 percent. The forecasts are similar for inflation and interest rates. All of the forecasters shown in Table 3 expect inflation to rise to around 2 percent per year, which is close to the average inflation rate of the past several years. The unusually low level of Federal interest rates that has prevailed since the financial crisis is also expected to end as real interest rates return to near their historical averages but only gradually over the next few years. The recent consensus expects a slower rise in interest rates than was assumed a few months ago. Table 4. ALTERNATIVE ECONOMIC FORECAST Economic Assumptions (Calendar years) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Nominal GDP: % Change, 4th/4th: MSR ��������������������������������������������������������� Alternative ���������������������������������������������� 4.7 4.7 4.4 3.6 4.8 4.5 5.7 5.5 5.8 5.8 5.6 6.0 5.4 5.8 4.8 5.4 4.4 4.3 4.4 4.3 4.3 4.3 4.3 4.3 % Change, Year/Year: MSR ��������������������������������������������������������� Alternative ���������������������������������������������� 4.2 4.2 4.1 3.7 4.8 4.1 5.4 5.3 5.7 5.6 5.7 5.9 5.5 5.9 5.1 5.6 4.5 4.7 4.4 4.3 4.3 4.3 4.3 4.3 % Change, 4th/4th: MSR ��������������������������������������������������������� Alternative ���������������������������������������������� 3.1 3.1 2.4 1.6 3.2 2.9 4.0 3.8 4.0 4.0 3.8 4.2 3.6 4.0 3.0 3.6 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 % Change, Year/Year: MSR ��������������������������������������������������������� Alternative ���������������������������������������������� 3.0 3.0 2.1 1.7 3.3 2.6 3.7 3.5 4.0 3.9 3.9 4.1 3.7 4.1 3.2 3.7 2.7 2.9 2.5 2.5 2.5 2.5 2.5 2.5 Real GDP: 14 MID-SESSION REVIEW Table 4. ALTERNATIVE ECONOMIC FORECAST—Continued Economic Assumptions (Calendar years) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Unemployment Rate: MSR ��������������������������������������������������������� Alternative ���������������������������������������������� 9.6 9.6 8.8 9.1 8.3 9.0 7.7 8.5 6.9 7.8 6.3 7.0 5.7 6.1 5.3 5.5 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 91-Day Treasury Bills: MSR ��������������������������������������������������������� Alternative ���������������������������������������������� 0.1 0.1 0.1 0.1 0.5 0.1 1.8 0.4 3.2 2.3 3.9 3.8 4.0 4.0 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 10-Year Treasury Notes: MSR ��������������������������������������������������������� Alternative ���������������������������������������������� 3.2 3.2 3.4 3.0 3.8 3.3 4.3 3.9 4.7 4.6 5.0 5.0 5.2 5.2 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 Interest Rates: Budget Effects of Alternative Forecast Relative to MSR (Fiscal years; in billions of dollars) 20122011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20122016 2021 Receipt changes ������������������������������������������������ Outlay changes: Unemployment ������������������������������������������� Net interest (rates) ������������������������������������ All other, including debt service ���������������� Total outlay changes ����������������������������� Deficit increase (–) �������������������������������������������� * $500 million or less. –9 –30 –55 –60 –50 –34 –14 –2 –2 –2 –2 –229 –250 2 2 * 4 12 –14 –1 –2 17 –43 * –27 22 –54 4 –28 23 –38 9 –7 19 –26 12 5 12 –23 14 2 2 –20 14 –4 * –18 13 –5 * –17 13 –3 * 93 108 –16 –175 –270 13 24 91 –3 –58 –71 –13 –28 –28 –32 –43 –39 –17 2 3 1 1 –170 –180 RECEIPTS The Mid-Session Review (MSR) estimates of receipts exceed the February Budget estimates by $141 billion in 2011 and by $46 billion in 2012. In each subsequent year, the MSR estimates of receipts are below the February Budget estimates, resulting in a net decrease in receipts of $882 billion over the 10-year budget horizon (2012 through 2021). The net increase in 2011 receipts is in large part attributable to the effect of technical revisions based on new tax reporting data, collections to date, and other information as well as to revised economic assumptions. The net increase in 2012 receipts is primarily attributable to technical revisions and revisions in the estimates of expiring provisions extended in the adjusted baseline, which increase receipts by $51 billion and $16 billion, respectively. These increases are partially offset by a $19 billion reduction in receipts attributable to moving the February Budget proposals to the MSR’s deficit reduction allowance. The net reduction in receipts of $882 billion over the 10-year budget horizon is primarily due to a receipt loss of $828 billion that results from moving the February Budget proposals to the deficit reduction allowance. The remainder of the decrease is due largely to a receipt loss of $394 billion attributable to revisions in the economic forecast, partially offset by a receipt increase of $283 billion attributable to technical revisions. Over the 10-year budget horizon, enacted legislation and administrative actions reduce receipts by $8 billion and revisions in the estimates of expiring provisions extended in the February adjusted baseline increase receipts by $64 billion. ENACTED LEGISLATION AND ADMINISTRATIVE ACTIONS Changes that have resulted from enacted legislation and administrative actions reduce receipts from the February Budget by $1 billion in 2011, have a negligible effect in 2012, and reduce receipts by $8 billion over the 10year budget horizon. The bulk of this reduction in receipts is due to the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, which repealed certain information reporting requirements for tax purposes and modified the limitation on repayment of advance premium assistance credits for coverage under a qualified health plan. Other legislated tax changes and administrative actions included repeal of the Free Choice Voucher program in the Department of Defense and Full-Year Continuing Appropriations Act, and a threemonth extension of the due date for filing the Federal highway use tax return. REVISIONS IN EXPIRING PROVISIONS EXTENDED IN THE ADJUSTED BASELINE The February adjusted baseline permanently continued the 2001 and 2003 tax cuts for middle-income taxpayers; permanently continued estate, gift, and generation-skipping transfer taxes at 2009 parameters; and reflected permanent extension of relief from the AMT. A reduction in the estimated cost of extending these expiring provisions increases receipts by $16 billion in 2012 and $64 billion over 10 years.1 The lower cost of extending these provisions is due in large part to reductions in the economic forecast for wages and salaries and revisions to models of receipts, which were reestimated using current collection experience and updated tax data for prior years. ECONOMIC CHANGES Revisions to the economic forecast increase receipts by $19 billion in 2011, reduce receipts by $2 billion in 2012, and reduce receipts in each subsequent year, for a total reduction of $394 billion over the 10 years beginning in 2012 and running through 2021. In 2011, revisions to the economic forecast have the greatest effect on individual and corporation income taxes, increasing those sources of receipts by $10 billion and $7 billion, respectively. The increase in 2011 individual income tax receipts The adjusted baseline for the Mid-Session Review also includes extensions of the 2001 and 2003 tax cuts for high-income taxpayers and extension of estate tax relief at current parameters, which are more generous than the parameters in effect in 2009. The Mid-Session Review proposes to allow these provisions to expire, and therefore these provisions do not affect the Mid-Session Review policy receipt levels. 1 15 16 is primarily attributable to increases in the forecasts of wages and salaries and nonwage sources of personal income. Changes in the forecast of GDP and other economic measures that affect the profitability of corporations largely account for the increase in 2011 corporation income tax collections. Over the 10-year budget horizon, revisions in the economic forecast have the greatest effect on individual income taxes and social insurance and retirement receipts, reducing collections by $283 billion and $173 billion, respectively. Reductions in the economic forecast for wages and salaries account for most of the downward revision in individual income tax collections over the period. Wages and salaries and proprietor’s income are the tax base for Social Security and Medicare payroll taxes, the largest component of social insurance and retirement receipts. Reductions in Social Security and Medicare payroll taxes, which are the net effect of reductions in the forecast of wages and salaries and increases in the forecast of proprietor’s income, account for most of the 10-year reduction in social insurance and retirement receipts. The reductions in individual income taxes and social insurance and retirement receipts are partially offset by increases in customs duties of $28 billion, due to increases in the forecast of imports, and increases in deposits of earnings of the Federal Reserve System of $26 billion, due to changes in the forecast of interest rates. Revisions in the forecast of GDP and other sources of income increase other sources of receipts (corporation income MID-SESSION REVIEW taxes, excise taxes, and estate and gift taxes) by a net $9 billion. TECHNICAL CHANGES Technical revisions in the estimates increase receipts by $122 billion in 2011, $51 billion in 2012, and $18 billion to $34 billion in each subsequent year, for an increase of $283 billion over the 10-year budget horizon. The net increase in receipts in each year is primarily due to upward re-estimates of individual income taxes, which are only partially offset by downward re-estimates of corporation income taxes and social insurance and retirement receipts. The technical revisions in both individual and corporation income taxes are in large part attributable to more recent collections data and revisions in the tax models based primarily on updated tax data for prior years. More recent taxable wage data from employer returns accounts for most of the technical revision in social insurance and retirement receipts. PRESENTATION OF PROPOSALS Net of legislative proposals that were enacted, the February Budget included proposals estimated to reduce receipts by $1 billion in 2011, increase receipts by $19 billion in 2012, and increase receipts in each subsequent year, resulting in a net increase in receipts of $828 billion over the 10-year budget horizon. Shifting these proposals to the Mid-Session Review’s deficit reduction allowance reduces receipts by an equivalent amount over the 10year budget window but has no effect on the deficit. 17 RECEIPTS Table 5. CHANGE IN RECEIPTS (In billions of dollars) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 February Budget estimate �������������������������� 2,174 2,627 3,003 3,333 3,583 3,819 4,042 4,257 4,473 4,686 4,923 Changes due to enacted legislation and administrative actions ��������������������������������� –1 * –1 –1 –1 –1 –1 –1 –1 –1 –1 Changes due to economic and technical revisions in provisions extended in the adjusted baseline ����������������������������������������� * 16 –1 5 6 7 6 6 6 7 7 Changes due to revised economic assumptions: Individual income taxes ������������������������������� Corporation income taxes ���������������������������� Social insurance and retirement receipts ��� Customs duties ��������������������������������������������� Deposit of earnings, Federal Reserve System ������������������������������������������������������ Other ������������������������������������������������������������� Total changes due to revised economic assumptions ��������������������������������������� 20122016 20122021 –3 –8 32 64 10 7 –1 1 –13 12 –10 2 –26 8 –16 3 –39 4 –22 3 –37 1 –23 3 –34 –2 –21 3 –29 –3 –17 3 –27 –2 –17 3 –28 –3 –17 3 –26 –7 –15 3 –25 –10 –15 2 –149 24 –93 14 –283 –1 –173 28 2 –* 7 * 8 * 4 * 2 * 1 1 1 1 1 2 1 2 1 2 1 2 21 1 26 10 19 –2 –23 –50 –54 –52 –44 –41 –42 –42 –44 –181 –394 Changes due to technical re-estimates: Individual income taxes ������������������������������� Corporation income taxes ���������������������������� Social insurance and retirement receipts ��� Other ������������������������������������������������������������� Total changes due to technical reestimates �������������������������������������������� 123 –11 9 1 62 –6 –3 –3 30 3 –* –1 35 –1 –2 2 36 –8 –4 2 36 –5 –5 –1 35 –8 –6 * 31 –8 –8 3 29 –7 –7 6 29 –6 –6 8 34 –5 –8 9 199 –17 –13 –* 356 –51 –48 26 122 51 31 34 27 26 20 18 22 25 30 168 283 Changes due to moving the February Budget proposals to the deficit reduction allowance ��� Total change in receipts ��������������� 1 141 –19 46 –45 –39 –28 –97 –141 –101 –100 –88 –104 –104 –40 –119 –162 –119 –117 –103 –115 –112 –331 –315 –828 –882 Mid-Session estimate ����������������������������������� 2,314 2,674 2,964 3,292 3,464 3,657 3,923 4,140 4,370 4,571 4,811 * $500 million or less. EXPENDITURES Outlays for 2011 are now estimated to be $3.630 trillion, $189 billion lower than the February Budget estimate, due largely to reduced appropriations in the Department of Defense and Full-Year Continuing Appropriations Act as well as slower-thanexpected spending in a number of programs, including veterans benefits and the purchases of GSE preferred stock. Relative to the February Budget, total outlays have decreased by $59 billion in 2012 and by $832 billion over 10 years. These changes are largely the effect of the caps on future discretionary budget authority enacted in the Budget Control Act of 2011 (BCA). POLICY CHANGES Changes due to Enacted Legislation Legislation enacted since the release of the February Budget has had a sizable, downward impact on outlays in 2011, decreasing spending by $51 billion. Over the subsequent 10 years, 2012 through 2021, enacted legislation reduces outlays by $997 billion. The largest of these changes is the enactment of the BCA. Budget Control Act of 2011. The BCA, enacted on August 2, authorized increases in the debt ceiling and included a number of provisions that will reduce budget deficits over the next 10 years. Reflecting the caps on discretionary budget authority enacted in the BCA in the 2012 MSR reduces spending relative to the February Budget by $740 billion over the next 10 years. Additional provisions in the BCA related to program integrity initiatives and higher education financial assistance further reduce spending since the Budget over 10 years by $13 billion. Full-year Appropriations for Fiscal Year 2011. The Department of Defense and Full-Year Continuing Appropriations Act, enacted in April, provided final appropriations for the Department of Defense and extended the continuing resolution funding non-defense programs to the end of 2011 at reduced levels. Relative to the February Budget, it reduced outlays by $51 billion in the current year, and is projected to reduce outlays by an additional $49 billion from 2012 to 2021. Changes in Administration Policy The BCA also created the Joint Select Committee on Deficit Reduction, which is charged with recommending legislation by November 23, 2011 to produce an additional $1.5 trillion in deficit reduction over the next 10 years. As a placeholder for the recommendations of the Joint Committee, the MSR includes an allowance for deficit reduction equaling the Joint Committee’s $1.5 trillion target. The Administration maintains its support for the specific mandatory and receipt proposals included in the February Budget, as shown in Summary Table S-9 of the MSR, “Mandatory and Receipt Proposals from the February Budget.” The estimates for the MSR shift the presentation of these proposals, along with their associated debt service savings, into the Joint Committee allowance to assume compliance with the requirements of the BCA. Removing the February mandatory proposals and debt service from the MSR outlay totals reduces spending in the MSR relative to the February Budget by $18 billion in 2011 but increases spending by $171 billion over the subsequent 10 years. The MSR also reflects the Administration’s strengthened commitment to permanent, fiscally responsible reform to Medicare physician payment rates. It affirms the Administration’s commitment to permanent reform by including in the adjusted baseline the expected costs of a zero percent update throughout the 10-year budget window, instead of the large cuts under current law. ESTIMATING CHANGES Estimating changes are due to factors other than enacted legislation or changes in policy, including changes in economic assumptions, discussed earlier in this Review, and changes in technical factors. Relative to the Budget estimate, economic and technical changes decrease estimated outlays for 2011 by $120 bil- 19 20 lion while reducing outlays by $6 billion from 2012 through 2021. Discretionary appropriations. Outlays for discretionary appropriations fall by $58 billion in 2011 and increase by $6 billion over the next 10 years relative to the Budget as a result of technical revisions. These changes reflect lower outlays in 2011 compared to the February Budget for both security and non-security discretionary programs. The Departments of Defense, Education, Energy, and Homeland Security show significantly lower outlays in 2011 than projected in the Budget due to technical revisions. Over the next 10 years, spending for security programs rises by $51 billion, which is offset by decreases in non-security related programs of $45 billion from 2012 through 2021. Refundable Tax Credits. Changes in technical assumptions increase estimated outlays for refundable tax credits by $8 billion in 2011 and by $133 billion over the 10year period. Refundable tax credits are paid out as outlays when the amount of the credit exceeds a taxpayer’s income tax liability; the remaining portion of the credits is recorded as reductions in tax receipts. Most of this impact is the result of changes to estimates of the premium assistance and earned income tax credits. Technical changes to the models used by Treasury to estimate these programs resulted in more low-income filers being projected to claim these credits. Unemployment compensation. Changes in economic and technical assumptions decrease outlays for unemployment benefits by $11 billion in 2011 and $17 billion in 2012. Over the 10-year period of 2012 through 2021, outlays are down by $117 billion relative to the February Budget estimate. The reduction is driven by a lower-than-expected insured unemployment rate as well as a decline in the average weekly unemployment benefit. Additional technical changes arise from a respecification of the estimating equations used in the Department of Labor’s unemployment model. Social Security. Estimating changes reduce outlays for Social Security by $1 billion in 2011 but increase outlays by $112 billion over the next 10 years. Spending increases in both the Old Age and Survivors Insurance MID-SESSION REVIEW (OASI) and Disability Insurance (DI) programs are largely due to higher cost-of-living adjustments (COLAs) starting in 2012 than were assumed in the February Budget. These economic changes are further amplified by increases in outlays due to lower projected mortality rates for persons ages 65 and older and revised estimates of the effects of the recession on disability incidence. Medicaid. Projected Federal outlays for Medicaid decrease by $3 billion in 2011 and by $98 billion over 10 years relative to the February Budget estimates. The decrease stems primarily from slower-than-expected growth in benefits paid since February as well as slower projected growth in the market basket and price indices used to calculate Medicaid benefits relative to the February Budget. Supplemental Nutrition Assistance Program (SNAP). Outlays for SNAP increase by $62 billion over the next 10 years due to economic and technical factors. The economic changes arise from a higher participation rate than was assumed in the Budget, as well as a higher cost of food in the Thrifty Food Plan. Technical changes to the SNAP model as well as a correction for spending of two-year contingency funding that was inadvertently omitted from the February Budget also contribute to the increases. Foreign military sales. Technical changes decrease spending related to the Foreign Military Sales Trust Fund by $20 billion over the next 10 years. The decrease can be attributed to an overhaul of the Defense Security Cooperation Agency projection model to now include statistical methods that will reduce volatility in future projections in the sales of U.S. defense equipment and services. Purchases of GSE preferred stock. Lower draws requested by Fannie Mae and Freddie Mac from Treasury in 2011 under the Preferred Stock Purchase Agreement, net of dividends, resulted in $25 billion lower projected outlays than in the February Budget. The gross draws projected in February were $47 billion. Based on these draws, $17 billion of dividends were projected, resulting in net draws of $30 billion. The actual gross draws paid were $21 billion and the actual dividends were $16 billion, resulting in actual net draws of $5 billion. EXPENDITURES Veterans benefits. Estimating changes reduce 2011 outlays for veterans compensation and pensions and readjustment benefits by $10 billion relative to the Budget, but increase outlays by $24 billion over the next 10 years. Actual experience with Agent Orange payments since February resulted in the lower outlay estimate for 2011. Part of the reduction in 2011 was for retroactive payments which are now expected to be paid in 2012. The increases beyond 2011 are also due to higher participation and average tuition costs in veterans education programs as well as higher COLAs leading to higher costs in 2012 and beyond in the veterans compensation and pension program. Civilian and military retirement. Economic changes comprise the majority of the increase of $21 billion over 10 years in spending relative to the Budget for civilian and military retirement. The COLA of 2.8 percent now projected for 2012, up from the 0.9 percent COLA assumed in February, led to the majority of the increases for both civilian and military retirement programs. Small COLA decreases in the period from 2013 to 2016 offset the increase somewhat, but not enough to counteract the 2012 increase and the effect of the increase on all of the ensuing years. Medicare. Estimating changes reduce outlays for Medicare by $4 billion in 2011 and by $4 billion over the next 10 years, most notably 21 in the earlier years of the period. Medicare Part A and D both increase over the next 10 years, with this increase more than offset by reductions in Part B. The main cause of the spending increase in Part A is higher estimated payment updates for providers mainly due to lower estimated labor productivity. Part D spending increases are due to use of more recent data and refined estimates for certain populations. New population projections led to higher enrollment projections in all three programs, which also contributed to the increases for Medicare Part A and D. The reduction in Part B spending is due to a lower estimate relative to the Budget of costs related to permanently overriding the reduction in Medicare physician payments dictated by the Sustainable Growth Rate (SGR) formula. Net interest. Excluding the debt service associated with enacted legislation and policy changes, outlays for net interest are projected to increase from February by $10 billion in 2011, but to decrease from February by $140 billion over the subsequent 10 years. The increase in 2011 is due primarily to higher outlays for inflated-indexed Treasury securities, driven by higher-than-expected growth in the Consumer Price Index. The reductions in subsequent years are virtually all due to the effect of lower short- and long-term 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. 22 MID-SESSION REVIEW Table 6. CHANGE IN OUTLAYS (In billions of dollars) 20122011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20122016 2021 February estimate ������������������������������������������ 3,819 3,729 3,771 3,977 4,190 4,468 4,669 4,876 5,154 5,422 5,697 Changes due to enacted legislation: Budget Control Act of 2011 ���������������������� 2011 full-year appropriations ������������������� Other legislation ��������������������������������������� Debt service ����������������������������������������������� Subtotal, enacted legislation �������������������������� –* –51 * –* –51 –32 –21 –* –* –53 –51 –6 * –2 –59 –72 –3 –* –6 –81 –75 –2 –* –11 –89 –79 –82 –87 –89 –95 –90 –309 –753 –2 –2 –2 –3 –4 –4 –35 –49 –* –1 –1 –1 –1 –1 –1 –4 –16 –21 –26 –31 –36 –42 –35 –190 –97 –106 –116 –124 –136 –136 –379 –997 Changes due to reestimates: Discretionary appropriations: –56 4 26 14 2 1 * 1 1 1 1 48 Security ��������������������������������������������������� Non-security �������������������������������������������� –2 9 –4 –6 –3 –6 –6 –8 –7 –6 –7 –11 Refundable tax credits ����������������������������� 8 6 7 10 14 16 16 15 16 16 17 53 Unemployment compensation ����������������� –11 –17 –14 –11 –10 –10 –10 –11 –11 –11 –12 –62 Social Security ������������������������������������������� –1 9 11 12 13 13 13 12 11 10 8 59 Medicaid ��������������������������������������������������� –3 –3 –3 –6 –8 –10 –10 –12 –13 –14 –19 –29 Supplemental Nutrition Assistance Program ������������������������������������������������ * 5 3 4 7 8 8 8 7 5 7 28 Foreign Military Sales Trust Fund ���������� –* –1 1 1 * –1 –4 –4 –4 –4 –5 * Purchases of GSE preferred stock ������������ –25 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Veterans benefits ��������������������������������������� –10 3 2 2 2 2 2 2 3 3 2 11 Civilian and military retirement ������������� –* 2 2 2 2 2 2 2 2 2 2 10 Medicare ���������������������������������������������������� –4 –8 –6 –5 –4 –3 2 3 4 4 8 –25 Other programs ���������������������������������������� –26 7 6 2 2 1 –* –* –* –2 * 18 Net interest1 ��������������������������������������������� 10 –5 –23 –29 –13 –11 –8 –9 –12 –13 –16 –81 Subtotal, reestimates ������������������������������������� –120 11 9 –8 4 2 4 –* –4 –11 –13 18 Change due to moving the February Budget proposals to the deficit reduction allowance 2 ��������������������������������������������������� –18 –17 –27 2 18 18 21 26 33 43 55 –6 Total change in outlays �������������������������������������� –189 –59 –78 –87 –67 –77 –81 –91 –95 –104 –94 –367 Mid-Session estimate ������������������������������������� 3,630 3,670 3,693 3,891 4,123 4,391 4,588 4,785 5,060 5,317 5,603 *$500 million or less. 1 Includes debt service on all reestimates 2 Includes debt service. 51 –45 133 –117 112 –98 62 –20 ......... 24 21 –4 15 –140 –6 171 –832 SUMMARY TABLES 23 ......... 1,316 ......... 1,293 –40 956 2,674 3,670 2012 –81 648 2,964 3,693 2013 –125 473 3,292 3,891 2014 –138 521 3,464 4,123 2015 –151 583 3,657 4,391 2016 –165 501 3,923 4,588 2017 –178 467 4,140 4,785 2018 –192 498 4,370 5,060 2019 –206 540 4,571 5,317 2020 Debt held by the public ����������������������������������������� Debt net of financial assets ���������������������������������� Budget Totals as a Percent of GDP: Receipts ����������������������������������������������������������������� Outlays ������������������������������������������������������������������ Allowance for Joint Committee deficit reduction target ����������������������������������������������������������������� Deficit ��������������������������������������������������������������� 2012– 2012– 2016 2021 Totals –223 568 ......... –0.3% –0.5% –0.7% –0.8% –0.8% –0.8% –0.8% –0.9% –0.9% –0.9% –0.6% –0.7% 8.8% 6.1% 3.9% 2.7% 2.8% 3.0% 2.4% 2.2% 2.2% 2.3% 2.3% 3.7% 3.0% 62.8% 68.6% 72.1% 73.5% 73.2% 72.8% 72.7% 72.0% 71.4% 71.0% 70.7% 70.5% 55.0% 61.4% 64.6% 65.3% 64.5% 63.8% 63.5% 62.8% 62.2% 61.8% 61.6% 61.3% ......... 9.0% 15.1% 15.5% 17.1% 18.0% 18.9% 18.8% 18.8% 19.2% 19.3% 19.6% 19.6% 19.8% 18.3% 18.9% 24.1% 24.3% 23.4% 22.4% 22.3% 22.4% 22.6% 22.4% 22.4% 22.7% 22.8% 23.0% 22.6% 22.6% –536 –1,500 3,181 5,755 4,811 16,050 37,865 5,603 19,767 45,120 2021 9,019 10,264 11,307 12,126 12,749 13,411 14,121 14,726 15,288 15,869 16,489 17,137 7,894 9,194 10,130 10,769 11,242 11,762 12,345 12,845 13,312 13,810 14,350 14,918 2,314 3,630 2,163 3,456 2011 Gross domestic product (GDP) ��������������������������������� 14,360 14,966 15,673 16,490 17,426 18,423 19,435 20,453 21,404 22,339 23,310 24,322 Debt held by the public ����������������������������������������� Debt net of financial assets ���������������������������������� Budget Totals in Billions of Dollars: Receipts ����������������������������������������������������������������� Outlays ������������������������������������������������������������������ Allowance for Joint Committee deficit reduction target ������������������������������������������������ Deficit ��������������������������������������������������������������� 2010 (In billions of dollars and as a percent of GDP) Table S–1. BUDGET TOTALS 24 MID-SESSION REVIEW 1,316 8.8% Memorandum: Resulting deficit levels if high-income tax cuts are not allowed to expire ������������������������������������������������ Percent of GDP �������������������������������������������������������� 969 6.2% 956 6.1% –76 –13 –* –* –13 –24 –* –24 –40 –* –40 1,033 6.6% 2012 * $500 million or less. 1 See Tables S-3 and S-7 for information on the adjusted baseline. –* 1,316 8.8% ......... –* –* –* Expiration of high-income tax cuts: Restore high-income tax rates to current law ������� Return estate tax relief to 2009 parameters ��������� Debt service ������������������������������������������������������������� Total, expiration of high-income tax cuts ����������� Resulting deficits in 2012 Mid-Session Review ����� Percent of GDP ������������������������������������������������������������� ......... ......... ......... Overseas contingency operations (OCO): Reductions in OCO funding ������������������������������������ Debt service ������������������������������������������������������������� Total, overseas contingency operations �������������� Total deficit reduction ������������������������������������������������ ......... ......... ......... 1,316 8.8% Joint Committee deficit reduction target: Programmatic changes ������������������������������������������� Debt service ������������������������������������������������������������� Total, Joint Committee deficit reduction target ����� Deficit reduction proposals: Projected deficits in the adjusted baseline 1 ����������� Percent of GDP ������������������������������������������������������������� 2011 695 4.2% 648 3.9% –207 –47 –* –1 –47 –78 –1 –79 –80 –1 –81 855 5.2% 2013 539 3.1% 473 2.7% –299 –54 –9 –3 –66 –103 –5 –108 –120 –5 –125 772 4.4% 2014 604 3.3% 521 2.8% –347 –67 –10 –7 –84 –115 –11 –126 –126 –12 –138 868 4.7% 2015 684 3.5% 583 3.0% –389 –79 –11 –11 –101 –120 –17 –136 –132 –19 –151 972 5.0% 2016 617 3.0% 501 2.4% –428 –88 –13 –16 –117 –123 –24 –146 –138 –27 –165 928 4.5% 2017 (Deficit increases (+) or decreases (–) in billions of dollars) 596 2.8% 467 2.2% –463 –94 –14 –21 –129 –126 –30 –156 –144 –34 –178 930 4.3% 2018 640 2.9% 498 2.2% –500 –100 –15 –27 –142 –129 –37 –166 –150 –42 –192 998 4.5% 2019 696 3.0% 540 2.3% –539 –106 –16 –34 –156 –132 –45 –177 –155 –51 –206 1,079 4.6% 2020 9,586 4.9% 2012– 2021 –260 –760 –31 –106 –21 –160 –311 –1,026 –439 –1,084 –33 –221 –472 –1,305 –498 –1,247 –38 –253 –536 –1,500 4,500 5.2% 2012– 2016 Totals 740 3.0% 568 2.3% 3,492 4.1% 3,181 3.7% 6,781 3.5% 5,755 3.0% –582 –1,319 –3,831 –112 –18 –41 –171 –135 –53 –188 –163 –60 –223 1,151 4.7% 2021 Table S–2. EFFECT OF BUDGET PROPOSALS ON PROJECTED DEFICITS SUMMARY TABLES 25 1 3,630 ......... 3,456 899 191 Receipts: Individual income taxes ������������������������������ Corporation income taxes ��������������������������� 86 22 2,314 76 21 2,163 1,293 196 1,097 1,370 –77 Deficit ������������������������������������������������������������� Net interest ������������������������������������������������� Primary deficit ����������������������������������������� On-budget deficit ����������������������������������������� Off-budget surplus (–) ��������������������������������� 1,316 216 1,100 1,377 –62 564 188 55 8 70 7 30 632 180 45 8 67 19 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 ����������������������������������������������������� Other miscellaneous receipts ��������������������� Total receipts ������������������������������������������ 1,089 194 726 484 273 –38 657 2,102 216 835 477 1,312 701 446 273 –110 644 1,954 196 816 490 1,306 2011 Mandatory programs: Social Security ���������������������������������������� Medicare ������������������������������������������������� Medicaid ������������������������������������������������� Troubled Asset Relief Program (TARP) 3 �� Other mandatory programs ������������������� Subtotal, mandatory programs ���������� Net interest ������������������������������������������������� Adjustments to reflect possible emergencies 4 ������������������������������������������� Total outlays ������������������������������������������� Appropriated (“discretionary”) programs: 2 Security �������������������������������������������������� Non-security ������������������������������������������ Subtotal, appropriated programs ������� Outlays: 2010 1,033 235 798 1,098 –65 73 19 2,661 651 200 55 8 79 12 34 1,196 333 3 3,694 768 478 266 17 602 2,132 235 883 440 1,324 2012 855 297 557 918 –63 55 19 2,918 721 215 59 8 87 13 37 1,294 408 7 3,773 813 524 285 12 559 2,192 297 883 394 1,277 2013 772 391 381 836 –63 44 52 3,229 762 232 62 8 97 15 39 1,437 481 8 4,001 858 554 348 6 579 2,344 391 874 384 1,258 2014 868 491 378 932 –64 40 69 3,387 804 246 64 9 102 16 42 1,566 429 9 4,255 907 580 386 5 616 2,493 491 875 387 1,262 2015 (In billions of dollars) 972 572 400 1,050 –78 39 74 3,566 861 264 65 9 104 17 43 1,694 396 9 4,538 959 631 421 2 668 2,681 572 887 389 1,276 2016 928 653 275 1,008 –79 43 78 3,822 908 279 61 9 108 18 46 1,822 451 10 4,750 1,015 654 451 1 671 2,791 653 903 394 1,297 2017 930 722 208 1,012 –82 47 82 4,032 958 294 59 9 115 19 48 1,945 455 10 4,963 1,074 678 480 * 674 2,907 722 922 401 1,323 2018 998 789 209 1,076 –78 50 87 4,255 1,007 309 61 9 128 21 51 2,064 467 10 5,253 1,138 738 514 * 713 3,103 789 942 410 1,352 2019 Table S–3. ADJUSTED BASELINE BY CATEGORY 1 1,079 853 225 1,144 –65 53 93 4,449 1,051 323 60 10 134 22 53 2,185 466 10 5,528 1,206 794 547 * 737 3,284 853 962 419 1,381 2020 1,151 917 234 1,208 –57 54 99 4,681 1,104 340 61 10 140 23 55 2,307 487 10 5,831 1,278 852 586 ......... 779 3,495 917 982 427 1,410 2021 4,500 1,986 2,514 4,834 –334 252 235 15,760 3,800 1,156 305 43 469 73 195 7,187 2,045 36 20,260 4,305 2,766 1,705 42 3,024 11,843 1,986 4,402 1,993 6,396 2012– 2016 9,586 5,920 3,666 10,282 –695 499 674 36,999 8,827 2,700 608 89 1,094 176 448 17,511 4,372 86 46,585 10,015 6,482 4,284 43 6,598 27,422 5,920 9,114 4,044 13,158 2012– 2021 Totals 26 MID-SESSION REVIEW 2011 2012 850 362 1,212 2013 865 369 1,234 2014 881 377 1,257 2015 897 384 1,281 2016 917 392 1,308 2017 936 401 1,337 2018 956 410 1,366 2019 976 419 1,395 2020 997 428 1,425 2021 4,338 1,852 6,190 2012– 2016 9,119 3,901 13,021 2012– 2021 Totals * $500 million or less. 1 See Table S–7 for information on adjustments to the Budget Enforcement Act (BEA) baseline. 2 Discretionary spending levels other than overseas contingency operations reflect the budget authority caps under the Budget Control Act of 2011. The split of discretionary spending between security and non-security after 2013 is based on increasing budget authority in each category by the growth rate in the aggregate discretionary cap. 3 Outlays for TARP in 2011 and subsequent years result from obligations incurred through October 3, 2010 for the Home Affordable Modification Program and other TARP programs. 4 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. Memorandum, budget authority for appropriated programs: 2 Security �������������������������������������������������������� 857 847 845 Non-security ����������������������������������������������� 401 370 360 Total, appropriated funding ������������������� 1,258 1,218 1,205 2010 (In billions of dollars) Table S–3. ADJUSTED BASELINE BY CATEGORY—Continued SUMMARY TABLES 27 –38 657 2,102 216 1 3,630 –110 644 1,954 196 ......... 3,456 899 191 Receipts: Individual income taxes ��������������������������� Corporation income taxes ������������������������ 86 22 2,314 76 21 2,163 ......... 1,293 196 1,097 Allowance for Joint Committee deficit reduction target 4 ���������������������������������� Deficit ���������������������������������������������������������� Net interest 4 ��������������������������������������������� Primary deficit/surplus (–) ����������������� 1,316 216 1,100 ......... 564 188 55 8 70 7 30 632 180 45 8 67 19 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 �������������������������������������������������� Other miscellaneous receipts ������������������ Total receipts ��������������������������������������� 1,089 194 726 484 273 835 477 1,312 701 446 273 816 490 1,306 2011 Mandatory programs: Social Security ������������������������������������� Medicare ���������������������������������������������� Medicaid ���������������������������������������������� Troubled Asset Relief Program (TARP) 2 ������������������������������������������� Other mandatory programs ���������������� Subtotal, mandatory programs ������� Net interest ���������������������������������������������� Adjustments to reflect possible emergencies 3 ���������������������������������������� Total outlays ���������������������������������������� Appropriated (“discretionary”) programs: 1 Security ����������������������������������������������� Non-security ��������������������������������������� Subtotal, appropriated programs ���� Outlays: 2010 956 234 722 –40 73 19 2,674 651 200 55 8 79 12 34 1,209 333 3 3,670 17 602 2,132 235 768 478 266 860 440 1,300 2012 648 295 353 –81 55 19 2,964 721 215 59 8 87 13 37 1,341 408 7 3,693 12 559 2,192 296 813 524 285 805 394 1,199 2013 473 378 95 –125 44 52 3,292 762 232 62 8 97 24 39 1,491 481 8 3,891 6 579 2,344 384 858 554 348 771 384 1,155 2014 521 461 60 –138 40 69 3,464 804 246 64 9 102 26 42 1,633 429 9 4,123 5 616 2,493 473 907 580 386 761 387 1,147 2015 (In billions of dollars) 583 525 58 –151 39 74 3,657 861 264 65 9 104 28 43 1,773 396 9 4,391 2 668 2,681 545 959 631 421 768 388 1,156 2016 501 587 –86 –165 43 78 3,923 908 279 61 9 108 31 46 1,910 451 10 4,588 1 671 2,791 613 1,015 654 451 781 393 1,174 2017 467 636 –169 –178 47 82 4,140 958 294 59 9 115 33 48 2,039 455 10 4,785 * 674 2,907 671 1,074 678 480 797 401 1,198 2018 498 682 –184 –192 50 87 4,370 1,007 309 61 9 128 36 51 2,164 467 10 5,060 * 713 3,103 724 1,138 738 514 813 410 1,223 2019 Table S–4. PROPOSED BUDGET BY CATEGORY 540 724 –184 –206 53 93 4,571 1,051 323 60 10 134 38 53 2,291 466 10 5,317 * 737 3,284 775 1,206 794 547 830 419 1,248 2020 4,305 2,766 1,705 3,964 1,993 5,957 568 763 –195 –223 54 99 4,811 1,104 340 61 10 140 41 55 2,420 487 10 5,603 3,181 1,893 1,287 –536 252 235 16,050 3,800 1,156 305 43 469 104 195 7,447 2,045 36 19,767 ......... 42 779 3,024 3,495 11,843 824 1,932 1,278 852 586 847 427 1,274 2021 5,755 5,286 469 –1,500 499 674 37,865 8,827 2,700 608 89 1,094 282 448 18,271 4,372 86 45,120 43 6,598 27,422 5,539 10,015 6,482 4,284 8,031 4,043 12,074 2012– 2021 Totals 2012– 2016 28 MID-SESSION REVIEW 748 369 1,117 536 –63 2014 761 376 1,137 585 –64 2015 775 384 1,159 661 –78 2016 791 392 1,183 580 –79 2017 807 401 1,208 549 –82 2018 824 410 1,234 576 –78 2019 841 419 1,260 606 –66 2020 858 428 1,286 625 –57 2021 3,831 1,851 5,682 3,513 –332 7,952 3,900 11,852 6,449 –694 2012– 2021 Totals 2012– 2016 * $500 million or less. 1 Discretionary spending levels other than overseas contingency operations reflect the budget authority caps under the Budget Control Act of 2011. The split of discretionary spending between security and non-security after 2013 is based on increasing budget authority in each category by the growth rate in the aggregate discretionary cap. 2 Outlays for TARP in 2011 and subsequent years result from obligations incurred through October 3, 2010 for the Home Affordable Modification Program and other TARP programs. 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. 4 Includes debt service on Joint Committee proposals. 736 362 1,098 2013 Memorandum, budget authority for appropriated programs: 1 Security ����������������������������������������������������� 857 847 811 Non-security �������������������������������������������� 401 370 360 Total, appropriated funding ���������������� 1,258 1,218 1,170 1,377 –62 2012 710 –63 1,370 –77 2011 1,020 –64 On-budget deficit �������������������������������������� Off-budget surplus (–) ������������������������������ 2010 (In billions of dollars) Table S–4. PROPOSED BUDGET BY CATEGORY—Continued SUMMARY TABLES 29 5.7 3.4 9.1 4.9 3.1 1.9 –0.8 4.5 13.6 1.4 ......... 24.1 6.3 1.3 4.4 1.3 0.3 0.1 0.5 0.1 0.2 0.5 0.1 15.1 ......... 9.0 1.4 7.6 9.5 –0.5 Appropriated (“discretionary”) programs: 1 Security ��������������������������������������������������������������� Non-security ������������������������������������������������������� Subtotal, appropriated programs �������������������� Mandatory programs: Social Security ����������������������������������������������������� Medicare �������������������������������������������������������������� Medicaid �������������������������������������������������������������� Troubled Asset Relief Program (TARP) 2 ����������� Other mandatory programs �������������������������������� Subtotal, mandatory programs ����������������������� Net interest �������������������������������������������������������������� Adjustments to reflect possible emergencies 3 �������� Total outlays �������������������������������������������������������� Receipts: Individual income taxes ������������������������������������������� Corporation income taxes ���������������������������������������� 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 ������� Other miscellaneous receipts ���������������������������������� Total receipts ������������������������������������������������������� Allowance for Joint Committee deficit reduction target 4 �������������������������������������������������� Deficit �������������������������������������������������������������������������� Net interest 4 ������������������������������������������������������������� Primary deficit/surplus (–) ��������������������������������� On-budget deficit ������������������������������������������������������ Off-budget surplus (–) ���������������������������������������������� Outlays: 2010 8.8 1.4 7.4 9.2 –0.4 ......... 3.8 1.3 0.4 0.1 0.5 0.1 0.2 0.6 0.1 15.5 7.3 1.3 4.8 3.2 1.8 –0.3 4.4 14.0 1.4 * 24.3 5.6 3.2 8.8 2011 6.1 1.5 4.6 6.5 –0.4 –0.3 4.2 1.3 0.4 0.1 0.5 0.1 0.2 0.5 0.1 17.1 7.7 2.1 4.9 3.1 1.7 0.1 3.8 13.6 1.5 * 23.4 5.5 2.8 8.3 2012 3.9 1.8 2.1 4.3 –0.4 –0.5 4.4 1.3 0.4 0.1 0.5 0.1 0.2 0.3 0.1 18.0 8.1 2.5 4.9 3.2 1.7 0.1 3.4 13.3 1.8 * 22.4 4.9 2.4 7.3 2013 2.7 2.2 0.5 3.1 –0.4 –0.7 4.4 1.3 0.4 * 0.6 0.1 0.2 0.3 0.3 18.9 8.6 2.8 4.9 3.2 2.0 * 3.3 13.5 2.2 * 22.3 4.4 2.2 6.6 2014 (As a percent of GDP) 2.8 2.5 0.3 3.2 –0.3 –0.8 4.4 1.3 0.3 * 0.6 0.1 0.2 0.2 0.4 18.8 8.9 2.3 4.9 3.1 2.1 * 3.3 13.5 2.6 * 22.4 4.1 2.1 6.2 2015 3.0 2.7 0.3 3.4 –0.4 –0.8 4.4 1.4 0.3 * 0.5 0.1 0.2 0.2 0.4 18.8 9.1 2.0 4.9 3.2 2.2 * 3.4 13.8 2.8 * 22.6 4.0 2.0 5.9 2016 2.4 2.9 –0.4 2.8 –0.4 –0.8 4.4 1.4 0.3 * 0.5 0.2 0.2 0.2 0.4 19.2 9.3 2.2 5.0 3.2 2.2 * 3.3 13.6 3.0 * 22.4 3.8 1.9 5.7 2017 2.2 3.0 –0.8 2.6 –0.4 –0.8 4.5 1.4 0.3 * 0.5 0.2 0.2 0.2 0.4 19.3 9.5 2.1 5.0 3.2 2.2 * 3.1 13.6 3.1 * 22.4 3.7 1.9 5.6 2018 2.2 3.1 –0.8 2.6 –0.4 –0.9 4.5 1.4 0.3 * 0.6 0.2 0.2 0.2 0.4 19.6 9.7 2.1 5.1 3.3 2.3 * 3.2 13.9 3.2 * 22.7 3.6 1.8 5.5 2019 2.3 3.1 –0.8 2.6 –0.3 –0.9 4.5 1.4 0.3 * 0.6 0.2 0.2 0.2 0.4 19.6 9.8 2.0 5.2 3.4 2.3 * 3.2 14.1 3.3 * 22.8 3.6 1.8 5.4 2020 2.3 3.1 –0.8 2.6 –0.2 –0.9 4.5 1.4 0.3 * 0.6 0.2 0.2 0.2 0.4 19.8 9.9 2.0 5.3 3.5 2.4 ......... 3.2 14.4 3.4 * 23.0 3.5 1.8 5.2 2021 Table S–5. PROPOSED BUDGET BY CATEGORY AS A PERCENT OF GDP Averages 3.7 2.1 1.6 4.1 –0.4 –0.6 4.3 1.3 0.3 * 0.5 0.1 0.2 0.3 0.3 18.3 8.5 2.3 4.9 3.2 1.9 0.1 3.5 13.5 2.2 * 22.6 4.6 2.3 6.9 3.0 2.6 0.4 3.4 –0.4 –0.7 4.4 1.3 0.3 * 0.5 0.1 0.2 0.3 0.3 18.9 9.1 2.2 5.0 3.2 2.1 * 3.3 13.7 2.7 * 22.6 4.1 2.1 6.2 2012– 2012– 2016 2021 30 MID-SESSION REVIEW 2011 8.8 8.1 7.5 5.2 2.3 2012 6.7 4.5 2.2 2013 6.4 4.3 2.1 2014 6.2 4.1 2.0 2015 6.0 4.0 2.0 2016 5.8 3.9 1.9 2017 5.6 3.8 1.9 2018 5.5 3.7 1.8 2019 5.4 3.6 1.8 2020 5.3 3.5 1.8 2021 Averages 6.5 4.4 2.1 6.0 4.1 2.0 2012– 2012– 2016 2021 *0.05 percent of GDP or less. 1 Discretionary spending levels other than overseas contingency operations reflect the budget authority caps under the Budget Control Act of 2011. The split of discretionary spending between security and non-security after 2013 is based on increasing budget authority in each category by the growth rate in the aggregate discretionary cap. 2 Outlays for TARP in 2011 and subsequent years result from obligations incurred through October 3, 2010 for the Home Affordable Modification Program and other TARP programs. 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. 4 Includes debt service on Joint Committee proposals. Subtotal, appropriated programs ����������������������� Memorandum, budget authority for appropriated programs: 1 Security ��������������������������������������������������������������������� 6.0 5.7 Non-security ������������������������������������������������������������ 2.8 2.5 2010 (As a percent of GDP) Table S–5. PROPOSED BUDGET BY CATEGORY AS A PERCENT OF GDP—Continued SUMMARY TABLES 31 860 440 1,300 768 478 266 17 602 2,132 235 3 3,670 1,209 333 651 200 55 8 79 12 34 73 19 2,674 –40 956 234 722 1,020 –64 Appropriated ("discretionary") programs: 1 Security ��������������������������������������������������������������������������������� Non-security ������������������������������������������������������������������������� Subtotal, appropriated programs ������������������������������������� Mandatory programs: Social Security ����������������������������������������������������������������������� Medicare �������������������������������������������������������������������������������� Medicaid �������������������������������������������������������������������������������� Troubled Asset Relief Program (TARP)2 ������������������������������ Other mandatory programs �������������������������������������������������� Subtotal, mandatory programs ���������������������������������������� Net interest ������������������������������������������������������������������������������� Adjustments to reflect possible emergencies3 �������������������������� Total outlays �������������������������������������������������������������������������� Receipts: Individual income taxes ������������������������������������������������������������ Corporation income taxes ��������������������������������������������������������� 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 ������������������������ Other miscellaneous receipts ��������������������������������������������������� Total receipts ������������������������������������������������������������������������� Allowance for Joint Committee deficit reduction target4 Deficit ������������������������������������������������������������������������������������������� Net interest4 ������������������������������������������������������������������������������� Primary deficit/surplus (–) �������������������������������������������������� On-budget deficit ����������������������������������������������������������������������� Off-budget surplus (–) ��������������������������������������������������������������� Outlays: 2012 629 286 343 690 –61 –79 701 209 58 8 85 13 36 54 19 2,880 1,303 396 790 509 277 11 543 2,130 287 7 3,589 782 383 1,165 2013 447 357 90 506 –59 –118 719 219 59 8 92 22 37 41 49 3,108 1,408 454 810 523 328 6 546 2,213 362 8 3,673 728 362 1,090 2014 477 422 55 536 –59 –127 737 225 58 8 94 24 38 37 63 3,173 1,496 393 831 531 353 4 565 2,285 434 8 3,777 697 354 1,051 2015 518 467 51 588 –69 –134 766 234 58 8 92 25 39 35 66 3,252 1,577 352 853 561 374 2 594 2,384 484 8 3,905 683 345 1,028 2016 (In billions of constant dollars, adjusted for population growth) 432 506 –74 500 –69 –142 783 240 53 8 94 27 39 37 67 3,384 1,647 389 875 564 389 1 578 2,407 529 8 3,958 673 339 1,013 2017 391 533 –141 460 –69 –149 802 246 49 8 96 28 40 39 68 3,465 1,706 381 899 568 402 * 564 2,433 561 8 4,005 667 336 1,002 2018 404 554 –149 468 –64 –156 817 251 50 8 104 29 41 41 71 3,548 1,757 379 924 599 417 * 579 2,519 588 8 4,108 660 333 993 2019 425 570 –145 477 –52 –162 828 254 47 7 105 30 42 42 73 3,601 1,805 367 950 625 431 * 581 2,587 610 8 4,188 654 330 983 2020 434 584 –149 478 –44 –171 844 260 47 8 107 31 42 41 76 3,677 1,850 372 976 651 448 ......... 595 2,671 630 8 4,282 647 327 974 2021 Table S–6. PROPOSED BUDGET IN POPULATION- AND INFLATION-ADJUSTED DOLLARS 32 MID-SESSION REVIEW 1.00 Memorandum, index of population growth and inflation ����� 1.03 715 352 1,067 2013 1.06 706 349 1,055 2014 1.09 697 345 1,042 2015 1.12 689 341 1,030 2016 1.16 682 338 1,020 2017 1.19 675 335 1,011 2018 1.23 669 333 1,002 2019 1.27 662 330 992 2020 1.31 656 327 983 2021 * $500 million or less. 1 Discretionary spending levels other than overseas contingency operations reflect the budget authority caps under the Budget Control Act of 2011. The split of discretionary spending between security and non-security after 2013 is based on increasing budget authority in each category by the growth rate in the aggregate discretionary cap. 2 Outlays for TARP in 2011 and subsequent years result from obligations incurred through October 3, 2010 for the Home Affordable Modification Program and other TARP programs. 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. 4 Includes debt service on Joint Committee proposals. 811 360 1,170 Memorandum, budget authority for appropriated programs: 1 Security �������������������������������������������������������������������������������������� Non-security ����������������������������������������������������������������������������� Subtotal, appropriated programs ����������������������������������������� 2012 (In billions of constant dollars, adjusted for population growth) Table S–6. PROPOSED BUDGET IN POPULATION- AND INFLATION-ADJUSTED DOLLARS—Continued SUMMARY TABLES 33 ......... ......... 1 ......... ......... ......... ......... ......... ......... ......... ......... Make program integrity adjustments ������������������ Subtotal ������������������������������������������������������������ Adjustment to reflect costs of possible emergencies 2 ����������������������������������������������������� ......... * 2 ......... ......... ......... ......... 1,293 Total program adjustments ���������������������������������� Debt service on adjustments �������������������������������� Total adjustments �������������������������������������������� Adjusted baseline deficit ������������������������������������� 1,033 22 * 22 ......... 54 –54 3 –27 –1 ......... –27 46 -* 13 2 14 18 1,011 2012 855 201 2 199 ......... 50 –50 7 –57 –3 ......... –54 249 -* 22 4 113 110 654 2013 772 297 11 286 ......... 59 –59 8 –78 –4 ......... –74 356 3 23 33 191 106 475 2014 868 342 27 314 ......... 60 –60 9 –92 –4 ......... –87 397 8 25 37 206 121 526 2015 972 387 44 343 ......... 60 –60 9 –102 –6 ......... –97 436 8 28 41 221 139 585 2016 928 435 63 372 ......... 61 –61 10 –110 –6 ......... –104 473 7 30 45 232 159 493 2017 930 481 84 398 ......... 64 –64 10 –119 –7 ......... –112 506 6 33 49 238 180 449 2018 998 530 105 425 ......... 65 –65 10 –128 –8 ......... –120 542 6 36 53 245 202 468 2019 1,079 584 130 454 ......... 66 –66 10 –137 –9 ......... –128 581 6 40 57 252 227 495 2020 1,151 640 156 484 ......... 67 –67 10 –147 –9 ......... –138 622 6 43 60 260 252 510 2021 4,500 1,249 84 1,165 ......... 282 –282 36 –356 –17 ......... –339 1,485 18 111 118 744 494 3,251 20122016 9,586 3,921 623 3,298 ......... 606 –606 86 –997 –56 ......... –942 4,210 50 293 382 1,971 1,513 5,666 20122021 Totals *$500 million or less. 1 OMB is in the process of developing its estimate of the 10-year average calculation for disaster relief pursuant to section 251(b)(2)(D) of the BCA. OMB's estimate of the maximum adjustment for 2012 will be transmitted to the Congress when OMB submits its report in compliance with section 251(b)(2)(D)(ii) of the BCA. 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. 1,316 2 46 41 Add outlays to mandatory category ��������������������� Subtotal ������������������������������������������������������������ –46 –41 Remove outlays from appropriated category ������� Reclassify surface transportation outlays: * ......... ......... Make disaster relief cap adjustments ���������������� 1 ......... ......... 1 ......... Set discretionary budget authority at cap levels ����� Adjustments for provisions contained in the Budget Control Act: ......... ......... 1,314 2011 ......... ......... Adjustments for current policy: Index to inflation the 2011 parameters of the AMT ������������������������������������������������������������������� Continue the 2001 and 2003 tax cuts ������������������ Extend estate, gift, and generation-skipping transfer taxes at current parameters �������������� Prevent reduction in Medicare physician payments ����������������������������������������������������������� Reflect incremental cost of funding existing Pell maximum grant award ������������������������������������� Subtotal ������������������������������������������������������������ 1,293 BEA baseline deficit ���������������������������������������������� 2010 (Deficit increases (+) or decreases (–) in billions of dollars) Table S–7. BRIDGE FROM BUDGET ENFORCEMENT ACT BASELINE TO ADJUSTED BASELINE 34 MID-SESSION REVIEW –* –20 1 –* –19 –19 –* 12 –7 –123 –56 –3 Revisions due to enacted legislation: Budget Control Act ������������������������������� 2011 full-year appropriations ��������������� Other legislative changes ��������������������� Debt service ������������������������������������������� Subtotal, enacted legislation ������������ Revisions due to updated economic assumptions: Receipts ������������������������������������������������ Mandatory outlays ������������������������������� Net interest ������������������������������������������ Subtotal, economic revisions ������������ Revisions due to updated technical assumptions: Receipts ������������������������������������������������� Discretionary outlays: Security ���������������������������������������������� Non-security ��������������������������������������� Mandatory outlays: Refundable tax credits ����������������������� Unemployment compensation ���������� Social Security ������������������������������������ Medicaid �������������������������������������������� Medicare ��������������������������������������������� Supplemental Nutrition Assistance Program ������������������������������������������ Purchases of GSE preferred stock ����� Veterans benefits �������������������������������� Other ��������������������������������������������������� 13 * 26 ......... * * 6 –15 –2 –3 –4 5 ......... 3 8 8 –11 –2 –3 –4 * –25 –10 –24 16 26 –67 2 14 –2 14 –26 –37 –* –* –63 13 1,090 6.9% * 1,597 10.6% 2012 Conceptual changes in the baseline: Extend expiring high-income tax cuts and current estate tax relief ������������� Extend expiring Medicare physician payment relief ����������������������������������� Debt service ������������������������������������������� Subtotal, conceptual changes ������������ February deficits in the adjusted baseline ���������������������������������������������������� Percent of GDP ������������������������������������������ 2011 4 ......... 1 7 8 –13 –2 –3 –1 30 12 –30 23 17 –14 27 –50 –38 2 –2 –89 22 1 69 47 846 5.1% 2013 3 ......... 1 2 11 –12 –2 –5 –* 18 9 –39 50 20 –15 55 –78 –36 2 –7 –119 23 4 91 63 770 4.3% 2014 5 ......... 1 1 15 –11 –1 –7 * 12 8 –33 54 21 2 78 –97 –32 1 –14 –141 25 10 112 77 841 4.5% 2015 5 ......... 1 –1 16 –11 * –8 1 13 8 –32 52 22 9 83 –108 –33 1 –21 –161 28 15 134 91 938 4.7% 2016 (In billions of dollars) 5 ......... 2 –5 16 –10 1 –9 3 15 8 –27 44 22 15 81 –116 –34 1 –29 –178 30 22 153 101 890 4.3% 2017 4 ......... 2 –6 16 –9 1 –10 5 18 7 –24 41 21 19 81 –124 –35 1 –38 –196 33 29 169 108 891 4.1% 2018 3 ......... 2 –6 16 –9 1 –12 6 21 7 –28 42 21 23 86 –133 –36 1 –47 –215 36 37 187 115 960 4.2% 2019 1 ......... 2 –8 17 –10 1 –13 6 24 7 –32 42 22 27 91 –143 –38 1 –56 –235 40 45 207 122 1,045 4.4% 2020 –* ......... 2 –6 18 –11 2 –17 8 27 7 –37 44 26 30 100 –153 –38 1 –67 –257 43 55 228 130 1,116 4.5% 2021 Table S–8. CHANGE IN THE ADJUSTED BASELINE FROM BUDGET TO MSR 22 ......... 7 18 56 –62 –7 –25 –4 89 63 –200 181 96 –20 257 –359 –175 6 –44 –573 111 30 432 290 35 ......... 17 –13 139 –112 –2 –87 24 193 99 –347 394 209 93 696 –1,028 –357 12 –281 –1,654 293 218 1,377 866 20122021 Totals 20122016 SUMMARY TABLES 35 1,316 8.8% MSR deficits in the adjusted baseline ���� Percent of GDP ������������������������������������������ –82 1,205 –2 –11 –13 1,218 MSR funding for appropriated programs ����� *$500 million or less. Total change in funding ���������������� –19 –63 1,231 Change in funding: Security ���������������������������������������������� Non-security ��������������������������������������� 1,287 1,033 6.6% –3 –3 –35 –58 2012 February funding ("budgetary resources") for appropriated programs ������������������� Memorandum: –2 –2 –255 –281 Net interest ������������������������������������������ Costs of possible emergencies ��������������� Subtotal, technical revisions ������������ Total changes since February �������������������� 2011 –95 1,212 –33 –62 1,307 855 5.2% –9 –1 1 8 2013 –103 1,234 –37 –65 1,337 772 4.4% –13 –* –25 2 2014 –108 1,257 –41 –67 1,366 868 4.7% –12 –* –21 27 2015 –115 1,281 –45 –70 1,396 972 5.0% –15 –* –22 34 2016 (In billions of dollars) –119 1,308 –47 –72 1,428 928 4.5% –15 –* –16 39 2017 –125 1,337 –50 –75 1,461 930 4.3% –18 ......... –15 40 2018 –130 1,366 –53 –77 1,496 998 4.5% –22 ......... –20 38 2019 –137 1,395 –56 –81 1,532 1,079 4.6% –25 ......... –29 34 2020 –145 1,425 –60 –85 1,569 1,151 4.7% –29 ......... –37 35 2021 –503 –175 –328 –52 –6 –102 14 20122016 –1,158 –441 –717 –161 –6 –220 199 20122021 Totals Table S-8. CHANGE IN THE ADJUSTED BASELINE FROM BUDGET TO MSR—Continued 36 MID-SESSION REVIEW 9,959 866 ......... Pay for Three Years of AMT Relief: Reduce the value of certain tax expenditures����������������������������������������������� 10,459 16 863 997 116 2 425 9,219 731 8,063 ......... 9,582 11,994 ......... 638 650 81 1,043 2013 734 32 860 1,077 183 2 100 10,073 1,089 8,884 ......... 5,405 19,687 ......... 1,043 10,772 1,422 1,045 2014 372 52 839 1,129 234 4 25 10,871 1,138 9,708 ......... 9,416 23,832 ......... 1,100 10,832 1,442 1,042 2015 158 71 815 1,152 263 3 25 11,123 578 10,520 ......... 12,964 28,264 ......... 1,240 11,552 1,469 1,039 2016 61 94 186 555 272 3 ......... 11,621 120 11,318 183 14,688 30,213 ......... 1,448 11,533 1,509 1,035 2017 95 116 –383 ......... 264 3 ......... 12,596 –73 12,103 566 15,119 30,767 ......... 1,704 11,364 1,544 1,036 2018 122 139 –374 11 243 3 ......... 13,827 –115 12,887 1,055 15,586 32,324 ......... 2,015 12,111 1,579 1,033 2019 169 162 –329 6 170 3 ......... 15,209 –64 13,686 1,587 16,158 33,294 ......... 2,381 12,117 1,610 1,028 2020 192 185 –273 –22 63 3 ......... 16,498 –27 14,499 2,026 16,885 35,037 ......... 2,809 12,665 1,657 1,021 2021 ......... 14,378 93,596 12,313 9,605 2012– 2021 5,417 3,661 21,682 176 3,656 4,703 858 13 22,321 872 2,483 5,253 1,870 28 1,025 1,025 46,630 116,381 3,820 41,785 106,278 ......... 45,235 123,671 91,928 253,563 ......... 4,021 33,806 4,414 4,452 2012– 2016 Totals –6,008 –18,996 –26,418 –29,766 –32,696 –35,699 –38,644 –41,496 –44,388 –47,180–113,884–321,291 5 279 348 1 ......... 43 450 5,344 ......... ......... 62 2 284 ......... 41 1 4,610 7,868 8,151 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 283 ......... ......... 2012 Incentives to promote regional growth: Extend and modify the New Markets tax credit�������������������������������������������������������������� Reform and extend Build America bonds1������� Reform and expand the Low-Income Housing Tax Credit (LIHTC)�������������������������������������� Designate Growth Zones1��������������������������������� Total, incentives to promote regional growth Continue certain expiring provisions through calendar year 20121�������������������� Tax Cuts for Businesses: Eliminate capital gains taxation on investments in small business stock������������ Enhance and make permanent the research and experimentation tax credit�������������������� Provide additional tax credits for investment in qualified property used in a qualified advanced energy manufacturing project����� Provide tax credit for energy efficient commercial building property expenditures in place of existing tax deduction����������������� Total, tax cuts for businesses������������������������ Tax Cuts for Families and Individuals: Extend earned income tax credit for larger families1��������������������������������������������������������� Expand child and dependent care tax credit1�� Provide for automatic enrollment in IRAs, including employer tax credit, and double the tax credit for small employer plan startup costs1������������������������������������������������� Extend American opportunity tax credit1�������� Provide exclusion from income for student loan forgiveness��������������������������������������������� Tax qualified dividends and net long-term capital gains at a 20-percent rate for upperincome taxpayers������������������������������������������ Total, tax cuts for families and individuals� Tax Provisions: 2011 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET SUMMARY TABLES 37 Total, reform U.S. international tax system�������������������������������������������������� Reform U.S. international tax system: Defer deduction of interest expense related to deferred income������������������������������������� Determine the foreign tax credit on a pooling basis����������������������������������������������� Tax currently excess returns associated with transfers of intangibles offshore������� Limit shifting of income through intangible property transfers�������������������������������������� Disallow the deduction for excess non-taxed reinsurance premiums paid to affiliates��� Limit earnings stripping by expatriated entities�������������������������������������������������������� Modify tax rules for dual capacity taxpayers Reinstate Superfund taxes������������������������������� Increase Oil Spill Liability Trust Fund financing rate by one cent���������������������������� Make unemployment insurance surtax permanent����������������������������������������������������� Repeal LIFO method of accounting for inventories����������������������������������������������������� Repeal gain limitation for dividends received in reorganization exchanges������������������������� Total, reform treatment of financial institutions and products������������������� Reform treatment of financial institutions and products: Impose a financial crisis responsibility fee���������������������������������������������������������������� Require accrual of income on forward sale of corporate stock������������������������������������������� Require ordinary treatment of income from day-to-day dealer activities for certain dealers of equity options and commodities Modify the definition of “control” for purposes of section 249 of the Internal Revenue Code��������������������������������������������� Other Revenue Changes and Loophole Closers: –29 –129 –212 –532 ......... ......... ......... ......... –364 –918 –223 –63 –2,038 –4,568 –5,138 –79 –2,598 –1,413 –46 –1,253 –1,926 –15 –226 –12 –1,000 2013 –382 –974 –237 –90 –2,114 –4,798 –5,396 –81 –5,649 –1,449 –46 –3,275 –2,038 –16 –240 –19 –3,000 2014 –401 –1,031 –250 –118 –2,212 –5,011 –5,636 –84 –6,484 –1,477 –46 –3,297 –2,093 –17 –254 –26 –3,000 2015 –421 –1,085 –264 –148 –2,280 –5,211 –5,861 –86 –6,457 –1,503 –46 –3,320 –2,144 –17 –270 –33 –3,000 2016 –442 –1,138 –277 –178 –2,290 –5,406 –6,080 –89 –6,435 –1,526 –46 –4,340 –2,185 –18 –286 –36 –4,000 2017 –464 –1,190 –289 –209 –2,231 –5,601 –3,114 –92 –6,387 –1,543 –46 –4,360 –2,212 –19 –303 –38 –4,000 2018 –487 –1,242 –302 –242 –2,158 –5,810 –1,103 –94 –6,337 –1,558 –47 –4,381 –2,246 –20 –321 –40 –4,000 2019 –512 –1,296 –315 –276 –2,138 –6,051 –1,149 –97 –6,293 –1,577 –46 –4,404 –2,272 –21 –341 –42 –4,000 2020 2012– 2016 2012– 2021 –74 –1,134 –96 –174 –2,746 –296 –451 –7,217 –15,015 –219 –377 –849 –537 –1,352 –328 –315 –2,166 –2,614 –1,668 –1,780 –4,222 –4,540 –10,758 –1,103 –448 –9,848 –20,831 –6,333 –22,243 –51,444 –1,202 –25,017 –37,665 –100 –6,240 –21,188 –52,880 –1,594 –47 –4,427 –11,304 –33,216 –2,329 –9,575 –20,819 –22 –361 –44 –4,000 –10,000 –30,000 2021 Totals –7,747 –13,312 –13,991 –14,659 –15,270 –15,811 –13,098 –11,344 –11,737 –12,233 –64,979–129,202 –1,204 ......... ......... –2,655 –47 ......... ......... ......... ......... –2,986 –1,375 ......... ......... –35 –9 ......... ......... –144 –35 –159 –1,374 –6 –1 –36 ......... ......... 2012 ......... 2011 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued 38 MID-SESSION REVIEW –21 ......... ......... Total, reform treatment of insurance companies and products��������������������� –6 Repeal capital gains treatment for royalties����������������������������������������������� ......... ......... ......... ......... ......... ......... ......... Repeal enhanced oil recovery credit������ Repeal credit for oil and gas produced from marginal wells���������������������������� Repeal expensing of intangible drilling costs����������������������������������������������������� Repeal deduction for tertiary injectants Repeal exception to passive loss limitations for working interests in oil and natural gas properties������������ Repeal percentage depletion for oil and natural gas wells��������������������������������� Repeal domestic manufacturing deduction for oil and natural gas companies�������������������������������������������� Eliminate oil and gas preferences: Total, eliminate coal preferences������ ......... –6 ......... Repeal percentage depletion for hard mineral fossil fuels������������������������������ Repeal domestic manufacturing deduction for coal and other hard mineral fossil fuels������������������������������ ......... Repeal expensing of exploration and development costs������������������������������� Eliminate coal preferences: Eliminate fossil fuel tax preferences: –172 ......... –902 –607 –23 –6 –1,875 ......... ......... –20 –136 –11 –78 –27 –201 –8 ......... 2012 Reform treatment of insurance companies and products: 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 (COLI)��������������������������������������� 2011 –1,558 –1,038 –27 –10 –2,512 ......... ......... –35 –222 –13 –129 –45 –578 –71 –465 –42 2013 –1,653 –1,079 –24 –10 –1,762 ......... ......... –38 –236 –22 –129 –47 –810 –181 –547 –82 2014 –1,749 –1,111 –22 –10 –1,403 ......... ......... –39 –249 –31 –130 –49 –949 –273 –579 –97 2015 –1,842 –1,142 –21 –10 –1,331 ......... ......... –41 –265 –38 –135 –51 –1,153 –433 –605 –115 2016 –1,932 –1,177 –19 –10 –1,124 ......... ......... –44 –276 –43 –139 –50 –1,393 –652 –607 –134 2017 (Deficit increases (+) or decreases (–) in millions of dollars) –2,020 –1,211 –18 –9 –830 ......... ......... –45 –285 –47 –145 –48 –1,639 –900 –585 –154 2018 –2,108 –1,243 –17 –9 –640 ......... ......... –48 –295 –51 –149 –47 –2,012 –1,280 –555 –177 2019 –2,200 –1,273 –16 –9 –523 ......... ......... –49 –303 –55 –154 –45 –2,445 –1,714 –528 –203 2020 Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued –2,296 –1,321 –16 –9 –447 ......... ......... –51 –312 –58 –165 –38 –2,900 –2,166 –503 –231 2021 –7,691 –5,146 –1,243 2012– 2021 ......... ......... –410 –2,579 –369 –1,353 –447 –203 –92 –7,704 –18,260 –4,977 –11,202 –117 –46 –8,883 –12,447 ......... ......... –173 –1,108 –115 –601 –219 –3,691 –14,080 –979 –2,368 –344 2012– 2016 Totals SUMMARY TABLES 39 Require greater electronic filing of returns������������������������������������������������ Authorize the Department of the Treasury to require additional information to be included in electronically filed Form 5500 Annual Reports���������������������������������� Implement standards clarifying when employee leasing companies can be held liable for their clients’ Federal employment taxes������������������������������ Increase certainty with respect to worker classification�������������������������� Improve compliance by businesses: Total, expand information reporting� Require a certified Taxpayer Identification Number from contractors and allow certain withholding����������������������������������������� ......... ......... –4 –12 ......... ......... ......... –48 427 ......... ......... –21 –21 ......... ......... –7 ......... –16 475 –2,274 ......... –318 ......... ......... –3,608 –6 Require information reporting for private separate accounts of life insurance companies�������������������������� –3,472 –59 2012 ......... ......... Repeal and modify information reporting on payments to corporations and payments for property 6��������������������������������������������� Expand information reporting: Reduce the tax gap and make reforms: Total, eliminate oil and gas preferences������������������������������������� Total, eliminate fossil fuel tax preferences������������������������������������������������� Tax carried (profits) interests as ordinary income������������������������������������������������������������ Deny deduction for punitive damages������������� Repeal lower-of-cost-or-market inventory accounting method���������������������������������������� Simplify the tax code���������������������������������������� Increase geological and geophysical amortization period for independent producers to seven years�������������������� 2011 –230 –5 ......... ......... –81 536 –1 618 –188 –35 –2,123 –23 –5,582 –5,360 –215 2013 –1,237 –6 ......... ......... –110 644 –2 756 –1,435 12 –2,154 –34 –5,094 –4,858 –330 2014 –956 –6 ......... ......... –115 811 –3 929 –2,334 23 –1,927 –35 –4,850 –4,601 –306 2015 –819 –6 ......... ......... –121 837 –3 961 –1,532 –141 –1,608 –35 –4,841 –4,576 –230 2016 –904 –7 ......... ......... –126 870 –4 1,000 –1,358 –147 –1,322 –36 –4,690 –4,414 –152 2017 (Deficit increases (+) or decreases (–) in millions of dollars) –994 –7 ......... ......... –132 910 –5 1,047 –309 281 –1,089 –36 –4,448 –4,163 –75 2018 –1,088 –7 ......... ......... –138 952 –6 1,096 –323 176 –908 –37 –4,334 –4,039 –22 2019 –1,186 –8 ......... ......... –144 996 –7 1,147 –337 107 –762 –37 –4,333 –4,030 –9 2020 Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued –1,140 2012– 2016 –1,408 2012– 2021 –1,284 –8 ......... ......... –150 1,022 –8 1,180 –352 138 –3,254 –27 ......... ......... –475 3,255 –9 3,739 –5,489 –148 –8,710 –64 ......... ......... –1,165 8,005 –39 9,209 –8,168 407 –640 –10,086 –14,807 –39 –127 –312 –4,411 –23,975 –46,191 –4,099 –22,867 –43,612 –10 2021 Totals 40 MID-SESSION REVIEW –16 –13 ......... ......... ......... ......... ......... ......... –21 Require a minimum term for grantor retained annuity trusts (GRATs)������� Limit Duration of Generation Skipping Transfer (GST) Tax Exemption���������� Total, modify estate and gift tax valuation discounts and make other reforms����������������������������������������������� Total, reduce the tax gap and make reforms������������������������������������������������ –563 –948 ......... –15 –806 –127 ......... –13 –13 –821 –1,077 ......... –46 –860 –171 ......... –27 –27 ......... –235 –18 ......... ......... 2013 ......... ......... Trade Initiatives: Promote trade���������������������������������������������������� Other Initiatives: Authorize the limited sharing of business tax return information to improve the accuracy of important economic measures ����������������� ......... 167 ......... 371 –397 –17,390 –29,977 ......... Modify rules on valuation discounts������ Total, other revenue changes and loophole closers��������������������������������������������������������� ......... Require consistency in value for transfer and income tax purposes������ ......... ......... ......... ......... ......... ......... ......... 2012 ......... Make permanent the portability of unused exemption between spouses�� Modify estate and gift tax valuation discounts and make other reforms: Total, expand penalties�������������������������� Increase penalty imposed on paid preparers who fail to comply with EITC due diligence requirements������ Impose a penalty on failure to comply with electronic filing requirements���� Expand penalties: Repeal special estimated tax payment provision for certain insurance companies������������������������������������������� Eliminate special rules modifying the amount of estimated tax payments by corporations����������������������������������� Total, improve compliance by businesses�������������������������������������� Strengthen tax administration��������������������� 2011 ......... 2016 –1,937 ......... –231 –1,823 –204 321 –34 –35 –1 –6,350 –51,278 –1,822 ......... –160 –1,687 –192 217 –32 –32 ......... –5,282 –50,115 –25 –28 –4,320 –49,290 ......... 2015 –2,176 –2,069 ......... –308 –1,966 –216 421 –35 –36 –1 –911 –30 ......... ......... 2017 –2,375 –2,218 ......... –389 –2,116 –229 516 –35 –36 –1 –1,001 –30 ......... ......... 2018 3,029 –2,388 ......... –477 –2,277 –243 609 –36 –38 –2 4,535 –32 5,630 ......... 2019 –8,473 –2,573 ......... –570 –2,444 –258 699 –37 –39 –2 –6,824 –33 –5,630 ......... 2020 –3,125 –2,781 ......... –670 –2,629 –273 791 –38 –40 –2 –1,292 –34 ......... ......... 2021 –2,095 3,681 –318 –327 –9 –8,774 –263 ......... ......... 2012– 2021 ......... –2,959 –7,778 –20,898 –7,510 –19,539 ......... –545 –6,734 –18,166 –876 645 –137 –138 –1 –3,281 –104 ......... ......... 2012– 2016 Totals ......... 514 ......... 636 ......... 755 ......... 837 ......... 910 ......... 982 ......... 1,053 ......... 1,127 ......... 2,443 ......... 7,352 15,190 –44,562 –89,414 –41,554 –37,353 –30,416 –42,706 –38,299–166,153–356,481 51,234 –1,726 ......... –93 –1,558 –182 107 –31 –31 ......... 52,367 –20 53,610 ......... 2014 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued SUMMARY TABLES 41 Agriculture: Change company reimbursement on crop insurance CAT premium������������������������������ Eliminate cotton and peanut storage payments������������������������������������������������������� 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���������������������������������������� Enact Forest Service payment to communities—impact on timber receipts���� Suspend SNAP time limits for able-bodied working-age adults without dependents����� Restore SNAP beneficiary payments terminated in P.L. 111–296�������������������������� Reduce commodity payments to wealthy farmers���������������������������������������������������������� Impose biobased labeling fee���������������������������� Total, Agriculture������������������������������������������� Mandatory Initiatives and Savings: Transportation Trust Fund: Outlays�������������������������������������������������������������� Bipartisan financing for Transportation Trust Fund��������������������������������������������������������������� Subtotal, transportation trust fund�������������� Upfront investment in aviation����������������������������� Upfront investment in TIGER grants������������������� Total, reauthorize surface transportation Reauthorize Surface Transportation: Eliminate certain reviews conducted by the U.S. Treasury Inspector General for Tax Administration (TIGTA)������������������������������� Modify indexing to prevent deflationary adjustments��������������������������������������������������� Total, other initiatives����������������������������������� 19,053 ......... ......... ......... 2013 16,230 ......... ......... ......... 2014 17,980 ......... ......... ......... 2015 21,965 ......... ......... ......... 2016 27,117 ......... ......... ......... 2017 30,412 ......... ......... ......... 2018 31,731 ......... ......... ......... 2019 32,207 ......... ......... ......... 2020 ......... ......... ......... 2012– 2016 ......... ......... ......... 2012– 2021 32,077 109,071 235,498 ......... ......... ......... 2021 Totals –161 –1 –20 –11 –27 –22 ......... 90 ......... ......... ......... –152 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... –228 ......... –481 ......... 51 –48 –22 –29 –12 –27 ......... –166 –261 ......... 2,663 3,239 1 –49 –22 –30 –12 –27 ......... –176 –312 ......... –577 56 ......... –49 –22 –31 –12 –28 ......... –179 –315 ......... –640 ......... ......... –50 –22 –31 –13 –29 ......... –180 –265 ......... –594 ......... ......... –52 –22 –31 –13 –30 ......... –181 –278 ......... –559 ......... ......... ......... –22 –32 –13 –31 ......... –183 –285 ......... –568 ......... ......... ......... –22 –32 –13 –32 ......... –184 –284 ......... –569 ......... ......... ......... –22 –32 –13 –33 ......... –185 –283 ......... –572 ......... ......... ......... –22 –33 –13 –34 ......... –187 –1,116 ......... 813 3,295 142 –196 –110 –148 –60 –131 –1 –862 –2,511 ......... –2,049 3,295 142 –248 –220 –308 –125 –291 –1 –1,782 ......... –20,000 –28,000 –29,000 –31,000 –32,000 –34,000 –36,000 –38,000 –39,000 –41,000–140,000–328,000 ......... –13,274 –8,947 –12,770 –13,020 –10,035 –6,883 –5,588 –6,269 –6,793 –8,923 –58,046 –92,502 ......... 596 2,146 608 ......... ......... ......... ......... ......... ......... ......... 3,350 3,350 ......... 20 420 680 400 200 140 100 40 ......... ......... 1,860 2,000 ......... –12,658 –6,381 –11,482 –12,620 –9,835 –6,743 –5,488 –6,229 –6,793 –8,923 –52,976 –87,152 6,726 ......... ......... ......... ......... ......... ......... 2012 ......... 2011 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued 42 MID-SESSION REVIEW ......... ......... ......... Subtotal, shift future Uniformed Services Family Health Plan enrollees into TRICARE-For-Life/ Medicare���������������������������������������������� Provide additional accrual payments to the Medicare Eligible Retiree Health Care Fund (non-PAYGO)��������������������������������������� Total, Defense������������������������������������������ –2,136 –535 –578 2 2 –384 ......... –60 ......... ......... ......... ......... –60 Total, Education�������������������������������������� Energy: Repeal ultra-deepwater oil and gas research and development program���������������������������� Provide HomeStar rebates for energy efficient home retrofits������������������������������������������������ Total, Energy�������������������������������������������������� –984 ......... –20 1,800 1,780 ......... 300 300 –2,544 2,069 ......... –1 –117 –1 –1 ......... 2012 Pell Grant Protection Act: Provide mandatory appropriation to sustain recent Pell Grant increases 7���������������������� Eliminate in-school interest subsidies for graduate and professional students 8�������� Provide current borrowers incentive to convert from guaranteed loans to direct loans to simplify loan servicing����������������� Eliminate year-round Pell Grants and simplify student aid application 9�������������� Reform and expand Perkins loan program��� Overhaul TEACH Grants and replace with Presidential Teaching Fellows������������������� Establish College Completion Incentive Grants��������������������������������������������������������� Accelerate the recall of the Perkins Loan revolving fund�������������������������������������������� Education: ......... ......... Shift future Uniformed Services Family Health Plan enrollees into TRICARE-forLife/Medicare: Effect on Medicare Eligible Retiree Health Care Fund�������������������������������������������������� Effect on accrual payments (non-PAYGO)���� Defense: 2011 2,100 2,060 –40 415 –618 42 102 –604 –1,564 –20 –3,200 6,277 755 ......... 755 –4 759 2013 1,020 970 –50 –2,283 –727 220 150 –711 –1,155 –16 –3,039 2,995 793 ......... 793 –12 805 2014 600 570 –30 –1,696 –764 288 156 –840 –896 –10 –3,019 3,389 826 ......... 826 –24 850 2015 180 170 –10 –620 –113 300 150 –995 –705 –10 –3,022 3,775 846 ......... 846 –43 889 2016 ......... ......... ......... –323 –197 291 138 –1,157 –547 –10 –3,041 4,200 877 ......... 877 –68 945 2017 (Deficit increases (+) or decreases (–) in millions of dollars) ......... ......... ......... –223 –25 93 1 –1,295 –504 –11 –3,110 4,628 905 ......... 905 –99 1,004 2018 ......... ......... ......... 60 94 15 –54 –1,335 –494 –11 –3,211 5,056 930 ......... 930 –137 1,067 2019 ......... ......... ......... 454 202 ......... –67 –1,372 –473 –13 –3,312 5,489 951 ......... 951 –183 1,134 2020 Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued 18,505 3,219 –117 3,219 –84 3,303 2012– 2016 43,864 7,849 –117 7,849 –809 8,658 2012– 2021 ......... ......... ......... 1,061 342 ......... –70 –1,399 –448 –7 –2,244 5,700 5,550 –150 –6,728 –2,606 852 560 5,700 5,550 –150 –5,699 –2,190 1,251 508 –3,685 –10,243 –4,898 –7,364 –2,192 –3,343 –13,264 –29,281 5,986 967 ......... 967 –238 1,205 2021 Totals SUMMARY TABLES 43 ......... Housing and Urban Development: Provide funding for the Affordable Housing Trust Fund���������������������������������������������������� –25 25 ......... –138 ......... ......... –4 –3 ......... ......... ......... ......... ......... ......... ......... ......... 10 240 495 18,955 ......... ......... 22 Interior: Impose fee on nonproducing oil and gas leases Reserve funds for insular affairs assistance��� Return to net receipts sharing for energy minerals��������������������������������������������������������� Reform coal and hardrock Abandoned Mine Lands (AML) programs2������������������������������� Impose hardrock mining royalty���������������������� Repeal Energy Policy Act fee prohibition and mandatory permit funds������������������������������� Increase Duck Stamp fees2������������������������������� Reathorize Federal Land Sales/Acquisition Law (FLTFA)������������������������������������������������� 220 381 342 244 2 ......... ......... 22 ......... ......... ......... ......... ......... –1,571 ......... ......... ......... ......... 18,602 ......... 2012 Shift future Uniformed Services Family Health Plan enrollees into TRICARE-forLIFE/Medicare: Effect on Medicare����������������������������������������� Reform child welfare assistance to improve permanency and safety��������������������������������� Strengthen and expand child care assistance� Extend TANF supplemental grants����������������� Modernize child support program�������������������� Extend the child welfare study������������������������ Extend Transitional Medical Assistance (TMA)������������������������������������������������������������� Extend Qualified Individuals (QI)������������������� Total, Health and Human Services��������������� Provide physicians relief from sustainable growth rate formula (SGR) and offset costs: 10 Provide SGR relief through 2013������������������ Offset cost of providing SGR relief through 2013 with specific health savings3������������ Provide SGR relief from 2014 onward���������� Offset cost of providing SGR relief from 2014 onward����������������������������������������������� Health and Human Services: 2011 –2,676 23,207 7,210 2014 –4,759 32,072 ......... 2015 –6,056 34,692 ......... 2016 –6,846 36,730 ......... 2017 –7,037 39,856 ......... 2018 –7,275 44,760 ......... 2019 ......... 2021 54,405 2012– 2016 54,405 2012– 2021 –9,674 –14,164 –17,237 –62,233 49,909 54,222 89,971 315,448 ......... 2020 Totals –5 –20 ......... –386 –7 –44 –39 24 140 415 ......... 28,088 245 632 64 310 4 ......... –8 –19 ......... –330 –5 –45 –59 24 290 10 ......... 5,774 249 730 ......... 251 ......... ......... –10 –18 ......... –204 –6 –47 –75 24 230 ......... ......... –3,471 250 749 ......... 269 ......... 20 –4 ......... ......... –129 –6 –47 –90 22 190 ......... ......... –4,723 250 750 ......... 303 ......... 30 ......... ......... ......... –81 –7 –48 –98 16 100 ......... ......... –5,440 250 750 ......... 356 ......... 50 ......... ......... ......... –128 –10 –50 –109 15 20 ......... ......... –5,605 250 750 ......... 362 ......... 70 ......... ......... ......... –145 –15 –53 –116 14 20 ......... ......... –5,933 250 750 ......... 252 ......... 90 250 750 ......... 226 ......... 150 ......... ......... ......... –100 –19 –52 –125 12 ......... ......... ......... ......... –89 –25 –55 –138 11 ......... ......... ......... ......... ......... –8,328 –12,788 250 750 ......... 226 ......... 120 –30 –57 –4 –1,187 –24 –183 –288 119 860 665 495 44,623 1,214 3,242 406 1,377 6 50 –30 –57 –4 –1,730 –100 –441 –874 187 1,000 665 495 6,529 2,464 6,992 406 2,799 6 530 ......... –23,207 –32,072 –34,692 –36,730 –39,856 –44,760 –49,909 –54,222 –89,971–315,448 –2,175 ......... 28,593 2013 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued 44 MID-SESSION REVIEW Veterans Affairs: Extend veterans income verification���������������� Extend VBA authority for use of HHS data���� Reform criteria for special monthly pension��� Provide authority for vendee loan pooling������� Expand eligibility for Vocational Rehabilitation and Employment on-the-job training program 5����������������������������������������� Treasury: Levy payments to Medicare providers with delinquent tax debt2�������������������������������������� Offset Federal tax refunds to collect State income taxes from debtors who currently reside in other States������������������������������������ Levy payments to Federal contractors with delinquent tax debt2�������������������������������������� Restructure assistance to New York City2������� Total, Treasury����������������������������������������������� 26 4 –6 –86 ......... ......... –59 200 77 –5 ......... –22 ......... ......... ......... ......... ......... ......... 3,941 ......... 1,344 ......... ......... –44 36 ......... ......... ......... –64 –10 415 ......... 124 –17 3,544 100 –7 ......... –152 2012 1,220 ......... Justice: Provide incentives for State medical malpractice reform���������������������������������������� Labor: Give States and employers short-term relief from interest and tax increases and strengthen unemployment insurance system solvency 2������������������������������������������� Reform Federal Employees’ Compensation Act (FECA)���������������������������������������������������� Reauthorize Trade Adjustment Assistance����� Protect pension benefits by empowering the PBGC Board to improve solvency���������������� Expand Foreign Labor Certification Fees�������� Expand work-sharing program2����������������������� Enhance unemployment insurance program integrity2,4������������������������������������������������������ Total, Labor���������������������������������������������������� ......... ......... ......... Repeal Geothermal Payments to Counties under 2005 Energy Policy Act���������������������� Repeal “deep gas” royalty incentives���������������� Total, Interior������������������������������������������������� 2011 ......... –7 2 –10 –93 –61 200 71 ......... –68 –142 4,626 ......... ......... 17 –13 713 4,051 50 –7 ......... –484 2013 50 –7 ......... –343 2015 ......... –7 ......... –261 2016 ......... –7 ......... –225 2017 –2,523 ......... 61 –7 825 –2,286 ......... 90 –17 746 –2,141 ......... 89 –26 708 ......... –13 1 –13 1 –64 200 65 ......... –71 ......... –20 ......... –16 ......... –67 200 59 ......... –74 ......... –27 –1 –20 ......... –69 200 55 ......... –76 ......... ......... –2 –23 ......... –73 200 51 ......... –76 –261 –222 438 –316 –7,976 –14,729 –11,573 –13,499 –1,121 ......... –5 –5 893 –7,477 –12,863 –10,544 –11,813 50 –7 ......... –449 2014 (Deficit increases (+) or decreases (–) in millions of dollars) ......... ......... –3 –27 ......... –76 200 46 ......... –78 195 –9,658 –2,046 ......... 88 –36 696 –8,555 ......... –8 ......... –290 2018 ......... ......... –4 –30 ......... –80 200 40 ......... –80 219 –982 –1,987 ......... 88 –46 710 34 ......... –8 ......... –323 2019 ......... ......... –5 –34 ......... –83 200 37 ......... –80 –137 –1,072 –1,966 ......... 88 –56 736 263 ......... –8 ......... –292 2020 Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued 250 –35 ......... –1,689 2012– 2016 250 –74 ......... –3,123 2012– 2021 –283 7,220 –5,930 –16,071 –44 –44 199 641 –52 3,592 ......... ......... –5 –37 ......... –87 200 32 ......... –81 ......... –41 6 –65 –178 –320 1,000 327 ......... –353 ......... –41 –13 –216 –178 –719 2,000 533 ......... –748 –330 –187 –556 –1,698 –25,711 –52,620 –2,001 ......... 89 –67 778 –167 –23,289 –43,527 ......... –8 ......... –304 2021 Totals SUMMARY TABLES 45 5 129 ......... ......... 2,271 Other Independent Agencies: Provide financial relief to the U.S. Postal Service����������������������������������������������������������� Enact Wireless Innovation and Infrastructure Initiative (WI3): Enact incentive auction authority and other spectrum reforms��������������������������������������� Build a Public Safety Broadband Network�� Reserve the D Block for public safety use���� Multi-Agency: Total, other independent agencies���������������� Subtotal, Federal Communications Commission (FCC)������������������������������ Federal Communications Commission (FCC): Enact spectrum license user fee�������������������� Provide no new funding for the Telecommunications Development Fund� 13 20 ......... ......... ......... ......... ......... –1,900 1,400 3,150 –207 72 –7 –3 –53 2,218 –200 –50 279 5 86 ......... ......... ......... –49 ......... ......... Social Security Administration: Require workers’ compensation information reporting4������������������������������������������������������� Temporarily extend SSI benefits for refugees� Require States and localities to provide pension information4������������������������������������� Revert to quarterly wage reporting4���������������� Enact DI Work Incentives Simplification Pilot (non-PAYGO)������������������������������������������������� Total, Social Security Administration����������� –49 ......... ......... –62 2012 ......... ......... Corps of Engineers: Reform inland waterways funding2������������������ Environmental Protection Agency: Enact pesticide registration and premanufacture notice fees�������������������������� Establish fees for use of hazardous waste electronic manifest system��������������������������� Total, Environmental Protection Agency������ ......... ......... Allow occupancy by a dependent child to satisfy VA home loans occupancy requirement��������������������������������������������������� Total, Veterans Affairs����������������������������������� 2011 –6,020 1,400 ......... –307 –58 –7 –300 249 10 157 20 30 5 92 ......... –81 –81 –196 1 –107 2013 –8,240 1,400 ......... –432 –111 –7 –425 321 15 133 18 100 ......... ......... –6 –94 –88 –163 1 –23 2014 –6,430 1,400 ......... –557 –258 –7 –550 299 22 –180 –202 ......... ......... ......... –4 –99 –95 –135 1 –35 2015 –2,460 1,400 ......... –557 –277 –7 –550 280 25 –414 –439 ......... ......... ......... –3 –100 –97 –72 1 –47 2016 –400 ......... ......... –557 –328 –7 –550 229 13 –561 –574 ......... ......... ......... –3 –104 –101 –72 1 –24 2017 (Deficit increases (+) or decreases (–) in millions of dollars) –1,300 ......... ......... –557 –328 –7 –550 229 ......... –609 –609 ......... ......... ......... –3 –107 –104 –71 1 –29 2018 –1,050 ......... ......... –557 –328 –7 –550 229 ......... –555 –555 ......... ......... ......... –3 –110 –107 –69 1 –33 2019 ......... ......... ......... –557 –328 –7 –550 229 ......... –522 –522 ......... ......... ......... –3 –113 –110 –70 1 –38 2020 Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued –2,060 –632 –35 –2,025 1,428 77 –175 –590 150 10 178 –13 –423 –410 –566 4 –274 2012– 2016 –4,845 –2,272 –70 –4,775 2,573 90 –2,901 –3,329 150 10 178 –28 –974 –946 –917 9 –439 2012– 2021 ......... –25,050 –27,800 ......... 7,000 7,000 ......... 3,150 3,150 –557 –328 –7 –550 229 ......... –479 –479 ......... ......... ......... –3 –117 –114 –69 1 –41 2021 Totals 46 MID-SESSION REVIEW ......... 14,616 ......... 14,616 18,930 14,227 Implement program integrity allocation adjustments 2, 11���������������������������������������������� Provide $250 Economic Recovery Payments 2�� Hold harmless the Federal poverty level��������� Total, multi-agency���������������������������������������� Total, mandatory and receipt proposals, including surface transportation����������� –4,909 1,250 681 2014 –4,403 ......... 627 2015 –521 ......... 539 2016 –277 ......... 123 2017 –1,266 ......... 34 2018 –1,050 ......... ......... 2019 ......... ......... ......... 2020 ......... ......... ......... 2021 –7,057 5,000 2,843 2012– 2016 –9,650 5,000 3,000 2012– 2021 5,671 –2,579 –83,764–121,100 –76,118 –71,523 –58,081 –73,693 –76,882–187,545–543,842 –4,187 –6,684 –9,465 –12,620 –14,990 –16,632 –18,305 –19,647 –20,976 –34,453–125,003 ......... ......... ......... ......... ......... ......... ......... ......... ......... 265 265 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... –6,970 –11,593 –13,868 –13,141 –15,267 –17,898 –19,355 –19,647 –20,976 –41,245–134,388 –2,783 1,250 587 2013 Totals 137 Total outlay effects of receipt proposals����������� 2,863 38 16 1,580 34 789 69 337 2013 9,523 66 4,465 2,793 43 437 1,372 347 2014 10,709 71 4,425 4,048 43 384 1,384 354 2015 11,976 79 4,655 5,314 40 121 1,404 363 2016 13,091 90 4,608 6,575 10 ......... 1,436 372 2017 14,295 105 4,531 7,830 –20 ......... 1,463 386 2018 17,146 15,861 Reform inland waterways funding������������������������ Reform coal and hardrock Abandoned Mine Lands (AML) programs������������������������������������� Increase Duck Stamp fees������������������������������������� Give States and employers short-term relief from interest and tax increases and strengthen unemployment insurance system solvency������ Expand work-sharing program����������������������������� ......... ......... –14 1,714 ......... ......... ......... ......... ......... 2012 ......... 2011 3,541 –14 –200 –14 –196 2013 –200 –14 –135 2015 –200 –14 –72 2016 –200 –14 –72 2017 –7,477 –12,863 –10,544 –11,814 –20 51 82 82 –200 –14 –163 2014 –8,555 81 –200 –14 –71 2018 34 81 –200 –14 –69 2019 263 81 –200 –14 –70 2020 142 4,775 10,324 –17 ......... 1,512 410 2020 122 4,791 9,080 –20 ......... 1,490 398 2019 The estimates for this proposal include effects on receipts. The receipt effects included in the totals above are listed below: 1,115 ......... ......... 599 14 ......... ......... 105 ......... 2 502 ......... ......... 32 ......... ......... 2012 Continue certain expiring provisions through calendar year 2012��������������������������������������������� 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������������������������������������������������������� Extend American opportunity tax credit�������������� Reform and extend Build America bonds������������� Designate Growth Zones��������������������������������������� 2011 880 37,304 59,704 113 2,233 11,681 3,387 2012– 2021 –800 –70 –566 2012– 2016 –1,800 –140 –917 2012– 2021 36,186 115,302 254 13,561 14,334 174 2,233 4,229 1,401 2012– 2016 –167 –25,629 –45,868 81 99 505 –200 –14 –69 2021 18,723 167 5,038 11,561 –14 ......... 1,551 420 2021 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. 1 The estimates for this proposal include effects on outlays. The outlay effects included in the totals above are listed below: –1,497 265 ......... 4,327 5,559 ......... Total, enact Wireless Innovation and Infrastructure Initiative (WI3)���������� 2,500 409 ......... ......... 2012 Extend wireless broadband through the National Wireless Initiative and support Universal Service Fund reform����������������� Create a Wireless Innovation Fund�������������� 2011 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued SUMMARY TABLES 47 ......... –64 –59 200 –276 112 1,613 ......... –17 –5 ......... ......... 216 194 2012 –804 ......... 2,330 –61 200 –68 –54 2013 –67 200 –74 –70 2015 –69 200 –76 588 2016 –73 200 –76 –162 2017 –76 200 –78 355 2018 –1,970 –3,721 –5,646 –7,227 –8,184 ......... ......... ......... ......... ......... –9,887 –16,893 –15,751 –19,356 –16,542 –64 200 –71 –108 2014 –8,773 ......... –8,513 –80 200 –80 388 2019 –87 200 –81 –144 2021 –320 1,000 –353 356 2012– 2016 –719 2,000 –748 835 2012– 2021 –9,274 –9,778 –12,417 –55,653 ......... ......... 112 112 –9,135 –10,259 –38,588–102,393 –83 200 –80 42 2020 Totals Expand CMS program integrity authority: Reduce Medicaid provider tax threshold beginning in 2015������������������������������������������ Strengthen Medicaid third-party liability������� Track high prescribers and utilizers of prescription drugs in Medicaid�������������������� Require manufacturers that improperly report items for Medicaid drug coverage to fully repay States������������������������������������������ Enforce Medicaid drug rebate agreements������ Increase penalties on drug manufacturers for fraudulent non-compliance with Medicaid drug rebate agreements�������������������������������� Require drugs to be properly listed with the FDA to receive Medicaid coverage��������������� Prohibit Federal funds from being used as Medicaid/CHIP State share unless specifically authorized by law���������������������� Recover erroneous payments made to insurers participating in Medicare Advantage����������������������������������������������������� Increase scrutiny of providers using higherrisk banking arrangements to receive Medicare payments��������������������������������������� Allow civil monetary penalties for providers who do not update enrollment information� Study the feasibility of using universal product numbers (UPNs) to improve payment accuracy in Medicare��������������������� ......... –65 –80 –10 ......... ......... ......... ......... –490 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... 2012 ......... ......... 2011 ......... ......... ......... –570 ......... ......... ......... –10 ......... –170 ......... –95 2013 ......... –10 ......... –600 ......... ......... ......... –10 ......... –310 ......... –155 2014 ......... –10 ......... –640 ......... ......... ......... –10 ......... –340 –1,460 –165 2015 ......... –10 ......... –650 ......... ......... ......... –10 ......... –370 –2,050 –170 2016 ......... –10 ......... –680 ......... ......... ......... –15 ......... –390 –2,690 –175 2017 ......... –10 ......... –680 ......... ......... ......... –15 ......... –410 –2,820 –190 2018 ......... –10 ......... –660 ......... ......... ......... –15 ......... –440 –2,970 –195 2019 ......... –10 ......... –610 ......... ......... ......... –15 ......... –460 –3,110 –200 2020 ......... –10 ......... –580 ......... ......... ......... –15 ......... –480 –3,270 –210 2021 2012– 2021 ......... –30 ......... –2,950 ......... ......... ......... –50 ......... –1,270 ......... –80 ......... –6,160 ......... ......... ......... –125 ......... –3,450 –3,510 –18,370 –650 –1,620 2012– 2016 3 The health savings to offset the cost of providing physicians two years of relief from scheduled payment cuts under the sustainable growth rate formula (SGR) are listed below: Enhance unemployment insurance integrity������� Levy payments to Medicare providers with delinquent tax debt�������������������������������������������� Levy payments to Federal contractors with delinquent tax debt�������������������������������������������� Restructure assistance to New York City������������� Implement program integrity allocation adjustments�������������������������������������������������������� Provide $250 Economic Recovery Payments�������� Total receipt effects of mandatory proposals��� 2011 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued 48 MID-SESSION REVIEW –10 ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... Total, expand CMS program integrity authority����������������������������������������������������� Other Medicare Proposals: Require the Secretary to determine the geographic scope of Quality Improvement Organization (QIO) contracts to maximize efficiency�������������������������������������������������������� Eliminate the conflict of interest between beneficiary protection and quality improvement activities for QIOs������������������ Expand pool of contractors eligible for QIO work��������������������������������������������������������������� Extend the QIO contract length from three years up to five years������������������������������������ Align QIO contract terminations with Federal Acquisition Regulations�������������������������������� Other Medicaid Proposals: Limit Medicaid reimbursement of durable medical equipment (DME) based on Medicare rates����������������������������������������������� Rebase Medicaid Disproportionate Share Hospital (DSH) allotments in 2021�������������� Total, other Medicaid proposals�������������������� ......... ......... –20 –10 ......... ......... ......... ......... ......... ......... ......... ......... –210 ......... ......... ......... –210 ......... –655 ......... ......... 2012 Permit exclusion of individuals affiliated with entities sanctioned for fraudulent or other prohibited actions from federal health care programs�������������������������������������������������������� Create a system to validate physicians’ and practitioners’ orders for certain high-risk products and services������������������������������������ Require prepayment review for all power wheelchairs��������������������������������������������������� Use a portion of Recovery Audit Contractor recoveries to implement actions that prevent improper payments and fraud�������� Provide flexibility to the Secretary in implementing predictive analytics technologies for claims payment to maximize cost effectiveness�������������������������� Limit the discharge of debt in bankruptcy proceedings in cases of fraudulent activity� Strengthen penalties for illegal distribution of Medicare, Medicaid, or CHIP beneficiary identification or billing privileges���������������� 2011 ......... ......... ......... –20 –50 ......... –420 –420 –885 ......... ......... –20 ......... –20 ......... ......... 2013 ......... ......... –10 –30 –110 ......... –470 –470 –1,155 ......... –10 –20 ......... –20 –20 ......... 2014 ......... –10 –20 –60 –190 ......... –550 –550 –2,805 ......... –10 –20 –20 –20 –110 ......... 2015 ......... –20 –20 –80 –230 ......... –700 –700 –3,560 ......... –20 –30 –30 –20 –200 ......... 2016 ......... –20 –20 –80 –260 ......... –730 –730 –4,310 ......... –20 –10 –30 –30 –250 –10 2017 (Deficit increases (+) or decreases (–) in millions of dollars) ......... –20 –30 –90 –290 ......... –770 –770 –4,475 ......... –20 ......... –30 –30 –260 –10 2018 ......... –30 –20 –100 –320 ......... –810 –810 –4,670 ......... –20 ......... –40 –30 –280 –10 2019 ......... –30 –20 –120 –360 ......... –850 –850 –4,815 ......... –20 ......... –40 –30 –310 –10 2020 Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued ......... –30 –30 –120 –390 –4,170 –5,060 –890 –5,005 ......... –30 ......... –40 –30 –330 –10 2021 ......... –150 –100 –230 –240 –1,760 –50 2012– 2021 –6,400 ......... –30 –50 –200 –600 ......... –160 –170 –710 –2,220 ......... –4,170 –2,350 –10,570 –2,350 –9,060 –32,335 ......... –40 –100 –80 –90 –330 ......... 2012– 2016 Totals SUMMARY TABLES 49 17,031 –2,175 28,593 ......... –1,571 ......... 18,602 ......... –138 –728 –72 –69 –609 –67 ......... ......... ......... 26,418 –590 –540 ......... ......... ......... –70 ......... ......... –30 2013 ......... ......... ......... 2012 4,534 –2,676 7,210 –147 –827 –74 –680 ......... ......... –150 2014 –171 –1,271 –175 –850 –250 ......... –350 2016 –184 –1,394 –32 –910 –300 ......... –380 2017 –200 –1,500 138 –960 –340 ......... –430 2018 –216 –1,706 381 –1,070 –420 ......... –470 2019 –231 –1,871 12 –1,180 –460 –1,620 –2,150 2020 –251 –1,991 72 –1,250 –490 –1,610 –2,180 2021 –8,790 –2,340 –3,230 –6,490 2012– 2021 –685 –1,767 –4,435 –12,897 –512 59 –3,420 –330 ......... –880 2012– 2016 –4,759 –6,056 –6,846 –7,037 –7,275 –9,674 –14,164 37,168 –7,828 –4,759 –6,056 –6,846 –7,037 –7,275 –9,674 –14,164 –17,237 –62,233 ......... ......... ......... ......... ......... ......... ......... 54,405 54,405 –160 –1,000 –124 –760 –80 ......... –280 2015 Totals 4 This proposal has both PAYGO and non-PAYGO effects. 5 This proposal has outlays of less than $500,000 per year. The total cost is $1 million from 2012–2016 and $3 million from 2012–2021. 6 This proposal was enacted in the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (P.L. 112–9). 7 Portions of this proposal were enacted in the Department of Defense and Full-Year Continuing Appropriations Act (P.L. 112–10) and the Budget Control Act of 2011 (P.L. 112–25). 8 This proposal was enacted in the Budget Control Act of 2011 (P.L. 112–25). 9 This proposal was enacted in the Department of Defense and Full-Year Continuing Appropriations Act (P.L. 112–10). 10 The proposal to provide permanent SGR relief is presented in the adjusted baseline for the Mid-Session Review. The Administration is committed to working with the Congress to achieve fiscally responsible SGR reform in the context of the Administration’s deficit reduction proposals. 11 The portions of the proposal that affect SSA and CMS were enacted in the Budget Control Act of 2011 (P.L. 112–25). Additional savings after paying for SGR relief through 2013������������������������������������������������� Other Pharmaceutical Proposals: Modify length of exclusivity to facilitate faster development of generic biologics������������������ Prohibit brand and generic drug companies from delaying the availability of new generic drugs������������������������������������������������� Streamline pharmacy benefit contracting in the FEHB program��������������������������������������� Total, other pharmaceutical proposals��������� Interactions������������������������������������������������������������ Total savings from CMS program integrity, and other Medicare, Medicaid, and pharmaceutical proposals������������������������������������������������������ Cost of providing SGR relief through 2013����� Dedicate EHR penalties to improving Medicare program financing������������������������ Total, other Medicare proposals�������������������� 2011 (Deficit increases (+) or decreases (–) in millions of dollars) Table S–9. MANDATORY AND RECEIPT PROPOSALS FROM THE FEBRUARY BUDGET—Continued 50 MID-SESSION REVIEW 5 -* 1 15 –89 2 1 2 4 –82 1 –141 1,913 –7 304 446 553 701 57 2,054 8 –3 –1 14 –10 2 –2 3 9 –87 2 –64 2,056 –13 314 484 536 726 75 2,120 2011 8 –3 3 11 24 3 1 7 8 –98 3 –32 2,066 7 307 466 480 768 69 2,098 2012 7 –1 2 18 –22 3 1 6 5 –94 4 –71 2,122 10 323 503 467 813 77 2,193 2013 7 –1 3 15 –28 2 -* 5 5 –97 4 –85 2,239 2 417 531 432 859 83 2,324 2014 Estimate 7 –1 1 15 –22 2 -* 4 5 –101 3 –87 2,387 2 484 556 435 908 89 2,474 2015 7 –1 –1 14 –15 2 -* 5 5 –102 4 –82 2,573 5 537 605 447 960 101 2,655 2016 *$500 million or less. 1 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 2012 Budget) and also from the adjusted baseline (see Table S–7). Total, outlays for mandatory programs under current law ������������������������������������ 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 �������������������������������������������������������������������������� Human resources programs: Education, training, employment and social services ����������������������������������������������������� Health �������������������������������������������������������������������������������������������������������������������������������� Medicare ���������������������������������������������������������������������������������������������������������������������������� Income security ����������������������������������������������������������������������������������������������������������������� Social Security ������������������������������������������������������������������������������������������������������������������� Veterans’ benefits and services ���������������������������������������������������������������������������������������� Subtotal, human resources programs ������������������������������������������������������������������������� 2010 Actual (In billions of dollars) Table S–10. OUTLAYS FOR MANDATORY PROGRAMS UNDER CURRENT LAW 1,2 SUMMARY TABLES 51 684.4 400.4 688.1 371.0 684.0 359.0 686.0 361.0 2013 698.0 368.0 2014 711.0 375.0 2015 725.0 382.0 2016 741.0 390.0 2017 757.0 399.0 2018 774.0 408.0 2019 791.0 417.0 2020 808.0 426.0 2021 51.3 50.0 1.3 51.5 50.0 1.5 51.6 50.0 1.6 51.7 50.0 1.7 51.7 50.0 1.7 51.8 50.0 1.8 51.8 50.0 1.8 51.8 50.0 1.8 332.8 326.5 6.2 591.6 576.5 15.1 662.5 329.9 992.3 655.8 327.0 982.7 6,963.2 3,409.1 10,372.3 1 P.L. 112–25, the Budget Control Act of 2011 (BCA), established discretionary caps for 2012–2021. The caps included separate categories for “security” and “nonsecurity” programs for 2012 and 2013 only with security defined as the Departments of Defense, Homeland Security, and Veterans Affairs, the National Nuclear Security Administration, the Intelligence Community Management Account, and budget function 150 for International Affairs. For purposes of this presentation, the security and non-security categories are increased after 2013 based on the growth in the overall discretionary category but do not reflect specific policy decisions. 2 The adjustments displayed do not include disaster relief pursuant to section 251(b)(2)(D) of the BCA as OMB is in the process of developing its estimate of the 10year average calculation at the time the MSR is being printed. OMB's estimate of the maximum adjustment for 2012 will be transmitted to the Congress when OMB submits its report in compliance with section 251(b)(2)(D)(ii) of the BCA. 3 The 2012 Budget includes placeholder estimates of $50 billion per year for Overseas Contingency Operations in 2013 and beyond. These estimates do not reflect any specific policy decisions. 4 The 2012–2021 levels reflect the maximum cap adjustment permitted each year under the BCA for Continuing Disability Reviews (CDRs) and Redeterminations and for Health Care Fraud and Abuse Control (HCFAC). The 2010 and 2011 levels reflect only the adjustment for CDRs and Redeterminations because the applicable adjustment for HCFAC became the enforcement base under the BCA. 5 Totals include Overseas Contingency Operations and Other Supplemental/Emergency Funding. 5 3,618.3 1,746.3 5,364.6 51.1 50.0 1.1 Memorandum, Budget Authority Adjusted for Inflation and Population: Security ������������������������������������������������������ 913.2 873.2 810.5 715.2 706.1 697.2 689.3 682.3 675.4 669.0 Non-Security ��������������������������������������������� 427.3 381.6 359.9 351.8 348.6 344.9 341.1 337.9 335.4 332.7 Grand Total ����������������������������������������������� 1,340.5 1,254.9 1,170.4 1,067.0 1,054.6 1,042.2 1,030.4 1,020.1 1,010.8 1,001.7 –1.3 9.6 127.4 126.5 0.9 5,681.8 11,851.6 159.9 159.4 0.5 163.1 162.6 0.5 7,375.0 3,885.0 20122021 5,349.0 11,260.0 3,504.0 1,845.0 20122016 Totals Grand Total, Discretionary Budget Authority ������������������������������������������������� 1,257.6 1,217.7 1,170.4 1,098.1 1,117.3 1,137.5 1,158.6 1,182.7 1,207.7 1,233.8 1,259.8 1,285.8 Subtotal, Cap Adjustments ���������������������� Other 2010 and 2011 Supplemental/ Emergency Discretionary Funding (not included above) ������������������������������������������ 2 Cap Adjustments: Overseas Contingency Operations 3 ���������� Program Integrity Adjustments 4 �������������� Subtotal, Discretionary Category ���������� 1,084.8 1,059.1 1,043.0 1,047.0 1,066.0 1,086.0 1,107.0 1,131.0 1,156.0 1,182.0 1,208.0 1,234.0 Discretionary Categories: 1 Security Category ������������������������������������� Non-Security Category ����������������������������� 2010 2011 Actual Enacted 2012 Discretionary Caps Enacted in the Budget Control Act of 2011 (Budget authority in billions of dollars) Table S–11. FUNDING LEVELS FOR APPROPRIATED (“DISCRETIONARY”) PROGRAMS BY CATEGORY 52 MID-SESSION REVIEW 181 –* 181 1,474 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) ������������������������������������� 5 1,658 Change in other factors ������������������������������������������������������������������������������ Total, change in debt subject to statutory limitation ��������������������������� 1,178 1 133 1,043 1,043 87 –* 87 ......... –1 –31 –6 126 ......... 956 2012 987 2 167 818 818 171 –* 171 ......... –1 2 –3 173 ......... 648 2013 803 1 178 623 623 150 –* 151 ......... –1 1 3 148 ......... 473 2014 869 1 207 662 662 141 –* 142 ......... –1 –1 6 138 ......... 521 2015 937 2 225 710 710 127 –* 127 ......... –1 –1 6 124 ......... 583 2016 Estimate 861 2 253 606 606 105 –* 105 ......... –1 –4 4 107 ......... 501 2017 843 2 280 562 562 94 –* 95 ......... –1 –4 –1 101 ......... 467 2018 858 2 275 581 581 83 –* 84 ......... –1 –6 –5 96 ......... 498 2019 891 2 270 619 619 79 –* 80 ......... –1 –7 –6 94 ......... 540 2020 908 2 257 649 649 80 –* 81 ......... –1 * –15 96 ......... 568 2021 8 10 11 13 14 15 16 17 18 18 18 18 Total, gross Federal debt �������������������������������������������������������������������� 13,529 14,918 16,095 17,080 17,882 18,750 19,685 20,544 21,385 22,241 23,130 24,036 Gross Federal debt: 5 Debt issued by Treasury ������������������������������������������������������������������������ 13,503 14,891 16,067 17,053 17,855 18,723 19,659 20,519 21,361 22,219 23,110 24,018 Debt issued by other agencies ��������������������������������������������������������������� 26 27 27 27 27 27 26 25 23 22 20 18 Debt Outstanding, End of Year: Total, debt subject to statutory limitation 4 ��������������������������������������� 13,511 14,901 16,079 17,066 17,869 18,738 19,675 20,536 21,379 22,237 23,128 24,036 Adjustment for discount, premium, and coverage 3 ����������������������������������� Debt issued by Treasury ����������������������������������������������������������������������������� 13,503 14,891 16,067 17,053 17,855 18,723 19,659 20,519 21,361 22,219 23,110 24,018 Debt Subject to Statutory Limitation, End of Year: 1 1,390 179 144 1,474 Change in debt held by Government accounts ������������������������������������������ 1,245 1,245 –71 –* –70 ......... 2 5 13 110 –200 1,316 Change in debt held by the public ������������������������������������������������������������� Changes in Debt Subject to Statutory Limitation: 1 –7 –29 Net change in other financial assets and liabilities 2 ������������������������ 2 Troubled Asset Relief Program (TARP) equity purchase accounts ��������������������������������������������������������������������������������������� Net purchases of non-Federal securities by the National Railroad Retirement Investment Trust (NRRIT) ����������������������������������������� 179 Guaranteed loan accounts �������������������������������������������������������������� 35 Direct loan accounts ����������������������������������������������������������������������� Net disbursements of credit financing accounts: Change in Treasury operating cash balance ������������������������������������� Changes in financial assets and liabilities: 1 Other transactions affecting borrowing from the public: 1,293 Actual 2010 2011 (In billions of dollars) FEDERAL GOVERNMENT FINANCING AND DEBT Unified budget deficit ���������������������������������������������������������������������������������� Financing: Table S–12. SUMMARY TABLES 53 4,654 4,787 2012 4,954 2013 5,133 2014 5,339 2015 5,564 2016 Estimate 5,817 2017 6,097 2018 6,372 2019 6,641 2020 6,898 2021 1,125 7,894 Total, financial assets net of liabilities ���������������������������������������������� Debt held by the public net of financial assets ������������������������������ 24 23 1,177 –29 1,357 –29 22 153 52 –28 1,077 110 1,507 –29 21 153 53 –25 1,225 110 1,649 –29 20 153 52 –19 1,363 110 1,776 –29 19 153 50 –13 1,486 110 1,881 –29 18 153 46 –9 1,593 110 1,976 –29 17 153 42 –10 1,694 110 2,059 –29 16 153 35 –15 1,790 110 2,139 –29 14 153 28 –21 1,884 110 2,219 –29 13 153 29 –36 1,980 110 9,194 10,130 10,769 11,242 11,762 12,345 12,845 13,312 13,810 14,350 14,918 1,069 –29 145 51 –26 904 110 * $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 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. 3 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. 4 The statutory debt limit is $14,694 billion, as increased on August 2, 2011. Under current law, the limit is scheduled to increase to $15,194 billion on or around September 21, 2011. 5 Treasury securities held by the public and zero-coupon bonds held by Government accounts are almost all measured at sales price plus amortized discount or less amortized premium. Agency debt securities are almost all measured at face value. Treasury securities in the Government account series are otherwise measured at face value less unrealized discount (if any). 6 At the end of 2010, the Federal Reserve Banks held $811.7 billion of Federal securities and the rest of the public held $8,207.2 billion. Debt held by the Federal Reserve Banks is not estimated for future years. 23 –29 Other assets net of liabilities ���������������������������������������������������������������� 77 109 TARP equity purchase accounts �������������������������������������������������������� Government-sponsored enterprise preferred stock ������������������������������ Non-Federal securities held by NRRIT ������������������������������������������������� 82 124 –32 –20 668 778 110 Guaranteed loan accounts ������������������������������������������������������������������ 310 9,019 10,264 11,307 12,126 12,749 13,411 14,121 14,726 15,288 15,869 16,489 17,137 9,019 10,264 11,307 12,126 12,749 13,411 14,121 14,726 15,288 15,869 16,489 17,137 4,510 Direct loan accounts ��������������������������������������������������������������������������� Credit financing account balances: Less financial assets net of liabilities: Treasury operating cash balance ���������������������������������������������������������� Debt held by the public ������������������������������������������������������������������������������� Debt Held by the Public Net of Financial Assets: Debt held by the public 6 ������������������������������������������������������������������������ Actual 2010 2011 (In billions of dollars) FEDERAL GOVERNMENT FINANCING AND DEBT—Continued Held by: Debt held by Government accounts ������������������������������������������������������ Table S–12. 54 MID-SESSION REVIEW EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C.