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UBLIC IIlEBT NEWS
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Department of the Treasury • 8ureau of the Public Debt • Washington, DC 20239

Ii.~!l u'l L-)' ,
FOR IMMEDIATE RELEASE
March 1, 1993

J"J U 7

~dNTACT:

Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $11,657 million of 13-week bills to be issued
March 4, 1993 and to mature June 3, 1993 were
accepted today (CUSIP: 912794D27).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.93%
2.97%
2.97%

Investment
Rate
2.99%
3.04%
3.04%

Price
99.259
99.249
99.249

Tenders at the high discount rate were allotted 97%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
lIocation
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
21,140
36,039,470
8,685
27,425
206,940
28,615
1,095,985
8,220
5,705
19,555
13,870
551,265
817,565
$38,844,440

Accel2ted
21,140
10,330,340
8,685
27,425
56,190
16,505
186,105
8,220
5,705
19,555
13,870
146,115
817,565
$11,657,420

Type
competitive
Noncompetitive
Subtotal, Public

$34,422,910
1,268,700
$35,691,610

$7,235,890
1,268.700
$8,504,590

2,779,730

373.100
$38,844,440

373,100
$11,657,420

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-55

UBLIC DEBT NEWS
Depar tment of the Treasu ry /l'if.J-tp~e~~ or~l),t: ~ublic Debt • Washi
ngton, DC 20239
, "
I,
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FOR IMMEDIATE RELEA~~.
Marc h 1, 1993
1,.:;
RESULTS OF

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~REASURY'S

CONTACT: Offi ce of Fina ncin g
202- 219- 3350

AUCTION OF 26-WEEK BILL S
'

Tend ers for $11,7 34 mill iorio f 26-w eek bill s
Marc h 4, 1993 and to matu re Septe mber 2, 1993 were to be issue d
acce pted toda y (CUS IP: 9127 94F5 8).
RANGE OF ACCEPTED
COMPETITIVE BIDS :
Low
High
Aver age

Disc ount
Rate
3.03%
3.05%
3.05%

Inve stme nt
Rate
,Pric e
3.12%
98.46 8
3.14%
98.45 8
3.14%
98.45 8

Tend ers at the high disco unt rate were allo tted
The inve stme nt rate is the equi vale nt coup on-is 40%.
sue yield .
TENDERS RECEIVED AND ACCEPTED (in thou sand s)
Loca tion
Bost on
New York
Phil adel phia
Clev eland
Richm ond
Atla nta
Chic ago
st. Loui s
Minn eapo lis
Kans as City
Dall as
San Fran cisco
Trea sury
TOTALS

Rece ived
15,20 5
37,4 33,2 75
7,625
25,50 5
421,6 90
35,35 5
1,52 8,17 0
9,990
5,040
24,00 5
12,16 5
738,9 45
596,6 65
$40,8 53,63 5

Acce Qted
15,20 5
10,4 61,5 05
7,625
25,50 5
181,6 90
27,75 5
151,5 70
9,99 0
5,040
24,00 5
12,16 5
215,7 45
596,6 65
$11,7 34,46 5

Type
Com petit ive
Nonc ompe titive
Subt otal, Publ ic

$36,6 75,62 0
931,2 15
$37,6 06,83 5

$7,5 56,4 50
931,2 15
$8,4 87,6 65

2,75 0,00 0

496,8 00
$40,8 53,63 5

496,8 00
$11,7 34,46 5

Fede ral Rese rve
Fore ign Offi cial
Inst ituti ons
TOTALS

LB-56

FOR RELEASE AT 2:30 P.M.
March 1, 1993

CONTACT:

Office of Financing
202/219-3350

TREASURY TO AUCTION CASH MANAGEMENT BILL
The Treasury will auction approximately $11,000 million of
48-day Treasury cash management bills to be issued March 5, 1993.
Competitive tenders will be received at all Federal Reserve
Banks and Branches. Noncompetitive tenders will not be accepted.
Tenders will not be received at the Bureau of the Public Debt,
Washington, D. C.
Details about the new security are given in the attached
offering highlights.
000

Attachment

LB-S7

HIGHLIGHTS OF TREASURY OFFERING
OF 48-DAY CASH MANAGEMENT BILL
March 1, 1993
Offering Amount .

. .

Description of Offering:
Term and type of security .
CUSIP number
. . .
Auction date . . . . . . .
Issue date . . . . . . . .
Maturity date .
....
Original issue date . . . .
Currently outstanding .
Minimum bid amount
Multiples . . . . . . .
Minimum to hold amount
Multiples . . .
Submission of Bids:
Noncompetitive bids . .
Competitive bids . . .

$11,000 million
48-day Cash Management Bill
912794 C3 6
March 3, 1993
March 5, 1993
April 22, 1993
October 22, 1992
$23,274 million
$1,000,000
$1,000,000
$10,000
$5,000

Not accepted
(1) Must be expressed as a discount rate
with two decimals, e.g., 7.10%.
(2) Net long position for each bidder
must be reported when the sum of the
total bid amount, at all discount
rates, and the net long position is
$2 billion or greater.
(3) Net long position must be determined
as of one half-hour prior to the
closing time for receipt of competitive tenders.

Maximum Recognized Bid
at a single yield

35% of public offering

Maximum Award . . .

35% of public offering

Receipt of Tenders:
Noncompetitive tenders
Competitive tenders . .
Payment Terms .

. . . . . .

Not accepted
Prior to 1:00 p.m. Eastern
time on auction day
Full payment with tender or by charge
to a funds account at a Federal
Reserve Bank on issue date

CONTACT:

FOR RELEASE AT 2:30 P.M.
March 2, 1993

Office of Financing
202/219-3350

TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $23,200 million, to be issued March 11,
1993. This offering will result in a paydown for the Treasury of
about $450 million, as the maturing 13-week and 26-week bills are
outstanding in the amount of $23,638 million. In addition to the
maturing 13-week and 26-week bills, there are $13,800 million of
maturing 52-week bills. The disposition of this latter amount
was announced last week.
Federal Reserve Banks hold $8,522 million of bills for their
own accounts in the three maturing issues. These may be'refunded
at the weighted average discount rate of accepted competitive
tenders.
Federal Reserve Banks hold $3,972 million of the three
maturing issues as agents for foreign and international monetary
authorities. These may be refunded within the offering amount
at the weighted average discount rate of accepted competitive
tenders. Additional amounts may be issued for such accounts if
the aggregate amount of new bids exceeds the aggregate amount
of maturing bills. For purposes of determining such additional
amounts, foreign and international monetary authorities are
considered to hold $3;463 million of the original 13-week and
26-week issues.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000

Attachment

HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS

March 2, 1993
Offering Amount .

Description of Offering:
Term and type of security .
CUSIP number
Auction date . . .
...
Issue date
. . . .
Maturity date . . . . .
Original issue date .
Currently outstanding . . .
Minimum bid amount
. . .
Multiples . . . . . . . . .

. .
.

. . .
.

$11,600 million

91-day bill
912794 D4 3
March 8, 1993
March 11, 1993
June 10, 1993
December 10, 1992
$12,291 million
$10,000
$ 5,000

182-day bill
912794 F6 6
March 8, 1993
March 11, 1993
September 9, 1993
March 11, 1993
$10,000
$ 5,000

The following rules apply to all securities mentioned above:

Submission of Bids:
Noncompetitive bids .

competitive bids

Maximum Recognized Bid
at a Single Yield
Maximum Award . . .

35% of public offering
.

Receipt of Tenders:
Noncompetitive tenders
Competitive tenders .
Payment Terms . . .

35% of public offering
Prior to 12:00 noon Eastern time on auction day
Prior to 1:00 p.m. Eastern time on auction day

. .

Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date

UBLIC DEBT- NEWS
•

'.,

,', "

Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
March 3, 1993

U j,}

UJ UC~JT~CT:

.,
i

. ~

Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 48-DAY BILLS
Tenders for $11,091 million of 48-day bills to be issued
March 5, 1993 and to mature April 22, 1993 were
accepted today (CUSIP: 912794C36).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.97%
2.98%
2.97%

Investment
Rate
3.02%
3.03%
3.02%

Price
99.604
99.603
99.604

Tenders at the high discount rate were allotted 2%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
RichmOnd
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS

LB-59

Received

51,525,000

o
o

3,100,000
25,000
1,620,000

o
o
o
o

530,000

Accepted

o
7,780,500

o
3,000,100
500
308,200

o
o
o
o

1,600

$56,800,000

$11,090,900

$56,800,000

$11,090,900

$56,800,000

$11,090,900

$56,800,000

$11,090,900

POOL REPORT:TREASURY SECRETARY BENTSEN INTERVIEW WITH REGIONAL NEWSPAPER REPORTERS
March 3,

1993

q. how important is bipartiaan support for the economic plan?
"I th1nk it i8 important. and I hope very much that as we
develop the passaqe of thia that you'll see more bipartisan
support than you're see1n; now .•. This president has made lome
very tough political choices and I th1nk that Democrat. and
hopefully Republicans will respond to it as they look at
trying to develop alteJ:natives and eee how difficult it i •• "
q. have any senate reputlicans expressed support?
Bentsen said he had talked to some Republicans who have
expressed support for various parts of the package, addinq
IIthat's not Surp.r181ng.
q. how open are you to compromise to get republican support?
"I've been negotiating with those folks up there for a
long time, I never did turn over all my cards.
II

q. 1s the administration actively looking for further spending
cuts?
"We're looking at all the options and trying to fully
under.tand them. That do•• n't naca •• arily mean we're going to
do any further before presentation. But I'm sure that you're
going see from the congressional side options offered. We want
to understand and antiCipate what they might be and have a
reasonable study of them so you don't have a top of the head
reaction to them."
q. accuracy of treasury revenue projections?
"Historically you've seen differences between joint tax
committee and treasury in both republican and democratic
administrations .•• that' e not new."
"As we go along , qlitches will develop. We know that. When
you run computers 24 hours a day and try to put a packaqe
together, there will be some thingl that will have to be
corrected al you go along. Overall I see our estimates as
good. It was interestinq to note insofar as the deficit itself
in '97 there was an incredible common situation as far as the
number. I think it was only a billion dollars apart.
It

q. are you worried rich will be trying to pre-empt increased
taxes by qoing to tax shelters?
"They're qoing to find it much more difficult than they
have in the past. As ~e drafted this thing we had that concern
in mind." He pointed to the passive los. provision and the
limite placed on how who can take advantage of it.
q. push back affective rate of tax date to jan 1, 94.

"That's Bomething that as we work with congre8s and the

leaaership there insofar as putting this package together,
we're consult with them on that one. That does not commit U8.
1

That is a matter of negotiation."
q. what about effect of packa~e on overall economy? won't it
depress growth to rail. taxes and cut spending?
"Go ahead and add the rest of it -- and the Itilnultant and
a substantial reduction in interest rates -- an amazing
reduction -- frankly better than we had anticipated ••.• It
must be over 8S baeie pointe. And as I listen to Alan Greenspan
talking about 1S basis pOints being equivalent to 1B billion
(dollar st~ulus). We're talking about an enormous stimulus
taking place here. We don't qat credit for that on the part of
CBO. "

q. what happens if the bond market turns around?
"We've got some cushion haven't we? It's gone down a
remarkable amount. If they give back 2B basis points, we're
8till looking at 58 basis paints."

q. should health care be put together with economic package in
congress.
""I'm not about to tell the leadership of the senate or
the house how to package this thing .•• we're going to keep
our options open."
q. Bank regulation raform?

"I will tell you that what you've seen is a coordinated
effort between the FDIC and the Federal Reeerve and Treasury
working together to sae if we can el~inate some of the red
tape and make more credit available, particularly to small
business. We think we have some proposals that the president
will be seriously interested in but it's up to him to make the
decision. "

q. Should we read anything into the delay in announcing these
measures?, ie that there are difficulties?
"No. "

q. minivans?
"We have not made a decision of that. It's under
review ... We have ben apprised of the opinions of varioue
countries that have been exporting to us."

q. excis. tax on imported cars to level playing field a8 far
al helth care coate?
"We've made no luch judgement."
q. are you considering it?
no comment

q. Waco situation?
"There was incredible bravery on the part of a numl:>er of
ATF people on that. They have good training. We have had
marveloue cooperation between the FBI and ATF .... The ATP is
still carrying on a good part of the negotiations.
"Obvously when all of this is through, then you always go
in when you have a major operation like that and evaluate it
after the fact as to ita effectiveness."
q. what hal your role been?

"I talked to the governor twice (sunday niqht). The last
time I tried to go to sleep and she got me up •... And I
talked to the president. I talked to the head of the FBI. I
talked to the head of the ATF. I spent a qOOQ part of the
niqht aa they were talking about the Bradley's coming out
trying to be a •• ured that they did not qet out in front too
much to spook thOle people inside where they might do
something drastic. We were always concerned about a Jonestown
possibility. So I was very much involved.
II

q. what were clinton's concerns?
"We were sharing concerns that we'd be in a defensive mode
at that point. We were concerned particularly about the women
and children that ware in there."
q. when aid you hear about it?
"On Friday they called Treasury and appriled Treasury.
Their intentions had been cleared with the U8 district
attorney and with the head of the ATF here. Trealury itself
was advised on Friday while I was on t.he plane to london."

q. job. and recovery?
"There il a very major emphasis on jobs (in Clinton
package). That's our concern. What you've seen 1e some
recovery taking place, but jobs have not responded. We're
doing all we can to puah that."
q. bank regulation changes purely adminietrative?

"yes, at thil point ••• What you aee that the president
will present does not mean the end of the process. I think
that over the months to come you'll see a continuation of
those things, A8 we further study, that we think will qive U8
further progress aa far as the availability of credit."
q. will package come before end of March?
"I certainly expect the president to say eomethin; before
the end of MArch."
q. will package include reduction of unQerwriting etandarde?

"Not a reduction of underwriting standards, but a
clarifying of underawriting standrads and an attempt to get
rid of redundancy there.
II

q. Treasury'l relation.hip with the fed?
"I've •• 14 there's broad agr.ement on the ;oa1 for
sustained qrowth without inflation.
"I think we have a good relationship. I have reinstated
the weekly meetin;s with the chairman ot the Federal Reserve.
"The way that we worked together at the G7 meeting was
very helpful. His counoil wal valuable and helful to me. We've
been friend. for a long time."
II

q. 1s there any understanding on easy money for tiqht fiscal
polley?
"No, no, no. You don't lock up that with the Federal
Reserve and I understand that. They preserve their
independence and they should."
q. russia?
"We're deeply concerned about the stability of Russia and
the hiqh inflation. They were making some proqre.1 on their
refor.ms up throuqh May of last year and lubsequent to that
inflation began to mount. We're deeply concerned that we not
end up in hyperinflation. We're concerned about the flight of
capital. We're looking at a possible reschedulinq that is
realistic, that the Russian. can meet and with conditions that
we expect to be abided by. "
q. are further lal.s of grain conditional on re8cheduling?
"They've got to pay some ot what they have in arrears. I
think yesterday they agreed to soma.
q. but we still have a lot of money owed to us?
"Absolutely. In thi8 process of doing a relcheduling we
must not ignore the Ukraine. I think that'. ~portant that
they be part of the equation, part of the agreement. We made
that point at the G7 me.tinq."
q. Waco -- who will make decision on how to end it -- will it
be DY pra8ident?
"I think that the settlement would be at the scene, by the
people neqotiat1n'll."
q. who i8 in charge down there?
nThe fbi is in char'lle. One of the prinCipal neqotiators
there is an ATF man. It'. still a stand-off."
q. any hopes for breakthrouqh?
hThey anticipated a breakthouqh yesterday, around noon.
You're dealing with a man who has no sense of what we think of
a8 responsibility?"
q. who's been briefinq preSident?
the FBI.

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the

Phblit"De'b~ \~";Washihkibn, DC 20239

~-n qOJJT~gTI: lo~tace of Financing

FOR IMMEDIATE RELEASE
March 4, 1993

,.:,,\

202-219-3350

RESULTS OF TREASURY'S Al]CTl;ON.OP: 52"'"WEEK BILLS
,I

,':.'

Tenders for $14,344 million of 52-week bills to be issued
March 11, 1993 and to mature March 10, 1994 were
accepted today (CUSIP: 912794J47).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.08%
3.10%
3.09%

Investment
Rate
3.20%
3.22%
3.21%

Price
96.886
96.866
96.876

Tenders at the high discount rate were allotted 40%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
17,140
37,322,780
9,260
122,125
23,940
15,090
1,486,335
8,275
4,915
22,105
5,785
590,260
289,020
$39,917,030

Accepted
17,140
13,473,580
9,260
122,125
23,940
13,290
162,035
8,275
4,915
22,105
5,785
192,260
289,020
$14,343,730

Type
Competitive
Noncompetitive
Subtotal, Public

$35,600,825
557,305
$36,158,130

$10,027,525
557,305
$10,584,830

3,250,000

508,900
$39,917,030

508,900
$14,343,730

Federal Reserve
Foreign Official
Institutions
TOTALS

An additional $476,100 thousand of bills will be
issued to foreign official institutions for new cash.

LB-60

PUBLIC DBBT'";NEWS
Department of the Treasury •

Bureau of the Pu~lic :Df90 ~ ~shiSgton, DC 20239 \\i:"

_, ,J

FOR RELEASE AT 3:00 PM
March 4, 1993

•

Contact: Peter Hollenbach
(202) 219-3302

PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR FEBRUARY 1993
Treasury's Bureau of the Public Debt announced activity figures for
the month of February 1993, of securities within the Separate
Trading of Registered Interest and Principal of Securities program,
(STRIPS) .
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)

$680,104,710

Held in Unstripped Form

$509,200,660

Held in Stripped Form

$170,904,050

Reconstituted in February

$11,702,440

PA-117

TABLE YI-HOLDINGS OF TR~SURV SECURmES IN STRIPPED FORM. FEBRUARV 21.-1993
(In thousands)

Ma~",

.... OaJ'1 OeSCI10UCM"l

Dale

rota!
$6 65B 554

S4 789 754

£186880011

21595

6933 861

,S97701

I 336 160 II

10224Q

51595

1'270861

8. IS 9S

- 955 901

, J42 301

25136001:

60800

) 10/20011

61200

'594

2·'. "ole C 1995

) I

060 846 ,

2466 24Q II

., IS 95

-)18550

>2113S0:

1'~

2 IS 96

'3416109

. S99 1(19

~1760011

30 400

J 8"b "ole ( '996

5 1596

08S 64)

"3452043

633.600 II

09600

:0 258BIO

'8222810

2036000 II

-: 8Q,o '\Iale A

• J<tr'6

Note 0 1?96

1 2Qo<o Nou~ A 1997

1596

a 555637

365.600 II

35 200

8305236

105760011

38400

226720011

51597

9921 237

8-15-97

3362836

178"0 Note C 1997

11 15.97

0808329 1

1 I 80,.. Note

21598

159068

8784 988

37408011

5 1598

165387

• 96518/

1200 200 II

~8.000

'1 )42646

'1)633 846

700800

16000

.14J.200 II

83 200

! 580".

NOle

8 1997

A 1998

!\I01e B 1998

815·98
~ ~

8"0 ".iole 0 1998

-1 -; 8". NOfe A

5.41 129

11 1598

) 902 875

9 459675

2'599

') 119623

9310023

~D9.600

48000

'; 1599

'J047 103

1563 903

1483.200 1/

264000

.' :63644

'912 144

251500 II

: ::3960

'J 031560

-'2400 II

'0673 033

'0492233

leo 800 II

'lOO

200

'J 496230

) 0)7030

'l59.200 II

, 080646

10 86t 926

218 720 I,'

26080

'15t9662

132082

38760011

'5200

- 3 4". Note" 2001

2 1501

113t2802

246.4Q2

66.400 II

8"\, Nole B 2001

51501

12398083

12085058

313.025 11

1 ~ 8"b Nole C 2001

8 1S,01

t2339185 1

t2 1s.2.385

156.800 II

24220.902

520011

11 460.797

2536001j

23822215

36800

2". Note D200t

, 1 2"0 Note ., 2002
ti 3 8". Note B 2002

6 t 4"b Note .,·2003
S 80.0 60flo 2004

, I

'2°'0 Bond 2005
'Q J.40/q

Bono 2005

1500

'1 t501

24226 102

5.1",02

8 15 02

23859015

215.03

1504

8"'. Bono 2015

970 143

8301806

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Removal Notice
The item identified below has been removed in accordance with FRASER's policy on handling
sensitive information in digitization projects due to copyright protections.

Citation Information
Document Type: Transcript

Number of Pages Removed: 10

Author(s):
Title:

Treasury Deputy Secretary Roger Altman Address to the Institute of International Bankers

Date:

1993-03-08

Journal:

Volume:
Page(s):
URL:

Federal Reserve Bank of St. Louis

https://fraser.stlouisfed.org

UBLIC ,DEBT NEWS
,

I '. _f~

Department of the Treasury - B\.Ireau of the Public Debt • Washington, DC 20239

iJ.~;:

J" j

FOR IMMEDIATE RELEASE
March 8, 1993
_., (

0 U I 2. L'

n
~~TACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 13-WEEK' BILLS
Tenders for $11,699 million of 13-week bills to be issued
March 11, 1993 and to mature June 10, 1993 were
accepted today (CUSIP: 912794D43).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.96%
2.98%
2.98%

Investment
Rate
3.02%
3.04%
3.04%

Price
99.252
99.247
99.247

Tenders at the high discount rate were allotted 50%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
22,220
38,213,030
9,090
43,135
235,255
38,225
1,762,960
7,940
6,375
26,710
15,755
1,168,110
869.170
$42,417,975

Acce12ted
22,220
9,793,475
9,090
43,135
182,755
31,725
252,460
7,940
-6,375
26,710
15,755
438,610
869,170
$11,699,420

Type
Competitive
Noncompetitive
Subtotal, Public

$37,709,965
1.391,055
$39,101,020

$6,991,410
1,391.055
$8,382,465

2,621,655

695,300
$42,417,975

695,300
$11,699,420

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-61

Department of the TreasurY'~1.Bureau of the Public Debt • Washington, DC 20239
J11.,(
. _, 1 r.
" ~J

I ,- , i 5 J'CONTACT:

U ~

-FOR IMMEDIATE RELEASE
March 8, 1993

Office of Financing
202-219-3350

RESULTS OF TREASURY" S-AUtTION OF 26-WEEK BILLS
Tenders for $11,676 million of 26-week bills to be issued
March 11, 1993 and to mature September 9, 1993 were
accepted today (CUSIP: 912794F66).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.07%
3.09%
3.09%

Investment
Rate
3.16%
3.18%
3.18%

Price
98.448
98.438
98.438

Tenders at the high discount rate were allotte'd 86%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
17,465
39,381,615
5,570
29,890
27,910
52,850
2,126,845
10,380
6,945
27,165
9,870
664,555
594.330
$42,955,390

Acce l2ted
17,465
10,588,535
5,570
29,890
22,910
36,010
121,305
10,380
6,945
27,165
9,870
205,255
594,330
$11,675,630

Type
Competitive
Noncompetitive
Subtotal, Public

$38,678,175
967.815
$39,645,990

$7,398,415
967,815
$8,366,230

2,650,000

659,400
$42,955,390

659.400
$11,675,630

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-62

Embargoed until delivered
Expected about 1:30 p.m.
March 9, 1993

contact:

Chris Peacock
(202)622-2930

Remarks As Prepared For Delivery
The Honorable Lloyd Bentsen
Secretary of the Treasury
1993 Greater New York Savings Bonds Committee
New York, New York

Thanks to all of you for coming out and making New York
number one in the country in savings bonds sales.
And thanks especially to Mayor Dinkins. I know how busy the
Mayor is, and I want to say what a great job everyone is doing
here to get the World Trade Center up and running.
I can tell you that this city has the full support of
President Clinton and we're doing everything we can in the
Treasury's Bureau of Alcohol, Tobacco and Firearms to investigate
this disaster and to take steps to ensure it doesn't happen
again.
Well, President Clinton has made it fashionable to give long
speeches, but I'll try to be on the short side today.
You have to get back to work, and I have a plane to catch -a commercial flight.
I don't know if you saw it, but last week the New York Times
did a piece about my schedule at the G-7 meeting. I flew
commercial from Washington to New York to London, met with my
fellow finance ministers for seven hours, and then flew back home
the same way -- all within a 40-hour period.
I had to laugh because the Times said it was a gruelling
schedule for a 72-year-old man. A reporter in his 40s wrote
that.
But for me, well, it was a quick way to pick up 9,600
frequent flier miles for the Treasury!
Today, I want to talk about savings bonds, and I want to
talk about the President's Economic Plan. There's a very easy
way to tie the two together. A couple numbers do it.
You see, for 52 years millions of Americans have invested a
total of $300 billion in savings bonds. Think about how many
kids went to college, think about how many families went on
vacation, think about how many homes were built because Americans
put away money every week to buy an EE bond. 52 years, $300
billion.
Well, here's the tie in. The government now borrows
$300 billion every 52 weeks, just to pay our bills.
Let me repeat that: it took millions of Americans 52 years
to save in bonds what we as a nation now borrow every 52 weeks.
Frightening, isn't it?
LB-63

-2-

In my opinion it's a national disaster. The American people
know it, and that's why they are praising President Clinton's
efforts to try to change our economy.
The President, Vice President Gore, all my colleagues in the
Cabinet -- we've gone around the country and world to explain the
plan. And we're finding a lot of enthusiasm.
I've talked to families who are struggling and small
businessmen and women who can't get loans, and they're committed.
I've talked to school children, and they're committed. They
don't want to be paying off bills for the next 40 years that we
created.
The news from the markets has been very encouraging. When
we proposed the package we expected some reduction in long-term
interest rates by the bond market, but the reaction has been
beyond our anticipation. Long-term bond rates have fallen nearly
38 basis points since the plan was announced and nearly 100 basis
points since the election.
The lower rates will have enormous benefits for the economy.
There will be a significant reduction in debt service costs for
Treasury. Consumers will be able to finance mortgages and other
purchases more cheaply. Businesses will be able to invest in
more plants and equipment because they can borrow at lower rates
and because of our proposed investment tax credit, which I'll
talk about in a minute. With greater investment our productivity
will rise, leading to higher-wage jobs for our workers.
I take all of this as a sign that the markets understand the
seriousness of our program. We're making some tough choices to
really bring the deficit down. But we really don't have any
choice in this.
If we do nothing now, the deficit in a decade
will be $653 billion.
It is gratifying for me to see the strong support in
Congress for the plan, and the fast pace in which Congress is
moving on it. The Senate Budget Committee is starting today to
mark up the budget resolution. The House Budget Committee starts
marking it up tomorrow. Gridlock is gone.
It was also gratifying for me to attend the G-7 meeting,
where the foreign finance ministers had praise for the plan. For
years they've been telling the United states:
"Get your deficit
down." Finally they're seeing a serious attempt, and they
appreciate it. The U.S. is in the strongest leadership position
it has been in more than a decade, I think.
Of course, we still need support from big business -- that
means we need your help.
First, we need you to sell more savings bonds. And second,
we need your help on the Economic Plan.
NOw, I don't know who scheduled me to speak 10 days after we
lowered the savings bonds minimum guarantee from 6 to 4 percent
-- something we hadn't done since 1986.
But let me explain this: we had to do it because our rates
were too high, and the Office of Management and Budget says it
will save us a couple billion dollars.

-3-

Savings bonds are good for the Treasury because they are a
low-cost way to finance the public debt -- and they're good for
Americans, because we don't save enough in this country.
Americans don't even save 5 percent of their incomes.
Americans save half of what a typical family in Germany saves,
and just one third of what a family in Japan saves.
And in spite of the rate cuts, I still think savings bonds
are an easy sell. The rates are still competitive compared to
CDs and other bonds. They can be cashed in any time after six
months from purchase. There are no commission or maintenance
fees. They offer tax advantages.
And they are easy to buy. Thanks to your efforts and others
across the country, we have an army of 500,000 volunteers in
businesses and government agencies ready to help out.
Last calendar year, more than $17 billion in sales were
completed -- our highest year ever -- and I hope we can do just
as well in 1993.
One more thing about savings bonds. Each time an American
buys a bond, he or she is directly investing in our future. They
are saying this country is worth investing in.
And that's what the President's Economic Plan is all about:
investing in America.
We've taken a cue from business. You can't grow your
business -- you can't survive in business today -- unless you
invest in it. Isn't the first question you ask every year -"How much should we invest in product and plant?" Isn't it the
CEO's job to think about the future?
How many times have you heard the American government, this
trillion dollar enterprise, talk about its long-term investment
plans?
Actually, we're taking two cues from business. You pick up
the paper every day, and you read how American companies are
downsizing. How they are closing operations, shutting down
plants, and doing anything they can to get lean and mean to
compete.
When in the last 10 years have you picked up a paper to read
about the downsizing of government? Not very often, I'm afraid,
and usually the attempts have failed because of gridlock.
Well, the two cues -- investing and downsizing -- we've put
into our Economic Plan. We think it's a good plan for America,
and in this case, what's good for America will be good for
business, too. I really believe that.
Let me take you through the plan -- briefly.
First, we have a moderate, $30-billion stimUlus to speed up
the recovery.
Why have a stimulus? Some people are saying it's not
necessary because the economic news has been better and job
growth picked up in February. But we think it's necessary
because the economy is still operating far short of its capacity.
The stimUlUS package can help to move the economy back towards
its potential.

-4-

Yes, employment rose in February, but we still have nearly 9
million Americans unemployed. A full 8 percent of New Yorkers
are unemployed. In New Jersey, unemployment is 7.8 percent.
We are operating well below capacity, so there is little chance
that the stimulus package will overheat the economy or rekindle
inflationary pressures -- as some may worry.
In fact, roughly half the $30-billion stimulus will go to
enhance growth and to jump-start the economy. We'll increase
spending for highways and mass transit systems, for example.
We'll create the equivalent of about 500,000 full-time jobs
overall.
The other half of the $30 billion will go toward tax
incentives to stimulate private sector investments -- your
investments. For large businesses, we have a temporary 7 percent
incremental investment tax credit. And for small businesses,
there's a permanent investment tax credit that starts at 7
percent and phases down to 5 percent in two years.
Second, we want to expand America's capacity to produce,
long term.
We haven't kept up in our investments in our infrastructure,
in a quality work force, or in modern plants and equipment that
produce our goods.
Just as an example, in the 1960s, public investment was 4.5
percent of Gross Domestic Product. But in the 1970s it was
only 3.3 percent. And by the 1980s, it had fallen to 2.6
percent.
Or here's a better example for business. Private investment
as a share of GOP is 15.5 percent in the United States. In
Japan, it's 32 percent -- 32 percent!
How do we expect American businesses to compete globally, if
we don't invest like the rest of the world?
So we have a lot of plans to shift these trends. We plan to
extend the research and development tax credit permanently. We
plan to increase investment incentives for small businesses, and
modify the alternative minimum tax depreciation schedule,
something that will especially help capital-intensive businesses.
We plan over $4 billion for worker retraining and defense
conversion. We plan to start a National Service Corps, so
American youth can payoff college with community service work.
You don't need a bunch of drop-outs knocking on your doors
for employment. You need educated future workers.
We will be investing by 1997 nearly $19 billion a year in
things that are important to productivity and growth -- like
transportation and technology.
All our investments make sense. They are the sorts of
spending that will remove our own impediments to competition.
The third and final part of the plan is deficit reduction.
This year, we will pay 14 percent of the federal budget for
interest. 14 cents on every dollar buys us nothing. It just
pays for our past sins. All we get back is canceled checks. If
we do nothing, in a decade it will be 20 percent.

-5-

We have a list of 150 ways to cut government spending.
Every segment of the budget -- defense, non-defense, entitlements
-- is included.
By 1997, a $37 billion savings in defense expenditures, $20
billion in non-defense spending, and $41 billion in entitlements.
President Clinton is cutting the White House staff by 25
percent. By 1997, we're cutting the cost of running our
departments and agencies by 14 percent.
Believe me, I personally feel the effects at Treasury.
These are honest cuts. The kinds that you make every day in
business -- we're finally making in government.
Of course, there are two ways to solve our deficit problem.
Yes, we're downsizing, but we also need to raise revenues.
There's no way of getting around that. By 1997, when the plan is
in full operation, roughly half the savings will come from
spending cuts and half from revenues.
In the years beyond, the
proportion of spending cuts remains at least that high.
In raising revenues, we're trying to restore equity in the
system, both in the personal income tax rates and in corporate
rates.
On the corporate side, the marginal rate is going up from 34
percent to 36 percent on the largest companies.
Please keep corporate tax rates in perspective. The rate is
50 percent in Germany, and in Japan it is 40 percent.
In 1950,
more than a quarter of our government's revenues came from
corporate taxes. Now, it's just 9 percent. Our proposed
increase is relatively modest.
To be sure there is tax fairness for everyone, we will
ensure that foreign businesses pay the taxes they owe in the
United states. To do this, we have a series of international
compliance reforms. And, a related provision restricts the
ability of foreign-owned U.s. corporations to avoid tax on their
earnings distributed as interest.
Finally, to raise revenue, we have a broad-based energy tax.
A tax that will also improve our environment by effectively
taxing pollution and reducing dependence on foreign oil by
encouraging conservation.
The President is very concerned about how all of these taxes
effect families and businesses. Obviously they are going to
effect everyone differently. Many of you in this room I'm
sure will be paying more personally on April 15, 1994. Some of
your businesses will be paying more.
But in the end, I think we need to look at how this effects
a middle-income family, earning, say, $40,000. You see
middle-income families are the customers who buy your products,
and if they are unemployed, they don't make very good customers.
And do you know what in 1997 the net impact on the entire
revenue package will have per week on a family earning $40,000?
$4. One trip per week across the George Washington Bridge.
Every day when I come to work at the Treasury Building I
pass a statue of Alexander Hamilton -- this country's first
Treasury Secretary, and a man who served with George Washington

-6-

in battle and in office. When I pass his statue, I think about
the history of this great country. I think about all the
sacrifices that our founding fathers and every generation that
followed have made for America.
. We always did it for our kids, didn't we? We always did it
so the next generation will have things better than we had them.
Maybe our package means one trip a week across the George
Washington Bridge for some •.. maybe many trips for others ...
maybe thousands of trips for still others ... but I think in
the end we can all come together and sacrifice together to keep
this country great. That's what America is all about.
Thank you very much. And one more thing: remember to sell
those savings bonds.
# # #

FOR RELEASE AT 2:30 P.M.
Marc h 9, 1993

i'··c6NT~CT:)

OffiC e of Fina ncin g
202/ 219- 3350

TREASURY'S WEEKLY BILL 'OFFERING
The Trea sury will auct ion two seri es of Trea sury bill
s
tota ling appr oxim ately $23,2 00 mill ion, to be issue
d
Marc h 18, 1993 . This offe ring will resu lt in a payd
Trea sury of abou t $175 mill ion, as the matu ring weekown for the
ly bill s are
outs tand ing in the amou nt of $23,3 77 mill ion.
Fede ral Rese rve Bank s hold $5,22 2 mill ion
the matu ring
bill s for thei r own acco unts , whic h may be refunof
ded
with in the
offe ring amou nt at the weig hted aver age disc ount rate
of acce pted
com petit ive tend ers.
Fede ral Rese rve Bank s hold $1,97 3 mill ion
agen ts for
fore ign and inte rnat iona l mone tary auth oriti es, as
whic
refun ded with in the offe ring amou nt at the weig hted h may be
disc ount rate of acce pted com petit ive tend ers. Add aver age
amou nts may be issue d for such acco unts if the aggr ition al
of new bids exce eds the aggr egat e amou nt of matu ringegat e amou nt
bill s.
Tend ers for the bill s will be rece ived at
ral
Rese rve Bank s and Bran ches and at the Bure au of Fede
the
Debt , Wash ingto n, D. C. This offe ring of Trea sury Publ ic
secu ritie s
is gove rned by the term s and cond ition s set forth in
the Unifo rm
Offe ring Circ ular (31 CFR Part 356, publ ished as a
fina
Janu ary 5, 1993 , and effe ctiv e Marc h 1, 1993 ) for the l rule on
issu e by the Trea sury to the publ ic of mark etab le Treasale and
sury bill s,
note s, and bond s.
Deta ils abou t each of the new secu ritie s are give n
in the
attac hed offe ring high ligh ts.
000

Attac hmen t

LB-64

HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
March 9, 1993

Offering Amount . . . . .
Description of Offering:

$11,600 million

Term and type of security
...
CUSIP number
. . . . . . . . .
Auction date
. . ..
...
Issue date.
......•..
Maturity date . . . . . . . . . . .
Original issue date . . . . . . . .
Currently outstanding .
Minimum bid amount . . . . . . . .
Multiples . . . . . . . . . . . . .

91-day bill
912794 05 0
March 15, 1993
March 18, 1993
June 17, 1993
December 17, 1992
$12,244 million
$10,000
$ 5,000

182-day bill
912794 F7 4
March 15, 1993
March 18, 1993
September 16, 1993
March 18, 1993
$10,000
$ 5,000

The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids • • .

Competitive bids

Maximum Recognized Bid
at a Single Yield
Maximum Award .

35% of public offering
.

Receipt of Tenders:
Noncompetitive tenders
competitive tenders . .
Payment Terms .

35% of public offering

. .

.
.

. . .

.
.

Prior to 12:00 noon Eastern time on auction day
Prior to 1:00 p.m. Eastern time on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date

Embargoed until delivery
Expected about 10 a.m.
March 10, 1993
Testimony of Treasury Secretary Lloyd Bentsen
Before the House Ways & Means committee
chairman Rostenkowski, members of the committee:
It's a pleasure to join you this morning. For me it's
always a special occasion to come before Chairman Rostenkowski,
with whom I worked so closely for so many years while in
Congress. I look forward to a continued close relationship with
all of you.
I have the greatest respect for the work of this committee.
It is here that much of the heavy lifting in our government
begins. This year will present you with many difficult
challenges, but
I am confident that you will meet them.
,
We have reached a turning point in our economic history, and
we cannot step back. In the past few weeks the President has
detailed a comprehensive plan to restore American economic growth
and leadership. It needs your input and we welcome that. I am
confident that you will find that time invested in working with
this Administration will produce results for all of us and for
the nation.
We have a singular opportunity to strengthen our economy,
improve our standard of living, and revitalize the American jobproducing machine.
On the evening of February 17th, President Clinton presented
his vision and plan to you, and to the millions of Americans
watching at home. The reception was gratifying, and the momentum
has continued to build.
From the moment we began talking about our plan we expected
that long-term interest rates would come down. In all candor,
the decline has been beyond our expectations. Although there may
be some fluctuations, there already has been a pay-off. We're
saving on debt service costs. Americans are saving money on
their home mortgages and credit cards. Businesses are finding it
cheaper to finance new plants and equipment, and our investment
tax credit proposals will help encourage that sort of expansion.
1
L8-65

I'm also gratified at the strong support we are getting in
Congress, and I applaud the Budget Committees for acting with
such dispatch on our program. In addition, the response from
overseas has been enthusiastic.
Eleven days ago in London I met with one of the toughest
audiences: the representatives of the six major industrialized
nations which, together with the United states, make up the G-7
group. These are the countries whose financial markets are
closely connected to our own, and whose purchases are important
for our exporters. Working together should open markets and lead
to the type of sustained growth that could increase demand for
American goods across the board.
The support I saw in London for this program was clear and
strong. Where economic- qrowth--is"concernedirnational interests
and international imperatives coincide. And growth is what the
Administration's economic plan will bring: growth in jobs,
growth in investment, and growth in productivity and incomes.
For the united states, a major obstacle to growth has been
our budget deficit. And it is the seriousness of President
Clinton's deficit reduction package that has triggered much of
the support and economic optimism both here and abroad. I'd like
to discuss that with you first and then move on to the closely
related subjects of our stimulus and investment plans.
I.

Reducing the Deficit

Deficit reduction is the key to a reduction in u.s. long
term interest rates, economic stability, and long-term
productivity and income growth here at home. Our trading
partners have long urged us to reduce our large and growing
budget deficits. Now we offer deeds, not just words. And they
can count on an investment-led u.s. recovery to offer additional
opportunities for their exports.
At home, the deficit affects every American, every day. It
is not some abstract concept debated by economists. It means
higher interest payments on mortgages and credit c~ -ds. It
lowers our investment and our standard of living. ~t touches us
all.
The large deficits we face seriously impede investment. When
the economy is fully employed, every dollar we borrow as a
government to finance consumption is a dollar that is unavailable
to the private sector to finance investment. This drain on our
saving has caused our rates of private investment to fall far
below those of our major trading partners. You can see this in
the first chart.

The willingness of foreign investors to provide funds has
compensated for much of the depressed level of savings in this
country that reflects, in part, our budget deficit. But this
means that we may be drawing on financial resources badly needed
elsewhere in the world. It also means that our children are
going to have to repay some of the fruits of our investment to
lenders in Europe and Japan, rather than keeping them at home.
Large annual deficits also produce a mountain of debt, and
the interest on that debt accounts for an ever increasing share
of the government budget. These increasing interest payments
squeeze out important government spending. With this mounting
interest burden, it is not surprising that our spending on public
infrastructure is only a third that of Japan's and well below
that of other major industrialized countries. You can see the
problem in the next-- chart~ ...
We must reduce the federal deficit to lessen the
government's drain on national saving, to free up funds for
investment, to leave room in the budget for critical domestic
programs, to restore our leadership in the world economy, and to
make our nation less dependent on foreign capital.
President Clinton's deficit reduction plan takes a bold step
in bringing the deficit under control. In 1997, when the
provisions are fully phased in, this plan will reduce the annual
deficit by $140 billion. We welcome the additional steps to by
members of the House and Senate Budget Committees to further cut
spending and increase the deficit reduction that the plan will
produce.
The president made hard choices on spending, and he made
sure that the deficit reduction plan is balanced. In 1997, when
the plan is fully operational, half the savings will come from
spending cuts and half from revenues. In the years beyond, the
proportion of spending cuts remains at least that high.
Furthermore, if the Congress adopts the additional spending cuts
that have been suggested by members, I anticipate this ratio will
be higher than 50 percent in spending cuts.
This administration's deficit reduction plan differs from
previous plans in a number of respects -- and here I really can
speak from experience. I know what it's like to receive a
proposal from the Executive Branch that promises vague cuts and
then asks Congress to make all the tough choices.
This package doesn't use the rhetoric of across-the-board
cuts, while dodging the reality of who gets hit; it offers 150
specific cuts. Furthermore, the savings in this plan are all
)ermanent, not temporary. Finally, this plan is not based on a
·Jrosy scenario," but rather works off the more conservative
economic forecasts of the Congressional Budget Office.
3

Let me just give you a few of the details on the plan.
We have taken the first steps to changing our economic course
within the federal government itself. It is only fair that if we
ask America to contribute, we make our contribution first.
Through 1997, we're cutting the cost of running our departments
and agencies by 14 percent. I'm taking my share of these cuts at
Treasury.
Major cuts will be made in domestic non-defense
discretionary categories, reducing spending by $20 billion in
1997. And, we will see $37 billion savings with prudent
reductions in defense expenditures.
The fair and equitable changes we propose in entitlement
programs will save $41 billion a year by 1997. Let me give you a
few examples of the "entitlement cuts ""We have"made.
In the area of farm subsidies, I understand the troubles
that our farmers put up with to provide us with the best
agricultural products in the world. But we need to make some
changes. There are some people who farm, who also earn more than
$100,000 a year from activities that have nothing to do with
feeding or clothing Americans. That $100,000 is a good income,
anywhere in America. We will end agricultural price supports to
these individuals. It's only fair that subsidies end for those
who do not need them.
Our plan also will make prudent cuts in the Medicare
provider payments without, and let me repeat that, without
reducing the care available to Medicare beneficiaries. Our plan
does not raise premiums. And hopefully, it may reduce out-ofpocket costs for Medicare beneficiaries.
The largest and most sensitive entitlement program of all
is, of course, Social Security. We propose no change in Social
Security benefits or the cost-of-living increases. But for
upper-income recipients, the plan increases the percentage of
their Social security benefits subject to tax, from 50 percent to
85 percent. This brings their tax treatment more in line with
the tax treatment of private pensions. Revenues from this
proposal go into the Medicare trust fund, a trust fund that is
expected to be in trouble in the next decade without this
funding.
NOW, let me turn to the revenue side of the deficit
reduction package. Here, the President's plan moves to restore
equity to our tax system. Throughout in the 1980s, our most
wealthy citizens benefitted disproportionately in relation to
middle income working families. As the:=hart shOWS, the
wealthiest 1 percent of Americans saw their income go up nearly
50 percent while their effective tax rate fell by nearly 25
percent. The President's plan reverses that pattern.
4

The revenue changes we propose restore greater progressivity
to the individual tax system. Families with about $180,000 in
adjusted gross income will have their rate increased from 31
percent to 36 percent. Furthermore a surtax of 10 percent is
levied on those with taxable incomes of $250,000 or more. These
changes will affect only the wealthiest 1.2 percent of American
taxpayers. These rate changes won't touch middle income
Americans at al~.
Higher-income workers will also be required to increase
their payments under the Medicare tax. The proposal eliminates
the current cap of $135,000 on earnings subject to the Hospital
Insurance portion of the payroll tax. Revenues from this
proposal also will go into the Medicare trust fund, further
extending its period of solvency.
In addition, we are asking corporations to pay their fair
share. Forty years ago, over a quarter of government revenues
came from the corporate tax. Now it's just 9 percent. We
propose raising the top rate from 34 percent to 36 percent for
corporations with incomes over $10 million. This change will
affect only 2,700 large corporations out of 2.2 million.
In dealing with corporate tax provisions, our plan also
recognizes that there are some deductions, such as business
meals, entertainment and club dues, that should be reduced or
eliminated.
We also will make certain that foreign businesses pay the
taxes they owe in the united states. To do this, the package has
a series of international compliance reforms. The principal
provision would require multinational enterprises to establish
their transfer pricing methodology before they file their tax
returns.
To ensure that we get the most revenue possible from our
existing taxes, the package also includes a series of domestic
compliance measures. The tax gap -- the difference between what
people owe in taxes and what is actually paid -- is a
persistently large number. Much of this is attributed to
unreported income, often by business. The package has several
provisions -- ones that raise over $2 billion in 1997 -- to help
us get at this problem.
Finally, the plan also includes a broad-based energy tax.
This proposal has three important goals: improving our
environment by effectively taxing pollution, reducing dependence
on foreign oil, and cutting the deficit.

The president carefully considered how the energy tax will
affect Americans. Our program is intended to be as regionally
neutral as possible. We chose a BTU tax rather than going after
any specific fuel, like imported oil, or gasoline, or coal.
We will apply this tax to fossil fuels -- coal, oil and
natural gas -- and we will work with you for a system to collect
it effectively and efficiently.
Along with our energy tax, we propose extending the 2.5cents-per-gallon tax on motor fuel, which was set to expire in
1995. This money will go towards replenishing the highway trust
fund, for investing in our public infrastructure.
In this country, we have relied on cheap energy for years.
Even with our energy-tax,--our-rates-will"be far below the tax
rates charged by many of our G-7 partners. For example even with
the new taxes, the price of a gallon of gasoline in the United
states will be roughly $1.20. In France and Germany that gallon
of gasoline costs nearly $4.
The president has been very concerned about how the energy
tax will affect American families. With the Earned Income Tax
Credit, and with changes to the Food stamp and the Low Income
Home Energy Assistance Program, families with incomes of $30,000
or less pay no, or virtually no additional tax under our revenue
plans.
In fact, if you look at the next chart, you will see that on
average, a family with an income of $40,000 will pay just $17 a
month more in 1997 when all of our changes are in place. Let me
remind you, lower interest rates are already saving Americans
$6r~ $80, $100 a month or more on new and refinanced mortgages,
so .hese tax changes are, for many people, already more than paid
for.
While raising taxes is never easy, let me put the magnitude
of this tax increase in perspective. The next chart shows the
total tax burden in the united states compared to that in other
industrialized countries. The figures include all taxes raised
by all levels of government. You can see that even once the new
taxes are introduced, the United states' tax revenues as a
percent of GOP are the lowest among the G-7 partners. For us the
figure will be about 33 percent. For the Germans, it's more than
43 percent. Even for the Japanese, it is nearly 35 percent.
II. Speeding Recovery From the Recession and Increasing
Investment

Deficit reduction will make an important contribution to our
long-term economic health. But we also need to take immediate
action to create jobs and to stimulate investment spending.
Thus, we are proposing a modest stimulus for the immediate
problems facing us, and an investment package to shift America's
priorities towards the future.
February's employment results were better than expected, and
we welcome them. But nearly 9 million people are still
unemployed, and a record number of people have been out of work
for extended periods of time. In California the unemployment
rate is pushing 10 percent. Even with the good February numbers,
job growth in this recovery is meager compared to the comparable
stage in previous recoveries. with a large number of people out
of work, and underutilized factories, we are operating well below
our capacity. With so much excess capacity',' inflationary
pressures are largely absent. Clearly there is both the need and
the opportunity to achieve high rates of real growth.
<

Roughly half the money in the stimulus goes for tax
incentives to stimulate private sector investment. Specifically,
the plan includes a temporary 7 percent incremental investment
tax credit for large businesses, and a permanent investment tax
credit -- phasing down from 7 percent to 5 percent in two years - on investments by small businesses. Small businesses are vital
to our economy, since they are the major source of new jobs.
The other half of the stimulus accelerates spending for
programs that serve the twin objectives of enhancing long-term
growth and jump-starting the economy. For example, it increases
spending for highways and mass transit systems, and it invests in
disadvantaged youth by creating roughly 700,000 jobs this summer.
On a full-year equivalent basis, the stimulus plan will
create 500,000 new jobs overall. Americans need jobs now and
they deserve them.
In addition, too often we have seen businesses which create
jobs having trouble getting the credit they need to expand. The
Treasury Department Comptroller General -- in cooperation with
the Federal Reserve and the FDIC -- is working to alleviate the
"credit crunch," and free up capital for small and medium-sized
businesses.
The president will be having something to say this afternoon
about our steps to relieve this impediment to our recovery.
The stimulus package, and our efforts to alleviate the
credit crunch are what must be done to tackle today's challenge.
Yet we all know that that's only half the battle.

Our investment package is designed to reverse the nation's
stagnating productivity and wage growth. As the chart shows, the
growth in output per worker has practically ground to a halt over
the last two decades, and real wages have barely budged at all.
As a result, average Americans have seen little increase in their
living standards. This means that simply recovering from the
recession is not good enough. We not only need to create more
jobs, we also need better jobs with higher wages.
There is little doubt that under-investment -- in private
business capital, in public infrastructure, and in the skills of
the American work force -- has contributed to slow productivity
growth and stagnant wages.
As I said before, America devotes a much smaller share of
its Gross Domesti~ Product'topublic-and private investment than
other developed countries. We have also neglected investment in
our citizens. For example, our students repeatedly score below
their counterparts in other developed countries on math and
science tests.
.
More investment is critical to improving productivity,
wages, and living standards. The investment package contains two
major efforts to improve both public and private investment.
The investment package will start shifting the composition
of the federal budget from consumption to investment. It will
expand America's capacity to produce, and offer better
opportunities to workers. It will bear fruit long after the
current recovery has been firmly established. The package
includes both tax incentives and public investment expenditures.
The tax side of the investment package includes two
important provisions for small business, since small companies
are the major source of new jobs. First, small business will
continue to enjoy the permanent investment tax credit that is
introduced in the stimulus package. Second, we propose that
investors in small corporations be able to exclude 50 percent of
the gain on stock held more than 5 years. This exclusion is
carefully targeted to benefit small growth companies and to avoid
abuse.
Both small and large capital-intensive corporations paying
the minimum tax will benefit from the simplified and enhanced
depreciation provisions included in the stimUlUS package. This
proposal substantially enhances the investment incentives for
these taxpayers by using the shorter regular tax depreciable
lives for minimum tax as well as regular tax purposes. This
proposal builds on important work done in this area by this
committee under the guidance of Chairman Rostenkowski

In addition, the tax side of the package permanently and
retroactively reinstates several provisions that expired last
June. For example, we make permanent the research and
development tax credit to let business better plan future
research investments. To stimulate investment in housing for
low-income families, we propose a permanent extension of both the
low-income housing credit and the mortgage revenue bond
provisions.
Since investment in people is as important as investment in
machines, the targeted jobs tax credit is made permanent and
expanded to include youth apprenticeship programs. In addition,
the general exclusion for employer-provided educational
assistance is permanently extended.
This part of the"proqram"als"O'authorizesthe establishment
of enterprise zones. While the details are still being refined,
the purpose is to provide incentives to hire and train workers,
and to improve the physical capital of some of our nation's most
distressed urban and rural areas.
These tax incentives in the investment package for the
private sector are then reinforced by increased public investment
in a wide range of physical capital and workers, both of which
are critical for productivity and growth. The investments
reaffirm the investment themes President Clinton articulated
during the campaign.
Chairman Rostenkowski, members of the committee: We have
presented detailed, enforceable, credible program which will
strengthen our economy and make a significant impact on deficit
reduction.
It will create jobs. It will make and encourage the
investment in America, and in Americans, that will produce the
economic growth and revitalization we need to strengthen our
position of world leadership. And, it will allow us to again be
certain we can pass on a better way of life to our children and
grandchildren.
Throughout my public life I've worked with many of you in
this room on the economic problems of our country -- budget
deficits, trade deficits, a growing debt, and the other issues we
have faced.
Today we stand at a crossroads. Down one path lies an
economy with restored vitality, an economy that again is the
strong and vibrant force that has made us a world leader. Down
the other path is delay and divisiveness, and a price in economic
pain that grows worse the longer we wait to act.

This committee will play a leadership role in determining
which course we chose.
You can be assured that this administration will work
cooperatively with you. Our approach is not one of
confrontation. There is nothing to be gained that way, and the
job is too important. It took difficult decisions to put this
package together, and it will require equally courageous
decisions by each of you. Together, we have the opportunity to
make a difference for our future, and we must seize it.
Thank you very much.

***

CHARTS TO ACCOMPANY
SECRETARY BENTSEN'S
TESTIMONY BEFORE
THE HOUSE WAYS AND MEANS
COMMITTEE

MARCH 10, 1993

U. S. Invests Less Than Its Competitors
Percent ----------------------------------------~
32.0%

n,,»»»n;,;

30
25
20
15
10

u.s.

France

Germany

Italy

Japan

U.K.

Gross average annual private investment as a percent of GOP, 1980-92
Source: OMS

u.s. Public Investment Is the Lowest
of the G-7 Countries

Pe~ent------------------------

----------------~

5
4

3
2

u.s.

France

Germany

Italy

Japa n

U.K.

Public investment as a percent of GDP, 1990
Source: DECO

Canada

Affluent Have Not Been Paying
Their Fair Share
Percent Change 1980-1993
47.6

Income

Effective Tax Rates
30
20
10

o
-4.0

-10
-20
-30

Lowest

Second

Middle

Fourth

81-900/0

91-95%

96-99%

Income Quintile (Constant 1989 Income)
Source: 1992 Green Book.

Top 1%

Energy Tax Will Cost the Average
Family Only $17 Per Month In 1997
Family Economic
Class ($)

Number of Families
(Millions)

Average Monthly
Energy Tax - 1997

0- 10,000

14.9

-1

10 - 20,000

18.4

20 - 30,000

16.0

30 - 50,000,

22.4

50 - 75,000

17.9

75 - 100,000

9.9

100 - 200,000

8.8

200,000 - Over

2.4

1,198

I
I
I

Other Benefits
• Reduces Pollution
• Conserves Finite Resources
• Lessens Dependence on Foreign Sources
of Energy
Source: Department of the Treasury

u.s. Taxes Still Lower Than
International Competitors

60r Percent - - - - - - - - - - - ,
50

46.5%

"""">,>",,

40
30
20
10

u.s.

France

Germany

Italy

Japan

U.K.

Government receipts as a percent of GOP, 1990
Source: OECD

Canada

Output Per Hour and Real
.Compensation Per Hour Have
Grown Slowly
Percent
1954-1973

1973-1992

3.1%

Output Per Hour

Hourly Compensation

Note: Compensation and output per hour are for the total economy.
Source: Department of Labor

,:"1"
'. . i\/ ,P,'I'

,d\~.: -,'

, .~,..

(
:.'

Office of the Comptroller of the Currency
.kif nt:.. R el~ea.s1e O-!;j~~~"_ _ _F_e_d_e_rn_,_I_D_e-Lp_o_s_it_In_s_U_rt_ln_c_e_C_o_tp-,--o_rn_ti_'o~n
Federnl Reserve Board
Office of Thrift Supervision
Interngency Policy Statement on
Credit Availability
March 10, 1993
The four federal regulators of banks and thrifts - the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the
Federal Reserve System, and the Office of Thrift SupervIsion - today announced a
program directed at dealing with problems of credit availability, especially for small and
medium-sized businesses.
The program will focus on the five areas In which the agencies will take actIOn designed
to alleviate the apparent reluctance by banks and thrifts to lend. Those areas are:
•

Lending to Small- and Medium-sized Businesses

•

Real Estate Lending and Appraisals
Appeals of Examination Decisions and Complaint Handling

•

Examination Processes and Procedures
Paperwork and Regulatory Burden.

The agencies intend to complete virtually all of the changes proposed in the program
within the next few months. As the specifics of any change are finalized, that change will
be made and published while details of other changes are In the process of being
finalized
A complete statement about the actIOns the agencies have planned is attached The
statement reaffirms the agencies' belief that It IS In the Interest of lenders, borrowers and
the general public that creditworthy borrowers have access to credit
This policy statement will be distributed to all federally examtned banks and thrifts
and to all regulatory agency offices and examtners

()ffice of the Comptroller of the Currency
Federal Deposit Insurance Corporation
Federal Reserve Board
Office of Thrift Supervision

Interagency Policy Statement on
Credit Availability
March 10, 1993

Problems with the availability of credit O\'er the last few years have been especially
significant for small- and medium-sized businesses and fanns. This reluctance to lend
may be attributed to many factors. including general trends in the economy; a desire by
both borrowing and lending institutions to improve their balance sheets: the adoption of
more rigorous underwriting standards after the losses associated with some laxities in the
1980s; the relative attractiveness of other types of investments: the impact of higher
capital requirements. supervisory policies. and examination practices: and the increase in
regulation mandated by recent legislation - specifically, the Financial Institutions Refonn
Recovery and Enforcement Act (FIRREA) and the Federal Deposit Insurance Corporation
Improvement Act (FDICIA).
The four federal regulators of banks and thrifts - the Office of the Comptroller of the
Currency. the Federal Deposit Insurance Corporation. the Board of Governors of the
Federal Reserve System. and the Office of Thrift Supervision - recognize that in the last
several years the buildup of certain regulations and practices has become overly
hurdensome. Indeed. those regulations and practices may have. in some cases. stifled
lending. particularly to small- and medium-sized businesses that met prudent undef\\Titing
standards.
It is in the interest of lenders. borrowers. and the general public that creditworthy loans
he nude. Since economic grO\\1h. especially job gro\\1h. is fueled primarily hy smalland medium-sized husinesses. credit a\'ailability to those horrov·;ers is especially
important. Accordingly. the agencies are working on the details of a new program to help
ensure that regulatory policies and practices do not needlessly stand in the \\ay of \ending.
Ll)anS tn creditworthy horrowers should he made \\hene\er possible. as long as they are
fully cnnslstent \\ lth sal'c and sl)und hanking practices.

Background
rile ne\\ program is one :lspect 01' :In o\erall effort by the agencies to c\a!uate c:lrefully
~md re:lct :lppropnately to risk in the l'nited States tinancI:l! services Industry.
fhat
\lwrall effort envisions substantial oversight. in some cases more than \\e have now. in
areas that pose greater risk to the system. By the same token. regulatory burden will be
reduced where risk is low. especially for strong. well-managed banks and thrifts. This
program is also part of a broader. effort to ensure equal credit opportunity for all
Americans and to make credit and other tinancial services available to low- and moderateincome neighborhoods and disadvantaged rural areas.

The Program
The new program involves a variety of regulatory and other administrative changes which
have been agreed to in principle by the agencies. These changes fall into live categories.
each of which is discussed below.

Timing. The agencies will work to complete virtually all of the changes outlined below
within the next three months. Once the specifics of any of the changes are agreed upon.
that change will be made and published. \vhile distribution of other changes remains to
be made.

Eliminating Impediments to Loans to Small- and Medium-Sized Businesses

Reducing Documentation. Strong and well-managed banks and thrifts will be permitted
to make and carry a basket of loans with minimal documentation requirements. consistent
with applicable law. To ensure that these loans are made to small- and medium-sized
husinesses. there will be a ceiling on the size of such loans and limits on the aggregate
nf such loans a bank may make.
Encouraging lIse of Judgment\Borrower's Reputation. The agencies will issue
~uidance to make it clear that bzmks and thrifts are encouraged to make loans to small:lnd medium-sized businesses. particularly loans in the basket discussed above. and to use
their judgment in broadly Jssessing the creditworthy nature of the borrower - general
reputation and good character as \\ell as financial condition may be elements in making
these Judgments.
Reliance nn a broad rJnge of factors \\hen making a credit
determmJtion is especially important.
~

Other .\ssets [specially \lentioned. Improper use of the Gltcgmy nf Other .\ssets
hpeciall: \ kntloned (0.\/:\1) may inhibit lending t() small- and medium-sized
husll1esses .. \ccordingly. the :lgencies \\ill clarify that examination and rJtmg procedures
Jo l1(1t group (),\L\1111ans \\1th claSSIfied loans.

Reducing Appraisal Burden and Impro"ing the Climate for Real Estate

Ihe experIence of the last dccade has underscored the importance of sound unden\TIting
-,tand:.uds and effective supen'ision for commercial real estate lo~:ms. \'onetheless. In
certain instances regulatory hurdens may he adversely affecting loans to sound borrowers.
rhis may he particularly so in the case of loans secured by real estate that are primarilv
used for non-real estate business purposes. Real estate collateral is often pledged for
loans to small- and medium-sized companies that have few other tangible assets.
Using Real Estate Appraisals Prudently. In some cases currently required real estate
appraisals may not add to the safety and soundness of the credit decision. Indeed. in
some cases. appraisals may prove so expensive that they make a sound small- or mediumsized business loan uneconomical. Accordingly. the agencies will make changes to their
rules relating to real estate appraisals along the following lines:
•

Accept Additional Collateral
When real estate is offered as additional collateral for a business loan. both the
time and expense involved in obtaining an appraisal from a certified or licensed
real estate appraiser may discourage a bank or thrift from taking the collateraL
may increase the cost of credit significantly. or even may cause the loan not to be
made.
In some such cases. the real estate appraisal requirement is
counterproductive from a safety and soundness perspective.
\10reover. the
constraint on credit flows to sound businesses may be substantial. :\ccordingly.
the agencies will alter their real estate appraisal rules so as not to require an
appraisal by a licensed or certified appraiser for such loans.
Reexamine Appraisal Thresholds
A ppraisals conducted by Iicensed and certified real estate appraisers. even on real
estate of modest \alue can he quite costly. In the case of a smaller loan. the
requirement of an appraisal hy a licensed or certified real estate appraiser may
make a sound loan uneconomical. Accordingly. the agencies \\ill reexamine their
existing rules to make certain that thresholds below \",hich formal appraisals arc
not needed are n:asonable.

•

Limit Periodic Appraisals
I n some cases real estate appraisals have been required after a loan has heen made.
clOd in circumstances \\ here the appraisal did not add tn the safet\· and soundness
(l! the l\lan \ccordin:;I). the a~encies \\ ill \\ork tll make certain that recti estate
clppr~lIsals are required ~l!ter a l(lan is made llnly \\ hen ckarly needed for safety
-Ind s\lundness purr(lSes. rr(l\ided \11 Cllurse. that all requIrements under b\\ ha\e
he en me!.

- -+ -

Changing Rules on financing of Other Real Estate Owned. Currently. accounting and
\)ther rules may discourage banks and thrifts from providing tinancing to borrowers \\ho
\\ ish to purchase real estate classitied as Other Real Estate Owned. The agencies \\ill
review rules relating to the reporting treatment and cIassitication of such loans and make
appropriate chanl!es to facilitate tinancinl! to creditworthv borrowers. consistent with safe
Jnd sound banking and accounting practices.
~

Reviewing In Substance foreclosure Rules. The inappropriate use of in substance
foreclosure rules have required foreclosure valuation treatment of loans when borrowers
were current on principal and interest payments and could reasonably be expected to repay
the loan in a timely fashion. The agencies will work with the appropriate authorities to
alter that treatment and to coordinate a change in accounting principles and reporting
standards.
Avoiding Liquidation Values on Real Estate Loans. Loans secured by real estate
should be evaluated based on the borrower's ability to pay over time, rather than a
presumption of immediate liquidation. The agencies will work with their examination
staffs to ensure that real estate loans are evaluated in accordance with agency policy.
3.

Enhancing and Streamlining Appeals and Complaint Processes

Appeals. I t is important for bankers to have an avenue by which they can obtain a
review of an examiner' s decision when they wish. For that reason. each of the agencies
has established an appeals process. To ensure the effectiveness of those processes. each
agency will take appropriate steps to ensure that its appeals process is fair and effective.
In particular. each agency wi II ensure that its process provides a fair and speedy review
of examination complaints and that there is no retribution against either the bank or the
examiner as the result of an appeal.

Complaints. [Jch of the agencies has a process to handle more general complaints from
the institutions they regulate and from the general public. .\Ithough the volume of such
complaints can be high. each agency recognizes that reviewing and responding to these
complaints is an important element of proper supervision. The agencies are particularly
concerned that complaints of discriminatory lending practices be handled with the utmost
seriousness and on an expedited basis .
. \cc()rdingl~. the :1gencies \\ J II re\ie\\' their complaint processes to imp[(wc both the care
\\ ith \\ Im:h (()Jl1pbints arc scrutll1ized and the timeliness of responses.

-to

""\

Impro\ing Examination Process and Procedures

Reducing the Burden of the Examination Process . .\ proper examination of a bank or
thrift by its \cry nature \nvohes some disruptIon to the examined institution. Such
Jisruptions. however. are costly to the institution and can interfere \vith its credit
I'unctions. It is highly desirable that examination disruptions be minimized.
Accordingly. the agencies have agreed to intensify efforts to minimize such disruptions
and. in particular. to take the following steps: (i) eliminate duplication in examinations
by multiple agencies. unless clearly required by law. (ii) increase coordination of
examinations among the agencies when duplication is required. and (iii) establish
procedures to centralize and streamline examination in multibank organizations.

Refocusing the Examination Process. I f examinations are to fulfill their functions in
the areas of safety and soundness. fair lending. and consumer protection compliance. it
is important constantly to reexamine the elements of the examination to determine whether
the process is effective. Similarly, regulations and interpretations must continually be
assessed to determine whether they are fulfilling these functions.
To improve the regulatory process. the agencies have agreed to heighten their emphasis
in examinations on risk to the institution and to issues involving fair lending in place of
areas that have become less productive over time. Agency policies and procedures will
be reviewed with this focus in mind.

Reducing Regulatory Uncertainty. LTncertainty is part of the regulatory burden that
banks and thrifts face and that contributes to their reluctance to make some credits
available. This uncertainty can stem from ambiguous language in regulations and
interpretations. from delays in publishing regulations and interpretations. and from failures
to follow UnIform examination standards that clearly renect agency policies .
.\ccordingly. the agencies \\ill review their regulations and interpretations to minimize
~lmbiguity :-\herever possible :.J.nd \\ill step up efforts to publish regulations and
interpretations required by 13w or sound regulatory practice. In addition. the agencies will
reemphasize to their examiners to follow agency policies and guidelines c:.J.refully and
accurately in carrying out examinations and reviewing applications. The agencies will
make nery effort to ensure that examination and application processing is performed
uniforml\'. across the cmmtf'.
.
~.

Continuing Further Efforts and Reducing Burden

Further Efforts ..\JJitional items \\ ill h: re\iewcJ I'or possible ch::mge. ()ne It~m that
\\ III he re\leweJ relates to the treJtrncnt of partlJlly chJrged-ntf loans. l 'nder current
I,ractice delinquent luans that ha\e heen partiall~ charged off cannot h~ returned to

- h -

I'l:rformmg. status 1:\l:n \\hl:n thl: hurnml:r is Jble tll. Jnd fully intends tll. PJy thl:
rl:maIning. interest and pnnelpJI tll thl: hJnk in J timely fashion. rhc ag.l:neleS \\ill work
tn dl:\'Clop common standards fur dl:tl:rmming. \\hen a loan may hI: returned to Jccrual
')tatus.

Papen\'ork Burden. :\0 l!ood is served
bv forcinl! banks to bear an excessive rel!uiatorv
.
paperwork burden . .\ecordinl!h.
the al.!encies
have bel.!un and will continue to revie\',' all
..... "
.
~

paperwork requirements to eliminate duplication and other excesses that do not contribute
substantially to safety and soundness.

Regulatory Burden.

It is not paperwork alone that unnecessarily burdens banks and
thrifts. Regulations and interpretations also may be unnecessarily burdensome. In some
cases the passage of time has made reg.ulations outmoded. In other cases the regulations
may not have fulfilled their goals.
Accordingly. the agencies also have begun and will continue to review all regulations and
interpretations to minimize burden while maintaining safety and soundness standards.

FOR IMMEDIATE RELEASE
March 11, 1993

CONTACT:

Scott Dykema
202-622-2960

TREASURY EXPOSES YUGOSLAV SHIPPING FRONTS

The Treasury Department today named 25 shipping firms and
front companies that are circumventing economic sanctions against
the Federal Republic of Yugoslavia (Serbia and Montenegro).
These shipping companies operate Yugoslavia's entire maritime
fleet.
Their assets and vessels within U. S. jurisdiction are
blocked, including assets held in overseas branches of American
banks.
Any economic transactions with these companies by U. S .
persons, including American firms and individuals anywhere in the
world are prohibited.
As part of aU. S. -led allied effort to tighten economic
sanctions against Yugoslavia, Treasury is naming the maritime firms
as "Specially Designated Nationals" (SONs) of Yugoslavia. These 25
firms and 55 ships they control will be added to a previously
released list of 416 blocked Yugoslav entities. u.S. persons are
barred from doing business with any SONs.
"Yugoslavia has continued to trade through its maritime fleet
in flagrant violation of U.N. sanctions.
Publication of these
names sends a clear signal: The United states will deny the Serbs
and Montenegrins any benefit of regular international commerce,"
said R. Richard Newcomb, Director of Treasury's Office of Foreign
Assets Control (OFAC).
These 25 Yugoslav-controlled maritime firms have attempted to
hide Yugoslav ownership of many of the 55 vessels they own, manage,
or operate by using foreign front companies, changing vessel names,
and reflagging ships. Milena Ship Management Co. Ltd. and Rigel
Shipmanagement Ltd. are key examples. These two Montenegrin-owned
Maltese firms alone manage 40 ocean-going bulk and general cargo
vessels controlled by YugOSlavia.
other actions being taken to tighten the sanctions include:
freezing of additional assets in U.s. banks, naming of additional
Yugoslav SONs in Europe, and new agreements by American allies to
take additional steps to cut off illicit trade and financial
transfers benefitting Yugoslavia.
All told, Treasury has frozen some $525 million in Yugoslav
assets since the sanctions were imposed May 30, 1992, $25 million
of which has been blocked in recent days.
Seven Yugoslav ships
detained last summer in U.S. ports remain blocked.
(more)
LB-66

Violations of the Yugoslav embargo carry maximum criminal
penalties of $500,000 per count for corporations and $250,000 for
individuals, plus prison sentences of up to 10 years for
individuals and participating corporate officers. OFAC also may
levy administrative civil penalties of up to $10,000 per violation.
This Yugoslav SON list may be expanded or amended at any time,
as new information becomes available to the Treasury Department.
Persons with information on individuals or firms owned or
controlled by Yugoslavia may call 202-622-2420. All calls will be
kept confidential.

-30-

·
e
... ...

DEPARTMENT OF THE TREASURY
WASHINGTON

--:

MAR 081993
OFFICE OF FOREIGN ASSETS CONTROL
FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA AND MONTENEGRO)
SANCTIONS REGULATIONS
GENERAL NOTICE NO. 3

NOTIFICATION OF ADDITIONAL BLOCKED FEDERAL REPUBLIC OF YUGOSLAVIA
(SERBIA AND MONTENEGRO) ENTITIES, SPECIALLY DESIGNATED NATIONALS,
AND MERCHANT VESSELS IN WHICH THEY HAVE AN INTEREST
On July 6, 1992, the Treasury Department released General Notice
No.1, entitled, "Notification of Status of Yugoslav Entities",
which contained the names of 284 entities owned or presumed to be
controlled by the Government of the Federal Republic of Yugoslavia
(Serbia and Montenegro) (the "FRY (S&M)").
On January 15, 1993,
General Notice No. 2 expanded the list to a total of 416 entities.
This General Notice No. 3 adds further identifying information for
one previously listed entity, adds 24 more entities (six within the
FRY (S&M) and 18 without) to the list, and publishes the names and
identifying characteristics of 55 merchant vessels in which the
Government of the FRY (S&M) has an interest.
These additions to the list incorporate, without distinction, 18
entities located outside of the FRY (S&M) which the Treasury
Department deems to be Specially Designated Nationals ("SON's") of
the FRY (S&M). All the entities appearing are owned by or presumed
to be controlled by the Government of the FRY (S&M) and therefore
are blocked by Sections 1 and 2 of Executive Order 12808 and
Section 1 of Executive Order 12810.
In addition, six of the new entities listed are located in the FRY
(S&M) and are thus subject to the transfer restrictions contained
in section 2(g) of Executive Order 12810. section 2(g) prohibits
transfers to or for the benefit of either the Government of the FRY
(S&M) or individuals or entities located in the FRY (S&M).
The 55 merchant vessels listed have been determined by the Treasury
Department to be vessels in which a majority or controlling
interest is held by a person or entity in, or operating from, the
FRY (S&M), even though the vessels may be registered or flagged in
another state.
Executive Order 12831 of January 15, 1993
("Additional Measures With Respect to the Federal Republic of
Yugoslavia
(Serbia and Montene'F':) ")
prohibi ts transactions
relating to any such vessel.
U.S. persons aLe prohibited from engaging in t~:"-:sactions with
these entities or vessels unless the transactions
'e licens~d by
the Office of Foreign Assets Control.
Additionally, all assets
within U.S. jurisdiction owned or controlled by these entities,
including the vessels themselves, are blocked.
U.S. persons a~~

prohibited from the unlicensed provision of port services to FRY
(S&M)-interest vessels. U.S. persons are not prohibited, however,
from paying funds owed to these entities into blocked accounts held
in the names of the blocked entities in domestic U.S. financial
institutions.
WARNING:
These lists are not all-inclusive and will be updated
from time to time. All entities located or organized in Serbia and
Montenegro, or under Serbian or Montenegrin control in third
countries (including the former Yugoslav republics), and such
entities' foreign subsidiaries, are presumed to be controlled by
the Government of the FRY (S&M).

Issued:

March 8, 1993

Control

ADDITIONAL BLOCKED ENTITIES AND SPBCIALLY DESIGNATBD NATIONALS
OP THE PEDBRAL REPUBLIC OP YUGOSLAVIA (SERBIA AND MONTENEGRO)

ARENAL SHIPPING S.A.
Office 803, Nicolaou Pentadromos centre,
Limassol, Cyprus

Pentadromos Junction,

BAGERSKO BRODARSKO PREDUZECE
Hajduk Veljkov Venac 46, 11000 Belgrade, Serbia
BAR OVERSEAS SHIPPING LTD.
Valletta, Malta
c/o Rigel Shipmanagement Ltd.
Second Floor, Regency House, Republic Street, Valletta, Malta
BEOGRADSKA PLOVIDBA
(a.k.a. BEOPLOV)
Lenjinov Bulevar 165A, 11070 Novi Beograd, Serbia
BOKA OCEAN SHIPPING CORPORATION
Monrovia, Liberia
c/o Jugoslavenska Oceanska Plovidba
BB, Njegoseva, P.O. Box 18, 85330 Kotor, Montenegro
GLIMMER MARITIME S.A.
Panama city, Panama
c/o Beogradska Plovidba
Lenjinov Bulevar 165A, Novi Beograd, 11070 Belgrade, Serbia
JUGOSLAVENSKA OCEANSKA PLOVIDBA
(a.k.a. JOP)
(a.k.a. JUGOOCEANIJA)
(a.k.a. YUGOSLAV OCEAN LINES)
BB, Njegoseva, P.O. Box 18, 85330 Kotor, Montenegro
KOMUNALNO PODUZECE
5, Hercegovacke Brigada, 81340 Herceg-Novi, Montenegro
KOTOR OVERSEAS SHIPPING LTD.
Valletta, Malta
c/o Jugoslavenska Oceanska Plovidba
BB, Njegoseva, P.O. Box 18, 85330 Kotor, Montenegro
LITALIA SHIPPING S.A.
Panama City, Panama
c/o Beogradska Plovidba
Lenjinov Bulevar 165A, Novi Beograd, 11070 Belgrade, Serbia
LOVCEN OVERSEAS SHIPPING LTD.
Valletta, Malta
c/o Rigel Shipmanagement Ltd.
Second Floor, Regency House, Republic Street, Valletta, Malta
LUKA BAR-PREDUZECE
81350 Bar, Montenegro

MILENA SHIP MANAGEMENT CO. LTD.
(a.k.a. MILENA LINES)
Masons Building, 86, The Strand, Sliema, Malta
MONTENEGRO OVERSEAS NAVIGATION LTD.
Panama City, Panama
c/o Prekookeanska Plovidba
P.O. Box 87, Marsala Tita 46, 85000 Bar, Montenegro
MOSTOGRADNJA-GRADJEVNO PREDUZECE
Vlajkoviceva 19A, 11000 Belgrade, Serbia
NOVI SHIPPING COMPANY S.A.
Panama City, Panama
c/o Beogradska Plovidba
Lenjinov Bulevar 165A, Novi Beograd, 11070 Belgrade, Serbia
OCEANIC BULK SHIPPING S.A.
Panama City, Panama
c/o Jugoslavenska Oceanska Plovidba
BB, Njegoseva, P.O. Box 18, 85330 Kotor, Montenegro
OKTOIH OVERSEAS SHIPPING LTD.
Valletta, Malta
c/o Rigel Shipmanagement Ltd.
Second Floor, Regency House, Republic Street, Valletta, Malta
PREKOOKEANSKA PLOVIDBA
P.O. Box 87, Marsala Tita 46, 85000 Bar, Montenegro
RIGEL SHIPMANAGEMENT LTD.
Second Floor, Regency House, Republic Street, Valletta, Malta
ROAD TOWN SHIPPING S.A.
Panama City, Panama
c/o Beogradska Plovidba
Lenjinov Bulevar 165A, Novi Beograd, 11070 Belgrade, Serbia
SOUTH ADRIATIC BULK SHIPPING LTD.
Valletta, Malta
c/o Jugoslavenska Oceanska Plovidba
BB, Njegoseva, P.O. Box 18, 85330 Kotor, Montenegro
SOUTH CROSS SHIPPING LTD.
(f.k.a. MONTENEGRO OCEAN SHIPPING)
Valletta, Malta
c/o Milena Ship Management Co. Ltd.
Masons Building, 86, The Strand, Sliema, Malta
SUNBOW MARITIME S.A.
Panama City, Panama
c/o Beogradska Plovidba
Lenjinov Bulevar 165A, Novi Beograd, 11070 Belgrade, Serbia
ZETA OCEAN SHIPPING LTD.
Valletta, Malta
c/o Jugoslavenska Oceanska Plovidba
BB, Njegoseva, P.O. Box 18, 85330 Kotor, Montenegro
4

VESSELS XN WHXCH THB GOVERNMENT OF THE PEDERAL REPUBLIC OP YUGOSLAVIA
(SERBIA AND MONTENEGRO) HAS AN INTEREST

\1essel Name

Callsign

Ship Type

Flag

Registered Owner

ADJHRAL ZMAJEVIC

9HTX3

General
Dry Cargo

8,569

Malta

South Adriatic Bulk
Shipping Ltd.

AIRE F
(f.k.a. OBOD)

9HTG3

General
Dry Cargo

13,651

Malta

Oktoih Overseas
Shipping Ltd.

ALBA

J8FM9

RO/RO
Cargo

BAR

9HSU3

Bulk
Carrier

17,460

Malta

Bar Overseas
Shipping Ltd.

BAYAMO
(f.k.a. NIKSIC)

9HTF3

Bulk
Carrier

9,916

Malta

Lovcen Overseas
Shipping Ltd.

BLUE STAR
(f.k.a. JUGOVO)

J8FN4

Ore/Oil
Carrier

53,029

BOR

9HSX3

Bulk
Carrier

6,951

Malta

Lovcen Overseas
Shipping Ltd.

BRISA
(f.k.a. IVANGRAD)

9HTB3

General
Dry Cargo

13,651

Malta

Oktoih Overseas
Shipping Ltd.

BUOVA

9HUH 3

Bulk
Carrier

17,397

Malta

South Adriatic Bulk
Shipping Ltd.

BULK STAR
(f.k.a. JUGOMETAL)

J8FN8

ore/Bulk/ 79,279
Oil carrier

C. BLANCO
9HSW3
(f.k.a. BIJELO POLJE)
CESTAR

Unknown

915

17,460

Bulk
Carrier
RO/RO
Cargo/Ferry

121

Saint
Montenegro Overseas
Vincent
Navigation Ltd.

Saint
Road Town Shipping
Vincent
S.A.

Saint
Litalia Shipping
Vincent
S.A.
Malta

Bar Overseas
Shipping Ltd.

Yugoslavia

Mostogradnja-Gradjevno Preduzece
Zeta Ocean Shipping
Ltd.

CRNA GORA

9HUL3

Bulk
Carrier

36,223

Malta

DAN
(f.k.a. GOLD STAR)
(f.k.a. AVALA)

J8FN7

Bulk
Carrier

27,069

Denmark Leonela Shipping
{Saint (Sunbow Maritime
Vincent) S.A.)

DURMITOR

9HUR3

General
Dry Cargo
Bulk
Carrier

12,375

Malta

9,916

Malta

Ge:;-.~al

13 I 688

Malta

GUANA
(f.k.a. KOLASIN)
HANUMAN

(f.k.a. BOU)

Unknown
9HUQ3

Dry Cargo
5

South Cross Shipping
Ltd.
Lovcen Overseas
Shipping Ltd.
South Adriatic Bulk
Shipping Ltd.

Vessel Name

Callsign

Ship Type

HERCEG NOVI

9 HUN 3

General
Dry Cargo

IGALO

YUFC

Ferry
RO/RO
Cargo/Ferry

KAMENARI
KAPETAN MARTINOVIC
KOLUBARA 1

Unknown
9HTY3
Unknown

Flag

Registered Owner

Malta

South Cross Shipping
Ltd.

299

Yugoslavia

Komunalno Poduzece

161

Yugoslavia

Komunalno Poduzece

Malta

South Adriatic Bulk
Shipping Ltd.

Yugoslavia

Bagersko Brodarsko
Preduzece

9,698

8,569

General
Dry Cargo

958

Dredger

KORDUN

9HSQ3

General
Dry Cargo

38,551

Malta

Kotor Overseas
Shipping Ltd.

KOSMAJ

9HSP3

Bulk
Carrier

38,550

Malta

Kotor Overseas
Shipping Ltd.

Yugoslavia

Komunalno Poduzece

LEPETANE

Unknown

RO/RO
Cargo/Ferry

132

LOVCEN

9HTU3

General
Dry Cargo

12,375

Malta

South Cross Shipping
Ltd.

MARIEL
(f.k.a. BEOGRAD)

9HSV3

Bulk
Carrier

15,396

Malta

Lovcen Overseas
Shipping Ltd.

MOA
(f.k.a. VIRPAZAR)

9HTM3

General
Dry Cargo

9,201

Malta

Bar Overseas
Shipping Ltd.

MONTE
(f.k.a. KOMOVI)

9HTD3

General
Dry Cargo

9,183

Malta

Bar Overseas
Shipping Ltd.

MORACA

9HTE3

General
Dry Cargo

13,651

Malta

Oktoih Overseas
Shipping Ltd.

MOSLAVINA

9HTW3

General
Dry Cargo

11,771

Malta

South Adriatic Bulk
Shipping Ltd.

NIPE
(f.k.a. ULCINJ)

9HTL3

Bulk
Carrier

9,028

Malta

Lovcen Overseas
Shipping Ltd.

ORE STAR
(f.k.a. SMEDEREVO)

J8FN9

Ore/Oil
Carrier

86,401

Saint
Glimmer Maritime
Vincent
S.A.

ORJEN

9HS03

Bulk
Carrier

38,551

Malta

Kotor Overseas
Shipping Ltd.

PERAST

Unknown

Yugoslavia

Komunalno Poduzece

RO/RO
Cargo/Ferry

131

Vessel Name

Callsign

Ship Tvpe

Flag

Registered Owner

PLAYA
(f.k.a. CETINJE)

9HSY3

Bulk
Carrier

9,028

Malta

Lovcen Overseas
Shipping Ltd.

POMORAC

3EIE4

Bulk
Carrier

20,904

Panama

Oceanic Bulk
Shipping S.A.

PRVI FEBRUAR

9HTZ3

Bulk
Carrier

17,233

Malta

South Adriatic Bulk
Shipping Ltd.

RADNIK

3ELK3

Bulk
Carrier

17,882

Panama

Oceanic Bulk
Shipping S.A.

9HUP3
(f.k.a. KUPRES)
(a.k.a. IRENE OLDENDORFF)

General
Dry Cargo

13,688

Cyprus New Owner Unknown
(Malta) (South Adriatic Bulk
Shipping Ltd.)

RIO B
(f.k.a. PIVA)

9HTH3

General
Dry Cargo

9,324

Malta

Bar Overseas
Shipping Ltd.

RIO G
(f.k.a. TARA)

9HTK3

General
Dry Cargo

9,201

Malta

Bar Overseas
Shipping Ltd.

RISAN

9HUD3

General
Dry Cargo

9,698

Malta

Zeta Ocean Shipping
Ltd.

RUMIJA

9HTI3

General
Dry Cargo

8,954

Malta

Lovcen Overseas
Shipping Ltd.

SERIFOS
(f.k.a. LAKE STAR)
(f.k.a. SKADARLIJA)

JIFN3

Bulk
Carrier

SLAVEN

YTMP

Tanker

126

Yugoslavia

Komunalno Poduzece

SOZINA

YTCS

Tug

169

Yugoslavia

Luka Bar-Preduzece

SUMADIJA

9HUI3

Bulk
Carrier

17,939

Malta

South Adriatic Bulk
Shipping Ltd.

SUTJESKA

9HSN3

Bulk
Carrier

38,551

Malta

Kotor Oversea ,,'
Shipping Ltd.

SVETI STEFAN

9HTJ3

pax/RO/RO
1,637
Cargo/Ferry

Malta

Lovcen Overseas
Shipping Ltd.

TIVAT

9HUM3

General
Dry Cargo

Malta

Zeta Ocean Shipping
Ltd.

yugoslavia

Luka

RAMA

TOPOLICA

Unknown

15,847

9,698

Tug

169

Panama

Brilliant Night
Shipping S.A.
(Saint (Novi Shipping
Vincent) Company S. A. )

Bar-Pred~zece

Vessel Name

Callsign

Ship Type

Flag

Registered Owner

9HTQ3

Bulk
Carrier

17,233

Malta

zeta Oeean Shippinq
Ltd.

VEDADO
9HSZ3
(f.k.a. DANILOVGRAD)

Ore
Carrier

15,396

Malta

Loveen Overseas
Shipping Ltd.

ZETA

General
Dry Cargo

9,862

Malta

South Cross Shipping
Ltd.

TRINAESTI JULI
(a.k.a. 13th JULY)

9HTV3

March 15, 1993
Contact: Michelle smith
(202) 622-2960
Bentsen Accepts Casey's Resignation;
Announces Interim CEO of the Resolution Trust Corporation
Treasury Secretary Lloyd Bentsen, on behalf of the
President, today accepted the resignation of Al Casey as chief
executive officer of the Resolution Trust Corporation (RTC)
effective today.
The Administration is currently searching for a permanent
replacement for Mr. Casey. President Clinton has named Deputy
Secretary of the Treasury Roger Altman interim chief executive
officer of the RTC until a new chief executive officer of the RTC
can be put in place. Mr. Altman's responsibilities at RTC
will be in addition to his Treasury duties.
"We appreciate AI's efforts as CEO of the RTC over the past
year and a half and the progress made there on a number of
challenging fronts," Secretary Bentsen said. Mr. Casey has
expressed his desire to return to Texas as soon as possible and
to resume teaching at Southern Methodist University.

LB-67

UBLIC DEBT NEWS
;....1'!~. •:-'\;""

I ' · ' ....

1="1'

Department of the Treasury • Bureau of the Public Oebt".e'JWashington, DC 20239

FOR IMMEDIATE RELEASE
March 15, 1993

j.,,,i

i ;,; "J ~:

$9Nt~T: Office of Financing
202-219-3350

RESULTS OF TREASURY'S'AUCTION QF 13-WEEK BILLS
Tenders for $11,713 million of 13-week bills to be issued
March 18, 1993 and to mature June 17, 1993 were
accepted today (CUSIP: 912794D50).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

. Discount
Rate
2.99%
3.00%
3.00%

Investment
Rate
3.06%
3.06%
3.06%

Price
99.244
99.242
99.242

$2,380,000 was accepted at lower yields.
Tenders at the high discount rate were allotted 58%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
21,050
40,580,010
4,705
30,980
131,495
14,280
1,492,725
10,200
11,590
20,090
16,190
620,850
667.105
$43,621,270

Accegted
21,050
10,660,180
4,705
30,970
89,495
13,860
106,405
10,200
10,135
20,090
16,190
62,450
667.105
$11,712,835

Type
Competitive
Noncompetitive
Subtotal, Public

$38,612,095
1.144.495
$39,756,590

$6,703,660
1.144.495
$7,848,155

2,622,380

1.242.300
$43,621,270

1.242.300
$11,712,835

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-68

PUBLIC DEBT NEWS
f ,

r'" ~

•

Department of the Treasury • Bureau of the Public Debt • 'Washi-ngtoii( I)(}ZD239
I ,).) .'. I)

CON'l:lM=r b ,Off ice, of Financing
~J C),j {. Ua.f>~-219-3 3 50

FOR IMMEDIATE RELEASE
March 15, 1993

RESULTS OF TREASURY'S AUCTION OF, 26-WEEK BILLS
Tenders for $11,648 million of 26-week bills to be issued
March 18, 1993 and to mature September 16, 1993 were
accepted today (CUSIP: 912794F74).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.11%
3.12%
3.12%

Investment
Rate
3.20%
3.21%
3.21%

Price
98.428
98.423
98.423

Tenders at the high discount rate were allotted 97%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
15,760
37,039,285
3,465
25,735
22,580
14,475
1,512,380
9,740
3,570
26,185
5J'930
584,785
422 1 930
$39,686,820

Acce 12ted
15,760
10,881,020
3,465
25,735
22,580
13,475
61,150
9,740
3,570
26,185
5,930
156,035
422 1 930
$11,647,575

Type
Competitive
Noncompetitive
Subtotal, Public

$35,877,440
766 1 280
$36,643,720

$7,838,195
766 1 280
$8,604,475

2,600,000

443 1 100
$39,686,820

443 1 100
$11,647,575

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-69

Embargoed until delivered
Expected about 10:00 a.m.
March 16, 1993

STATEMENT OF THE HONORABLE LLOYD BENTSEN
CHAIRMAN, THRIFT DEPOSITOR PROTECTION OVERSIGHT BOARD
BEFORE THE HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS
TUESDAY, MARCH 16, 1993
2129 RAYBURN HOUSE OFFICE BUILDING

Mr. Chairman, members of the Committee:
I am pleased ,to testify today on the Administration's
objectives for the savings and loan cleanup and the funds that will
be necessary to fulfill the government's deposit insurance
commitment.
This is my first appearance before this Committee as Secr~tary
of the Treasury. Mr. Chairman, you and I have worked together for
many years as colleagues and fellow Texans.
I look forward to
continuing our productive relationship. And Congressman Leach, I
congratulate you on becoming ranking member of the Committee. This
Committee has many new members, and I look forward to working with
all of you in a truly bipartisan spirit.
with me today are oversight Board members Alan Greenspan,
Chairman of the Federal Reserve Board; Philip Jackson, Adj unct
Professor at Birmingham Southern College and former Governor of the
Federal Reserve Board: Robert Larson, Chairman of Taubman Realty
Group; Roger Altman, Deputy Secretary of the Treasury and interim
CEO of the RTC; Jonathan Fiechter, Acting Director of the Office
of Thrift Supervision; and Andrew Hove, Acting Chairman of the
Federal Deposit Insurance Corporation.
Also accompanying us is
Peter Monroe, President of the oversight Board. William Roelle,
RTC Senior Vice President and Chairman of the RTC' s Executive
Committee, and Lamar Kelly, RTC Senior Vice President for Asset
Management and Sales, are present to help respond to your
questions.
We are here to begin the process of crafting legislation to
fund the Resolution Trust Corporation and permit it to complete its
portion of the savings and loan cleanup.
This has been a
bipartisan issue from the start. Just as one of President Bush's
first p~oposals to Congress was a plan to deal with the savings and
loan crisis, my first appearance before this Committee demonstrates
this Administration's commitment to funding the RTC and to closing
this chanter .0£ nu,. country's financial history.
LB-70

2 -

Mr. Chairman, let me state right at the start, that this
Administration is committed to fulfilling our government's
commitment to savings and loan depositors under the Federal deposit
insurance program. There has been a lot of confusion about this
program. It has been labelled a "bailout." That is dead wrong.
This is a program for people -- millions of Americans who, over
the years, have placed their savings in insured institutions in
confidence that the Government would honor its insurance pledge.
Not a dollar has gone to "bailout" bankrupt S&Ls or to payoff
their shareholders.
The funds are to be used solely to protect
depositors.
Let me also tell you that I know, from personal experience,
that a vote to fund the RTC is a tough vote. It is a tough vote
for you just as it was for me as a Senator. But I also know that
this is a vote for depositors, for the safety of our financial
institutions, and that if we fail to meet this obligation, we will
pay a far greater price, and deservedly so.
I also know that many of you cannot vote to fund the RTC
unless dramatic improvements are made in its operations. I will
tell you plainly, on the record, that we intend to make such
improvements.
In August, 1989, this committee and the Congress responded to
the need to defend our financial system by passing the Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA). That
was a bipartisan effort, and, for all its troubles, it has worked.
On the day FIRREA passed, the thrift industry consisted of
over 3,000 institutions, more than 260 of which were in
conservatorship. It was losing more than $1 billion a year. Its
return on assets was negative.
Its deposit insurance fund was
bankrupt.
Let me show you a few charts.
Pursuant to FIRREA, 21.8 million depositor accounts have been
made whole by the Resolution Trust Corporation [See Chart I]. The
size of the average account protected was $9,000. RTC has closed
654 insolvent savings and loan institutions, which is equal to 89
percent of the total of 737 institutions that have been seized [See
Chart II]. The RTC has taken possession of about $438 billion of
assets, and has sold or collected about $337 billion of that
amount, at an average return of 92% of book value [See Chart III].
Under its affordable housing program RTC has closed sales of
almost 14,000 homes to low and moderate income homeowners -- enough
to create a small city [See Chart IV]. In addition, the RTC has
closed sales of 350 multifamily properties with 30,000 units, of
which over 11,500 have been dedicated for occupancy by lower
income, and very low income, families.

3 -

The Department of Justice has sent 685 individuals, including
many thrift executives, directors and officers, to jail for crimes
against the country and the taxpayer. While the record on courtordered restitutions from criminals is not good, civil recoveries
obtained by the RTC, FDIC and OTS now total more than $1 billion
[See Chart V].
The Task Ahead
The
(2)
RTC
and

While much has been accomplished, much remains to be done.
task ahead consists of four parts: (1) protecting depositors,
selling assets at best possible prices, (3) ensuring that the
is run efficiently, and (4) closing down the RTC in a planned
orderly way, as soon as feasible.

Eighty-three insolvent institutions, with about 4.3 million
depositor accounts, are now operating under the conservatorship of
the RTC. RTC is obligated to operate them, at a daily loss to the
taxpayer and in competition with the healthy thrifts and banks in
their communities, until Congress votes funds to pay their
depositors and close them.
And, as the Acting Director of the
Office of Thrift Supervision can tell you, OTS will continue to
transfer additional thrifts to the RTC for closure.
The existence of current and additional conservatorships means
unnecessary extra costs to the taxpayer that must be stopped as
quickly as possible by funding the RTC. The history of the savings
and loan debacle shows us that refusing to provide funds to close
insolvent thrifts simply means greater losses for the taxpayers.
Protecting the depositors in existing and new conservatorships
is only one part of the job remaining to be done.
The second task, managing the sale of the remaining assets,
is just as important. I said earlier that the RTC has achieved an
impressive record in its asset sales to date. But the remaining
assets of more than $100 billion, together with assets to be
received from institutions placed in conservatorship before
September 30, this year, consist substantially of the hardest-tosell land and real property, and non-performing mortgages. We can
limit the potential loss to the taxpayer if these assets are
managed, marketed and sold carefully.
The third task relates to RTC management.
We have an
overriding responsibility to the taxpayers to change the way the
RTC does business. We must ensure that the RTC is managed in the
most efficient and responsible way according to the best management
practice, under a carefully considered business plan. We must now
take action to protect the public against needless expense in the
RTC's management of its contractors, to prevent fraud and waste,
and to correct deficiencies found by the RTC's auditors. And we

4 -

must use the best available information systems to identify and
track assets and provide RTC management with accurate, timely
information.
And finally, we must plan for closing the RTC as soon as
possible without impairing RTC operations, ensuring an orderly
transition of RTC personnel and systems to the FDIC. I have asked
Mr. Hove and RTC's new leadership to establish a joint FDIC/RTC
task force both to be sure FDIC has sufficient resources to manage
the Savings Association Insurance Fund, and to plan for the return
of RTC personnel, and the transfer of its systems, to the FDIC.
Improving RTC Management
Let me turn to the matter of RTC's efficiency.
As Chairman of the oversight Board I pledge to use the Board
and its staff to improve RTC management practices in order to earn
taxpayer trust in the RTC and to effect savings to reduce the
deficit.
Mr. Casey has resigned as the CEO of the RTC, and we are very
grateful to him for his leadership and for his service to the
country in this difficult and complex job.
The President has
replaced him, on an interim basis, with Mr. Roger Altman, Deputy
Secretary of the Treasury, under the Vacancies Act.
Under the
terms of that Act Mr. Altman will serve as long as necessary within
the constraints of the Vacancies Act, or until the President can
appoint a permanent RTC CEO.
Mr. Altman has a number of other
responsibilities but will provide leadership for the RTC during
this transition period, and will begin to put in place as soon as
possible the programs I will describe for you today.
To put these programs in the proper context, it is important
to keep in mind that the RTC has been in existence for less than
four years, has seized over 730 institutions, and taken possession
of over $400 billion in assets.
Any organization, public or
private, that reaches this size so quickly is bound to have
operations that need to be improved.
To demonstrate this Administration's dedication to improving
RTC efficiency, I have asked the interim CEO to begin to implement
the following administrative actions. These initiatives are
intended to strengthen the RTC's management in a number of critical
areas. They will take time to put in place, but we will begin them
now [See Chart VI].
First, strengthen internal controls against waste, fraud, and
abuse:
RTC will conduct a thorough evaluation of all of its
internal accounting and administrative control systems, identify
the weaknesses, and develop ways to fix them.
Let me explain.

- 5 -

Internal controls are the systems that an organization relies on
for (1) reliable financial recording and reporting and (2) ensuring
efficiency and preventing fraud, waste, and abuse in operations.
Reports on the results of the evaluation, with a plan for
correcting weaknesses, will be made to Congress, the President,
the Oversight Board, OMB, and GAO as required by law. This action,
perhaps more than any other, is the taxpayers' first line of
defense against waste, fraud and abuse in all RTC programs,
including affordable housing. Had these systems been sufficiently
strong, Western storm and the HomeFed incident would not likely
have occurred.
Second, respond to problems flagged by auditors:
RTC will
implement a system -- such as is required under OMB guidelines for
other government agencies -- to provide prompt, systematic, and
effective followup on the findings and recommendations contained
in the reports issued by the GAO and RTC's own Inspector General.
When audits uncover problems, this is the system relied upon to
correct them so that they do not recur.
RTC must not repeat its
mistakes after the audi tors have brought them to management • s
attention. A thorough audit followup system should assure that the
recommendations of auditors receive prompt attention.
Third, prepare a comprehensive business plan for the balance
of the cleanup:
I have directed that the RTC prepare a
comprehensive business plan for the balance of the cleanup.
The
plan will include RTC's strategy for the sale of its remaining
assets, many of which are hard-to-sell real estate and nonperforming loans.
The oversight Board will review the plan and
strategy in an effort to maximize the return to the taxpayer from
the sale of these assets.
Fourth, expand opportunities for minorities and women: I have
asked the interim CEO to have the RTC officer with responsibility
for minority and women's programs report directly to him, and I
have asked that he attempt to develop ways to provide more
opportunities for minority and women-owned businesses in the
management and disposition of RTC assets. I have also asked that
RTC make improved efforts to preserve contracting and asset
acquisition opportunities for minorities, women, small businesses
and small investors.
Fifth. improve RTC's Professional Liability section: I have
asked that the interim CEO review and recommend improvements in the
organization and staffing of the RTC I S Professional Liability
Section (PLS). These are the RTC lawyers who pursue claims, on the
taxpayers' behalf,
against thrift managers and others who
contributed to the losses through negligence or misconduct. We are
committed to building a PLS that operates in a professional and
competent manner subject to appropriate management review.

6 -

sixth. improve management information systems: I have asked
the interim CEO to take action to improve RTC's management
information systems, so that RTC has complete information on its
assets and that its management information needs are met.
Seventh«
strengthen
contractor
systems
and
contractor
oversiaht:
I have asked that the RTC review and strengthen its
contracting systems, and improve oversight of its private sector
contractors. RTC has tens of thousands of contractors working on
many types of assets. It must make every effort to ensure that the
taxpayers' money is being spent for appropriate and timely
services, and that the RTC is getting what it's paying for.
Eighth. appoint a Chief Financial Officer:
Consistent with
strong Congressional interest in establishing independent chief
financial officers for all the agencies, I have asked that RTC
appoint a Chief Financial Officer who does not have other operating
responsibilities.
Finally. appoint an audit committee: I intend to appoint an
audit committee of the oversight Board to monitor and advise on
RTC t s improvement of its internal controls, to monitor its followup
on the recommendations of its auditors, and to consider special
audit and accounting issues as they arise.
In summary, the program I have outlined is very ambitious.
Achieving results will take time and hard work. But we intend to
place the RTC on a sound management footing and give renewed
emphasis to one of its central objectives: maximizing savings to
the taxpayer.
The final important task ahead is to put the RTC out of
business as quickly as we can -- perhaps well before December,
1996, the date contained in FIRREA.
Funds Needed
I have told you how this Administration plans to improve RTC
operations to win taxpayer trust, and to win your trust.
I now
must ask you for prompt passage of the Thrift Depositor Protection
Act of 1993, which I am sending to the Speaker of the House and the
President of the Senate.
This - bill provides an additional $45
billion to permit the RTC to resume its work of closing insolvent
savings and loans and protecting their depositors, and to fund the
Savings Association Insurance Fund (SAIF).
Let me review briefly the history of RTC funding [See Chart
VII].
FIRREA, which was enacted on August 9, 1989, provided $50
billion for the RTC. In March, 1991, the RTC Funding Act provided
another $30 billion.
In December, 1991, the RTC Refinancing,
Restructuring and Improvement Act provided another $25 billion, but

- 7 -

this act prevented any use of these funds after April 1, 1992.
Because of this restriction the RTC was able to use only $6.7
billion, bringing the total of RTC loss funding to $86.7 billion.
Of this amount the RTC has retained a reserve of $2.3
billion, for emergency uses, from funds provided by FIRREA and the
March Refunding Act.
Last year the Senate passed a bill providing $43 billion for
RTC.
The House, however, defeated a measure that would have
provided $18 billion.
Thus the RTC has been without sufficient
funds to resolve institutions for almost a year.
Our request for funds consists of two parts, $28 billion to
fund the RTC and $17 billion to fund the SAIF.
Passage of our
combined request, when added to the $87 billion already provided,
would bring the total of all RTC/SAIF funding up to $132 billion
for the 1989-1998 period. The table in Attachment I gives a more
detailed picture of these estimates.
I should note that if RTC does not use all the funds provided
to it, the unused portion can be transferred to SAIF.
And of
course, if the full amount provided is not needed, it will not be
drawn from the Treasury.
How does this compare with previous projections?
The last
Administration estimated that the cost of the cleanup would fall
in a range of $100 billion to $160 billion.
At its appearance
before this Committee in July last year, the Oversight Board
estimated that the cost could fall close to the middle of the
range, or about $130 billion.
Our request today for $45 billion
would bring total RTC/SAIF funding to an amount close to that
estimated by the Board last year.
Funding the SAIF
Our request goes beyond the Board's request last year because
it includes an amount to cover losses of SAIF. Let me explain why
this is necessary. until this year the savings and loan industry's
premium assessments have been used to help defray the cost of the
1988 Deals. In January, this year, the industry's net assessments
began to flow to the SAIF. Thus, by October 1, this year, the SAIF
will have about $1.1 billion in reserves.
Foreseeing that industry contributions would be insufficient
to permit SAIF to take over after the RTC completed its work,
FIRREA authorized further provision of funds by Congress to
properly capitalize SAIF.
Consistent with the concept in FIRREA
that SAIF will need public funding, we are recommending that SAIF
be provided. up to $17 billion to be used to cover future industry
losses.
This should allow SAIF to accumulate an expected $1.2

8 -

billion to $1.4 billion of annual net assessment income so as to
reach over $7 billion in 1998 as required by FIRREA.
Mr. Chairman, one of the questions I have most frequently been
asked is, will $45 billion be enough to complete the cleanup? In
candor, I must say that no one can know for certain because no one
can foresee with certainty trends in the economy, in interest
rates, and in regional real estate markets out until 1998. But we
have made a very earnest attempt to estimate the costs.
We hope
that we will use less than $45 billion, but we believe our request
is SUfficient to complete the job, once and for all, so that we
will not come back to you to ask again for funds.
Why Funds Are Needed
It has been suggested that if the RTC has been able to operate
since April last year without funding, there is no need to vote
such funds now.
This may be an appealing idea, but it is at best misleading.
RTC needs funds to close the existing 83 conservatorships and
to protect the depositors in those institutions. Failure to close
the conservatorships means that these insolvent institutions will
continue to operate in the private sector at a
further,
unnecessary, loss to the taxpayer.
This is because, for practical purposes, insured deposits at
conservatorships are federal government borrowings. When compared
with the cost of direct Treasury borrowings, insured deposits are
an expensive way for the government to borrow money. If there were
to be another delay in funding of one year, the additional cost to
the taxpayer,
just for existing conservatorships, would be
approximately $1 billion.
This estimate does not take into account additional
conservatorships to be transferred to RTC, nor the adverse effects
on other thrifts of competing with conservatorships, nor the cost
of keeping RTC's conservatorship and resolution programs in place
longer than otherwise necessary.
Losses due to delays in funding until this time are estimated
at about $1.1 billion.
This financial hemorrhage must not be allowed to continue.
Enough has been lost already.
It is unfair to the taxpayers, it
places an unnecessary drain on our financial system, and it
prevents the RTC from completing its work and closing up shop.
Funding must be provided: inevitably, the depositors must be paid.

9 -

Conclusion
Mr. Chairman, I said that there are four major remaining tasks
to accomplish before the savings and loan cleanup can be completed:
protect depositors in existing and additional conservatorships,
sell remaining assets, improve RTC management efficiency, and close
the"RTC quickly, in an orderly way.
I have also indicated that this Administration is determined
that improving RTC management efficiency will be a top priority
and a continuing objective.
I have spelled out a number of ways
in which we will accomplish this objective through administrative
actions and Oversight Board review.
These will take time to
implement fully, but we are committed to the effort. Our purpose
is to complete the cleanup quickly, at least cost, with maximum
returns to the taxpayers on assets sales. We intend to nominate
a new CEO who shares our determination and is committed to achieve
each of these objectives and who will effect an orderly termination
of the RTC.
We ask-that this Committee and the Congress respond with swift
approval of the funding request contained in the Thrift Depositor
Protection Act.
With the provision of these funds the remaining
insolvent thrifts can be resolved, their depositors protected, and,
finally, the Resolution Trust corporation can be closed.
I do not want to conclude without thanking you, Chairman
Gonzalez, for your willingness to hold these hearings and to move
legislation.
You have made it clear from the beginning of the
session that you and your Committee were ready to go to work on
this issue, and we appreciate that.
As I said at the outset we
are ready to work with you, Congressman Leach, and all the members
of this Committee to write responsible legislation that will let
us bring an end to the savings and loan cleanup in the same
bipartisan spirit with which we began it in FIRREA.
This concludes my prepared statement.
Responses to the
questions required by FIRREA to be addressed at these appearances
are contained in Attachment II to the statement.

CHART

•

21.8 Million Depositors Protected
(# Millions)
Inception through March 8, 1993
26.1

4.3

__ # of Accounts

Depositors'Accounts in
Conservatorships

II]

Total Depositors' Accounts
Protected

....
15

10
Average Account Protected

$9,000

o ......-

,.....,

03 '89 04 '89 01 '90 02 '90 03 '90 04 '90 01 '91 02 '91 03 '91 04 '91 01 '92 02 '92 03 '92 04 '92 01 '93'
• Quarter to date.
Note: Figures represent cumulative depositors' accounts protected
Source: RTC Office of Corporate Communications; TFR

CHART

•

654 S&Ls Resolved
Inception through March 8, 1993
737

700
600-:1

-a- # of Institutions
0

Institutions Awaiting Sale or Closure

Insolvent S&Ls Sold or Closed

500
400

300
200
100

03 '89 04 '89 01 '90 02 '90 03 '90 04 '90 01 '91 02 '91 03 '91 04 '91 01 '92 02 '92 03 '92 04 '92 01 '93·
* Quarter to date.
Note: Figures represent cumulative ATC resolutions
Source: ATC Review; OB Analysis

CHART

~ Three-Fourths of RTe Assets Are Already Sold

•

(Book Value - $ Billions)
Inception through January 31, 1993
$438.0

- --

$337.4

Proceeds to Date:

$31 0.8
77%

- --

$100.6

23%
Total Assets
Source: RTC Review

Assets Sold
or Collected

Inventory
1/31/93

III

CHART

II
•

Affordable Housing Has Created Almost 14,000
Homeowners·
Single Family Closed Sales··
June 30, 1991 through January 31, 1993
13,999
14,000
12,000
10,000
8,000
6,000
4,000
2,000

o~----------~--------------------------------~--------~--June
1991

September December

• Data revised to include Closed Sales only.
*- Sales of both receivership and conservatorship properties.
Source: ATC - AHD Program

March
1992

September December

January
1993

CHART V

•

Prosecutions, Fines and Recoveries
($ Millions)

"Major" S&L prosecutions (Department of Justice)":
1,358
1,062
184
209
685

Defendants Charged
Convicted
Awaiting Sentence
Suspended Sentence
Sentenced to Prison

CEO's, Board Chairmen, Presidents, Directors, and other officers
Cha~ed
390
Convicted
324
Acquitted
18

Criminal Restitutions··:
Total t

Ordered
$490

Collected
$34

Civil Recoveries··:
Includes professional liability recoveries, civil money penalties, and administrative adjudications

Totaltt
•

$1,017

October 1, 1988-November 30,1992. "Major" defined as (a) fraud or loss of $100,000 or more, or (b) defendant was
officer, director, or shareholder/owner, or (c) schemes involved multiple borrowers in same institution.
•• September 30,1992.
t Includes criminal restitutions ordered and collected by the FSLlC Resolution Fund, BIF, and RTC.
tt Includes civil recoveries collected by RTC, FSLlC Resolution Fund, and OTS.

CHART VI

,~ ~

__ ) Administrative Reforms
~9IJ,~

• Strengthen internal controls against waste, fraud, and abuse.
• Respond to problems flagged by auditors.
• Prepare Business Plan/Asset Sales Strategy.
• Expand opportunities for minorities and women.
• Improve RTC's Professional Liability Section.
• Improve management information systems.
• Strengthen contracting systems and contractor oversight.
• Appoint a Chief Financial Officer.
• Appoint Oversight Board Audit Committee.

'-'HART V ..

•

~M~

RTe Funding History

August 9. 1989 (FIRREA. PL 101-73)

$50 billion

March 23.1991 (RTC Funding Act. PL 102-18)

$30 billion

December 12. 1991 (RTC Refinancing. Restructuring ... Act, PL 102-233)

$25 billion'

March 26,1992 (R.TC Funding Act of 1992. S2482)

Passed (52-42)

$43 billion
(lift 4/1/92 limit; added $25 billion)

~priI1. 19,~2 (~TC funding Limitation.

HA 4704)

Total Loss Funds Enacted
Loss Funds Expired
Loss Funds (total) Available for RTC Use
Loss Funds Used to Date
Loss Funds Reserve Remaining

DE!feated (125-298)

$18 billion
(lift 4/1/92 limitation)

$105.0 billion
(18.3 billion)
$86.7 billion
84.4 billion
2.3 billion

• up to $25 billion until 4/1/92; by 4/1/92 RTe expended only about $6.7 billion and authority to spend $18.3 billion expired

Attachment I

RTC/SAIF Estimated Loss Fund Usage

•

As of March 10, 1993

#of
Cases

Gross
Assets·

Point
Estimate
of loss

Likely High
Estimated
loss

Add. Funds
Needed for High
estimated loss

RTC Resolutions
(As of March 5, 1993)

654

$337

$85

$91

ATC Conservatorships and
Probable Cas est

118

$105

$19

$21

Total RTC Probable Cases

$442

$104

$112

$25

ATC or SAIF - Ukely to Fail
within the next ~12 months

SAIF - Possible SAIF Cases
after September 30, 1993··

105

$93

$13

$17

929

$554

$119

$132

$45

--------------------------------------52
$19
$2
$3
$3

I Total Cases -1989-1998
($ Billions)

Note:

••

The "additional funds needed" numbers take into account the $87 billion already provided to the RTC to date. The poinl estimate assumes a
midrange loss rale averaging 24% of assets. The likely high estimated loss is derived using higher loss rates averaging 28%.
Asset data for resolved and conservatorships are as of Ihe quarter prior to takeover. Data for remaining caseload are as of December 31, 1992.
The 105 institutions fisted here have $66 billion in assets and are possible cases through 1995. Since additionaf failures are possible in 1996-1998,
the gross assets were increased to $93 billion to include additional failures of 1% of the assets of the thrill industry for each year in 1996, 1997, and
1998.
As of March 5, 1993, there were 83lhrifls in RTC conservatorships with $74 billion in assets al takeover. There are 35 additional thrifts with $31
billion in assels fisted by OTS as probable RTC cases before October " 1993.

Attachment"
Requirements Established in FIRREA for
Comments

Semi-Annual Appearances
I.

Report on the progress made during the 6-month period

During the six month period, the RTC resolved 12 institutions with $15 billion

covered by the semi-annual report in resolving

of assets. On September 30, 1992 there were 69 conservators hips with $34

institutions insured by the FSLlC prior to FIRREA, and for which

billion of assets waiting for resolution. During the six month period,

a conservator or receiver has been appointed atter 12/31/88

conservatorship and receivership assets decreased $8.0 billion in book

and before 10/1193. These institutions are referenced below as

value.

those described in subsection (b)(3)(A).

II.

Provide an estimate of the short-term and long-term cost to the

We interpret this requirement to address ATC short-term borrowings from the

United States Government of obligations issued or incurred
during such period.

Federal Financing Bank ("FFB") and long-term borrowings from Resolution
Funding Corporation ("REFCORP").
During the reporting period, the ATC decreased issued and outstanding
obligations from $57 to $47 billion in the form of short-term working capital
borrowings from the FFB. Approximately $1.0 billion in interest expenses
were incurred in connection with the issuance of these obligations during
such period. Aepayment of these obligations will come from currently
appropriated loss funds and ATC recoveries from receiverships. We
expect that proceeds from the disposition of RTC assets will be sufficient
to repay these short-term obligations.
REFCORP issued its last obligation in January, 1991. The total amount
outstanding is the full $30 billion of obligations authorized by FIAREA, with
average maturities of 33 years and average yield of 8.76%. Total interest on
REFCOAP obligations is expected to be a nominal $87.9 billion. The
Treasury share of this interest is expected to be a nominal $78 billion.

III. Report on the progess made during such period in selling

As of September 30, 1992, the RTC had sold and collected approximately

assets of institutions described in subsection (b )(3)(A) and the

$309 billion (book value) of assets which was 74% of assets seized by that

impact such sales are having on the local markets in which such
assets are located.

date, there is no evidence that RTC sales have had an adverse

date. The proceeds from these asset reductions totaled $287 billion. To
impact on local real estate markets. A survey conducted by RTC's National
Advisory Board concluded that the RTC does not appear to affect real
estate prices, but that ATC activities may create a "psychological
overhang" in the markets. causing local buyers to delay decisions. This
observation is consistent with independent reports. The ATe will continue
however, to monitor the impact of its sales activity in local markets through
'h~ in"", nf ;tc: R~,,;,," __ , A,.,.,f-e,.",v R"'."rrl~

Requirements Established In FIRREA for
Semi-Annual Appearances

IV. Describe the costs incurred by the Corporation in issuing
obligations, managing and selling assets acquired by the

Comments

We have interpreted this requirement to address the assets of receiverships
and conservatorships which are under the management of the RTC.

Corporation.
The total amount paid to private contractors during the April-September period
was $1,208 million, of which $764 million represents fees paid under
receivership management contracts and $125.2 million represents issuance
costs incurred in connection with the securitization program.
After the appointment of RTC as conservator, association employees continue
to perform asset management functions under the supervision of the RTC
Managing Agent. These staff are already supplemented by outside
contractors hired and paid for by the institution for services for which the
institution would typically contract in the normal course of business.
Accordingly, we have excluded such costs for the purposes of this calculation.

V. Provide and estimate of income of the Corporation from
assets acquired by the Corporation

In its corporation capacity, the ATC's only substantial source of "income"
is interest on advances made by the Corporation to conservatorships
and receiverships. The RTC accrued $292 million of Interest income
on advances and loans to conservators hips and receiverships In the
six months ended September 30, 1992. Dividends are not included in
income because they are a reduction In RTC's claims against the
assets of the receiverships, thus a return of capital, and not income.
However, dividends received by the RTC during the period totalled $14.6 billion.

VI. Provide an assessment of any potential source of additional
funds for the Corporation.

The only remaining sources of additional funds to the Corporation are the
secured borrowings for working capital from the FFB and the $5 billion line of
credit from the Treasury provided in FIRREA. Unused loss funds total $2.3
billion which are being held for both contingencies and emergencies. There are
no other funds currenUy available to the RTC.

VII. Provide an estimate the remaining exposure of the United
States Government in connection with institutions described
in subsection (b)(3)(A) which, in the Oversight Board'S estimation,
will require assistance or liquidation after the end of such period.

The estimate of the total resolution cost to be borne by the RTC in connection
with those Institutions described in subsecdon (b)(3)(A) Is projected to be up
to $115 billion. The RTC recognized approximately $84 billion for estimated
losses from inception through September 30, 1992.

FOR RELEASE AT 2:30 P.M.
.arch 16, 1993

CONTACT:

Office of Financing
202/219-3350

TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $22,400 million, to be issued
March 25, 1993. This offering will result in a paydown for the
Treasury of about $450 million, as the maturing weekly bills are
outstanding in the amount of $22,841 million.
Federal Reserve Banks hold $4,522 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $1,673 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of-maturing bills.
Tenders.for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth -in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000

Attachment

LB-71

HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS

March 16, 1993
Offering Amount .

Description of Offering:
Term and type of security
CUSIP number . . . .
Auction date
Issue date . . .
Maturity date . .
Original issue date .
Currently outstanding
Minimum bid amount . . •
Multiples . • . . . .

$11,200 million

91-day bill
912794 D6 8
March 22, 1993
March 25, 1993
June 24, 1993
December 24, 1992
$12,709 million
$10,000
$ 5,000

182-day bill
912794 E3 4
March 22, 1993
March 25, 1993
September 23, 1993
September 24, 1992
$14,889 million
$10,000
$ 5,000

The following rules apply to all securities mentioned above:

Submission of Bids:
Noncompetitive bids . . .
Competitive bids

Maximum Recognized Bid
at a Single Yield

35% of public offering

Maximum Award . . . . • • . .

35% of public offering

Receipt of Tenders:
Noncompetitive tenders
Competitive tenders .

Prior to 12:00 noon Eastern time on auction day
Prior to 1:00 p.m. Eastern time on auction day

Payment Terms . . . . . .

Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date

FOR RELEASE UPON DELIVERY
EXPECTED ABOUT 8 P.M. EST
March 16, 1993
REMARKS OF TREASURY SECRETARY BENTSEN
ELECTRONIC INDUSTRIES ASSOCIATION
WASHINGTON, D.C.
I'm delighted to be able to join you tonight.
The EIA, and
its members in every sector of the industry, have made an
important contribution to the technological advances we have seen
and enjoyed over the years.
Since the founding of the original
Radio Manufacturers Association nearly six decades ago, you have
touched the lives of every American, and made them better.
It's also a particular pleasure to be here to see my good
friend John Roach get the association's Medal Of Honor.
John has
done a lot for his industry, and for the economy of my state of
Texas. He truly deserves this award.
I was thinking about all the products the members of the
association make, and I got to thinking about when I was a B-24
pilot in World War II.
I marvel at how much technology has changed since I was
flying.
You know, back then we had these old scratchy radios
that you tuned by turning a dial.
Now we've got satellite
telephones on our commercial planes, and TV screens and computers
at our seats.
Back then, we were navigating with OF radios, shooting the
stars and using time and distance calculations to figure out
where we were. Today, Global Positioning systems will tell you
where you are -- within meters, and in three dimensions no less.
And now we've got auto-land systems and fly-by-wire jets,
like the F-16 that's built in a state I'm quite fond of. You
don't have to wrestle planes around anymore like we did.
Things have changed, for the better.
And that's what I want to talk to you about tonight.
a change in America, for the better.

Making

I think by now you're familiar with the highlights of
President Clinton's economic program, but there's some fine print
that bears discussing.
I.I-""~--

Obviously, there are three parts: the stimulus , the
investment package, and the deficit reduction program.
I'd like
to start with the deficit reduction package, because that's the
part that has had the most immediate impact on all of our lives.
It is a core element of our program to return the growth to
our economy that your j dustry needs and every American wants.
The polls tell us that there is very strong public support
for the president's plan. Congress is working on it rapidly.
The simple act of talking about getting our deficit under control
has brought long term interest rates down.
Now that our plan is
before Congress, those rates have fallen even more.
In fact,
they're down about a full percentage point since the election.
This is saving the government billions of dollars in
borrowing costs.
It's already saving Americans each time a new
home is sold or an existing mortgage is refinanced. And it's
saving your businesses. You can look forward to paying less for
the money you need to expand operations and modernize.
It has also brought us renewed respect, leadership and
leverage in the international economic arena, where our major
trading partners are delighted that we're putting our economic
house in order.
Our government borrows more each year than this association
has in total sales. We'd like to see that situation reversed.
President Clinton has proposed 150 very specific cuts in
federal spending, along with changes in the income taxes and an
energy tax to cut our deficit by at least $140 billion by 1997.
We made our cuts in a clear, out-in-the-open manner. We
named exactly what will be trimmed. Nothing was sacrosanct.
From the outset, our plan had an
spending cuts and increased revenue.
done, the package may end up having a
spending cuts.
It could have an even
upon our deficit.

equal balance between
By the time Congress is
greater percentage of
more significant affect

The increase we are seeking in corporate taxes is, frankly,
minimal -- two percent.
We have to keep these rates in perspective. Let me give you
a couple of examples: Our top federal corporate rate will be 36
percent.
In Germany, the rate is 50 percent.
In Japan, it's 40
percent.

3
When you take all taxes at all levels into consideration,
we're still at the low end of the scale: Tax collections as a
percentage of Gross Domestic Product are just under 33 percent in
this country.
In Germany, it's well over 43 percent.
It's the same thing when you look at energy taxes: After
our tax is phased in, a gallon of gasoline will cost about $1.20
in this country. Consumers in France and Germany today pay almost
$4 for a gallon of gasoline, and about 75 percent of that $4 per
gallon is tax.
We've had it easy for years, and the contribution we're
asking almost everyone to make in this area is a fair request,
particularly when you consider that this will help cut down on
pollution, reduce our dependence on imported energy supplies, and
contribute in a major way toward reducing our deficit.
Our plan to get the deficit down has won the confidence of
the markets recently, chiefly the bond market. They see what
hopefully others realize: this administration has a long range
strategy for investing in America to restore economic growth -growth in jobs, productivity, income and investment.
Our stimulus package is a precursor to our long range
investment program. We're in a recovery, but what bothers me
about the recovery is that far too few new jobs are being
created.
Our stimulus attacks our immediate problems with
infrastructure improvements that will remove some of our
impediments to staying competitive. At the same time, it will
create about 500,000 new jobs. Not only that, but it also offers
some needed tax incentives to begin the task of improving our
long term investment in our economy, both in the public and
private sector.
The regulatory steps we announced last week to help ease the
credit crunch also should help spur the investment in the economy
that we are seeking.
It is our long range investment plan that will build the
base of high-wage, high-technology jobs -- in industries like
yours -- that will help solidify our economic position in the
world.
We have a serious under investment problem, both in our
infrastructure and in the skills of our workers. Japan's average
annual private investment is 32 percent of its GOP.
What is it
in the united states? Less than half that, just 15.5 percent.

It's exactly the same story when you look at public
investment, only worse.
Our public investment as a percentage of
GOP is 1.7 percent.
In Japan, it's 6.1 percent. There's a
lesson here for all of us, and this administration is heeding it.
We have a package of government investments in our
infrastructure, which simply must be improved to help us remain
competitive in world marke i 3. And we have plans to invest in
Americans, so that we have a well-trained and well-educated,
healthy work force.
Investments in job training, in fully
funding Head start, in a national service program, and in
apprenticeship programs will produce the employees you need.
We also want to induce industry to invest in the future,
and we have a variety of incentives to make this course of action
more attractive.
One of the more important facets of the plan is our decision
to make permanent the research and experimentation tax credit.
This will make it far easier to plan research investments on a
long term basis, rather than worrying whether the credit will
expire, and when it will expire.
We also want to reduce capital gains for long-term
investments in small businesses.
In addition, both small and
large capital-intensive corporations paying the minimum tax will
benefit from our simplified and enhanced depreciation provisions,
which are also included in the stimulus package.
We will make permanent for small businesses the investment
tax credit that's in the stimulus package. And, we want to let
investors in small corporations exclude up to half of the gain on
stock they hold more than five years.
This is a program that looks to our future.
But more will
be done.
The president and vice president recently announced a
high technology initiative.
It will give us more competitive
businesses, more effective government, better educational
programs, and enhanced technical leadership.
In it will be elements such as antitrust reforms to permit
joint production ventures. That builds upon the 1984 National
Cooperative Research and Development Act that you were involved
with.
It has been a success, and important ventures like
Sematech have come from it.
At the Commerce Department, they plan to expand the advanced
technology program to provide matching grants for industry-led
research and development consortia. We want to invest in applied
research in manufacturing, aerospace, biotechnology and advanced
materials, to help you look through the test tube as you take on
the marketplace.

We intend to establish a national network of manufacturing
extension centers to help small and medium-sized businesses gain
access to technology. We hope to increase the partnership
between industry and o~r national laboratories.
A major priority in this package is the development of a
national information infrastructure to develop the technology to
apply supercomputing and high-speed networking to a variety of
applications in our society.
We also intend to increase the research spending at the
National Institutes of Standards and Technology.
We're also going to upgrade the IRS computers, although I
know not everyone will consider that a good thing.
Hand in hand with this new technology effort is our program
to assist the firms that helped us win the Cold War make the
transition toward greater production of consumer goods. Many of
you feel the effects of reduced defense spending, and we're
taking an activist role in trying to assist with the transition.
As you know, President Clinton was at a Westinghouse plant
in Maryland just last week to discuss this issue.
Not only have we freed up the money appropriated last year
for defense conversion, we added $400 million.
For the current
fiscal year alone we have about $600 million in worker retraining
and transition assistance. There is money to help communities
feeling the effects of the drop in defense business.
We're changing the name and focus of the Defense Advanced
Research projects Agency, so it does more in the area of dual-use
technology. And, our investments in new civilian technology and
research and development should help create new jobs.
Over five years, our technology initiatives and defense
conversion efforts will total about $20 billion.
This plan is good for business.
It's good for America, and
it's good for the world. As our recovery proceeds, our actions
can help the economies of our major trading partners.
If trading
systems are open and fair -- and we're working to ensure they are
the growth in other nations will good for exports.
The economists tell me that for every percentage point rise
in the growth rate of our trading partners, we get a boost of
about $15 billion or $20 billion in exports. And each $1 billion
of that generates something on the order of 20,000 jobs.

Our economic program will bring down our deficit, create the
new jobs and business opportunities our economy needs, improve
our competitiveness, and build upon the technology lead that our
nation -- and this industry in particular -- has established.
We are at a crossroads in our economic history. The path
President Clinton has selected will lead us to an American
economy with restored vitality, an economy that again is the
strong and vibrant force that made us a world leader.
Thank you very much.

* * *

Embargoed until delivered
Expected about 9:00 A.M.
March 17, 1993

TESTIMONY OF ROGER ALTMAN
DEPUTY SECRETARY OF THE TREASURY
BEFORE THE SUBCOMMITTEE
ON COMMERCE, CONSUMER, AND MONETARY AFFAIRS
COMMITTEE ON GOVERNMENT OPERATIONS
WEDNESDAY, MARCH 17, 1993

Mr. Chairman and members of the subcommittee:

I am very pleased to appear here today to discuss the
requlatory burdens experienced by financial institutions in
lending to business and consumers. This is a particularly timely
session. Last week President Clinton addressed these same issues
when he unveiled the Administration's plan to strengthen our
economy by breaking the back of the credit crunch. The President
knows that businesses and consumers need access to credit and he
has made this one of his highest priorities.
The Treasury Department helped develop the President's
plan with the four federal bank and thrift requlatory agencies.
Along with Treasury, these agencies fully endorse the plan and
are working hard to implement it within the next three months.
BACKGROUND
Let me begin by emphasizing one overriding principle in
the President's plan: we must not and will not sacrifice the
safety and soundness of our financial system in any way. We will
not go back to the policies of forbearance that contributed to
the savings and loan problems of the last decade. Instead, we
believe that by avoiding requlatory excess and duplication and
focusing instead on the real risks to our financial institutions
our new plan will actually increase the safety of insured
financial institutions.
Our new plan will not reduce attention to proper
reserves for problem loans, and it will not lower capital
requirements established in accordance with international
standards. Our plan will improve the health of our financial
institutions: it will not cause a single bank to fail; it will
not cost the deposit insurance fund A single dollar.
LB-73

This plan is not just aimed at banks. As you know,
banks have just concluded one of their most successful years in
history, with record profitability and record additions to
capital.
We wanted a job and business growth plan that addresses
the needs of our country's most distressed areas where a lack of
credit has seriously hampered business opportunity and job
growth. These areas are especially reliant on small and medium
sized businesses which are the real engines for growth in our
economy and which employ nearly two-thirds of all American
workers. Between 1988 and 1990, while large corporations were
cutting jobs, small business created four-point-one million new
jobs.
Yet, in the last two years, small business job growth
has lagged and this slowdown is one reason we still have 9
million unemployed Americans. And we know that one key factor in
this slowdown is the lack of available credit.
It's not enough, however, to have more lending, if it's
not more fair lending. By freeing regulators from unproductive
and redundant efforts, the President's plan will make resources
more readily available to ensure that fair lending standards are
met and that there is meaningful compliance with the community
Reinvestment Act.
THB PLAN

Let me now provide you with some of the details on the
five parts of this plan: first, small and medium sized business
credit; second, lending related to real estate; third, fair and
effective appeals and complaint processes; fourth, improvements
to examination process and procedures; and, fifth, ongoing
efforts to reduce regulatory and paperwork burdens.
Small and Medium Sized Business Credit
The plan takes two important steps to address the
credit needs of small and medium-sized businesses. First, it
allows the better rated and better capitalized banks to devote
some of their asset portfolios to loans that can be made with a
minimum of documentation. These loans will be of limited size,
and the aggregate amount of these loans will not exceed a set
percentage of the lender's capital.
We devised this plan after consulting with small
business owners and hearing their concerns. The plan recognizes
the fact that to stay competitive, the small borrower must often
act quickly to obtain credit to develop new products and services
or lose potential business. We also heard that most small
2

businesses do not have a large staff or the expensive equipment
needed to generate the complex documentation too often required
to obtain a loan.
In the past, these kinds of businesses received loans
from bankers who used their knowledge of the community, the
particular business of the borrower, and often too, the
borrower's own reputation, as a basis for the credit decision.
The. Administration's plan allows our country's best bankers to
cut through the red tape and again use their judgment to make
these kinds of loans. It does, however, insert a greater degree
of control, in order to ensure that we do not jeopardize safety
and soundness.
Another problem facing small and medium sized
businesses is that too often their loans have been incorrectly
placed in the category of so-called "other Assets Especially
Mentioned," for minor problems that do not affect whether or not
the loan is recoverable. Worse still, loans in this category are
lumped in with loans where collection is truly doubtful. This
practice has discouraged lenders from making loans to small
business.
Our plan will help cure this problem and further
encourage loans to small and medium sized businesses. Our bank
and thrift regulators will establish examination and rating
procedures for all banks that more accurately define loans in
this "other mentioned" category, and then more accurately
differentiate this category of loans from higher-risk
classifications.
Real Estate Lending

I think we all have learned a lesson about commercial
real estate loans, but it is also clear that the regulatory
burdens in this area have become excessive. The current
regulatory burden is particularly heavy for loans secured by real
estate where the loan is primarily used for a business purpose.
This is an especially severe problem since small- and mediumsized companies often only have real estate to offer as
collateral.
To restore the balance in this area, bank and thrift
regulators will make a variety of changes to their existing
rules. For example, the bank regulators will modify a number of
unnecessarily regulations and practices relating to real estate
appraisals. In a number of cases these appraisals are so
expensive that they make a small or medium-sized business loan
uneconomical to the bank and too high-priced for the borrower.
Perversely, these appraisals often add little to the safety of
the credit.
3

Let me give you a few examples of what the plan will
do. First, when real estate is additional collateral for loans
for non-real estate related purposes we will eliminate the
appraisal requirement; second, we will raise the thresholds below
which appraisals are not needed to reasonable levels; and,
finally, we will cut back rules requiring periodic appraisals of
the same property so that such appraisals are required only when
safety and soundness is really at stake.
It's time to change this system especially since often
these appraisal requirements cause banks to make a loan without
all the available collateral, thus putting the banks in a less
safe position. In other cases, banks have decided just not to
make loans to good customers. Our new plan will change this,
increasing safety and loan availability while decreasing needless
expense and effort.
Appeals Process and Complaints Generally
The regulatory agencies work hard to do a thorough and
fair job in supervising the nation's banks. Yet employees of the
agencies, like everyone else, sometimes make mistakes. Bankers
fear that challenging such mistakes will cause retribution, and
this fear has caused some bankers to be unwilling to use the
available appeals procedures. Efforts to date by bank regulators
have not resolved this problem.
We also know that both bankers and consumers are often
frustrated by rules and regulations that appear arbitrary and yet
there has been no way to complain effectively. Our plan will
change this.
To encourage lending decisions to be made that are
neither overly lenient nor overly conservative, and to inject a
greater element of fairness into the supervisory process, the
bank regulatory agencies will make significant revisions to their
appeals procedures. Similarly, very significant changes will be
made in complaint procedures so that bankers, bank customers and
the general public will have an effective avenue of complaint.
We know that if we want these reforms to work we have
to listen carefully to our constituents -- borrowers and lenders
alike. We want to be able to respond quickly and effectively to
~riticism to provide the best possible service.
We are confident
that an improved appeals and complaint processes will help us do
just that.

Examination Process ,

Proce~ures

The Administration is fortunate to have a fine corps of
bank and thrift examiners who believe that bank and thrift
examinations must ensure safety and soundness. Yet it is also
clear that sometimes redundant and disruptive examinations add
unnecessary expenses and delays and hinder the ability of banks
and thrifts to do their jobs.
Let me give you an example. We know of one case where
over 30 examiners from three federal bank and thrift regulatory
agencies spent over a year examining one subsidiary entity of a
large bank holding company. How big was this subsidiary? Well,
it employed a total of 150 people. This kind of excess and
redundancy does not add to safety and soundness and simply cannot
continue.
The President's plan addresses this problem. It
provides that in the future, the bank and thrift regulators will
(i) eliminate duplication in examinations by multiple regulators,
unless such duplication or so-called back-up examinations are
clearly required by law; (ii) increase coordination of
examinations by regulatory agencies in those cases where
duplication is required; and (iii) establish procedures to
centralize and streamline examination in multi-bank
organizations.
Equally important, bank and thrift regulators have
agreed to shift their priorities to analysis of real risk to the
institution and to issues involving fair lending.
paperwork

Bur~en/Furtber

Efforts

Finally, our Administration knows that no good is
served by forcing banks to bear an excessive regulatory paperwork
burden. You may have seen that during his remarks last week the
President held up a loan file for one loan that contained a full
three to four inches of required documents. That simply makes no
sense. We believe that loans like that one can been safely made
with a small fraction of the amount of paper.
So we intend to work hard over the coming days and
weeks to reduce this needless burden. The federal bank and
thrift regulators will sit down within the coming week to begin
the arduous but important process of reviewing all paperwork
requirements to eliminate duplication and other excess.

CONCLUSION

Let me just close by saying that the Treasury
Department recognizes the importance to this country of
addressing the credit needs of small and medium-sized businesses
and consumers while at the same time maintaining the safety and
soundness of our banking and systems.
We believe that this plan deserves constant attention
and rapid implementation so let me reassure you that bank and
thrift regulators are already meeting to put this plan in place.
r am pleased that r have had the opportunity to discuss elements
of this plan with you today.

Expected about 10:00 a.m.
March 17, 1993

STATEMENT OF THE HONORABLE LLOYD BENTSEN
CHAIRMAN, THRIFT ryEPOSITOR PROTECTION OVERSIGHT BOARD
BEFORE THE SENATE COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS
WEDNESDAY, MARCH 17, 1993
534 DIRKSEN SENATE OFFICE BUILDING

Mr. Chairman, members of the Committee:
I am pleased to testify today on the Administration's
objectives for the savings and loan cleanup and the funds that will
be necessary to fulfill the government's deposit insurance
commitment.
This is my first appearance before this Committee as Secretary
of the Treasury. Mr. Chairman, you and I have worked together for
many years as colleagues, as I have with most of the members of
this committee, and I look forward to continuing our relationship.
And Senator D'Amato, I congratulate you on becoming ranking member
of the Committee. This committee has some new members, and I look
forward to working with all of you in a truly bipartisan spirit.
With me today are oversight Board members Alan Greenspan,
Chairman of the Federal Reserve Board; Philip Jackson, Adjunct
Professor at Birmingham Southern college and former Governor of the
Federal Reserve Board; Robert Larson, Chairman of Taubman Realty
Group; Roger Altman, Deputy Secretary of the Treasury and interim
CEO of the RTC; Jonathan Fiechter, Acting Director of the Office of
Thrift supervision; and Andrew Hove, Acting Chairman of the Federal
Deposit Insurance Corporation.
Also accompanying us is Peter
Monroe, President of the Oversight Board.
William Roelle, RTC
Senior Vice President and Chairman of the RTC's Executive
Committee, and Lamar Kelly, RTC Senior Vice President for Asset
Management and Sales, are present to help respond to your
questions.
We are here to begin the process of crafting legislation to
fund the Resolution Trust Corporation and permit it to complete its
portion of the savings and loan cleanup.
This has been a
bipartisan issue from the start. Just as one of President Bush's
first proposals to Congress was a plan to deal with the savings and
loan crisis, my first appearance before this Committee demonstrates
this Administration's commitment to funding the RTC and to closing
this chapter of our country's financial history.
L8-74

- 2 -

Mr. Chairman, let me state right at the start, that this
Administration is committed to fulfilling our government's
commitment to savings and loan depositors under the Federal deposit
insurance program.
There has been a lot of confusion about this
program.
It has been labelled a "bailout." That is dead wrong.
This is a program for people -- millions of Americans who, over the
years, have placed their savings in insured institutions in
confidence that the Government would honor its insurance pledge.
Not a dollar has gone to "bailout" bankrupt S&Ls or to payoff
their shareholders.
The funds are to be used solely to protect
depositors.
Let me also tell you that I know, from personal experience,
that a vote to fund the RTC is a tough vote.
It is a tough vote
for you just as it was for me. But I also know that this is a vote
for depositors, for the safety of our financial institutions, and
that if we fail to meet this obligation, we will pay a far greater
price, and deservedly so.
I also know that many of you cannot vote to fund the RTC
unless dramatic improvements are made in its operations.
I will
tell you plainly, on the record, that we intend to make such
improvements.
In August, 1989, this Committee and the Congress responded to
the need to defend our financial system by passing the Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA). That
was a bipartisan effort, and, for all its troubles, it has worked.
On the day FIRREA passed, the thrift industry consisted of
over 3,000 institutions, more than 260 of which were in
conservatorship.
It was losing more than $1 billion a year. Its
return on assets was negative.
Its deposit insurance fund was
bankrupt.
Let me show you a few charts.
Pursuant to FIRREA, 21.8 million depositor accounts have been
made whole by the Resolution Trust Corporation [See Chart I). The
size of the average account protected was $9,000. RTC has closed
654 insolvent savings and loan institutions, which is equal to 89
percent of the total of 737 institutions that have been seized [See
Chart II]. The RTC has taken possession of about $438 billion of
assets, and has sold or collected about $337 billion of that
amount, at an average return of 92% of book value [See Chart III].
Under its affordable housing program RTC has closed sales of
almost 14,000 homes to low and moderate income homeowners -- enough
to create a small city [See Chart IV].
In addition, the RTC has
closed sales of 350 multifamily properties with 30,000 units, of
which over 11,500 have been dedicated for occupancy by lower
income, and very low income, families.

3 -

While much has been accomplished, much remains to be done.
task ahead consists of four parts:
(1) protecting depositors,
selling assets at best possible prices, (3) ensuring that the
is run efficiently, and (4) closing down the RTC in a planned
orderly way, as soon as feasible.

Eighty-three insolvent institutions, with about 4.3 million
depositor accounts, are now operating under the conservatorship of
the RTC. RTC is obligated to operate them, at a daily loss to the
taxpayer and in competition with the healthy thrifts and banks in
their communities, until Congress votes funds to pay their
depositors and close them.
And, as the Acting Director of the
Office of Thrift Supervision can tell you, OTS will continue to
transfer additional thrifts to the RTC for closure.
The existence of current and additional conservatorships means
unnecessary extra costs to the taxpayer that must be stopped as
quickly as possible by funding the RTC. The history of the savings
and loan debacle shows us that refusing to provide funds to close
insolvent thrifts simply means greater losses for the taxpayers.
Protecting the depositors in existing and new conservatorships
is only one part of the job remaining to be done.
The second task, managing the sale of the remaining assets, is
just as important.
I said earlier that the RTC has achieved an
impressive record in its asset sales to date.
But the remaining
assets of more than $100 billion, together with assets to be
received from institutions placed in conservatorship before
September 30, this year, consist substantially of the hardest-tosell land and real property, and non-performing mortgages. We can
limit the potential loss to the taxpayer if these assets are
managed, marketed and sold carefully.
The third task relates to RTC management.
We have an
overriding responsibility to the taxpayers to change the way the
RTC does business. We must ensure that the RTC is managed in the
most efficient and responsible way according to the best management
practice, under a carefully considered business plan. We must now
take action to protect the public against needless expense in the
RTC's management of its contractors, to prevent fraud and waste,
and to correct deficiencies found by the RTC's auditors.
And we

- 4 -

must use the best available information systems to identify and
track assets and provide RTC management with accurate, timely
information.
And finally, we must plan for closing the RTC as soon as
possible without impairing RTC operations, ensuring an orderly
transition of RTC personnel and systems to the FDIC. I have asked
Mr. Hove and RTC's new leadership to establish a joint FDICjRTC
task force both to be sure FDIC has sufficient resources to manage
the savings Association Insurance Fund, and to plan for the return
of RTC personnel, and the transfer of its systems, to the FDIC.
Improving RTC Management
Let me turn to the matter of RTC's efficiency.
As Chairman of the Oversight Board I pledge to use the Board
and its staff to improve RTC management practices in order to earn
taxpayer trust in the RTC and to effect savings to reduce the
deficit.
Mr. Casey has resigned as the CEO of the RTC, and we are very
grateful to him for his leadership and for his service to the
country in this difficult and complex job.
The President has
replaced him, on an interim basis, with Mr. Roger Altman, Deputy
Secretary of the Treasury, under the Vacancies Act.
Under the
terms of that Act Mr. Altman will serve as long as necessary within
the constraints of the Vacancies Act, or until the President can
appoint a permanent RTC CEO.
Mr. Altman has a number of other
responsibilities but will provide leadership for the RTC during
this transition period, and will begin to put in place as soon as
possible the programs I will describe for you today.
To put these programs in the proper context, it is important
to keep in mind that the RTC has been in existence for less than
four years, has seized over 730 institutions, and taken possession
of over $400 billion in assets.
Any organization, public or
private, that reaches this size so quickly is bound to have
operations that need to be improved.
To demonstrate this Administration's dedication to improving
RTC efficiency, I have asked the interim CEO to begin to implement
the following administrative actions. These initiatives are
intended to strengthen the RTC's management in a number of critical
areas. They will take time to put in place, but we will begin them
now [See Chart VI].
First, strengthen internal controls against waste, fraud, and
abuse:
RTC will conduct a thorough evaluation of all of its
internal accounting and administrative control systems, identify
the weaknesses, and develop ways to fix them.
Let me explain.

- 5 -

Internal controls are the systems that an organization relies on
for (1) reliable financial recording and reporting and (2) ensuring
efficiency and preventing fraud, waste, and abuse in operations.
Reports on the results of the evaluation, with a plan for
correcting weaknesses, will be made to Congress, the President, the
Oversight Board, OMB, and GAO as required by law.
This action,
perhaps more than any other, is the taxpayers' first line of
defense against waste, fraud and abuse in all RTC programs,
including affordable housing. Had these systems been sufficiently
strong, Western storm and the HomeFed incident would not likely
have occurred.
Second, respond to problems flagged by auditors:
RTC will
implement a system -- such as is required under OMB guidelines for
other government agencies -- to provide prompt, systematic, and
effective followup on the findings and recommendations contained in
the reports issued by the GAO and RTC's own Inspector General.
When audits uncover problems, this is the system relied upon to
correct them so that they do not recur.
RTC must not repeat its
mistakes after the auditors have brought them to management's
attention. A thorough audit followup system should assure that the
recommendations of auditors receive prompt attention.
Third, prepare a comprehensive business plan for the balance
of the cleanup:
I have directed that the RTC prepare a
comprehensive business plan for the balance of the cleanup.
The
plan will include RTC's strategy for the sale of its remaining
assets, many of which are hard-to-sell real estate and nonperforming loans.
The Oversight Board will review the plan and
strategy in an effort to maximize the return to the taxpayer from
the sale of these assets.
Fourth, expand opportunities for minorities and women: I have
asked the interim CEO to have the RTC officer with responsibility
for minority and women's programs report directly to him, and I
have asked that he develop ways to provide more opportunities for
minority and women-owned businesses in the management and
disposi tion of RTC assets.
I have also asked that RTC make
improved efforts to preserve contracting and asset acquisition
opportunities for minorities, women, small businesses and small
investors.
Fifth, improve RTC's Professional Liability section:
I have
asked that the interim CEO review and recommend improvements in the
organization and staffing of the RTC' s Professional Liability
Section (PLS). These are the RTC lawyers who pursue claims, on the
taxpayers'
behalf,
against thrift managers and others who
contributed to the losses through negligence or misconduct. We are
committed to building a PLS that operates in a professional and
competent manner subject to appropriate management review.

6 -

sixth, improve management information systems:
I have asked
the interim CEO to take action to improve RTC's management
information systems, so that RTC has complete information on its
assets and that its management information needs are met.
Seventh,
strengthen
contractor
systems
and
contractor
oversight:
I have asked that the RTC review and strengthen its
contracting systems, ? ld improve oversight of its private sector
contractors. RTC has tens of thousands of contractors working on
many types of assets. It must make every effort to ensure that the
taxpayers' money is being spent for appropriate and timely
services, and that the RTC is getting what it's paying for.
Eighth, appoint a Chief Financial Officer:
Consistent with
strong Congressional interest in establishing independent chief
financial officers for all the agencies, I have asked that RTC
appoint a Chief Financial Officer who does not have other operating
responsibilities.
Finally, appoint an audit committee: I intend to appoint an
audit committee of the Oversight Board to monitor and advise on
RTC's improvement of its internal controls, to monitor its followup
on the recommendations of its auditors, and to consider special
audit and accounting issues as they arise.
In summary, the program I have outlined is very ambitious.
Achieving results will take time and hard work. But we intend to
place the RTC on a sound management footing and give renewed
emphasis to one of its central objectives: maximizing savings to
the taxpayer.
The final important task ahead is to put the RTC out of
business as quickly as we can -- perhaps well before December,
1996, the date contained in FIRREA.
Funds Needed
I have told you how this Administration plans to improve RTC
operations to win taxpayer trust, and to win your trust.
I now
must ask you for prompt passage of the Thrift Depositor Protection
Act of 1993, which I sent to the Speaker of the House and the
President of the Senate yesterday.
This bill provides an
additional $45 billion to permit the RTC to resume its work of
closing insolvent savings and
loans and protecting their
deposi tors, and to fund the Savings Association Insurance Fund
(SAIF) .
Let me review briefly the history of RTC funding [See Chart
VII].
FIRREA, which was enacted on August 9, 1989, provided $50
billion for the RTC. In March, 1991, the RTC Funding Act provided
another $30 billion.
In December, 1991, the RTC Refinancing,

- 7 -

Restructuring and Improvement Act provided another $25 billion, but
this act prevented any use of these funds after April 1, 1992.
Because of this restriction the RTC was able to use only $6.7
billion, bringing the total of RTC loss funding to $86.7 billion.
Of this amount the RTC has retained a reserve of $2.3
billion, for emergency uses, from funds provided by FIRREA and the
March Refunding Act.
As you know, Mr. Chairman, with your leadership the Senate
last year passed a bill providing $43 billion for RTC. The House,
however, defeated a measure that would have provided $18 billion.
Thus the RTC has been without sufficient funds to resolve
institutions for almost a year.
Our request for funds consists of two parts, $28 billion to
fund the RTC and $17 billion to fund the SAIF.
Passage of our
combined request, when added to the $87 billion already provided,
would bring the total of all RTCjSAIF funding up to $132 billion
for the 1989-1998 period. The table in Attachment I gives a more
detailed picture of these estimates.
I should note that if RTC does not use all the funds provided
to it, the unused portion can be transferred to SAIF.
And of
course, if the full amount provided is not needed, it will not be
drawn from the Treasury.
How does this compare with previous projections?
The last
Administration estimated that the cost of the cleanup would fall in
a range of $100 billion to $160 billion. At its appearance before
this Committee in July last year, the Oversight Board estimated
that the cost could fall close to the middle of the range, or about
$130 billion. Our request today for $45 billion would bring total
RTCjSAIF funding to an amount close to that estimated by the Board
last year.
Funding the SAIF
Our request goes beyond the Board's request last year because
it includes an amount to cover losses of SAIF. Let me explain why
this is necessary. until this year the savings and loan industry's
premium assessments have been used to help defray the cost of the
1988 Deals. In January, this year, the industry's net assessments
began to flow to the SAIF. Thus, by October 1, this year, the SAIF
will have about $1.1 billion in reserves.
Foreseeing that industry contributions would be insufficient
to permit SAIF to take over after the RTC completed its work,
FIRREA authorized further provision of funds by Congress to
properly capitalize SAIF.
Consistent with the concept in FIRREA
that SAIF will need public funding, we are recommending that SAIF
be provided up to $17 billion to be used to cover future industry

8 -

losses.
This should allow SAIF to accumulate an expected $1.2
billion to $1.4 billion of annual net assessment income so as to
reach over $7 billion in 1998 as required by FIRREA.
Mr. Chairman, one of the questions I have most frequently been
asked is, will $45 billion be enough to complete the cleanup? In
candor, I must say that no one can know for certain because no one
can foresee with certainty trends in the economy, in interest
rates, and in regional real estate markets out until 1998. But we
have made a very earnest attempt to estimate the costs.
We hope
that we will use less than $45 billion, but we believe our request
is sufficient to complete the job, once and for all, so that we
will not corne back to you to ask again for funds.
Why Funds Are Needed
It has been suggested that if the RTC has been able to operate
since April last year without funding, there is no need to vote
such funds now.
This may be an appealing idea, but it is at best misleading.
RTC needs funds to close the existing 83 conservatorships and
to protect the depositors in those institutions. Failure to close
the conservatorships means that these insolvent institutions will
continue to operate in the private sector at a
further,
unnecessary, loss to the taxpayer.
This is because, for practical purposes, insured deposits at
conservatorships are federal government borrowings. When compared
with the cost of direct Treasury borrowings, insured deposits are
an expensive way for the government to borrow money. If there were
to be another delay in funding of one year, the additional cost to
the taxpayer,
just for existing conservatorships, would be
approximately $1 billion.
This estimate does
not
take
into
account additional
conservatorships to be transferred to RTC, nor the adverse effects
on other thrifts of competing with conservatorships, nor the cost
of keeping RTC's conservatorship and resolution programs in place
longer than otherwise necessary.
Losses due to delays in funding until this time are estimated
at about $1.1 billion.
This financial hemorrhage must not be allowed to continue.
Enough has been lost already.
It is unfair to the taxpayers, it
places an unnecessary drain on our financial system, and it
prevents the RTC from completing its work and. closing up shop.
Funding must be provided: inevitably, the deposltors must be paid.

- 9 -

Conclusion
Mr. Chairman, I said that there are four major remaining tasks
to accomplish before the savings and loan cleanup can be completed:
protect depositors in existing and additional conservatorships,
sell remaining assets, improve RTC management efficiency, and close
the RTC quickly, in an orderly way.
I have also indicated that this Administration is determined
that improving RTC management efficiency will be a top priority and
a continuing objective.
I have spelled out a number of ways in
which we will accomplish this objective through administrative
actions and Oversight Board review.
These will take time to
implement fully, but we are committed to the effort. Our purpose
is to complete the cleanup quickly, at least cost, with maximum
returns to the taxpayers on assets sales. We intend to nominate a
new CEO who shares our determination and is committed to achieve
each of these objectives and who will effect an orderly termination
of the RTC.
We ask that this Committee and the Congress respond with swift
approval of the funding request contained in the Thrift Depositor
Protection Act.
with the provision of these funds the remaining
insolvent thrifts can be resolved, their depositors protected, and,
finally, the Resolution Trust Corporation can be closed.
I do not want to conclude without thanking you, Chairman
Riegle, for your willingness to hold these hearings and to move
legislation.
You have made it clear from the beginning of the
session that you and your Committee were ready to go to work on
this issue, and we appreciate that. As I said at the outset we are
ready to work with you, senator D'Amato, and all the members of
this Committee to write responsible legislation that will let us
bring an end to the savings and loan cleanup in the same bipartisan
spirit with which we began it in FIRREA.
This concludes my prepared statement.
Responses to the
questions required by FIRREA to be addressed at these appearances
are contained in Attachment II to the statement.

CHART

(../~'
~~
~!'~

21.8 Million Depositors Protected
(# Millions)

Inception through March 8, 1993
26.1

__ -

Depositors'Accounts in
Conservatorships

Total Depositors' Accounts
Protected

20-

1. )

# ot Accounts

21.8

Average Account Protected

$9,000

o .-:

03 '89 04 '89 01 '90 02 '90 03 '90 04 '90 01 '91 02 '91 03 '91 04 '91 01 '92 02 '92 03 '92 04 '92 01 '93
• Quarter to date.
Note: Figures represent cumulative depositors' accounts protected
Source: RTC Otlice of Corporate Communications; TFR

CHART

654 S&Ls Resolved
Inception through March 8, 1993
737

700
600

___ # ot Institutions

Institutions Awaiting Sale or Closure

Irlsolvcnt S&Ls Sold or Closed

tn
654

500
400
300

200
100

03 '89 04 '89 01 '90 02 'gO 03 '90 04 '90 01 '91 02 '91 03 '91 04 '91 01 '92 02 '92 03 '92 04 '92 01 '93'

• Quarter to date.
Note: Figures represent cumulative RTC resolutions
Source: RTC Review; 08 Analysis

CHART
,.:2.: .~

(!fW!I)
'~'"-'!'"

Three-Fourths of RTC Assets Are Already Sold
(Book Value - $ Billions)
Inception through January 31, 1993
$438.0

---

$337 4

Proceeds to Date:

$31 0.8
77%

- --

$100.6

23%
Total Assets
Source: RTe Review

Assets Sold
or Collected

Inventory
1/31/93

III

CHART

•

Affordable Housing Has Created Almost 14,000
Homeowners·
Single Family Closed Sales"
June 30, 1991 through January 31, 1993
13,999
14,000

12.000 -

10,000-

8,000 -

G,oao -4,000 -

2,000

O~--~------~------------------------~------~------~--September December
June
March
September December
January

1991
• Data revised to include Closed Sales only .
•• Sales of both receivership and conservatorship properties.
Source: ATC - AHD Program

1992

1993

(;HART V

Prosecutions, Fines and Recoveries
($ Millions)

"Major" S&L prosecutions (Department of Justice)":
1,358
1,062
184
209
685

Defendants Charged
Convicted
Awaiting Sentence
Suspended Sentence
Sentenced to Prison

CEO's, Board Chairmen, Presidents, Directors, and other officers
Charged
Convicted
Acquitted

390
324
18

Criminal Restitutions":
Total t

Ordered
$490

Collected

$34

Civil Recoveries":
Includes professional liability recoveries, civillTlon cy pe na ItH~r;, iJ lid ;-)rJrn illlslr (I II vI? ;J(l) tJd Ie; II I I)/l~
Total"

$1,017

October 1, 1988-November 30, 1992 "Major" defined as (a) fraud or loss of $100 ,000 or rnorp, or (b) cif:ff.orld,1I11 w;l"
officer, director, or shareholder/owner, or (c) schemes involved multiple borrowers in same inslilulion
September 30, 1992
Includes criminal restitutions ordered and collected by the FSlIC HcsolLJllon f-u/ld, BIF, alld HIe
Includes civil recoveries collected by RTC, FSLlC Resolution Fund, and OTS

CHAR T

•

~~!"-!

Adm inis trat ive Reforms

• Stre ngth en inter nal cont rols against waste, fraud, and abus
e.
• Respond to prob lems flagged by audi tors.
• Prepare Busi ness Plan /Ass et Sales Strategy.
• Expand oppo rtuni ties for mino rities and women.
• Impr ove RTC's Prof essio nal Liab ility Section.
• Impr ove man agem ent infor mati on syste ms.
• Stre ngth en cont racti ng syste ms and cont racto r over sigh t.
• Appo int a Chie f Fina ncia l Officer.
• Appo int Ove rsigh t Board Audi t Com mitte e.

CHART

i~\

(,.~~)

VII

RTC Funding History

'''-~!'' -!

August 9, 1989 (FIRREA, PL 101-73)

$50 billion

MtJrch 23, 1991 (RTC Funding Act, PL 102-18)

$30 billion

December 12, 1991 (RTC Refinancing, Restructuring ... Act, PL 102-233)

$25 billion'

March 26, 1992 (RTC Funding Act of 1992, S2482)

Passed (52-42)

$43 billion
(LI1I4/1/921Imll; added $25 billion)

April 1, 1992 (RTC Funding Limitation, HR 4704)

Defeated (125-298)

$18 billion
(Lift 411/92 limitation)

Total Loss Funds Enacted
Loss Funds Expired
Loss Funds (total) Available for RTC Use
Loss Funds Used to Date
Loss Funds Reserve Remaining

$105.0 billion

j18.3

bil!io~L

$86.7 billion
84.4 billion
2.3 billion

• up to $25 billion until 4/1/92; by 4/1/92 RTe expended only about $6.7 billion and authority to spend $183 billion expired

Attachment I

RTC/SAIF Estimated Loss Fund Usage

~Ye~

As of March 10, 1993

# of
Cases

Gross
Assets'

Point
Estimate
of Loss

Likely High
Estimated
Loss

Add, Funds
Needed for High
Estimated Loss

--------

------

RTC Resolutions
(As of March 5, 1993)

654

$337

$85

$91

$.1

RTC Conservatorships and
Probable Cases f

118

$105

$19

$21

n2
Total RTC Probable Cases
- - - - - - - - - - - - - RTC or SAIF - Likely to Fail
52
'NTthin the next 6-12 months

$442

$104

$112

$25

---.-.

4
5

----- -

-..........-

$19

SAIF - Possible SAIF Cases
afler September 30, 1993"'

105

$93

$13

$17

Total Cases -

929

$554

$119

$132

$45

1989-1998

($ Billions)
Note:
The 'additional funds needed' numbers take inlo accounllhe $87 billion already provided 10 !he RTC 10 dale The polnl estlm<Jto assumes ;1
midrange loss rale a\'eraging 24% 01 assets The likely high eslimated loss is derived using higher loss rates averaging 28%
Assel data lor resolved and conservalorships are as 01 the quartEr prior to takeover. Data 'Of remaining caseload are as 0' December 31, 1<),)2
The 105 institutions listed here have $66 billion in assets and are possible cases through 1995 Since additional 'ailures are posslblo in 1996-1998
the gross assets were Increased to $93 billion 10 indude additional failures 01 1% 01 the assets 01 the thrill induslry tor each year in 1996, 1997, and
1998
t As 01 March 5, 1993, thore were 83 !hrihs in RTC conservatorships with $74 billion in assets at t<Jkeover There are 35 additional thnfts With $3t
billion in assets listed by OTS as probable RTC cases belore Oclober I, 1993

Attachment II
Requirements Established in FIRREA lor
Semi-Annual Appearances

Comments

Report on the progress made during the 6-month period

During the six month period, the RTC resolved 12 institutions with $15 billion

covered by the semi-annual report in resolving

01 assets On September 30, 1992 there were 69 conservatorships with $34

instltu~ons

insured by the FSLlC prior to FIRREA, and for which

billion of assets waiting for resolution. During the six month period,

a conservator or receiver has been appointed after 12/31/88

conservatorship and receivership assets decreased $8 0 billion in book

and before 10/1193 These institutions are relerenced below as

value

those described in subsection (b)(3)(AJ
II.

PrOVide on estimate at the short-term and long-term cost to the

We interpret thiS requirement to address RTC short-term borrowings Irom the

United States Government of obligations issued or incurred

Federal Financing Bank CFFS") and long-term borrowings from Resolution

during such period.

Funding Corporation ("REFCORP")
During the reporting period, the RTC deaeased Issued and outstanding
obligatIOns Irom $57 to $4 7 billion in the lorm 01 shorl-term working capital
borrowings from the FFB

Approximately $10 billion in intereslexpenses

were incurred in connection with the issuance of these obligations dUfing
such period Repayment 01 these obligations Will come Irom currently
approp/l31ed loss funds and RTC recovefles Irom recer.ershlps

e.pect that prOCGflds hum tho dispOSItion of RTC assets Will be suffiCient
to ropay these short-term oblig;ltions
REFCORP Issued Its la~t obhgatJOn

January, 1991

The lotal omount

outstanding is the full $30 billion 01 obhgatlons nuthorized by FIRREA, With
averagq maturitlos 01 33 years and averaga Yield of 876°/.

Total interest on

REFCORP obligatIOns IS e)pected to be a nomina! $87 9 billion

The

Trfl;lsury share 01 thiS Inl<Jrest is ekpected to be a nominal $78 billion

III- Report on the progess made during such period In seiling
assets 01 instillJlions described in subsection (b)(3)(A) and the
impact such sales are having on the local markets in which such
assets are located

As of Septamber 30. 1992, the RTC hnd sold and collected approximately
$309 billion (book value) 01 assets which was 74% 01 assets seized by that

d~te

The proceeds Irom these asset reducbons totaled $287 billion

date, there is no eviden(AI thaI RTC sales h~ve hnd an adverse
impact on local real estate markets

A survey conducted by RTC's t~a!JO(lal

Advisory Board conduded thetthe RTC does no! appear 10 affect real
estate pllces_ but th.:Jt RTC actlvllies may create a ·psychological
rn3r~.>!S causing Ioc."\l blJ~nrs 10 d"'ay dnelsir)ns
rt ,,;prv.IT,' ..",; rY n"',· 'rlflr ~"rrh "lf~~n'1-"'f rc,~',
Tt, .. nrr: v.," ('

ollerhang- in the

,t,

ThIS
• "n-

Rcquirements Established in FIRREA lor

~~~I·~nf)~~~ ~ee:~~f):~

IV. Du:,crlbe the C(j,ts Incurred by the

Corpora~on

-----

In Issuing

ut,IICjatluns marla!jlng and seiling assets acquired by the

CQmmenls

We have Interpreted thiS requllement to address the assets of reC6lvershlps

and conservatorships which are under the management 01 the ATC

Cvlp0r.JDun
Tha tot.JJ amount paid to pllvate contractors dUllng the Aprll·September period
was $1.208 million, 01 which $764 million represents fees paid under
receivership management contracts and $125 2 million represents IssuanC6
Lusts Incurred In connection With the securltlzallon program
AI1t1r the appointment 01 ATC as conservator, assoclallon employees conhnue
to perform asst.t management tuncllons under the supervision of the ATC
t.1.Jnaglng Agent These stall are already supplemented by outside
contractors hired and paid lor by the institullon for serviC6s fO( which the
InslJtu~on

would typically contract In the normal

cour~

of business

Accordingly, we have excluded such costs lor the purposes 01 this calcula\lon

f'I'"H)oJ .JIIJ .. ~L"lo.JllJ ul II)u.,[lllJ 01 U,tl
d'~:"tj[:" ,-,,-q'llrud

Li tt,tj

Cvrl-")ro.Juun

hUIll

tA:..t~)O..Jr.d!"n

In Its corporallun capacity, the ATC's onty substantlal $Ou(C6 01 'Income'
IS Interest on advances made by the Corporalion to con~rva\orshlps
and recervershlps

The ATC acc.rued $292 million of Interest Income

on advances and loans \0 conservatorshlps and receIVerships In the
SIX months endoo September 30, 1992. DIVidends are not included an
Income because they are a reductlOn in RTC's daims agamst the
assets 01 the receiverships, thus a return 01 capital, and not income.
However, diVidends received by the RTC during the penod totalled $14.6 billion.

VI. Provide an assessment 01 any potenllal sourC6 01 additional
tunds for the Corporation.

The only remaining sources of additional funds to the Corporation are the
secured borrowings for working capital from the FFB and the $5 billion line of
credit from the Treasury provided in FIAAEA.

Unused loss funds total $2.3

billion which are being held for both contingencies and emergencies. There are
no other funds currently available to the ATC.

VII. Provide an estimate 01 the remaining exposure 01 the United
Stales Government In connection with instltutJons descnbed
In subsectJon (b)(3)(A) which, In the Oversight Boaras estimallon,
",III roqlJlle 3~SI~I,lnco or Ilylll,LlLcn atter the olld 01 SIKh pOllod

The esllmate of the total resolution cost to be borne by the ATC in connection
with those institutions described in subsection (b)(3)(A) is projected to be up
to $115 billion. The ATe recognized approximately $84 billion lor estimated
lo~s6s from incepbon through September 30, 1992

CONTACT:

FOR RELEASE AT 2:30 P.M.
March 17, 1993

Office of Financing
202/219-3350

TREASURY TO AUCTION 2-YEAR AND 5-YEAR NOTES
TOTALING $26,250 MILLION
The Treasury will auction $15,250 million of 2-year notes
and $11,000 million of 5-year notes to refund $21,006 million of
publicly-held securities maturing March 31, 1993, and to raise
about $5,250 million new cash.
In addition to the public holdings, Federal Reserve Banks
hold $2,602 million of the maturing securities for their own
accounts, which may be refunded by issuing additional amounts of
the new securities.
The maturing securities held by the public include $2,460
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities. Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
Both the 2-year and 5-year note auctions will be conducted
in the single-price auction format. All competitive and noncompetitive awards will be at the highest yield of accepted
competitive tenders.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356, published as a final rule on January 5, 1993, and
effective March 1, 1993) for the sale and issue by the Treasury
to the public of marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000

Attachment

~B-75

HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC OF
2-YEAR AND 5-YEAR NOTES TO BE ISSUED MARCH 31, 1993
$15,250 million

$11,000 million

. . . .
. . . .
. . .

2-year notes
Series U-1995
912827 K2 7
March 24, 1993
March 31, 1993
March 31, 1993
March 31, 1995
Determined based on the
highest accepted bid
Determined at auction
September 30 and March 31
$5,000
$5,000

5-year notes
Series L-1998
912827 K3 5
March 25, 1993
March 31, 1993
March 31, 1993
March 31, 1998
Determined based on the
highest accepted bid
Determined at auction
September 30 and March 31
$1,000
$1,000

. . . .
. . . .

None
Determined at auction

Offering Amount . . . . .
Description of Offering:
Term and type of security
Series . . . . . . . . .
CUSIP number
Auction date
Issue date
Dated date
Maturity date .
Interest rate . .
yield . .

. .

. . .

Interest payment dates
Minimum bid amount
Multiples . . . . . .
Accrued interest
payable by investor .
Premium or discount . .

March 17, 1993

The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids . . . . .
Accepted in full up to $5,000,000 at the highest
accepted yield
Competitive bids
(1) Must be expressed as a yield with two decimals,
e.g., 7.10%
(2) Net long position for each bidder must be reported
when the sum of the total bid amount, at all
yields, and the net long position is $2 billion or
greater.
(3) Net long position must be determined as of one
half-hour prior to the closing time for receipt of
competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award . . . . . . . . .
35% of public offering
Receipt of Tenders:
Noncompetitive tenders . . .
Prior to 12:00 noon Eastern time on auction day
competitive tenders
. . . Prior to 1:00 p.m. Eastern time on auction day
Payment Terms . . . . • .
. . . Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date

CONTACT: Scott Dykema

FOR IMMEDIATE RELEASE
March 17, 1993

(202) 622-2960

STATEMENT BY SECRETARY LLOYD BENTSEN

RE: Meeting with Polish Finance Minister Jerzy Osiatynski
"We had a very productive meeting today. Since it began the
painful process of democratic and economic reform, Poland has
shown courage in sticking with a tough, forward-looking program.
This program is paying off: inflation is under control, growth is
rebounding, a new private sector is thriving, and Poland is
poised to gain access to foreign capital. The United States is
delighted to have played a role in Poland's efforts and continues
to support reform. I hope the lessons learned by Poland will be
applied successfully by other countries struggling to build
market economics and durable democracies."

-30-

LB-76

EMBARGOED UNTIL DELIVERY

(Expected about 10 a.m.)

STATEMENT OF LAWRENCE H. SUMMERS
NOMINEE FOR
ONDER SECRETARY FOR INTERNATIONAL AFFAIRS
DEPARTMENT OF THE TREASURY
BEFORE THE SENATE COMMITTEE ON FINANCE
March 18, 1993

Mr. Chairman, distinguished members of the Senate Finance
Committee, ladies and gentlemen:
I welcome the opportunity to appear before you today as President
Clinton's nominee to be Under Secretary of the Treasury for
International Affairs.
.
If confirmed -for the position of Under Secretary, I will look
forward to serving President Clinton and Secretary Bentsen, and
to working with you and your colleagues in the Congress to
promote and defend the economic well-being of the United States.
President Clinton has committed his Administration to a policy of
engaged, enlightened, and hard-headed economic internationalism
to go along with his program of domestic renewal. We are living
in an era of increasing global economic interdependence, where
national economies are interconnected as never before, and
domestic and foreign policies are inextricably linked. We have
the chance to free up billions spent on national defense, to
promote free elections and free economies from Poland to Peru,
and to realize the vast potential of global economic integration.
The nations of the world have the opportunity to grow and prosper
together -- or stagnate and scapegoat apart.
The Under Secretary of the Treasury for International Affairs 'is
charged with helping the President and the Secretary design and
implement American international economic strategy. The Under
Secretary's responsibilities include the development and
LB-77

implementation of policies in the areas of international
macroeconomic policy coordination, exchange rate policy trade
and investment policy, international debt strategy, and'U.S.
participation in international financial institutions. The Under
Secretary also serves as the G-7 Financial Deputy, with primary
responsibility for coordinating economic policy with other
inaustrial nations, and as the financial "Sherpa" in preparation
for the annual Economic Summit.
There are many aspects to the job, but what I would like to do
this morning, Mr. Chairman and Members of the Committee, is
outline for you four critical policy areas that will be at the
top of my agenda if I am confirmed.
First, we must improve macroeconomic coordination between the
United States and its G-7 partners. The U.S. economy is likely
to grow far more rapidly than the economies of Europe and Japan
over the next year or two. While we can take satisfaction from
our recovery, slow growth abroad means slower growth for U.S.
exports and rising trade imbalances.
Secretary Bentsen has taken the initiative to revive the policy
coordination process -- which is important to the restoration of
global growth and employment. The President's economic program
has brought us new respect in the international economic arena.
And it will strengthen our hand in encouraging our major trading
partners to take complementary actions to strengthen growth in
their oWn countries. The Secretary began this effort in London.
Both he and the President have made it clear that they hope to
see real progress by the time of the Economic Summit in Tokyo.
Second, we must work to promote international economic
integration and to insure that its benefits are shared fairly
among nations. There is no alternative to economic integration.
As President Clinton said at American University, the United
states must compete -- not retreat.
This means we must promote exports, because exports are the path
to economic growth and to the creation of better jobs in the
United States. For America to expand exports, foreign markets
must be open. Good Uruguay Round and NAFTA agreements will make
a major contribution to the health of our economy and to that of
our trading partners.
But concluding trade treaties is not enough. Where serious
barriers to U.S. exports remain, we must vigorously enforce
existing trade law to remove them. The trading practices of
those nations that run chronic and increasing surpluses with most
regions of the world are obviously of particular concern.

If confirmed, I will place particular emphasis on promoting
financial market liberalization in Asia, Latin America, and
Europe. Our financial institutions are world class innovators.
They will succeed where they are given the opportunity to
compete.
I will also work to ensure that American firms are not
victimized by exchange rate manipulation. And Treasury will
insist on ensuring that just as our market is generally open to
foreign friends that wish to invest here, foreign markets will be
open to American investment.
Third, we must do what we can to ensure the success of Russia's
democratic and economic reform effort. Political scientists
offer this critical lesson of history: democracies do not make
war on each other. To this important political science maxim, an
economist would attach a critical corollary: democracies cannot
survive hyperinflation. These twin truths are overriding
considerations when we confront American interests in securing
the success of the embattled reform effort underway in Russia.
Russia is perilously close to hyperinflation, and unless Russia's
leaders can reassert macroeconomic discipline, the country could
go the way of Weimar Germany or the Junta's Argentina.
The Clinton Administration is already fully engaged in devising
and implementing, in cooperation with our allies, an effective
economic assistance package for Russia and the other states of
the former Soviet union. The Treasury department brings crucial
economic perspectives to the table on matters concerning
stabilization policy, debt, technical assistance, and economic
restructuring. The task of rebuilding the Russian economy is the
greatest economic restructuring job since the Marshall Plan.
If
confirmed, I will work, under Secretary Bentsen's leadership,
with-the rest of the Administration and Congress to ensure that
the united States does all that it possibly can to support the
political and economic transition in Russia at this historic
moment.
Fourth, we must work to support sustainable and environmentally
responsible development in the developing world. With 1 billion
people trying to survive on less than $1 a day, this is a moral
imperative.
It is also an economic imperative as the developing
world represents the fastest-growing market for u.s. exports.
And it is a security imperative because prosperous nations are
most likely to be peaceful ones.
The Secretary of the Treasury is the u.S. Governor of the
International Financial Institutions -- the IMF, the World Bank,
and the regional development banks. These institutions afford
the united states extraordinary leverage. The World Bank, for
example, has committed over $220 billion to the less developed
world over the last 40 years, while u.S. contributions to the
Bank have cost the taxpayers less than $2.9 billion over the same
period.
3

If these institutions are to serve u.s. interests in the Third
World, they must be much more than financial institutions. They
must make a real, as well as a rhetorical commitment to helping
the poor and protecting the environment. The Treasury Department
will break with tradition to ensure that the u.s. representatives
to these institutions draw on the expertise of environment and
development communities, as well as the financial community.
In his welcoming address to the employees of the Treasury
Department, secretary Bentsen said that as the Departments of
state and Defense were the guarantors of military security during
the Cold War, the Treasury Department must be the guarantor of
America's economic' security in the post-Cold War world. It is a
distinct privilege and honor to have been asked by Secretary
Bentsen and nominated by the President to serve at Treasury
during this critical time. Mr. Chairman and members, if
confirmed, I look forward to working with you. Thank you.

THE SECRETARY OF THE TREASURY
WASHINGTON

March 18, 1993

,-"
' IJ
.rh ,i L' J, i'

IUbG

The Honorabl~ ,~obert ,C., Byrd
President p~6 ~~mp6i~
United States Senate
Washington, D.C.
20510
Dear Bob:
I am writing to request action by Congress on
legislation to increase the statutory limit on the public debt.
Currently, our best estimate is that the Treasury will run out of
cash and room under the current $4,145.0 billion debt limit on
April 7 as social security recipients and others attempt to cash
their checks.
The April 7 date reflects the most accurate information
we have on the outlook for changes in cash and debt over the
coming weeks, absent extraordinary actions.
We will let you know
if this date changes materially, but believe it is very important
that legislation to increase the debt limit pass before the
upcoming Cor.~~essional ~£c~ss.
To avoid unnecessary uncertainty in financial markets
and dislocations in the Treasury's usual pattern of auction
announcements, it would be best if congressional action on the
debt limit could occur by March 26. This date marks the
sched~lcd announcement of the regular 52-week Treasury bill that
is to be auctioned on April 1 for settlement on April 8.
We are requesting that the debt limit be increased to
$4,J70.0 billion on a temporary basis through September 30, 1993.
I u~ge Congress to act in a timely manner on a debt limit
lnc~ease 1n order to avoid financial market disruptions, which
would tend to raise the Treasury's cost of financing.
Of course,
a more significant delay could risk default on the Government's
sec~rities, with its adverse consequences on the financial
markets, the Federal deficit, and the u.s. economy.
)T.r::

Identical copies were sent
to the following:
Sen. Byrd
Sen. Mitchell
Sen. Dole
Sen. Moynihan
Sen. Packwood
Sen. Sasser
Sen. Domenici
Congo Foley
Congo Gephardt
Congo Michel
Cona.

rtUS~uw5d:

C"t'\·.. a.

Archer

Sincerely,

~Bentsen

:'~;R

IMMEDIATE RELEAS:-

~:o.rch

18,

CO:lTl\C~:

1993

Scott Dykema

(202)

622-2960

TREASURY MAKES SHORT-TERM BRIDGE LOAN TO PERU
The u.s. Treasury Department today announced participation
in a short-term multilateral bridge l03n for Peru to clear Peru's
urrears to the International Monetary Fund and the World Bank.
The multilateral ID3~ toto.led 5900 million, of ~hich the
share was $470 millIon.
The C.S. shure ~3S repaid today.

~'.S.

-30-

.......

(.,

03/1~

tI1A2 623 4940

IMF/QUSED

AL TERt-IATE EXECUTIVE DIRECTOR
~('(·'tl1 13 - 320

TREAS/GC

IaI 0021003

0411

MONETARY

INTERNATIONAL

FUND

NEWS@BRIEF
F"o.R IM.MEDIATE

RELEASE

Numbsr 93/3

March 18, 1993

Camdsssus Praises Peru: R,st Success
Under IMF Arrears Strategy

After today'S meeting of tne Executive Board on Peru, Mr, Michel Camdessus, Managing
O;rActor .,)f the IMF. made the following statement:
-, welcome today's action of the Executive Board restoring Peru's eligibility to use the
resources of the IMF and committing the institution's financial support for the country's three-year
economiC reform program. Peru's successful completion of Its 'rights-accumulation' program is a
Inbure to its couraee. viSion. and determination to work towards a better future with the support of
the International community.
Peru is the first country to recaln access to the international financial community through the
s rights accumulation approach to eliminate payments arrears with the institution. It is my hope
that Peru's example Will insplfe other countries in similar circumstances to implement souna
Ac,nnm1C Dolicies deserving International SUPPOr1. Today's action is nothing short of an important
acr. 1s .... emenf lor 1nternatlonal cooperatIOn.·
I MF'

-- -

- - ._----- ----------------------

• "1 1 .". ..... , r""I", f ' \ \

. J (I

I ,!II Illl'

202-623·7100 • Facsimile 202·623·6772

Monthly Treasury Statement
of Receipts and Outlays
of the United States Government
For Fiscal Year 1993 Through February 28, 1993, and Other Periods

Highlight

Accelerated electronic income tax return filing and a 5% increase in eligible Earned Income Credit
(EIC) recipients increased the EIC reporting by $2,385 million through February 1993, compared to
the same period last year.

RECEIPTS, OUTLAYS, AND SURPLUS/DEFICIT
THROUGH FEBRUARY 1993

600,..-r---------,

8
I
L
L
I

o
N
S

Contents

500

Summary, page 2

400

Receipts, page 6
Outlays, page 7

300
Means of financing, page 20

200

Receipts/outlays by month, page 26

100

Federal trust funds/securities, page 28
Receipts by source/outlays by
function, page 29

-100.vt---------=
Explanatory notes, page 30

Compiled and Published by

Department of the Treasury

Financial Management Service

Introduction
The Monthly Treasury Statement of Receipts and Outlays of the United States
Government (MTS) is prepared by the Financial Management Service, Department of
the Treasury, and after approval by the Fiscal Assistant Secretary of the Treasury, is
normally released on the 15th workday of the month following the reporting month.
The pubhcatlOn IS based on data prOVided by Federal entities, disbursing officers,

of receipts are treated as deductions from gross receipts; revolVing and management fund receipts, reimbursements and refunds of monies previously expended are
treated as deductions from gross outlays; and interest on the public debt (public
issues) is recognized on the accrual basIs. Major information sources include
accounting data reported by Federal entities, disbursing officers, and Federal
Reserve banks.

and Federal Reserve banks.

Triad of Publications
The MTS is part of a triad of Treasury financial reports. The Daily Treasury
Statement is published each working day of the Federal Government It prOVides
data on the cash and debt operations of the Treasury based upon reporting of the
Treasury account balances by Federal Reserve banks The MTS is a report of
Government receipts and outlays, based on agency reporting. The U.S. Government
Annual Report is the official publication of the detailed receipts and outlays of the
Government It is published annually in accordance with legislative mandates given
to the Secretary of the Treasury.

Audience
The MTS IS published to meet the needs of: Those responsible for or interested
In the cash position of the Treasury; Those who are responsible for or interested in
the Government's budget results; and individuals and businesses whose operations
depend upon or are related to the Government's financial operations.

Disclosure Statement
This statement summarizes the financial activities of the Federal Government
and off-budget Federal entities conducted in accordance with the Budget of the U.S.
Government, ie, receipts and outlays of funds, the surplus or deficit, and the means
of finanCing the deficit or dispOSing of the surplus. Information is presented on a
modified cash basis: receipts are accounted for on the basis of collections; refundS

Data Sources and Information
The Explanatory Notes section of this publication provides information concerning the flow of data into the MTS and sources of information relevant to the MTS.

Table 1. Summary of Receipts, Outlays, and the Deficit/Surplus of the U.S. Government, Fiscal Years 1992 and 1993,
by Month
[$ millions]
Period

Outlays

Receipts

Deficit/Surplus (-)

FY 1992
October
November
December
January
February
March
April
May
June
July
August
September

Year-to-Date

78,068
73,194
103,662
104,091
62,056
72,917
138,430
62,244
120,909
79,074
78,216
118,338

114,660
117,878
106,199
119,755
111,230
123,629
123,821
109,029
117,126
122,220
102,918
112,938

36,592
44,684
2,537
15,664
49,174
50,712
-14,609
46,786
-3,783
43,146
24,702
-5,400

1,091,200

1,381,404

290,203

76,832
74,633
113,756
112,809
66,194

125,620
107,363
152,701
82,996
113,788

48,788
32,730
38,945
-29,812
47,594

444,223

582,468

138,245

FY 1993
October
November
December
January
February

year-la-Date, ... ,,. .. ,.,. .... ,.., ... , ,.

Table 2. Summary of Budget and Off-Budget Results and Financing of the U.S. Government, February 1993 and
Other Periods
[$ millions1

Current
Fiscal
Year to Date

This
Month

Classification

Total on-budget and off-bUdget results:
Total receipts ....

1,162,934

421,072

1,253,101

41,093
25,100

327,247
116,975

838,919
324,015

306,513
114,559

906,370
346,731

113,788

582,468

1,503,886

569,723

1.527,340

89,332
24,456

478,217
104,251

1,238,659
265,227

470,958
98,765

1,250.928
276,412

-47,594

-138,245

-340,952

-148,650

-274,239

-48,239
+644

-150,969
+12,724

-399,740
+58,788

-164,445
+15,794

-344,558
+70,319

47,594

138,245

340,952

148,650

274,239

30,689
27,227
-10,321

103,828
39,690
-5,273

342,265

122,797
24,602
1,252

274,796

On-budget outlays
Off-budget outlays

Total on-budget and off-budget financing
Means of financing:
Borrowing from the public .
Reduction of operating cash, increase (-)
By other means .

'These figures are based on the MId-Session Review: The Presldent·s Budget and Economic
Growth Agenda released by the Office of Management and Budget on July 24. 1992

-1,313

No Transactions.
Note: Details may not add to totals due to rounding

Figure 1. Monthly Receipts, Outlays, and Budget Deficit/Surplus of the U.S. Government, Fiscal Years 1992 and 1993

$ billions

."...... . .

. .

,
,,

, '

.,'

Receipts

Deficit(-)/Surplus

Oct.

Dec.

Feb.

Budget
Estimates
Next Fiscal
Year (1994)1

444,223

Total outlays

On-budget surplus (+) or deficit (-)
Oft-budget surplus (+) or deficit (-)

Prior
Fiscal Year
to Date
(1992)

66,194

On-budget receipts "
Off-budget receipts

Total surplus (+) or deficit (-)

Budget
Estimates
Full Fiscal
Year'

Apr.

Jun.

FY
92

Aug.

Oct.

Dec.

Feb.

-557

Figure 2.

Monthly Receipts of the U.S. Government, by Source, Fiscal Years 1992 and 1993

$ billions

1~n-,~-------------------------------------------,

ITotal Receipts I

1
1

Oct.

Dec.

Feb.

Apr.

Jun.

Aug.

FY
92

Dec.

Oct.

FY
93

Figure 3. Monthly Outlays of the U.S. Government, by Function, Fiscal Years 1992 and 1993

$ billions
Total Outlays

1
1

Oct.

Dec.

Feb.

Apr.

Jun.

Aug.

FY
92

Oct.

Dec.

Feb.

Table 3. Summary of Receipts and Outlays of the U.S. Government,
February 1993 and Other Periods
[$ millions)
This Month

Current
Fiscal
Year to Date

23,947
792

219,206
30,528

197,146
27,474

506,981
112,159

25,100
6,522
2,259
369
3,342
822
1,347
1,695

116,975
32,508
6,652
1,944
18,415
4,650
7,364
5,980

Total Receipts "., ... " ... , ... , .. ', .. ", .. ", .. " .. " ... " .....

114,559
32,476
6,056
1,961
18,221
4,304
7,082
11,793

324,015
89,832
25,528
5,109
48,037
12,842
18,075
20,357

66,194

444,223

421,072

(On-budget) .. " .... , .. ," ... , .. " .... , .. '" .. " .. ,,' .. ,' ... '.

1,162,934

41,093

327,247

306,513

(Off-budget) .......... .......... .......... .......... .........

838,919

25,100

116,975

114,559

324,015

195
157
12
862
4,389
202
22,003
2,459
2,714
1,266

1,024
858
87
7,483
28,224
1,235
115,786
12,405
13,289
6,700

1,029
813
83
6,066
26,341
1,034
118,708
12,444
6,579

2,785
2,792
255
11,580
62,337
2,882
278,006
29,260
30,781
16,232

22,184
25,061
1,764
477
677
3,797
247
2,158

113,032
120,159
10,426
2,639
4,448
18,268
2,412
13,397

105,189
113,093
10,076
2,679
4,109
17,178
2,101
12,887

290,789
296,912
26,128
6,544
10,366
38,914
5,209
34,512

16,813
4,152
2,626
383
383
1,008
2,886
41

127,037
4,494
14,145
2,281
142
5,781
14,878
291

127,190
222
15,263
2,425
156
5,831
14,609
208

307,463
3,312
34,180
6,156
1,320
14,086
37,499
392

-622
-1,166

-8,787
4,427

-8,194
12,340

42,457
30,251

-530
-2,809

-40,377
-13,716

-37,704
-14,669

-81,975
-37,539

Classification

Comparable
Prior Period

Budget
Estimates
Full Fiscal Year'

Budget Receipt s
Individual income taxes
Corporation income taxes
Social insurance taxes and contributions:
Employment taxes and contributions (off-budget)
Employment taxes and contributions (on-budget)
Unemployment insurance
Other retirement contributions
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts

Budget Outlays
Legislative Branch
The Judiciary
Executive Office of the President
Funds Appropriated to the President
Department of Agriculture
Department of Commerce
Department of Defense -Military
Department of Defense -Civil
Department of Education
Department of Energy
Department of Health and Human Services, except Social
Security
Department of Health and Human Services, Social Security
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
Department of State
Department of Transportation
Department of the Treasury:
Interest on the Public Debt
Other
Department of Veterans Affairs .
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Office of Personnel Management
Small Business Administration
Other independent agencies:
Resolution Trust Corporation
Other
Allowances
Undistributed offsetting receipts:
Interest
Other

11,636

Total outlays .......... .......... .......... .......... .......... .

113,788

582,468

569,723

(On-budget) ., ... , .. ,' ....... " .. " ... , .... , .. " .... , .. ", ... ,

1,503,886

89,332

478,217

470,958

(Off-budget) .......... .......... .......... .......... .........

1,238,659

24,456

104,251

98,765

Surplus (+) or deficit (-) .......... .......... .......... ......

265,227

-47,594

-138,245

-148,650

(On-budget) .... ' .. ", ... , ... , ... , ... , .... , .. , ..... , .. " .. ""

-340,952

-48,239

-150,969

-164,445

-399,740

+644

+12,724

+15,794

+58,788

(Off-budget) .......... .......... .......... .......... .........

'These figures are based on the Mld·Session Review: The President's
Budget and EconomiC
Growth Agenda, released by the Office of Management and
Budget on July 24, 1992.

No TransactIOns.
Note: Details may not add to totals due to roundmg.

Table 4, Receipts of the U.S. Government, February 1993 and Other Periods
[$ millions]
This Month

Classification

Gross
Receipts

Individual Income taxes.
Withheld
Presidential Election Campaign Fund
Other

Refunds
(Deduct)

Prior Fiscal Year to Date

Current Fiscal Year to Date

I .

Receipts

33,652
4
967

Gross
Receipts

Refunds
(Deduct)

I .

Receipts

Gross
Receipts

185,696
5
48.442

I l
Refunds
(Deduct)

Rece' t
Ip S

179,670
6
34,739

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

34.623

10.671

23.947

234,143

Corporation income taxes ............ , .......... , ............

2,510

1,719

792

36,804

21,629
1,041

(' ')
( )

106,885
-1,229
-9

22,670

105,647

103.454

103,454

2,318
112

11.459
-129

11,459
-129

11,082
23

)

-1

..)

(")

2.430

11,329

11.329

11,105

5,846
334

31,090
-187

30,739
103

30.139
103

Total-Individual income taxes

Social insurance taxes and contributions:
Employment taxes and contributions:
Federal old-age and survivors ins. trust fund:
Federal Insurance Contributions Act taxes
Self-Employment Contributions Act taxes
Deposits by States
Other

Total-FOASI trust fund
Federal disability insurance trust fund:
Federal Insurance Contributions Act taxes
Self·Employment Contributions Act taxes
Receipts from railroad retirement account
DepOSits by States
Other

(

Total-FDI trust fund
Federal hospital Insurance trust fund:
Federal Insurance Contributions Act taxes
Self-Employment Contributions Act taxes
Receipts from Railroad Retirement Board
Deposits by States

(

)

(

Railroad retirement accounts:
Rail Industry pension lund
Railroad Social Security equivalent benefit
Total-Employment taxes and contributions

..
..)

190
153

(

31,623

(

Unemployment insurance:
State taxes deposited in Treasury
Federal Unemployment Tax Act taxes
Railroad unemployment taxes
Railroad debt repayment

1,540
683
23
24

Total-Unemployment insurance

2,270

6,276

219,206

214,415

17,269

197,146

30.528

34,715

7,301

27,474

106,885
-1,229
-9

103.468
-15
2

)

(

)

(

103,468
-15
2

)

(")

)

-3

6,180

30,900

30.900

30.843

30,843

190
153

890
726

883
726

874
761

872
761

31,623

149.491

149.483

147,037

147,035

1,540
672
23
24

4,881
1,703
47
53

4,881
1,672
47
53

4,254
1,737
85
16

4,254
1.101
85
16

2,259

6,684

6.652

6.092

6,056

)

6,180

Total-FHI trust fund

(

14,937

)

Other retirement contributions:
Federal employees retirement - employee
contributions
Contributions for non-federal employees

362
7

1,905
39

1,918
43

Total-Other retirement contributions

369

1,944

1,961

Total-Social insurance taxes and
contributions ........................................
Excise taxes:
Miscellaneous excise taxes 1
Airport and airway trust fund
Highway trust fund
Black lung disability trust fund
Total-Excise taxes

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

Estate and gift taxes ................................
Customs duties

0 .. 0 0 ....

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

Miscellaneous Receipts:
Deposits of earnings by Federal Reserve banks
All other

34,261

34,251

158,119

158,080

155,090

155,052

1,692
305
1.344
49

1.644
305
1,344
49

11.066
191
7,194
262

194
5
99

10,872
186
7,095
262

8,971
2,089
7,311
260

228
7
176

8,743

3,390

3,342

18,714

299

18,415

18,631

411

18,221

851

822

4,772

123

4,650

4,434

130

4,304
7,082
10,402
1,391

2,Q82

7,135
260

1,403

1,347

7,672

307

7,364

7,404

322

1,517
312

2134

1,517
178

4.457
1,659

136

4,457
1,523

10.402
1,392

1,829

134

1,695

6,116

136

5,980

11,795

11,793

Total -

Miscellaneous receipts ........................

Total -

Receipts

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

78,869

12,675

66,194

466,339

22,116

444,223

446,544

25,472

421,072

Total -

On-budget

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

53,768

12,675

41,093

349,364

22,116

327,247

331,985

25,472

306,513

Total -

Off-budget

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

25,100

116,975

114,559

'Includes amounls for Windfall prohts tax pursuant to PL 96-223
2Rep resents a transter from miscellaneous receipts to a depoSit
transportation audit SUits against the General Services AdministratIon.

... No Transactions.

Less Ihan $500.000.
Nole: Details may not add to totals due to rounding

fund tor payment of

114,559

---

Table 5.

Outlays of the U.S. Government, February 1993 and Other Periods
[$ millions]
This Month

Current Fiscal Year to Date

Gross !APPlicab lel
Outlays
Outlays
Receipts

Gross !APPlic.able! Outla s
Outlays
Receipts
y

Classific ation

Legislativ e Branch:
Senate
House of Representatives
Joint items
Congressional Budget Office
Architect of the Capitol
Library of Congress
Government Printing Office:
RevolVing fund (net)
General fund appropriations
General Accounting Office
United States Tax Court
Other Legislative Branch agencies
Proprietary receipts from the public
Intrabudgetary transactions

47
59
6
2
16
23

.. )

20
43
182
13
14

)

-3

195

1,034

(

198

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

833
14

785
14

858

813

1,029
14

157

858

3
6

3
3
6

16
22
49

14
21
48

29
121
76

424
2,818
1,971
-6
14
14

499
2,035
1,412
13
17
14

300

199

185
2,818
1,971
-6
14
14
-199

202

199
2,035
1,412
13
17
14
-202

437

4,798

3,991

502

3,489

(

)

(

(* *)

238

(

)

785
14

(* *)

813

4
-93

168

137

5,235

10
71

367
154
311

465
137
304

832

906

80
44
52

527
271
195

644
209
174

5
64

50
-64

227

25
361

202
-361

266

20
341

246
-341

231

386

834

1,293

361

932

87
161
34

153
3

87
9
31

517

1.965

161

1,220

16
2
7

25
2

16
-23
4

80
39
34

106
3

80
-68
31

337

239

2,205

496

1,710

2,481

695

-86

-18
1,056

109
5,110
5

(' *)

100
5,015
143

51
16
1,056

(

)

(" *)

607
3

...........

1,039

2
-1

36
45
181
13
13
-2
-1

Peace Corps
Overseas Private Investment Corporation
Other

1,024

178
321
34
9
89
112

(* *)

304

International Monetary Programs
Military Sales Programs:
Special defense acquisition fund
Foreign military sales trust fund
Kuwait Civil reconstruction trust fund
Proprietary receipts from the public
Other ..

..)

36
45
181
13
13

..)

157

Total-Int ernationa l Development Assistance

20
43
182
13
14
-3
-3

(

833
14

..)

Total-Mu ltilateral Assistance

179
322
34
9
95
112

147
6

(

Agency for International Development:
Functional development assistance program
Sub-Saharan Africa development assistance
Operating expenses
Payment to the Foreign Service retirement and
disability fund
Other
Proprietary receipts from the public
Intrabudgetary transactions

186
306
32
9
94
130

Outla s
y

)

103
121
76

International Development Assistance:
Multilateral Assistance:
Contributions to the International Development
Association
International organizations and programs
......... ..
Other

)
)

(

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

Total-Inte rnational Security ASSistance

....

(
(

Gross JAPPlic.a ble
Outlays
Receipts

147
6

Funds Appropria ted to the Presiden t:
International Security Assistance
Guaranty reserve fund
Foreign military finanCing grants
Economic support fund
Military assistance
Peacekeeping Operations
Other
Proprietary receipts from the public

Total-Ag ency for International Development

Executiv e Office of the PreSident:
Compensation of the President and the White House
Office
Office of Management and Budget
Other
..............

Total-Fu nds Appropri ated to the Presiden t

2
9
30
2
2
-1

(

The Judiciary :
Supreme Court of the United States ..
Courts of Appeals. District Courts. and other judiCial
services
Other

Total-Ex ecutive Office of the Presiden t

187
307
32
9
101
130

2
9
30
2
2

Total-Le gislative Branch .......... .......... .......... ..

Tolal-T he Judiciary

47
59
6
2
14
23

(* *)
( )

Prior Fiscal Year to Date

1,768

906

-607
3
862

109
4,847

5,110
5
-4,847
13

5,889

7,483

13
13,371

11,646

-86
116
54
4,392

-15
5,015
89
4,392
1

5,580

6,066

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]
This Month
Classification

Gross IAPPlicable
Outlays
Receipts

Department of Agriculture:
Agricultural Research Service
Cooperative State Research Service
ExtenSion Service
Animal and Plant Health Inspectton Service
Food Safety and Inspectton Service
Agricultural Marketing Service
SOil Conservation Service
Agricultural Stabllizatton and Conservation Service:
Conservation programs
Other
Foreign assistance programs

Current Fiscal Year to Date

I Outlays

Gross
Outlays

Applicable
Receipts

Outlays

Prior Fiscal Year to Date
Gross
Outlays

IApplicable
I
ReceIpts

Outta s

50
36
33
38
39
69
64

305
179
168
199
196
449
354

305
179
168
199
196
448
354

293
173
164
162
188
435
329

14
73
109

1,726
300
214

1,690
270
241

308
1,161
332
15
253
98
42

1,084
1,264
211
2

-776
-103
122
13
253
98
42

557
1,763
378
9
245
73
34

1,314
1,231
202

-757
532
176
7
245
73
34

293
173
164
162
188
431
329
1,690
270
241

Farmers Home Administration:
Public enterprise funds:
Agricultural credit Insurance fund
Aural housing Insurance fund
Aural development insurance fund
Other
Salaries and expenses
Rural water and waste disposal grants
Other

23
157
32
4
46
13
7

171
214
23
(' ')

-148
-57
8
4
46
13
7

Total-Farmers Home Administration

283

408

-126

2,209

2,560

-351

3,058

2,748

310

Aural Electrification Administration
Federal Crop Insurance Corporation
Commodity Credit Corporation:
Price support and related programs
National Wool Act Program

218
60

152
4

66
56

968
409

1,570
314

-603
95

883
614

1,172
257

-288
357

1,443
1

530

912

12,164
4

2,823

9,340
4

9,711
3

2,341

7,371
3

Food and Nutrition Service:
Food stamp program
State child nutrition payments
Women, infants and children programs
Other

2,061
540
248
134

10,190
2,912
1,238
373

9,491
2,773
1,140
333

2,983

14,713

13,737

91
13
70

575
158
557

564
159
501

174

1,291

1,224

45
-98
-150

260

13
453

269

13
570

256
-570

-150

247
-453
-150

4,389

35,959

7,735

28,224

33,446

7,105

26,341

20
20
24

19
20
24

106
152
126

96
152
126

33
138
125

130
-2
9
5

129
-2
9
2

739
29
91
35

664
25
85
34

729
29
91
20

652
25
85
34

869

807

796

41
-48

-66

(oo)

(")

1,034

Total-Food and Nutrition Service
Forest Service:
National forest system
Forest service permanent appropriations
Other
Total-Forest Service

Other
Proprietary receipts from the public
Intra budgetary transactions
Total-Department of Agriculture
Department
Economic
Bureau of
Promotion

-150

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

5,583

of Commerce:
Development Administration
the Census
of Industry and Commerce

SCience and Technology
National Oceanic and Atmospheric Administration
Patent and Trademark Office
National Institute of Standards and Technology
Other

1,195

3
3

138

894

..)

10
-10

216

Total-Science and Technology

142

Other
Propnetary receipts from the public
Intrabudgetary transactions
Offsetting governmental receipts

Total-Department of Commerce

2
98

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

..)

(oo)

202

1,319

(

r ')

1,235

-2

1,127

138
125

-2

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]
This Month
Classification

GrosslAPPlicablej Outlays
Outlays
Receipts

Department of Defense-Military:
Military personnel:
Department of the Army
Department of the Navy
Department of the Air Force
Total-Military personnel
Operation and maintenance:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies
Total-Operation and maintenance ....
Procurement:
Department of the Army
Department of the Navy
Department of the Air Force ...
Defense agencies
Total-Procurement
Research, development, test, and evaluation:
Department of the Army .Department of the Navy
Department of the Air Force
Defense agencies
Total-Research, development, test and evaluation
Military construction:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies

Family housing:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies
Revolving and management funds:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies
Trust funds:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies
Proprietary receipts from the public:
Department of the Army .Department of the Navy
Department of the Air Force
Defense agencies
Intra budgetary transactions:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies:
Defense cooperation account
Other.
Offsetting governmental receipts:
Department of the Army
Defense agencies:
Defense cooperation account

lAPPlic.abl~1
ReceIpts

Gross !APPlic.ablel Oulla s
Outlays
ReceIpts
y

Gross
Outlays

Outla s
y

2,17B
1,B70
1,60B

11,79B
11,325
8,B60

11,798
11,325
B,860

14,027
12,601
9,257

5,656

31,982

35,8B5

35,885

1,B60
2,033
1,862
1,399

10,042
9,346
9,498
7,185

11,675
10,850
10,582
3,698

7,154

36,072

36,B04

7BB
2,364
2,245
338

788
2,364
2,245
33B

4,715
11,780
10,B16
1,451

4,715
11,780
10,816
1,451

5,370
13,181
11,330
1,433

5,736

28,763

31,316

497
643
1,056
734

2,429
2,925
5,652
3,651

2,350
2,917
5,301
3,387

2,930

14,657

13,955

53
36
70
92

392
369
527
616

321
404
378
441

321
404
37B
441

251

1,904

1,544

112
B7
71
6

112
87
71
5

530
340
340
34

530
340
340
30

608
309
344
14

..)

60B
309
344
14

39
43

106
44

2,193

2,192

-3
24
9
2,212

..)

-3
24
9
2,212

(. ')

(

39
43
11

(

)

(

)

1
3

4
-2
43

55
-47
56
-1

-55
47
-56

5
1
43

...........

Total-Department of Defense-Military .............

Prior Fiscal Year to Date

2,178
1,870
1,608

...........

Total-Military construction

Current Fiscal Year to Date

3
-421
1

(. ')

(

346

(

22,073

)

(")

8
17

14
-4
-2

219
225
223
76

-219
-225
-223
-76

(

)

(

)

20
16
-41

(

)

9
17

12
-1
-41

-141
191
178
109

141
-191
-178
-109

107
412
38

230
492
22

-2
-950

-199
-385

)

22,003

)

22
13
-2

(

116,602

-7

-5

-37

4,099

-4,099

816

115,786

4,467

118,708

123.175

rable 5. Outlays of the U.S. Government, February 1993 an~. Other Periods-Continued
[$ millions]

Classification

Department of Defense-Civil
Corps of Engineers:
ConstrucllOn, general
Operation and maintenance, general
Other
Proprietary receipts from the public

Current Fiscal Year to Date

Prior Fiscal Year to Date

Gross jAPPlicablel
Outlays
Outlays
Receipts

Gross IAPPlicable I
Outlays
Receipts
Outlays

Gross jAPPlic.ablej Outla s
Outlays
Receipts
Y

73
96
123
292

Total-Corps of Engineers
Military retirement:
Payment to military retirement fund
Retired pay
Military retirement fund
Intrabudgetary transactions
Education benefits
Other
Proprietary receipts from the public

285

1,790

447
600
494

439
556
795
-65

1,725

1,541

12,273

11,169

2,152

2,152
15
8

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

Total-Office of Elementary and Secondary
Education
Office of Bilingual Education and Minority Languages
Affairs
Office of Special Education and Rehabilitative Services:
Special education
Rehabilitation services and disability research
Special institutions for persons with disabilities
Office of Vocational and Adult Education
Office of Postsecondary Education:
College housing loans
Student financial assistance
Guaranteed student loans
Higher education
Howard University
Other
Total-Office of Postsecondary Education
Office of Educational Research and Improvement
Departmental management
Propnetary receipts from the public

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

Department of Energy:
Atomic energy defense activities
Energy programs:
General sCience and research activities
Energy supply, Rand D activities
Uranium supply and enrichment activities
Fossil energy research and development
Energy conservation
Strategic petroleum reserve
Nuclear waste disposal fund
Other
Total-Energy programs

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

1.473
11,169

2
4

10,578
-12,273
79
28
-4

10,049
-11,169
76
44

2
4

10,049
-11,169
76
43
-4

12,405

11,711

11,636

10,578
-12,273
79
29

( )

15
8
-1

2,459

12,476

626
98
132
2
8

2,788
560
658
7
32

2,696
422
671
5
29

866

4,045

3,823

288
170
10
120

1,175
837
56
614

980
855
39
451

3
854
308
44
15

3
854
308
44
15
1

4
3,891
1,943
337
84
5

-26
3,891
1,943
337
84
5

4
3,569
2,029
337
81
2

-26
3,569
2,029
337
81
2

1,225

1,224

6,263

6,234

6,022

5,992

23
-2

151
115
14

151
115
-14

116
127

23
-2
-2

116
127
-19

2,714

13,333

13,289

12,494

12,444

839

4,410

4,674

110
210
92
29
43
24
8
8

110
210
92
29
43
24
8
7

584
1,092
453
159
191
136
113
82

584
1,092
453
159
191
136
113
80

542
1,149
602
165
173
77
131
232

542
1,149
602
165

131
230

523

2,809

2,808

3,072

3,070

55
32
-147
-37

829
186

581
186

535

280
186
-826
-153
-5

1,381

6,700

(

2,468

2,716

524

Power Marketing Administration
Departmental administration
Propnetary receipts from the public
Intrabudgetary transacllOns
Offsetting governmental receipts

447
600
494
-69

..)

(

Department of Education:
Office of Elementary and Secondary Education:
Compensatory education for the disadvantaged
Impact aid
School improvement programs
Chicago litigation settlement
Indian education
Educational excellence

Total-Department of Education

439
556
795

73
96
123
-7

12,273

Total-Department of Defense-Civil

Total-Department of Energy

This Month

180
32

)

..)
(.. )

(

125
147

-37

..)

(

1,538

272

(

826
-153

)

1,266

549

8,081

173
77

186
-1,262
-126
-9

1,808

6.579

1,262
-126
8,387

-45

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]

Classification

Department of Health and Human Services, except Social
Security:
Public Health Service:
Food and Drug Administration " . . . . . . . . . . . .
Health Resources and Services Administration
...........
Indian Health Service
Centers for Disease Control
National Institutes of Health:
Cancer research
Heart, lung, and blood research
Diabetes, digestive and kidney diseases
Neurological disorders and stroke
Allergy and infectious diseases
General medical sciences
Child health and human development
Other research institutes .. ,
Research resources ......
Other

........ , ..

Total-National Institutes of Health
Alcohol, Drug Abuse, and Mental Health Administration.
Agency for Health Care Policy and Research
Assistant secretary for health

...........

Federal hospital insurance trust fund:
Benefit payments
Administrative expenses and construction
Interest on normalized tax transfers .....
Quinquennial transfers to the general fund from FHI
Total-FHI trust fund .....
Federal supplementary medical insurance trust fund:
Benefit payments
Administrative expenses and construction
Total-FSMI trust fund
Other
Total-Health Care Financing Administration
Social Security Administration:
Payments to Social Security trust funds
Special benefits for disabled coal miners
Supplemental security income program
Total-Social Security Administration
Administration for children and families:
Family support payments to States "
Low income home energy assistance
Refugee and entrant assistance
Community Services Block Grant Act Programs
Payments to States for afdc work programs
Interim assistance to States for legalization ., ...
Payments to States for day care assistance ........ ,.
Social services block grant ..
Act service programs
..................
Payments to States for foster care and adoption
assistance
Other
............
Total-Administration for children and families
Office of the Secretary
Proprietary receipts from the public

Current Fiscal Year to Date

Prior Fiscal Year to Date

Gross !APPlicable! Outlays
Outlays
Receipts

Gross !APPlic,able! Outla s
Outlays
Receipts
y

Gross IAPPlicable! Outla 5
Outlays
Receipts
Y

(' .)

293
703
615
417

790
492
265
240
392
344
206
646
138
129

881
463
259
210
359
312
199
484
141
191

727

3,640

3,499

230
4
55

1,162
14
266

1,093
40
78

1,546

7,383

7,381

6,739

6,003
3,740

30,111
18,316

26,868
17,604

7,332
91

35,144
421

31,696
510

7,423

35,565

32,205

3,675
137

20,571
529

20,533
629

3,811

21,101

21,162

198

20,984

105,290

97,848

9
68
1,973

3,071
336
9,075

2,851
345
8,655

2,049

12,482

11,851

1,492
180
40
37
55
15
26
245
306

6,648
804
155
177
289
55
112
1,232
1,543

6,513
646
117
188
217
248

1,096
1,595

231

962
( )

1,051
)

1,051
(" ')

2,626

11,979

11,670

20
-1,301

242

242
-6,027

290
838
644
529

156
98
42
47
77
67
33
155
28
24

727
230
4
55

(

)

2,626
20
1,301

6,027

(

291
703
615
417

288
838
644
529

56
229
140
105

1,546

Total-Public Health Service
Health Care Financing Administration:
Grants to States for Medicaid
Payments to health care trust funds

This Month

5,370

6,737

56
-5,370

Table 5. Outlays of the U.S. Government, February 1993 an~. Other Periods-Continued
[$ mllhons]

Classification

Department of Health and Human Services, except Social
Security:-Continued
Intrabudgetary transactions:
Quinquennial transfers to the general fund
From FHI. FOASI, and FDI
Payments for health Insurance for the aged:
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Payments for tax and other credits:
Federal hospital Insurance trust fund
Other
Total-Department of Health and Human Services,
except Social Security ................................
Department of Health and Human Services, Social
Security (off-budget):
Federal old-age and survivors insurance trust fund:
Benefit payments
Administrative expenses and construction
Payment to railroad retirement account
Interest expense on interfund borrowings
Interest on normalized tax transfers
Quinquennial transfers to the general fund from
FOASI
Total-FOASI trust fund
Federal disability insurance trust fund:
Benefit payments
Administrative expenses and construction
Payment to railroad retirement account
Interest on normalized tax transfers
QUinquennial transfers to the general fund from FDI
Total-FDI trust fund
Proprietary receipts from the public
Intrabudgetary transactions 1
Total-Department of Health and Human Services,
Social Security(off-budget) ..............................
Department of Housing and Urban Development:
Housing programs:
Public enterprise funds:
Federal housing administration fund
Housing for the elderly or handicapped fund
Other
Rent supplement payments
Homeownership aSSistance
Rental housing aSSistance
Rental housing development grants
Low-rent public housing
PubliC housing grants
College housing grants
Lower Income housing aSSistance
Section 8 contract renewals
Portability program fees
Special purpose grants
Other
Total-Housing programs
Public and Indian Housing programs:
Payments for operation of low-income housing
projects
Low-rent public housing-Loans and other expenses
Total-Public and Indian Housing programs
Government National Mortgage Association:
Management and liqUidating functions fund
Guarantees of mortgage-backed securities
PartiCipation sales fund
Total-Government National Mortgage Association
Community Planning and Development:
Public enterprise funds
Community Development Grants
Other
Total-Community Planning and Development

This Month

Current Fiscal Year to Date

Gross IAPPlicablel Outlays
Receipts
Outlays

Gross !APPlicable[
Outlays
Receipts
Outlays

Gross IAPPlicable
Outlays
Receipts

-18,320

-17,687

113,032

110,560

-3,740

Outlays

22,184

119,061

22,130
100

108,629
744

108.629
744

102.763
767

22,230

109.373

103,530

2.754
86

13,503
357

13.503
357

12.057
368

12,057
368

2.840

13.860

12,425

23,485

1,301

Prior Fiscal Year to Date

2,840

..)

(

(oo)

-9

6,029

-9

-3,073

)

(

)

5,371

12,425
(")

-3,073

-2,862

105,189

(")

-2,862

25,061

( )

25,061

120,160

( )

120,159

113,093

567
-1
31
5
7
53
-1
23
203
1
892
199

528
58
5

39
-59
26
5
7
53
-1
23
203
1
892
199

3,072
393
137
23
31
275
13
391
975
8
4,465
907

2.380
257
28

692
136
109
23
31
275
13
391
975
8
4,465
907

4,329
566
12
23
36
269
5
401
823
9
4,543
519

4
2

10
10

5
6

1.393

10,712

2.665

8,048

11,548

3,792

7,756

195
4

195
3

933
107

933
86

858
117

858
94

199

197

1.040

1,019

975

953

4
2
1,984

591

..)

)

113,093

3,491
272
29

839
294

(

)

-17
23
36
269
5
401
823
9
4,543
519
5
6

133

220

-87

557

2
766

-2
-209

755

2
905

-2
-149

133

220

-87

557

768

211

755

907

152

8
217
25

-2
217
25

34
1,334
115

-11
1,334
115

93
1,269
85

48
1,269
85

251

241

1.484

1,439

1.447

1,402

(

)

(

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]

Classification

Department of Housing and Urban Development:Continued
Management and Administration
Other
Proprietary receipts from the public
Total-Department of Housing and Urban
Development .............................................
Department of the Interior:
Land and minerals management:
Bureau of Land Management:
Management of lands and resources
Fire protection
Other
Minerals Management Service
Office of Surface Mining Reclamation and
Enforcement

...........

Total-Fish and wildlife and parks
Bureau of Indian Affairs:
Operation of Indian programs
Indian tribal funds
Other
Total-Bureau of Indian Affairs

Total-Department of the Interior
Department of Justice:
Legal activities
Federal Bureau of Investigation
Drug Enforcement Administration
Immigration and Naturalization Service
Federal Prison System
Office of Justice Programs
Other
Intra budgetary transactions
Offsetting governmental receipts
Total-Department of Justice

Gross !APPlicable! 0 tl
Outlays
Receipts
u ays

37
5

2,608

225
13

37
5
-21

844

1,164

14,031

(")

41
7
13
54

224
57
89
290

Total-Water and science

Territorial and international affairs
Departmental offices
Proprietary receipts from the public
Intrabudgetary transactions
Offsetting governmental receipts

Gross !APPlicable! Outlays
Outlays
Receipts

137

...........
., .........

Fish and wildlife and parks:
United States Fish and Wildlife Service
National Park Service

Current Fiscal Year to Date

41
7
13
54

Total-Land and minerals management
Water and science:
Bureau of Reclamation:
Construction program
Operation and maintenance
Other
Geological Survey
Bureau of Mines

This Month

.........

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

Department of Labor:
Employment and Training Administration:
Training and employment services
Community Service Employment for Older Americans
Federal unemployment benefits and allowances
State unemployment insurance and employment service
operations
Payments to the unemployment trust fund
Advances to the unemployment trust fund and other
funds

3,605

10,426

14,949

224
57
89
289

219
60
138
262

Outla s
y

107

207
17
-107

4,873

10,016

219
60
138
262

126

127

137

786

784

806

107
112
195
255
80

122
94
248
254
83

107
112
137
255
68

122
94
194
254
71

678

800

734

16
19
16
39
11

112

101

748

84
89

471
608

400
532

173

1,079

932

110
60
17

110
60
15

569
87
112

569
87
106

436
193
164

436
193
157

187

185

768

762

793

786

4
16
-138
-2

147
55

147
55
-859
-8

189
37
720
4

189
37
-720
-80
-4

191

2.619

183

1,407
696
335
502
875
320
161
-5
-183

213

4.109

4
16

859

-8

150

471

3.514

1,366
783
285
603
882
392
550
-182

212
130
-3
117
163
70
54
-2
-65

671

4,618

284
27
11

-26
1,050

(

.........

207
17

107

225
13
-107

)

(

138

Gross !APPlic.able
Outlays
Receipts

16
19
23
39
15

-2

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

Prior Fiscal Year to Date

628
212
130
-3
117
170
70
54
-2
149

)

(

..)

-80

936

2,639

3.471

1,407
696
335
502
905
320
161
-5

193

1,366
783
285
603
845
392
550
-182
-193

230

4,448

4,322

1.554
154
66

1,554
154
66

1,492
171
55

1.492
171
55

16
4,270

16
4.270

250

100

)

(

)

(

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]

Classification

Department of Labor:-Continued
Unemployment trust fund:
Federal-State unemployment insurance:
State unemployment benefits
State administrative expenses
Federal administrative expenses
Veterans employment and training
Repayment of advances from the general fund
Railroad unemployment insurance
Other
Total-Unemployment trust fund
Other
Total-Employment and Training Administration
Pension Benefit Guaranty Corporation
Employment Standards Administration:
Salaries and expenses
Special benefits
Black lung disability trust fund
Other
Occupational Safety and Health Administration
Bureau of Labor Statistics
Other
Proprietary receipts from the public
Intrabudgetary transactions

This Month

Current Fiscal Year to Date

Gross !APPlicablel Outlays
Outlays
Receipts

Gross \APPlicablel
Outlays
Receipts
Outlays

Prior Fiscal Year to Date
Gross IAPPlic.able
Outlays
ReceIpts

Outla s

3.176
310
10
14

15.130
1.434
50
70

13.795
1.265
49
72

8
2

31
9

42
11

3.519

16.723

15.233

4.874

23.063

17.144

-257

328

-370

324

25
109
53
9
25
22
39

110
-413
254
54
113
123
155

110
-413
254
54
113
123
155
-1
-4.821

95
-382
258
52
127
81
183
-322

18,268

17,559

2328

25
109
53
9
25
22
39
(oo)

(oo)

380

-56
95
-382
258
52
127
81
183
-1
-322

-1.102

-4.821

3,797

18,967

62
3

776
181

772
120

34
11

119
168
46

113
157
32

Total-Administration of Foreign Affairs

110

1.291

1.193

International organizations and Conferences
Migration and refugee assistance
International narcotics control
Other
Proprietary receipts from the public .
Intra budgetary transactions
Offsetting governmental receipts

40
79
13
5

882
312
55
37

719
207
56
39

719
207

(' .)
(oo)

-165

247

2,412

837
15
15

867

National Highway Traffic Safety Administration

Federal Railroad Administration:
Grants to National Railroad Passenger Corporation
Other

31
31

Total-Department of Labor

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

Department of State:
Administration of Foreign Affairs:
Salaries and expenses
Acquisition and maintenance of buildings abroad
Payment to Foreign Service retirement and disability
fund
Foreign Service retirement and disability fund
Other

Total-Department of State ..............................
Department of Transportation:
Federal Highway Administration:
Highway trust fund:
Federal-aid highways
Other
Other programs
Total-Federal Highway Administration

Total-Federal Railroad Administration

-1.102

697

4,125

329

(oo)
(oo)

248

699

(oo)

381

(oo)

(")

17,178

( )

-113

-165

-113

2,412

2,102

6.136
62
86

5.621
43
63

867

6.285

5.727

5,727

100

262
154

262
146

245
134

245
128

416

408

379

373

(* *)

2,101

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]
This Month

Current Fiscal Year to Dale

Prior Fiscal Year to Date

Gross !APPlicable! 0 II
Outlays
Receipts
u ays

Gross !APPlicable! 0 tI
Outlays
Receipts
u ays

Classification

Department of Transportation:-Continued
Federal Transit Administration:
Formula grants
Discretionary grants
Other
Federal AViation Administration:
Operations
Airport and airway trust fund:
Grants-in-aid for airports
Facilities and equipment
Research. engineering and development
Operations
Total-Airport and airway trust fund
Other
Total-Federal Aviation Administration
Coast Guard:
Operating expenses
Acquisition. construction. and improvements
Retired pay
Other
Total-Coast Guard
Maritime Administration
Other
Proprietary receipts from the public
Intrabudgetary transactions
Offsetting governmental receipts
Total-Department of Transportation

177
78
29

721
518
159

885
512
201

144

773

956

158
145
15
190

902
744
73
950

702
701
85
879

508

2,668

2,366

(")

(oo)

(")

-1

(oo)

(")

(<0)

653

(")

652

3,441

3,440

3,322

(")

3.322

98
10
35
78

(")

98
10
35
78

920
87
185
135

920
87
185
132

1,025
161
177
111

1.025
161
177
109

222

(' ')

221

1.327

1,324

1,473

1,471

102
32

46
1

56
30

460
170

(")
(")

265
7
2

177
131
-2

-3
9

291
165
-1
-3
-9

442
138

(")

170
5
1

-4

(")

-1

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

Department of the Treasury:
Departmental offices:
Exchange stabilization fund
Other
Financial Management Service:
Salaries and expenses
Payment to the Resolution Funding Corporation
Claims, judgements. and relief acts
Other
Total-Financial Management Service
Federal Financing Bank
Bureau of Alcohol. Tobacco and Firearms:
Salaries and expenses
Internal revenue collections for Puerto Rico ,
United States Customs Service
Bureau of Engraving and Printing
United States Mint
Bureau of the Public Debt
Internal Revenue Service',
Processing tax returns and assistance
Tax law enforcement
Information system
Payment where earned income credit exceeds liability
for tax
Health insurance supplement to earned Income credit
Refunding Internal revenue collections. interest
Other
Total-Internal Revenue Service

177
78
29

2,210

2,158

13,593

196

13,397

13,174

287

12,887

-119
-74

-120
-74

-412
4

-417
4

-782
-11

-789
-11

130
10

93
1,164
260
86

91
1,164
464
80

91
1.164
464
80

158

1,603

1,799

-102

121

118

37
18
142
-4
10
16

156
93
738
10
47
109

139
105
764
-19
35
75

113
318
125

627
1,537
503

606
1,450
401

3.947
260
133
16

4,206
276
730
56

(")

4,206
276
730
56

1,821
164
1,299
80

1,821
164
1,299
78

4,913

7,935

(")

7,935

5,822

5,821

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]

Classification

Department of the Treasury:-Continued
United States Secret Service
Comptroller of the Currency
Office of Thrift Supervison

This Month

Current Fiscal Year to Date

Prior Fiscal Year to Date

Gross !APPlicablel
Outlays
Receipts
Outlays

Gross JAPPlicablel
Outlays
Receipts
Outlays

Gross !APPlic.able! Outla s
Outlays
Receipts
Y

41
27
16

Interest on the public debt:
Public issues (accrual basis)
Special issues (cash basis)
Total-Interest on the public debt
Other
Proprietary receipts from the public
Receipts from off-budget federal entities
Intrabudgetary transactions
Offsetting governmental receipts ..

41
-81
-71

220
149
96

15,635
1,178

16,813
5

220
-48
-5

199
145
111

84,927
42,110

88,062
39,128

16,813

127,037

127,190

24
948

24
-948

413

5
-413
-249
-73

-4,837
311

-4,837
-311

-6,735

73
21,646

682

20,965

133,093

1,561

131,532

1,122
18

1,122
-2

5,620
457

105

-450
275
1,422
74
9

835
694
6,899
388
47

86
1
8
4

401
7
51
-9

-249

Total-Department of the Treasury

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

Department of Veterans Affairs:
Veterans Health Administration:
Medical care
Other
Veterans Benefits Administration:
Public enterprise funds:
Loan guaranty revolving fund .'
-...........
Other
...............
Compensation and pensions
Readjustment benefits ....
............
Post-Vietnam era veterans education account
Insurance funds:
National service life
United States government life ....
Veterans special life ...
Other
...........
Total-Veterans Benefits Administration

196
327
1,422
74
9
86
1
11
4

260

-6,735
-260

128,973

1,560

127,412

5,620
352

5,539
241

106

5,539
134

8
367
6,899
388
47

574
347
7,984
334
69

401
7
-37
-9

844
16
83
-9

1,429

9,313

1,242

8,071

10,242

51
74

239
453

(0O)

239
453

264
435

3,395

570
291

87
949

397

-177

-31

166

-166

177

(0O)

(0 0)

("0)

(0 0)

('")

-14
-2

416

221

-7

-416
-7

-4

-221
-4

769

2,626

16,075

1,929

14,145

16,716

1,453

15,263

83
509
810
531
442

16
76

83
509
810
531
426
-76

488
349
1,003
515
395

7
84
129
92
85
-14

(00)

(0 0)

-3

383

2,375

2,281

2,500

381
-17
4

199
-67
-11

13
-1

180
-3
-30
7
16

143

142

14
383

9,293

381
-17
4

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

844
16
-5
-9

264
435

3
16
56

-250

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

4
56
7,984
334
69

(0O)

7
84
129
92
86

General Services Administration:
Real property activitfes
Personal property activities
Information Resources Management Service
Federal property resources activities
General activities
Proprietary receipts from the public .
Total-General Services Administration

199
-30
-40

17
-966

(0O)

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

Total-Environmental Protection Agency

827
327

175
151

966

702

-2

Environmental Protection Agency:
Salaries and expenses
Abatement, control, and compliance
Construction grants
Hazardous substance superfund
Other
Proprietary receipts from the public
Intrabudgetary transactions
Offsetting governmental receipts

646
53

197
101

2,131

Construction
Departmental administration
...........
Proprietary receipts from the public:
National service life
United States government life
Other
Intrabudgetary transactions
. . . . . . . . .. . . . .. . . . . .
Total-Department of Veterans Affairs

108
87

(00)

(0 0)

(* *j

383

170

488
345
1,003
515
379
-56
-250
2,425
180
-3
-30

7
16
-14

156

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]

Classification

This Month

Current Fiscal Year to Date

Prior Fiscal Year to Date

Gross lAPPlicable / Outlays
Outlays
Receipts

Gross /APPlicable/ 0 tl
Outlays
Receipts
u ays

Gross /APPlic.able! Outlays
Outlays
Receipts

National Aeronautics and Space Administration:
Research and development ...
...............
Space flight, control. and data communications
Construction of facilities
.... ............. ............
Research and program management
....
Other
. . . . . . . . , . . . . . . . , .......... ,.

494
366
25
121
1

2.805
2.118
225
626
6

2.576
2.250
190
810
5

Total-National Aeronautics and Space
Administration ............................................

1,008

5,781

5,831

279

1.444

1.359

Office of Personnel Management:
Government payment for annuitants. employees health
benefits ..... ..................... ......... , . . ...........
Payment to civil service retirement and disability fund .....
Civil service retirement and disability fund .... ......... , ...
Employees health benefits fund .... , .........
Employees life insurance fund ......
Retired employees health benefits fund
...........
Other .............
Intrabudgetary transactions:
Civil service retirement and disability fund:
General fund contributions .............
Other .....

2.894
1.130
110
1
25

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

4,435

Small Business Administration:
Public enterprise funds:
...............
Business loan and investment fund
Disaster loan fund
Other
.........................
............
Other

56
21
3
49

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

129

Total-Office of Personnel Management

Total-Small Business Administration

Other independent agencies:
Action
Board for International Broadcasting
Corporation for PubliC Broadcasting
District of Columbia:
Federal payment
Other
Equal Employment Opportunity Commission
Export-Import Bank of the United States
Federal Communications Commission ...
Federal Deposit Insurance Corporation:
Bank insurance fund ....
Savings association insurance fund ....
FSLlC resolution fund
Federal Emergency Management Agency:
Public enterprise funds
...........
Disaster relief ...
Emergency management planning and aSSistance
Other . " . "
............... '
Federal Housing Finance Board
Federal Trade Commission
Interstate Commerce Commission
Legal Services Corporation ....
National Archives and Records Administration
National Credit Union Administration:
Credit union share insurance fund
...........
Central liquidity facility
Other

(' 'J
13.768
-68
-567

13.768
5.622
481
4
139

("J

-18

-23

14.191
5,780
540
3
82

-3

-18

1,549

2,886

22,023

7,146

14,878

21,350

6,741

14.609

43
45
1

356
226
24
209

307
211
7

("J

50
15
17
209

464
221
24
74

347
219
10

("J

13
-24
3
49

("J

118
2
15
73

815

524

291

783

575

208

11
17

83
100
319

77
91
327
691
5
76
684
47

841
22

691
-32
76
-157
25

1,249
299

2.894
-120
-189

(' 'J

("J

-3

11
17

6,069
1.074
3

14.191
-288
-533

(' 'J

(' 'J
139

77
91
327

15
103
9

("J
88
3

15
15
6

698
2
87
469
52

293
2
855

3,328
391
76

-3.035
-389
779

4.188
-7
1.618

8.256
409
658

-4.067
-416
960

10.138
-7
2.833

6,457
17
1.100

3.681
-24
1.733

71
133
21
28
1
6
4
59
4

59
133
21
28

158

14
822
81
125
3
36
17
177
90

145
242
115
115
5
30
16
152
53

131

("J

171
822
81
125
6
36
17
177
90

15
242
115
115
-8
30
16
152
53

-10
10
8

26
10
2

47
57
10

314
57
45

-267

223
217
-28

("J

6
4
59
4
-36
6

952
14

698
-22
87
-483
38

5.689
1.048
4

("J

(. 'J

-35

("J
419
321

-196
-105
-29

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]
This Month
Classification
Gross IAPPlicable
Outlays
Receipts
Other independent agencies:-Continued
National Endowment for the Arts
National Endowment for the Humanities
National Labor Relations Board
National SCience Foundation
Nuclear Regulatory Commission
Panama Canal Commission
Postal Service
Public enterprise funds (off-budget)
Payment to the Postal Service fund
Railroad Retirement Board
Federal windfall subSidy
Federal payments to the railroad retirement accounts
Regional rail transportation protective account
Rail Industry pension fund'
Advances from FOASDI fund
OASDI certifications
Administrative expenses
Interest on refunds of taxes
Supplemental annUity pension fund
Other
Intrabudgetary transactions:
Social Security equivalent benefit account
Payments from other funds to the railroad
retirement trust funds
Other

I Outla y s

Current Fiscal Year to Date

Prior Fiscal Year to Date

Gross IAPPlic.ablej Outla s
Outlays
Receipts
y

Gross jAPPlicablel 0 tl
Receipts
u ays
Outlays

61
69
949
181
206

61
69
949
-25
-13

75
54
65
865
202
207

-461
100

19,103
276

122
30

130
119

(")

-442
442
31
5
1,198
5

-427
427
30

1,156
3

1,939

1,893

15
13
12
207
37
40

17
44

15
13
12
207
20
-4

3.963

33,973

-10

20,129
100

)

(' ')
( )

-94
91
5

.. )

(
(

206
219
20,590

(

75
54
65
865
210
209
19.847

..)

-2
-744
276

( )

(")

248

385

1,939

-30

-119

Total-Railroad Retirement Board

660

3,301

3,212

Resolution Trust Corporation
Securities and Exchange Commission
Smithsonian Institution
Tennessee Valley Authority
United States Information Agency
Other

470
3
30
549
82
68

1,092

7,950
34
159
3,456
430
589

16,737

106

-8,787
34
159
905
430
483

16,741
46
151
917
396
559

24,935

-622
3
30
72
82
29

300
6
105

-8,194
46
151
617
389
454

7,791

9,579

-1,788

46,939

51,299

-4,360

59,116

54,970

4,146

Total-Other independent agencies

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

476
(

..)

Undistributed offsetting receipts:
Other interest
Employer share. employee retirement:
Legislative Branch:
United States Tax Court
Tax court Judges survivors annuity fund
The Judiciary
Judicial survivors annuity fund
Department of Defense-Civil:
Military retirement fund
Department of Health and Human Services:
Federal old-age and survivors insurance fund (offbudget):
Federal employer contributions
Payments for military service credits
Federal disability Insurance trust fund (off-budget)·
Federal employer contributions
Payments for military service credits
Federal hospital insurance trust fund:
Federal employer contributions
Payments for military service credits
Department of State:
Foreign Service retirement and disability fund
Office of Personnel Management
CIVil service retirement and disability fund
Independent agencies:
Court of veterans appeals retirement fund
Total-Employer share. employee retirement

2,551
(")

(

(' ')

)

(

..)

(

..)

(")

..)

(

..)

(

)

-1,062

-5,455

-6,814

-490

-2,186

-2,036

-52

-233

-220

-190

-947

-913

-8

-43

-39

-762

-3,856

-3,718

-3.718

-2,564

-12,720

-13,740

-13.740

Table 5. Outlays of the U.S. Government, February 1993 and Other Periods-Continued
[$ millions]
This Month

Current Fiscal Year to Date

Prior Fiscal Year to Date

Gross IAPPlicable!
Outlays
Receipts
Outlays

Gross .!APPlic.able! Outla s
Outlays
Receipts
y

Gross lAPPlicablel Outlays
Outlays
Receipts

Classification

Undistributed offsetting receipts:-Continued
Interest received by trust funds:
The Judiciary:
Judicial survivors annuity fund
Department of Defense-Civil:
Corps of Engineers
............ , ...
Military retirement fund
Education benefits fund
Soldiers' and airmen's home permanent fund
Other ....
............
Department of Health and Human Services:
Federal old-age and survivors insurance trust fund
(off-budget)
Federal disability insurance trust fund (off-budget)
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Department of Labor:
Unemployment trust fund ..
Department of State:
Foreign Service retirement and disability fund ....
Department of Transportation:
Highway trust fund
Airport and airway trust fund
Oil spill liability trust fund ..
.. ..... ... .
Department of Veterans Affairs:
National service life insurance fund
United States government life Insurance Fund
Environmental Protection Agency
National Aeronautics and Space Administration
Office of Personnel Management
Civil service retirement and disability fund
Independent agencies:
Railroad Retirement Board
Other
Other
Total-Interest received by trust funds

(00)

(

(" ')

-4

-8

-4
-4.842
-30
-9

-6
-4.378
-32
-1

)

(' 0)

-239
-11
-1

-4
-4.842
-30
-9

(" 0)

('0)

(00)

-42
-11
-9
-12

-12.518
-510
-5.219
-893

-10.772
-557
-4.856
-809

-10

-1.337

-1.991

(00)

(0 ')

-268

-252

-5
-3
-36

-750
-558
-39

-778
-634
-3

(0 ')
('O)
( )
( )

(" 0)
(' 0)
(" 0)
0)

-538
-5

-539
-6

(00)

(0 ')

(" 0)

(0 ')

-1

-38

-12,426

-11.669

-107
-2
-2

-480
58

-480
-6
58

-392
3
-23

-530

-40.377

-37.704

....

245

Rents and royalties on the outer continental shelf lands
Sale of major assets

..)

(

-6

-245

997

-997

928

-928

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

-3,094

245

-3,338

-53,097

997

-54,093

-51,445

928

-52,373

Total outlays .................................................

131,933

18,145

113,788

673,744

91,276

582,468

667,150

97,427

569,723

...........................................
...........................................
Total off-budget
Total surplus (+) or deficit ................................
Total on-budget ...........................................

103,504

14,172

89,332

548,902

70,685

478,217

548,539

77,581

470,958

28,429

3,973

24,456

124,842

20,591

104,251

118,611

19,847

98,765

Total-Undistributed offsetting receipts

Total on-budget

Total off-budget ...........................................

-47,594

-138,245

-148,650

-48,239

-150,969

-164,445

+644

+12,724

+15,794

MEMORANDUM
Receipts offset against outlays

[$ millions)

Current
Fiscal Year
to Date
Proprietary receipts
Receipts from off-budget federal entities
Intrabudgetary transactions
Governmental receipts ....
Total receipts offset against outlays

Comparable Period
Prior Fiscal Year

17.201

15.947

97.547
770
115.519

90.737
4.775
111,459

No Transactions.
(' ') Less than $500.000
Note: Details may not add to totals due to rounding

'Includes FICA and SECA tax credits. non-contributory military service credits. special benefits
for the aged. and cred,t for unnegotiated GASI benefit checks
'Includes a decrease In net outlays of $97 million for amortization of zero coupon bonds.
'The Postal Service accounting IS composed of 28-day accounting periods. To conform With
the MTS calendar-month reporting basis utilized by all other Federal agencies. the MTS reflects
actual USPS results through 215 and estimates for $1.246 mill10n through 2128

Table 6.

Means of Financing the Deficit or Disposition of Surplus by the U.S. Government, February 1993 and Other Periods
[$ millions]

Assets and Liabilities
Direclly Related to
Budget Off-budget Activity

Net Transactions
(-) denotes net reduction of either
liability or asset accounts

Account Balances
Current Fiscal Year

Fiscal Year to Date

Beginning of

This Month
This Year
Liability accounts:
Borrowing from the publiC
Public debt seCUrities. Issued under general Financing authorllies:
Obligations of the United States. Issued by
United States Treasury
Federal FinanCing Bank
Total. public debt securllies

4.049.621
15.000

4.152.200
15.000

4.162.004
15.000

29.803

132.383

163.755

4.064.621

4.167.200

4.197.004

-4
-76

-24
-656

243
-1.226

1.032
81.090

1.013
80.511

1.008
60.435

29.875

133.014

165.224

3.984.565

4.087.704

4.117.579

476

911

-2.069

18.250

18.686

19.162

30.351

133.926

163.155

4.002.815

4.106.390

4.136,741

-434

29.812

41.789

1.016,453

1.046.699

1.046.265

-97

-286

1,431

12,415

12.225

12.129

Net federal seCUrities held as investments of government
accounts

Accrued Interest payable to the public
Allocations of special drawing rights
Deposit funds
Miscellaneous liability accounts (includes checks outstanding etc.)

Total liability accounts ................................................... .
Asset accounts (deduct)
Cash and monetary assets'
U.S Treasury operating cash:'
Federal Reserve account
Tax and loan note accounts
Balance

-337

30.097

40.358

1.004.038

1.034,473

1.034.136

30.689

103.828

122.797

2.998.777

3.071.916

3.102.605

-13.758
-28
-115
3,443

-6,792
-474
-272
-225

-4.874
63
-593
3.787

44.212
7.216
6,422
2.143

51.178
6.771
6.265
-1.525

37,420
6,742
6.150
1.918

20,231

96,066

121,180

3,058,770

3,134,605

3,154,836

-4.222
-23.005

-19.236
-20.454

-2,451
-22.151

24.586
34.203

9.572
36.754

5.350
13,749

-27.227

-39.690

-24.602

58.789

46.326

19.099

105

299

12.111
-10.018

8.546
-8,018

6.651
-6,018

105

-3,460
2.000
-1,460

299

2.093

528

633

-153
-17
5

12,063
-1.950
-9.096
-22

231
-183

31.762
4.895
-24,460
-100

31,762
4.741
-24,477
-95

SpeCial draWing rights·
Total holdings
SDR certificates Issued to Federal Reserve banks
Balance
Reserve position on the U.S quota in the IMF:
US subSCription to International Monetary Fund:
Direct quota payments
Maintenance of value adjustments
Letter of credit Issued to IMF
Dollar depOSits with the IMF
Receivable/Payable (-) for Interim maintenance of value
adJustments

-9

19.699
6.692
-15.381
-73

103
-63

1.256

-145

-1.167

-14

2.250

-105

9.770

12.083

12.020

)

( )

385

210

17.093

23.842

23.667

24.052

-26.800

-38.689

-7.316

94.494

82.604

55.804

-383
131
-287

-1,464
1.068
-2.973

-7

-826
2,447
-1.411

-1.907
3.385
-4.097

-2.290
3.516
-4.383

Balance
Loans to International Monetary Fund
Other cash and monetary assets
Total cash and monetary assets

This Month

163.755

Deduct.
Federal seCUrities held as Investments of government accounts
(see Schedule D)
Less discount on federal securities held as investments of
government accounts

Total borrowing from the public

132.383

Agency securities. Issued under special finanCing authorities (see
Schedule B. for other Agency borrowing. see Schedule C)
Total federal securities

This Year

29.803

Plus premium on public debt securllies
Less discount on publiC debt securities
Total public debt securities net of Premium and
discount

I Prior Year

Close of
This month

(

Net activity. guaranteed loan financing
Net activity. direct loan finanCing
Miscellaneous asset accounts

487
-20.501

)

(

Total asset accounts ................................................... ..

-27,339

-42,058

-27,337

94,704

79,985

52,646

Excess of liabilities (+) or assets (-) .................................. ..

+47,570

+138,124

+148,517

+2,964,066

+3,054,620

+3,102,189

122

133

122

+47,594

+138,245

+148,650

+3,054,717

+3,102,~

Transactions not applied to current year's surplus or defiCit (see
Schedule a for Details)

Total budget and off-budget federal entities (financing of deficit (+)
or disposition of surplus (-» ............................................ ..
'1\1a/o r sources of )nformat~on used to determIne Treasury s operatIng cash Income Include the
Dally Balance VINes from Federal Reserve Banks, reportIng from the Bureau of PubliC Debt
electroniC transfers through tile Treasury FinanCial CommunicatIon System and reconCIling Wires
trom Internal Revenue Centers Operating cash IS presented on a modified cash baSIS, depOSits
are reflected as received and Withdrawals are reflected as processed

+2,964,066

No TransactIons
(0 0) Less than $500.000
Note Details may not add to totals due to roundmg

Table 6. Schedule A-Analysis of Change in Excess of Liabilities of the U.S. Government, February 1993 and
Other Periods
[$ millions]
Fiscal Year to Date
Classification

This Month

This Year
...
Excess of liabilities beginning of period:
Based on composition of unified budget in preceding period ...... .
Adjustments during current fiscal year for changes in composition
of unified budget:
Reclassification of the Disaster Assistance Liquidating
Account, FEMA, to a budgetary status ..
Revisions by federal agencies to the prior budget results

3,054,620

Prior Year

2,964,066

2,673445

(")
(")

680

3,054,620

2,964,066

2,674,125

Budget surplus (-) or deficit:
Based on composition of unified budget in prior fiscal yr
Changes in composition of unified budget

47,594

138,245

148,650

Total surplus (-) or deficit (Table 2)

47,594

138,245

148,650

Excess of liabilities beginning of period (current basis)

Total-on-budget (Table 2)

48,239

150.969

164445

Total-oft-budget (Table 2)

-644

-12,724

-15,794

-25

-122

-133

Transactions not applied to current year's surplus or deficIt:
Seigniorage ... . ..
Profit on sale of gold
Total-transactions not applied to current year's Surplus or
deficit
............ .
Excess of liabilities close of period " .... " .. , ... ', ....... ,""',' .. ,'

Table 6,

(.')

-25

-122

-133

3,102,189

2,822,642

Schedule B-Securities isued by Federal Agencies Under Special Financing Authorities, February 1993 and
Other Periods
[$ millions]

Net Transactions
(-) denotes net reduction of either
Liability accounts

Account Balances
Current Fiscal Year

Classification
Fiscal Year to Date

Beginning of

Close of
This month

This Month

This Year
Agency securities, issued under special financing authorities;
Obligations of the United States. issued by:
Export-Import Bank of the United States
Federal Deposit Insurance Corporation:
Bank insurance fund ..
FSLlC resolution fund
Obligations guaranteed by the United States, issued by:
Department of Defense'
Family housing mortgages
Department of HOUSing and Urban Development:
Federal HOUSing Administration
Department of the Interior:
Bureau of Land Management
Department of Transportation:
Coast Guard:
Family housing mortgages
Obligations not guaranteed by the United States, issued by:
Legislative Branch:
Architect of the Capitol
Department of Defense:
Homeowners assistance mortgages
Department of HOUSing and Urban Development:
Government National Mortgage Association
Independent agencies:
National Archives and Records Administration
, ...........
Postal Service
Tennessee Valley Authority
Total, agency securities

-194
(")

(

)

-64

Prior Year

..)

(")

-1
-3,756

93
1.137

93
943

..)

301

231

237

(

.. )

(' 'J

(

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

No Transacllons
(' ') Less than $500.000
NOle: Details may nol add 10 10lals due to rounding

Month

(

I This

This Year

)

-3

162

167

168

302
220
16,710

302
220
17.178

18,686

19,162

468

1,163

1,655

302
220
16,015

476

911

-2,069

18,250

rable 6. Schedule C (Memorandum)-Federal Agency Borrowing Financed Through the Issue of Public Debt Securities,
February 1993 and Other Periods
[$ millions)
Account Balances
Current Fiscal Year

Transactions
Classification
Fiscal Year to Date
This Month

This Year
Borrowing from the Treasury:
Funds Appropriated to the President:
Agency for International Development:
Housing and other credit guaranty programs
Overseas Private Investment Corporation
Department of Agriculture
Foreign assistance programs
Commodity Credit Corporation
Farmers Home Administration:
Agriculture credit insurance fund
Self-help housing land development fund
Rural housing insurance fund
Rural development insurance fund
Rural development loan fund
Federal Crop Insurance Corporation:
Federal crop insurance corporation fund
Rural Electrification Administration:
Rural communication development fund
Rural electrification and telephone revolving fund
Rural Telephone Bank
..............
Federal ship financing fund, NOAA
Department of Education:
Guaranteed student loans
College housing and academic facilities fund
College housing loans
Department of Energy:
Isotope production and distribution fund
Bonneville power administration fund
Department of Housing and Urban Development:
Housing programs:
Federal Housing Administration
Housing for the ederly and handicapped
Public and Indian housing:
Low-rent public housing
Department of the Interior:
Bureau of Reclamation Loans
Bureau of Mines, Helium Fund
Bureau of Indian Affairs:
Revolving funds for loans
Department of Justice:
Federal prison industries, incorporated
Department of State:
Repatriation loans
Department of Transportation:
Federal Railroad Administration:
Railroad rehabilitation and improvement
financing funds
Settlements of railroad litigation
Amtrak cOrridor Improvement loans
Regional rail reorganization program
Federal Aviation Administration:
Aircraft purchase loan guarantee program
Department of the Treasury:
Federal Financing Bank revolving fund
Department of Veterans Affairs:
Loan guaranty revolving fund
Guaranty and Indemnity fund
Direct loan revolving fund
Vocational rehabilitation revolving fund
EnVIronmental Protection Agency:
Abatement, control, and compliance loan program
Small BUSiness Administration
BUSiness loan and revolVing fund

Beginning of

(

3
1,021

)

125

(

)

(")

101
14,533

104
15,553

144

-6,937

5,526

5,629

5,670

(

-2,567
-516

)

(")

1,989
1,545

r .)

2,098
1,558
2

2,199
1,565
2

113

25
7,905
763
2

25
7,960
763

25
7,967
765

2,090
156
524

9
1,906

11
2,106

12
2,306

8,774

8,959

2
252

4
252

-39
2
39

8
-39
2
39

B
-39
2
39

(

)

( )

)

7
2

63
2
-2

3
400

185

-7,323
1,079

-1

(

)

-3,096

(

)

(

)

-1

-16,459

-11,496

149,422

136,059

132,962

-678
8

371
6

921
40
1,730
1

243
49
1,730
1

243
49
1,730

..
..

(
(

)
)

(

)

(

)

2
(

)

209
21

)

70
17,282

1 01
7

(

125

-3,648

(

1
200

This Month

34
-1,728

(

This Year

Prior Year

Close of
This month

..)

Table 6,

Schedule C (Memorandum)-Federal Agency Borrowing Financed Through the Issue of Public Debt Securities,
February 1993 and Other Periods-Continued
[$ millions]
Account Balances
Current Fiscal Year

Transactions
Classification
Fiscal Vear to Date

Beginning of

This Month

I Prior Year

This Year
Borrowing for the Treasury:-Contlnued
Other Independent agencies:
Export-import of the United States
Federal Emergency Management Agency:
National Insurance development fund
Pennsylvania Avenue Development Corporation:
Land aquisition and development fund
Railroad Retirement Board:
Railroad retirement account
Social Security equivalent benefit account
Smithsonian Institution:
John F Kennedy Center parking faCilities
Tennessee Valley Authority

-3

249

Total agency borrowing from the Treasury financed through
public debt securities issued ......................................
Borrowing from the Federal Financing Bank:
Funds Appropriated to the President:
Foreign military sales
Department of Agriculture:
Rural Electrification Administration
Farmers Home Administration:
Agriculture credit insurance fund
Rural housing insurance fund
Rural development insurance fund
Department of Defense
Department of the Navy
Defense agencies
...........
Department of Education:
Student Loan Marketing Association
..... . ......
Department of Health and Human Services,
Except Social Security:
Medical facilities guarantee and loan fund
Department of Housing and Urban Development:
Low rent housing loans and other expenses
Community Development Grants
Department of Interior:
Territorial and International affairs
Department of Transportation:
Federal Railroad Administration
Department of the Treasury:
Financial Management Service
General Services Administration:
Federal buildings fund
National Aeronautics and Space Administration:
Space flight. control and data communications
Small Business Administration'
Business loan and investment fund
Independent agencies:
Export-Import Bank of the United States
Federal Deposit Insurance Corporation:
Bank insurance fund
National Credit Union Administration
Pennsylvania Avenue Development Corporation
Postal Service
Resolution Trust Corporation
Tennessee Valley Authority
...........
Washington Metropolitan Transit Authority
Total borrowing from the Federal Financing Bank

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

This Year

I This Month

crose of
This month

117

114

1,245

1,187

2,128
2.670

2,128
3.666

2.128
3.915

20
150

-1,465

-16,502

-29,830

206,410

191,373

189,908

-15

-86

4,344

4,273

4,258

-1

-107

-103

22,742

22,636

22,635

-130
-2,030

12.858
26,446
3,675

12,858
26,446
3,675

-48

1,624
-48

1.624
-96

1,624
-96

-30

4,820

4,790

124

123

120

-3

-4

-1

-52
-28

-50
-8

1.853
174

1,801
147

1.801
146

-28

-1

125

699

1,110

1,176

(

-48

)

-51
477

19
-33

-8

-47

-84

782

742

734

-490

-1,458

7.692

7,202

-2,500

-5,660

10.160

7,000

4,500

-997
-143

23
537
-10,548
813

3.572
-104
15
-9,064
-1,872

78
9,903
46,536
9,592
177

93
10,440
36.984
8.922
177

101
10,440
35,987
8.779
177

-3,595

-16,958

-11,496

164,427

151,064

147,469

Note ThiS table Includes lending by the Federal FinanCing Bank accomplished by the purchase

.. No Transactions

01 agency finanCial assets by the acquIsition of agency debt securities. and by direct loans on

(' ') Less than $500.000
Note: Details may not add to totals due to rounding

behalf of an agency. The Federal Financing Bank borrows from Treasury and Issues Its own
seCUrities and In turn may loan these funds to agencies In lieu of agencies borrowing directly
through Treasury or Issuing their own securities

Table 6. Schedule D-Investments of Federal Government Accounts in Federal Securities, February 1993 and
Other Periods
[$ millions)
Securities Held as Investments
Current Fiscal Year

Net Purchases or Sales (-)
Classification

Fiscal Year to Date

Beginning of

This Month

This Year
Federal funds:
Department of Agriculture
Department of Commerce
Department of Defense-MIlitary
Defense cooperation account
Department of Energy
Department of Housing and Urban Development'
Housing programs
Federal housing administration fund,
Public debt seCUrities
Government National Mortgage Association'
Management and liqUidating functions fund
Public debt seCUrities
Agency securities
Guarantees of mortgage-backed securities:
Public debt seCUrities
Agency securities
Other
Department of the Interior:
Public debt securities
Department of Labor
Department of Transportation
Department of the Treasury
Department of Veterans Affairs:
Canteen service revolVing fund
Guaranty and indemnity fund
Veterans reopened Insurance fund
Servicemen's group life Insurance fund
Independent agencies:
Export-Import Bank of the United States
Federal Emergency Management Agency:
National Insurance development fund
Federal Deposit Insurance Corporation'
Bank Insurance fund
FSLlC resolution fund:
Public debt securities
Savings association Insurance fund
National Credit Union Administration
Postal Service
Tennessee Valley Authority
Other
Other

This Year

5
11

-1,996
163

1 ,581
285

2,032
3,513

36
3,610

36
3.675

-38

-460

-62

5,858

5,435

5,398

(")

6
60

8
60

86
(")

191
(' ')
5

167
2
-1

2,699
62
245

2,804
62
250

2,890
62
250

30
110
10
-4

205
34
44
1,769

1,369
1 ,486
56
838

2,333
15,480
781
3,462

2,509
15,405
815
5,235

2,538
15,515
825
5,231

(")

509
198

527
173

525
173

-2

430

246

480

518

-32

124

543

453

510

545

-1,550

287

4,664

2,570

3,115

-781
389
30
188
42
-7

-470
416
302
725
-464
55
168

-724
24
225
2,016
-745
87
-154

1,319
340
2,392
4,679
2,239
765
2,410

1,630
367
2,665
5,216
1,774
778
2,585

849
756
2,694
5,404
1,775
820
2,578

759

-470
(")

6,993
2

56,611
123

55,383
123

56,141
123

-470

6,994

56,734

55,505

56,264

759

Trust funds:
Legislative Branch'
Library of Congress
United States Tax Court
Other
The Judiciary'
Judicial retirement funds
Department of Agriculture
Department of Commerce
Department of Defense-Military
Department of Defense-CIvil
Military retirement fund
Other

15
-25

-1

(")
(")

4
27

5
4
27

12
1

193
6

203
5

205
5

(")
(")

-107
-2

I
i

5
8

-2

I
I

-3
-1

(")

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

I This Month

Close 01
This month

-1
3

-1
(")

Total public debt securities
Total agency securities

Total Federal funds

Prior Year

(")

864

(")
(")

(")

-12

160

1,036

1,024

-808
50

11,157
211

11,953
361

87,753
1,098

99,718
1,259

98,910
1,309

Table 6.

Schedule D-Investments of Federal Government Accounts in Federal Securities, February 1993 and
Other Periods-Continued
[$ millions]
Securities Held as Investments
Current Fiscal Year

Net Purchases or Sales (-)
Classification

Fiscal Year to Date
This Month

Beginning of

This Year

Prior Year

I This Month

Close of
This month

Trust Funds-Continued
Department of Health
Department of Health and Human Services, except Social Security:
Federal hospital insurance trust fund:
Public debt securities
..................
Federal supplementary medical insurance trust fund ,.'
Other
Department of Health and Human Services, Social Security:
Federal old-age and survivors insurance trust fund:
Public debt securities .. ..
.............
Federal disability insurance trust fund ..
Department of the Interior:
Public debt securities
.... ......
Department of Labor:
Unemployment trust fund .
Other ..
Department of State:
Foreign Service retirement and disability fund
Other
............
Department of Transportation:
............
Highway trust fund
Airport and airway trust fund ... , ........
Other
...... , ......
Department of the Treasury
Department of Veterans Affairs
General post fund national homes ."
National service life insurance:
Public debt securities ......
Government life insurance fund
Veterans special life insurance fund
Environmental Protection Agency ...
National Aeronautics and Space Administration
Office of Personnel Management:
Civil service retirement and disability fund:
............
Public debt securities
Employees health benefits fund
Employees life insurance fund
Retired employees health benefits fund
Independent agencies:
Harry S. Truman memorial scholarship trust fund
Japan-United States Friendship Commission
Railroad Retirement Board
Other
............

-560
868
10

2,236
3,440
29

5,495
1,546
56

120,647
18,534
621

123,443
21,106
640

122,883
21,974
650

932
-343

13,846
-1,637

15,497
-495

306,524
12,918

319,439
11,624

320,370
11,281

-67

-196

336

206

140

-197
42

4,495
3

-6,850
-41

35,133
52

30,835
13

30,638
55

-20

269
12

263

..)

5,999

..)

6,288
12

6,268
12

977
-2,065
106
49

1,652
257
108
51

20,962
15,090
1,399
184

21,599
13,282
1,469
150

21,939
13,025
1,505
233

11,310
134
1,406
4,456
16

11,672
134
1,451
4,535
16

11,619
133
1,443
4,689
16

284,430
5,993
12,604
1

290,225
6,119
12,949
1

288,459
6,240
13.104
1

47
17
11,522
105

48
17
11,628
104

339
-256
37
83

(

5
-54
-1
-8
154

308
-1
38
233

-125
-9
5
382

(

(' ')

4,030
246
500

3,623
74
575

..)

-1,766
121
155

..)

(

(")

(

..1)

(' ')

(

106
-1

101
-1

330
7

47
17
11,527
104

-1.193

30.282

34.795

959,719

991.193

990.001

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

-1,193

30,282

34,795

959,719

991,193

990,001

Grand total __ . __ . ___ , ____ '" __ . __ .. ____ ...... __ .. __ ... __ .. __ ... __ .. __ .. __ .. __

-434

29,812

41,789

1,016,453

1,046,699

1,046,265

Total public debt securities
Total trust funds

(

-17

)

Note Investments are In pubhc debt seCUrities unless otherwise noted.
Note. Details may not add to totals due to rounding

. No Transactions

(' ') Less than $500.000.

Table 7. Receipts and Outlays of the U.S. Government by Month, Fiscal Year 1993
[$ millions]

Classification

Receipts:
Individual Income taxes
Corporation Income taxes
SOCIal Insurance taxes and
contnbutlOns
Employment taxes and
contnbutlons
Unemployment Insurance
Other retirement contnbutlons
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts

March

Fiscal
Year
To
Date

Comparable
PeriOd
Prior
F.Y.

Oct.

Nov.

Dec.

Jan.

Feb.

37.287
2096

33.097
1.478

51.171
22.950

73.704
3.212

23.947
792

219,206
30.528

197,146
27.474

28.135
1.034
426
3.670
1.027
1.666
1.491

30.264
2.270
366
4.082
954
1.503
618

31.252
245
421
4.014
959
1.539
1.206

28.209
844
363
3.307
888
1.310
971

31.623
2.259
369
3.342
822
1.347
1,695

149,483
6.652
1,944
18,415
4.650
7,364
5,980

147.035
6.056
1.961
18,221
4,304
7,082
11,793

......

April

May

June

July

Aug.

Sept.

...........

76,832

74,633 113.756 112,809

66,194

444,223

(On-budget)

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

55,056

51,219

89,660

90,220

41,093

327,247

......

(Olf·budget)

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

21,776

23,414

24,096

22,589

25,100

116,975

.. ....

-8. U()8

73.194 103.66l 104.091

6l.056

m.o;:;

, Oil h",,~('{ I

.\ -.: /!,

5U.898

80.1-:

79.937

38.l90

306.513

lOll h",,~('{ I

~().85':

::.l96

l3.490

l4.155

lJ 766

114.559

204
135
18

211
162
22

193
183
14

221
221
21

195
157
12

1,024
858
87

1,029
813
83

334

3.393

521

414

137

4,798

3.489

629
270

260
-27

216
77

366
171

239
486

1,710
975

1,965
613

1.653
5.397
290

2.277
3,347
285

3.344
3.301
228

1.263
3,253
231

1.022
3.367
202

9,558
18,666
1,235

7,615
18,725
1,034

9.210
6.526
5.698

3.613
7.265
5.327

9.118
8.140
6.974

4.385
6.986
5.027

5.656
7.154
5.736

31.982
36,072
28.763

35,885
36,804
31,316

3.002
393
219

2.752
427
218

3.337
500
264

2.636
333
263

2.930
251
275

14.657
1,904
1,239

13,955
1,544
1,275

905
-30
25

109
-3
240

676
-3
-59

559
-2
-1,248

..93

-91

2,342
-38
-1,133

2,241
-4,299
-13

25.947

19.949

28.946

18.941

22.003

115,786

118,708

2.493
2.334
1.714

2.506
2.675
1.391

2.509
2.664
1,549

2,438
2,903
780

2,459
2,714
1.266

12,405
13,289
6,700

11,636
12.444
6.579

1,438

1.476

1.573

1.348

1.546

7,381

6,737

6.215
7.299

5.592
6.555

6.320
8.117

5.981
6.171

6.003
7.423

30.111
35,565

26,868
32,205

4.851
3.247
4.691

3.773
3.270
386

4.985
7.723
3.483

3.680
529
1.874

3.811
3.746
2.049

21,101
18,514
12.482

21,162
17,612
11,851

2.178
-4.271

2.132
-4.269

2.507
-9.835

2.536
-705

2.626
-5.021

11,979
-24,100

11.670
-22.918

21.530
2.771
-1.523

21.508
2.638
-5

43.838
5.145
-21

267
465
-1.515

22.230
2.840
-9

109,373
13.860
-3.074

103.530
12,425
-2.862

Total-Receipts this year

/1."tI-R('(('If1!\

{Jrt()r \,('(/1

Outlays
Legislative Branch
The JudiCiary
Executive Office of the PreSident
Funds Appropriated to the President
International Secunty Assistance
InternatIOnal Development
ASSistance
Other
Department of Agriculture'
Foreign assistance. special export
programs and Commodity Credit
CorporatIOn
Other
Department of Commerce
Department of Defense'
Military
Military personnel
Operation and maintenance
Procurement
Research. development. test. and
evaluation
Military construction
Family hOUSing
RevolVing and management
funds
Defense cooperation account
Other
Total MIlitary
CIVil
Department of Education
Department of Energy
Department of Health and Human
Services. except SOCial Secunty
PubliC Health Service
Health Care FinanCing Administration'
Grants to States for Medicaid
Federal hospital Ins, trust fund
Federal supp med, inS trust
fund
Other
SOCial Secullty Administration
Administration for children and
families
Other
Department of Health and Human
Services SOCial Security
Federal old·age and SurviVorS Ins
trust fund
Federal disability Ins trust fund
Other

(

)

Table 7.

Receipts and Outlays of the U.S. Government by Month, Fiscal Year 1993-Continued
[$ millions]

Classification

Oct.

Nov.

Dec.

Jan.

Feb.

March

April

May

June

July

Aug.

Sept.

Fiscal
Year
To
Date

Comparable
Period
Prior
F.Y.

Outlays-Continued
Department of Housing and Urban
Development ....
Department of the Interior
...
Department of Justice
..........
Department of Labor:
Unemployment trust fund
...........
Other
Department of State ....... ... .... . ...
Department of Transportation:
........... ....
Highway trust fund
Other ....
. ....
Department of the Treasury:
Interest on the public debt ..... .... ..
Other ... ....
.," . ..... ' .... ..
Department of Veterans Affairs:
Compensation and pensions ... . . . . . .
National service life
United States government life ........
.......
Other ....
Environmental Protection Agency .... ...
General Services Administration ,.' ... ' "
National Aeronautics and Space
Administration .................... .....
Office of Personnel Management
.......
Small Business Administration
Independent agencies:
Fed. Deposit Ins. Corp.:
Bank Insurance funds ...... , .. ...
Savings association fund .... . . . . . . .
.....
FSLlC resolution fund
Postal Service:
Public enterprise funds (off......
budget) .....
" .. ,
Payment to the Postal Service
fund
... .......
Resolution Trust Corporation
Tennessee Valley Authority
Other independent agencies
Undistributed offsetting receipts:
Employer share, employee
....... .. ....
retirement
....
Interest received by trust funds
Rents and royalties on outer
continental shelf lands
....
Other.
........... .....

2,591
698
1,215

2,053
500
913

2,232
447
849

1,786
517
794

1,764
477
677

10,426
2,639
4,448

10,076
2,679
4,109

3,041
626
900

3,119
-288
365

3,459
410
529

3,584
521
371

3,519
277
247

16,723
1,546
2,412

15,233
1,945
2,101

1,479
1,454

1,486
1,490

1,320
1,645

1,061
1,302

852
1,307

6,199
7,198

5,664
7,223

17,978
137

22,506
-904

51,678
536

18,062
575

16,813
4,152

127,037
4,494

127,190
222

2,623
37
1
1,400
439
165

79
27
1
1,610
511
-478

2,694
51
2
1,377
510
734

80
65
2
1,470
437
-662

1,422
55
1
1,147
383
383

6,899
235
7
7,004
2,281
142

7,984
667
16
6,596
2,425
156

1,098
3,090
113

1,317
2,586
95

1,266
2,986
44

1,092
3,330
-1

1,008
2,886
41

5,781
14,878
291

5,831
14,609
208

97
-87

232
1
339

-848
-3
30

-514
-26
-102

-3,035
-389
779

-4,067
-416
960

3,681
- 24
1.733

-452

327

349

-677

-10

-461

-744

69
-2,578
271
2,326

-3,628
307
1,195

-1,392
115
1,345

30
-566
140
1,125

-622
72
1,416

100
-8,787
905
7,408

276
-8,194
617
6,801

-2,498
-443

-2,511 -2,522
-4,952 -34,461

-2,624
9

-2,564
-530

-12,720
-40,377

-13,740
-37,704

-261

'-36

-245

-997

-928

(")

. ...

("")

-12

-442

(")

.. .

....

Totals this year:
Total outlays

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

125,620 107,363 152,701

82,996 113,788

582,468

('0)

......

(On-budget)

........................ 103,780

83,444 116,640

85,022

89,332

478,217

......

(Off-budgetl

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

23,919

36,061

-2,025

24,456

104,251

......

..... -48,788 -32,730 -38,945 +29,812 -47,594

-138,245

......

-150,969

......

TOlal-surplus (+) or deficit (-)

........................
(Off-budget) ........................
Total borrowing from the public ....
(On-budget)

21,841

-48,724 -32,225 -26,980
-65
-1,552

+5,198 -48,239

-505 -11,965 +24,614

+644

+12,724

......

-8,355

30,689

103,828

122,797

61,969

21,078

114,660 117.878 106,199 119,755 IIU30

Toral-ollliars priof .\'mr

)09. i.'3

(On-bud"c[)

94.671

95.584

95.500

97.195

88.008

470.9511

(Off-budget)

19.990

2.',294

10,699

22,561

23,22.'

911.7!)5

Tolal-.lurplus (+) or dt/icil (-) prior
I'car
(On-budget)
(Off-bud"cl)

-2.537 -15.664 -49.174

-148.!)50

-37,454 -44.687 -15,328 -17,258 -49.717

-/64.445

+544

15.71)4

- 36.592 -44.61J4

+862

~ 12.792

+1.594

... No transactions.
(0 ') Less than $500,000.

Note' Details may not add to totals due to rounding.

Table 8.

Trust Fund Impact on Budget Results and Investment Holdings as of February 28, 1993
[$ millions)
This Month

Securities held as Investments
Current Fiscal Year

Fiscal Year to Date

Classification
Beginning of
Receipts

Outlays

Excess

Receipts

Outlays

Excess
This Year

Trust receipts. outlays, and investments
held:
Airport
Black lung disability
Federal disability Insurance
Federal employees life and health
Federal employees retirement
Federal hospital Insurance
Federal old-age and survivors Insurance
Federal supplementary medical Insurance
Highways
Military advances
Railroad retirement
Military retirement
Unemployment
Veterans life Insurance
All other trust

18,679
37.265
123.293
25.021
7,845
4.847
2.170
22.570
12,750
711
3,194

2.668
254
13,860
-667
14,359
35,565
109.373
21.101
6,822
5.110
3.179
10.578
16,723
371
1.392

-1.924
9
-1.657
667
4.320
1,700
13.920
3.921
1.023
-263
-1.008
11.992
-3.973
339
1.802

-1,659

271,555
93.083

240,687
93.083

30,867

40.029

-1,659

178.472

147,605

30,867

277,373

446,485

-169,113

277.277

446.389

11.526

11,526

444,223

582,468

1,174
6.405
23.211
5.025
1.349
607
474
1.301
3,345
32
767

508
53
2.840
-299
2,928
7.423
22.230
3.811
942
1.056
636
2.152
3.519
95
304

-201
-4
-347
299
-1,755
-1.018
981
1.214
408
-449
-162
-851
-175
-63
463

Total trust fund receipts and outlays
and investments held from Table 60 ..........................................
Less Interfund transactions

46,541
8.171

48,200
8.171

Trust fund receipts and outlays on the basIs
of Tables 4 & 5

38.369

308
49
2.494

Total Federal fund receipts and outlays
Less Interfund transactions

29,865
17

75,799
17

-45,935

Federal fund receipts and outlays on the
basIs of Table 4 & 5

29.848

75.783

-45.935

2,023

66,194

113,788

Less offsetting proprietary receipts
Net budget receipts & outlays

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

-47,594

744
263
12.203

Note Details may not

No transactions
Note Interfund receipts and outlays are transactions between Federal funds and trust funds
such as Federal payments and contributions, and Interest and profits on Investments In Federal
secuntl8S They have no net effect on overall budget receipts and outlays Since the receipts Side of
SUCh transactions IS offset against bugdet outlays In thiS table. Interfund receipts are shown as an
adlustment to arrive at total receipts and outlays of trust funds respectively

Close of
This Month

15.090

13.282

13.025

12.918
18.598
290.626
120.647
306.524
18.534
20.962

11.624
19.069
296.721
123,443
319.439
21.106
21.599

11.281
19.345
294.937
122.883
320.370
21.974
21,939

11.527
87.753
35.133
12.850
8.556

11.522
99.718
30.835
13,257
9.579

11.628
98.910
30.638
13.195
9.876

959,719

991,193

990,001

-169.113

-138,245
add

This Month

to totals due to rounding

Table 9.

Summary of Receipts by Source, and Outlays by Function of the U.S. Government, February 1993
and Other Periods
[$ millions]
Classification

This Month

Fiscal Year
To Date

Comparable Period
Prior Fiscal Year

23,947
792

219,206
30,528

197,146
27.474

31,623
2.259
369
3.342
822
1.347
1,695

149,483
6,652
1,944
18.415
4.650
7,364
5,980

147,035
6,056
1,961
18,221
4,304
7082
11.793

66,194

444,223

421,072

22.903
1,253
1.325
399
1.282
1.145
-3.532
2.093
690
4,068
8.053
9,935
21.317
25,070
2.649
1.060
994
15,893
-2,809

120,540
9,728
7,313
2,075
9,336
10,188
-11,917
13,353
3,793
20,501
39,513
50,654
88,714
123,230
14,258
5,915
6,068
82,921
-13,716

123,905
7.939
6,975
1,860
8,955
8,344
-1,699
13,158
3,151
19,636
35,469
48,010
81,571
115,944
15,389
5,581
6,298
83,90:'
-14,669

113,788

582,468

569,723

RECEIPTS
Individual income taxes
Corporation income taxes
Social Insurance taxes and contributions:
Employment taxes and contributions
Unemployment Insurance
Other retirement contributions
Excise taxes
Estate and gift taxes
Customs
Miscellaneous
Total

NET OUTLAYS
National defense
International affairs
General science. space. and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and Regional Development
Education, training, employment and social services
Health
Medicare
Income security
Social Security
Veterans benefits and services
Administration of lustice
General government
Interest
Undistributed offsetting receipts
TOlal ........................................................ .

Note Details may not add to totals due to rounding

Explanatory Notes
employees' salaries which are withheld for individual income taxes. and
for savings bond allotments. Outlays are stated net of offsetting
collections and refunds representing reimbursements as authoriZed by
law. refunds of money previously expended. and receipts of revolving and
management funds. Federal credit programs subject to the Federal Credit
Reform Act of 1990 use the cash basis of acconting. Budgetary outlays of
subsidy and administrative expenses are recorded in the program
account. Interest on the public debt (public issues) is recognized on the
accrual basis. Outlays of off-budget Federal entities and activity of the
financing and liquidating accounts subject to credit reform are excluded
from budget outlay totals.

1. Flow of Data Into Monthly Treasury Statement
The Monthly Treasury Statement (MTS) IS assembled from data in the
central accounting system. The malor sources of data include monthly
accounting reports by Federal entities and disbursing officers. and daily
reports from the Federal Reserve banks. These reports detail accounting
transactions affecting receipts and outlays of the Federal Government
and off-budget Federal entities. and their related effect on the assets and
liabilities of the US. Government. Information is presented in the MTS on
a modified cash basIs.
2. Notes on Receipts
Receipts Included in the report are classified into the following major
categories (1) budget receipts and (2) offsetting collections (also called
applicable receipts). Budget receipts are collections from the public that
result from the exercise of the Government's sovereign or governmental
powers. excluding receipts offset against outlays. These collections. also
called governmental receipts. consist mainly of tax receipts (including
social Insurance taxes). receipts from court fines. certain licenses. and
deposits of earnings by the Federal Reserve System. Refunds of receipts
are treated as deductions from gross receipts.
Offsetting collections are from other Government accounts or the
public that are of a business-type or market-oriented nature. They are
classified into two malor categories: (1) offsetting collections credited to
appropriations or fund accounts. and (2) offsetting receipts (Le .. amounts
deposited in receipt accounts). Collections credited to appropriation or
fund accounts normally can be used without appropriation action by
Congress. These occur in two instances: (1) when authorized by law.
amounts collected for materials or services are treated as reimbursements to appropriations and (2) In the three types of revolving funds
(public enterprise. intragovernmental. and trust); collections are netted
against spending. and outlays are reported as the net amount.
Offsetting receipts in receipt accounts cannot be used without being
appropriated. They are subdivided into two categories: (1) proprietary
receipts-these collections are from the public and they are offset against
outlays by agency and by function. and (2) intragovernmental fundsthese are payments into receipt accounts from Governmental appropriation or funds accounts. They finance operations within and between
Government agencies and are credited with collections from other
Government accounts. The transactions may be intrabudgetary when the
payment and receipt both occur within the budget or from receipts from
off-budget Federal entities in those cases where payment is made by a
Federal entity whose budget authority and outlays are excluded from the
budget totals.
Intrabudgetary transactions are subdivided into three categories:
(1) interfund transactions. where the payments are from one fund group
(either Federal funds or trust funds) to a receipt account in the other fund
group: (2) Federal intrafund transactions. where the payments and
receipts both occur within the Federal fund group; and (3) trust intrafund
transactions. where the payments and receipts both occur within the trust
fund group.
Offsetting receipts are generally deducted from budget authority and
outlays by function. by subfunction. or by agency. There are four types of
receipts. however. that are deducted from budget totals as undistributed
offsetting receipts. They are: (1) agencies' payments (including payments
by off-budget Federal entities) as employers into employees retirement
funds. (2) Interest received by trust funds. (3) rents and royalties on the
Outer Continental Shelf lands. and (4) other interest (Le .. interest collected
on Outer Continental Shelf money in deposit funds when such money is
transferred into the budget).

4. Processing
The data on payments and collections are reported by account symbol
into the central accounting system. In turn. the data are extracted from
this system for use in the preparation of the MTS.
There are two major checks which are conducted to assure the
conSistency of the data reported:
1. Verification of payment data. The monthly payment activity reported by
Federal entities on their Statements of Transactions is compared to the
payment activity of Federal entities as reported by disbursing officers.
2. Verification of collection data. Reported collections appearing on
Statements of Transactions are compared to deposits as reported by
Federal Reserve banks.

5. Other Sources of Information About Federal Government
Financial Activities
• A Glossary of Terms Used in the Federal Budget Process. March
1981 (Available from the U.S. General Accounting Office. Gaithersburg.
Md. 20760). This glossary provides a basic reference document of
standardized definitions of terms used by the Federal Govemment in the
budgetmaking process.
• Daily Treasury Statement (Available from GPO. Washington. D.C.
20402. on a subscription basis only). The Daily Treasury Statement is
published each working day of the Federal Government and provides data
on the cash and debt operations of the Treasury.
• Monthly Statement of the Public Debt of the United States
(Available from GPO. Washington, D.C. 20402 on a subscription basis
only). This publication provides detailed information concerning the public
debt.
• Treasury Bulletin (Available from GPO, WaShington. D.C. 20402, by
subscription or single copy). Quarterly. Contains a mix of narrative. tables,
and charts on Treasury issues, Federal financial operations. international
statistiCS. and special reports.
• Budget of the United States Government, Fiscal Year 19 (Available from GPO, Washington, D.C. 20402). This publication is a
Single volume which provides budget information and contains:
-Appendix, The Budget of the United States Government, FY 19_
-The United States Budget in Brief. FY 19 _
-Special Analyses
-Historical Tables
-Management of the United States Government
-Major Policy Initiatives

3. Notes on Outlays
Outlays are generally accounted for on the basis of checks issued by
Government disbursing officers. and cash payments made. Certain
Intragovernmental outlays do not require issuance of checks. An example
would be charges made against appropriations representing a part of

• United States Government Annual Report and Appendix (Available
from Financial Management Service, U.S. Department of the Treasury,
Washington, D.C. 20227). This annual report represents budgetary
results at the summary level. The appendix presents the individual receipt
and appropriation accounts at the detail level.

Scheduled Release
The release date for the March 1993 Statement will be 2:00 pm EST April 21, 1993.

For sale by the Superintendent of Documents, U.S. Government Printing
Office, Washington, D.C 20402 (202) 783-3238. The subscription price is
$27.00 per year (domestic), $33.73 per year (foreign).
No single copies are sold

Text as Prepared for Delivery
Embargoed until delivered
Expected about 1 p.m.
March 22, 1993

contact:
Telephone:

Chris Peacock
202-622-2930

REMARKS OF THE HONORABLE LLOYD BENTSEN
SECRETARY OF THE TREASURY
BEFORE THE NATIONAL ASSOCIATION OF HOME BUILDERS
WASHINGTON, D.C.

When I came to Treasury I thought I'd be speaking less than
I did as a Senator. But lim finding I'm speaking more -in fact, maybe four or five times a week, which is a pretty heavy
load.
And I was wondering: "Why all of the sudden the increased
demand?" But after I picked up the paper last week, I figured it
out.
You see, to come to speak to groups like this you can get
one of three Texans who hold or held the title Treasury Secretary
-- Jim Baker, John Connally, or myself.
Now I come free. I don't know what John Connally charges,
but I read where Jim Baker just signed up to go on the circuit
for a fee that is, well, almost the price of a new house!
So I guess that's why I'm here talking to home builders.
But let me warn you: with me, you get what you pay for!
First off, let me say thank you for supporting the
President's Economic Plan. When one of the most important
industries in the country backs your economic plan, that says a
lot -- believe me. President Clinton appreciates it, and so do
I.
I heard what you're going to tell the Congress. And it's
the same message Americans across the country are saying. We
don't mind paying higher taxes, because we believe serious
deficit reduction is good for the country -- and it's causing
interest rates to go down.
That's your bottom line -- interest rates. I know you're
concerned about timber prices. I know you're concerned about
construction safety reform. But the bottom line in housing and
autos or any big durable goods always has been and always will be
interest rates.
LB-:-79

You know the numbers better than I. During the recession,
when 30-year interest rates were 10 percent, a monthly mortgage
on a $100,000 house was $875 --that's principal and interest.
Now, with a 7 1/2 percent rate, the monthly mortgage on the same
house is $700. I don't know an American who doesn't like
pocketing an extra $175 -- per month.
In fact, with 175 bucks a month, an American could fully
fund an IRA -- think about what that could do to the savings rate
in this country.
Well, you're here for a legislative conference. So today
I'd like to make an observation about government and about this
town.
I've been around a few years.
I've seen government work.

I've seen the ups and downs.

I saw the 1940s and '50s -- when America crafted the
strategic and military renaissance that eventually won us the
cold war. I saw the '60s, when our government sparked a
scientific renaissance that put a man on the moon.
And I've seen government not work. I remember that a few
years after Herbert Hoover triumphantly proclaimed the Depression
ended, another President acknowledged that a third of this nation
was ill-housed. I've lived through the gridlock of the last
decade. I've lived through the frustration of crafting bills
that I thought would help people, and politics got in the way,
and no one was ever helped.
Well, here's my observation -- and it's the thought I want
to leave you with this afternoon: right now, our government is
doing major remodeling. And the place never looked better.
We're not a developer who can pick a plot in the country,
start from scratch, and build a dream house.
We're not a manufacturing company that can find a green
field in Timbuktu, put up a plant, hire a new work force, train
them to their ways, and build a world-class product.
Life's easy when you can start from a clean piece of paper
with no restrictions and no history.
It doesn't work that way in government. We start with more
than 4.8 million workers. We start more than $4 trillion in
debt. We start with a structure that is 200 years old. We start
with a foundation of 535 congressmen and a President and a
Cabinet and a judicial branch that is hard to change.

About the best we can do in Washington is get the paint
brushes out, buy the plywood, and tune into Tim Allen's
Home Improvement!
Last year, the people said let's remodel Congress. They
sent us 124 new faces. And I'll tell you I'm impressed with many
of them because they aren't finger pointing or running away from
problems that aren't theirs.
I was on the Hill last week testifying for the RTC, and a
new Congressman from New Jersey looked me in the eye and said: I
wasn't here when the S&L problem was created. But speaking for
the new members, we recognize that we have to face the problem.
We have to take responsibility.
I can't tell you how pleased I was to hear him say that.
Gridlock is gone and grinding out legislation is in.
I see major remodeling of the Executive Branch. I sit at
Cabinet meetings, and I'm impressed with the freshness of the
ideas.
I see a willingness to tackle problems that never have been
tackled -- i.e. health care. Under Mrs. Clinton's leadership, we
want to find ways to control health care costs and provide
coverage for every American.
President Clinton came to the Treasury Building last week to
talk to our civil servants, and what stood out in my mind was the
energy level in that room. I saw motivated workers with one
goal: "Let's make government work better."
I went to a G-7 meeting last month with my fellow finance
ministers from around the world, and it was gratifying to see
their reaction to the new United states.
For years, they've been telling us: "Get your deficit
down." Finally, they're seeing a serious attempt, and they
appreciate it. The U.S. is in the strongest economic leadership
position it has been in more than a decade.
At the center of the remodelling efforts is the President's
economic plan -- passed by the House last week and up for a vote
in the Senate this week.
It has three parts -- first, a stimulus to speed up the
recovery; second, an investment package to expand America's
capacity to produce, long-term; and third, deficit reduction.

There are some who look at the numbers at the end of the
month and say things are getting better. Housing starts went up
2.5 percent in February. Employment rose. Why do we need a
stimulus?
Employment rose, but we still have 9 million Americans
unemployed -- and unemployed Americans won't be shopping for new
homes this spring, I guarantee you that. We are operating well
below capacity in this country.
The stimulus will jump-start the economy. We'll create half
a million new jobs in the short run and we hope 8 million new
jobs over the life of the economic plan.
And we hope to stimulate private-sector investments, with
investment tax credits for business, large and small.
Second, we want to expand America's capacity to produce,
long term.
We haven't kept up in our investments in our infrastructure,
in a quality work force, or in modern plants and equipment that
produce our goods.
Just as an example, in the 1960s, public investment was
4.5 percent of Gross Domestic Product. But in the 1970s it
was only 3.3 percent. And by the 1980s, it had fallen
to 2.6 percent.
Here's another example. Private investment as a share of
GDP is 15.5 percent in the United states. In Japan, it's percent
-- 32 percent! How do we expect American businesses to compete
globally, if we don't invest like the rest of the world?
So we have a lot of plans to shift these trends. We plan to
extend the research and development tax credit permanently.
We plan to increase investment incentives for small
businesses, and modify the alternative minimum tax depreciation
schedule, something that will especially help capital-intensive
businesses.
We plan to invest in worker retraining and defense
conversion. We'll invest in things that are important to
productivity and growth -- like transportation and technology.
We plan to start a National Service Corps, so American youth
can payoff college with community service work. Aren't many of
your potential first-time home buyers college graduates?

Well, tell me, how can they afford a down payment or
mortgage payments, when they have car payments •.• and credit
card payments •.• and $25,000 in student loans to repay?
I remember the first speech I ever gave on the floor of the
Senate was for a program to put youth into work-study programs
that help pay for college expenses. And that was back in 1971,
when four years at a public college was $6,000 not $25,000.
And we have many programs aimed at investments in real
estate -- programs that will directly help you.
We plan to extend mortgage revenue bonds to make housing
more affordable to lower- and middle-income families.
The same
with the low-income housing credit -- we want to extend that,
permanently.
We want to provide passive loss relief for certain real
estate activities. The passive loss rules are in place to curb
tax shelters, but we need to be fair to real estate
professionals, and this will help them out.
We also want to make it easier for pension funds to invest
in real estate, so we have several steps in mind that will
facilitate this.
I know many of you are small, independent business people
which means your health-care insurance is self-provided. Big
companies can generally deduct, as an employee compensation
expense, the full cost of any health insurance coverage. You
can't.
So we plan to extend the 25 percent deduction for you. I
have a feeling you'd like to see it at 100 percent, but this is a
start until we complete our comprehensive health care proposals.
And one other thing that will help you is our credit crunch
package. Two weeks ago we announced regulatory steps to make
credit more available. It was unheard of, but we got the Federal
Reserve, FDIC, Comptroller of the Currency, and Office of Thrift
Supervision all working together.
In the past, regulators and examiners have virtually forced
the banks to liquidate real estate rather than to get on-going
market value. And redundant appraisals have added to the costs
of real estate loans. You're going to start seeing some changes.
The third and final part of the plan is deficit reduction.
This year, we will pay 14 percent of the federal budget for
interest. 14 cents on every dollar buys us nothing. All we get
back is canceled checks. If we do nothing, settle for the status
quo, in a decade it will be 20 percent.

We have a list of 150 ways to cut government spending.
Every segment of the budget -- defense, non-defense, entitlements
-- is included. And congress wants us to find even more ways.
President Clinton is cutting the White House staff by 25 percent.
By 1997, we're cutting the cost of running our departments
and agencies by 14 percent. Believe me, I personally feel the
effects at Treasury. These are honest cuts. The kinds that you
make every day in business -- we're finally making in government.
But along with the downsizing, we have to raise revenues.
There's no way of getting around that. And in ra1s1ng revenues,
we're trying to restore equity in the system, both in the
personal income tax rates and in corporate rates.
For the wealthiest 1.2 percent of American taxpayers (the
people who make over $180,000) their taxes will increase from
31 to 36 percent. These rate changes won't touch the average
American household.
The increase we are seeking in corporate taxes is, frankly,
minimal -- 2 percent. Please keep corporate tax rates in
perspective. The rate in Germany is now 50 percent ••• in Japan
it is now 40 percent •.. and after our increase is phased in, it
will still be only 36 percent here.
To be sure there is tax fairness for everyone, we will
ensure that foreign businesses pay the taxes they owe in the
united states. To do this, we have a series of international
compliance reforms. And, a related provision restricts the
ability of foreign-owned u.s. corporations to avoid tax on their
earnings distributed as interest.
Finally, to raise revenue, we have a broad-based energy tax.
A tax that will also improve our environment by effectively
taxing pollution and reducing dependence on foreign oil by
encouraging conservation.
Let me tell you what it means at the gas pump. After our
energy tax is phased in, a gallon of gasoline will cost about
$1.20 in this country. I don't know if you've been to Europe
lately, but it gets a little expensive there if you say:
"fill'er up." Consumers in France and Germany now pay almost 4
bucks for a gallon of gasoline, and about 75 percent of that is
tax.
If you recall, at the beginning of the speech, I told you
what your bottom line was. At rates of 10 percent on a $100,000
mortgage, Americans pay $875 a month. At 7 1/2 percent rates,
they're paying $700 a month. A savings of $175 a month.

Well, let me tell you what our bottom line is. The average
American family earning $40,000 will pay an additional $17 a
month in energy taxes. Now say this is the same family that has
the $100,000 mortgage, they will save 10 times in interest costs
what the energy tax will cost them. You can't find a better
deal.
Americans know it.
our remodeling efforts.

That's why they've been so supportive of

And the bond market knows we're serious about deficit
reduction. That's why we've seen long-term interest rates at
their lowest level in 30 years.
You know, when you're 22 you dream about building a home.
When you're 42 you dream about building your dream home.
And when you're my age, well, I can dream about re-building
America's home.
I don't know if you saw it, but the other day the New York
Post ran a picture of Alexander Hamilton shedding a tear.
Hamilton started the paper, and I guess the reporters there
thought that he'd be disappointed if he saw its condition now.
Well, Alexander Hamilton also was the first Treasury
Secretary of the united states. I think if he saw our books, he
wouldn't be shedding one tear, he'd be shedding a sea of tears.
He wouldn't like to know that we're $4 trillion in hock.
But I bet Alexander Hamilton would also have a smile on his
face.
You see, he'd be glad to know that a new President and a new
Congress are remodeling the place.
And he'd be glad to know that builders like you
allover
this country -- are keeping the American dream alive of having
every American own their own home.
Thank you very much.

And have a nice stay in Washington.
#

Contact:

FOR IMMEDIATE RELEASE
March 22, 1993

Chris Peacock
(202) 622-2930

SELECTION OF CUSTOMS COMMISSIONER ANNOUNCED
Treasury Secretary Lloyd Bentsen announced Monday that the
President intends to nominate George J. Weise to be Commissioner
of the u.S. Customs Service.
Weise, 44, has been staff director of the Subcommittee on
Trade of the House Ways and Means Committee since 1989.

received an M.B.A. from George Washington University, a J.D. from
the University of Maryland School of Law, and a B.S. from the
University of Maryland.
-30-

LB-80

Monthly Release of u.s. Reserve Assets
The Treasury Department today released u.s. reserve assets data
for the month of February 1993.
As indicated in this table, u. S • reserve assets amounted to
72,847 million at the end of February 1993, up from 71,962 million in
January 1993.

u.s. Reserve Assets
(in millions of dollars)

End
of
Month

Total
Reserve
Assets

Gold
stock 1/

Special
Drawing
Rights Y1I

Foreign
Currencies .!/

Reserve
position
in IMF Y

January

71,962

11,055

8,546

40,282

12,079

February

72,847

11,055

8,651

41,120

12,021

Valued at $42.2222 per fine troy ounce.

Beginning July 1974, the IMF adopted a technique for valuing the
SOR based on weighted average of exchange rates for the
currencies of selected member countries. The u.s. SDR holdings
and reserve position in the IMF also are valued on this basis
beginning July 1974.

Includes allocations of SORs by the IMF plus tran$actions in SORs .

.!/

Valued at current market exchange rates.

LB-81

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
March 22, 1993

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $11,220 million of 13-week bills to be issued
March 25, 1993 and to mature June 24, 1993 were
accepted today (CUSIP: 912794D68).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.93%
2.94%
2.94%

Investment
Rate
2.99%
3.00%
3.00%

Price
99.259
99.257
99.257

Tenders at the high discount rate were allotted 66%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
21,300
45,661,985
10,195
32,465
33,075
61,985
1,611,565
13,095
5,610
22,265
14,140
910,900
735,295
$49,133,875

Acce:gted
21,300
10,194,175
9,195
32,465
33,075
35,965
33,165
13,095
5,610
22,265
14,140
70,400
735,295
$11,220,145

Type
Competitive
Noncompetitive
Subtotal, Public

$44,784,025
1,243,330
$46,027,355

$6,870,295
1,243,330
$8,113,625

2,321,810

784,710
$49,133,875

784,710
$11,220,145

Federal Reserve
Foreign Official
Institutions
TOTALS

An additional $6,790 thousand of bills will be
issued to foreign official institutions for new cash.

LB-82

UBLIC DEBT

~~EWS

Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
March 22, 1993

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $11,204 million of 26-week bills to be issued
March 25, 1993 and to mature September 23, 1993 were
accepted today (CUSIP: 912794E34).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.04%
3.05%
3.05%

Investment
Rate
3.13%
3.14%
3.14%

Price
98.463
98.458
98.458

Tenders at the high discount rate were allotted 73%.
~he investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
23,425
37,258,495
5,195
31,800
22,330
53,195
1,721,910
7,885
7,195
28,925
5,905
916,915
606 1 525
$40,689,700

AcceQted
23,425
10,049,495
5,195
31,800
22,330
48,605
21,910
7,885
7,195
28,925
5,905
344,515
606 1 525
$11,203,710

Type
Competitive
Noncompetitive
Subtotal, Public

$36,613,640
991 1 170
$37,604,810

$7,127,650
991 1 170
$8,118,820

2,200,000

884.890
$40,689,700

884.890
$11,203,710

Federal Reserve
Foreign Official
Institutions
TOTALS

An additional $2,410 thousand of bills will be
issued to foreign official institutions for new cash.

LB-83

statement of Honorable Roger C~ Altman
Chief Executive Officer, Resolution TrUst,corporation
Before the Subcommittee on General Oversight
of the
Committee on Banking, Finance and Urban Affairs
March 23, 1993
2222 Rayburn House Office Building

Chairman Flake, members of the Subcommittee, it is a pleasure
to be with you today as you begin your examination of the
Resolution Trust Corporation's minority and women owned business
program.

It is my understanding that your Subcommittee will hear
testimony today about the participation of Minority and Women
Owned Businesses (MWOBs), and Minority and Women Owned Law Firms
(MWOLFs) in RTC contracting.

Let me say at the outset, Mr. Chairman, that Secretary
Bentsen and I are fully committed to expanding opportunities for
minority and women owned businesses in all RTC activities.

As you know, I was appointed interim Chief Executive Officer
of the RTC on March 15 under the Vacancies Act of 1966, as
amended.

The search for my replacement as RTC CEO is currently

underway.

Since I was appointed on March 15, I have participated as a
member of the Thrift Depositor Protection Oversight Board in
LB-84

hearings before the House and Senate Banking Committees, on March
16 and 17.

At these hearings I joined with Secretary Bentsen, the
Chairman of the Oversight Board, as he set forth the nine
management reforms that I am now beginning to implement.

These

reforms are far-reaching and will take time to accomplish fully.
Each of them is important.

Collectively they will contribute to

earning public confidence in, and respect for the RTC.

Secretary

Bentsen and I are completely committed to this effort, and we
intend that the new CEO we nominate will share our determination
to achieve each of these objectives.

A key element of our reform package is to expand
opportunities for minority and women owned businesses in all RTC
activities, including the management and disposition of RTC
assets.

In taking on this assignment I have the great advantage

of having the assistance of Ms. Johnnie B. Booker, Assistant Vice
President of the RTC for Minority and Women's Programs, and your
next witness this morning.

Since late December, 1991, when she joined the RTC, Ms.
Booker has been working to centralize and strengthen RTC's
efforts to enlarge minority and women participation in its work.
She has made real progress.

In her statement today she will

describe in detail the quantitative measures of that progress:

the number of contract awards, and the dollar amount of the fees,
received by all minorities and by non-minority women.

She will

also describe the programs she has put in place to reach out to
minority and women owned businesses and to expand their
participation in RTC's work.

As you know I have asked Ms. Booker to report directly to me
in my new capacity, and it is my intention that she continue to
report directly to whomever succeeds me.

This more immediate

reporting relationship demonstrates our commitment to this effort
and I hope that it will also bring results.

Mr. Chairman, I came here today for two reasons.

First, I

came to affirm my strong commitment to expanding opportunities
for minority and women owned businesses in all RTC programs.

I also came to hear from you and other members of your
Subcommittee.

I value this opportunity to have your ideas about

the RTC and to have your observations and your suggestions for
improving our activities in this area.

Thank you for the opportunity to be with you.

FOR RELEASE AT 2:30 P.M.
March 23, 1993

CONTACT:

Office of Financing
202/219-3350

TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $22,400 million, to be issued April I,
1993. This offering will result in a paydown for the Treasury of
about $300 million, as the maturing weekly bills are outstanding
in the amount of $22,697 million.
Federal Reserve Banks hold $5,440 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $2,558 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000

Attachment

LB-s.5

HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS

March 23, 1993
Offering Amount .

Description of Offering:
Term and type of security
CUSIP number . . . . . .
Auction date . . . .
Issue date . . . . . .
Maturity date . . . .
Original issue date . . .
Currently outstanding . .
Minimum bid amount
Multiples . . . . . . . .

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

$11,200 million

91-day bill
912794 07 6
March 29, 1993
April 1, 1993
July 1, 1993
July 2, 1992
$27,426 million
$10,000
$ 5,000

182-day bill
912794 F8 2
March 29, 1993
April 1, 1993
September 30, 1993
April 1, 1993
$10,000
$ 5,000

The following rules apply to all securities mentioned above:

Submission of Bids:
Noncompetitive bids
competitive bids

Maximum Recognized Bid
at a single Yield
Maximum Award .
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders .
payment Terms .

Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
35% of public offering
35% of public offering
Prior to 12:00 noon Eastern time on auction day
Prior to 1:00 p.m. Eastern time on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date

federal financing
WASHINGTON, DC

20220

bankNEWS
March 23,1993

For Immediate xelease

FEDERAL FINANCING BANK

Charles D. Haworth, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month of February 1993.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $147.5 billion on February 28,
1993, posting a decrease of $3,594.4 million from the level on
January 31, 1993. This net change was the result of decreases in
holdings of agency debt of $3,496.7 million, in holdings of
agency assets of $3.4 million, and in holdings of agencyguaranteed loans of $94.3 million. FFB made 21 disbursements in
February.
Attached to this release are tables presenting FFB February
loan activity and FFB holdings as of February 28, 1993.

LB-86

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Paqe 2 of 3

BARK

~BDBRAL ~IBAKCI.G
~BBRUARY 1993 ACTIVITY

DATE

BORROWER

AMOUNT
OF ADVANCE

INTEREST
FINAL
MATURITY
RATE
(semiannual)

INTEREST
RATE
(not semiannual)

GOVERNMENT - GUARANTEED LOANS
G~H~RAL ~~BVI~~~ ADMIHI~IRATION

Oakland Office Buildinq
ICTC Buildinq
Foley Square Courthouse
ICTC Buildinq
Miami Law Enforcement
Oakland Office Buildinq
Memphis IRS Service Center
Foley Square Office Bldq.
GSA Refinancinq Loan
RURAL

~LB~BI[I~AtIQH

2/1
2/2
2/8
2/19
2/19
2/19
2/24
2/25
2/26

6,543,834.00
3,717,915.12
8,662,213.00
3,664,094.22
679,710.00
5,872,469.00
304,748.87
8,061,766.00
35,610,000.00

01/31/94
11/15/93
12/11/95
11/15/93
07/01/93
01/31/94
01/03/95
12/11/95
03/02/98

3.524%
3.414%
4.661%
3.315%
3.143%
3.404%
3.968%
4.464%
4.703%

1,006,000.00
1,357,899.49
571,761.41
238,959.00
268,641. 37
469,948.35
500,000.00
550,000.00

12/31/14
12/31/13
12/31/13
12/31/13
06/30/98
12/31/13
12/31/25
12/31/25

6.659%
6.662%
6.529%
6.529%
4.955%
6.529%
6.443%
6.727%

150,000,000.00
50,000,000.00
73,000,000.00
57,382,266.99

03/23/93
04/02/93
04/13/93
04/20/93

3.149%
3.149%
3.149%
3.149%

AQMIHlstRATIOH

Guam Telephone Auth. #371
@Medina Electric Coop. '113
@Gulf Telephone Co. #050
@Gulf Telephone Co. 1050
@Gulf Telephone Co. #050
@Gulf Telephone Co. #050
Randolph Electric 1359
Oconto Electric Coop. 1369

2/9
2/11
2/18
2/18
2/18
2/18
2/24
2/26

tENNESSEE VAT.T.ty AU'I'HOBlty
Seven States Energy Corporation
Note
Note
Note
Note

A-93-5
A-93-6
A-93-7
A-93-8

@interest rate buydown

2/26
2/26
2/26
2/26

6.604%
6.607%
6.477%
6.477%
4.925\
6.477%
6.392%
6.671%

qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.

Page 3 of 3
FEDERAL FINANCING BANK
(in millions)
Program
Agency Debt:
Export-Import Bank
Federal Deposit Insurance Corporation
Resolution Trust Corporation
Tennessee Valley Authority
u.s. Postal Service
sub-total*
Agency Assets:
Farmers Home Administration
DHHS-Health Maintenance Org.
DHHS-Medical Facilities
Rural Electrification Admin.-CBO
Small Business Administration
sUb-total*
Government-Guaranteed Loans:
DOD-Foreign Military Sales
DEd.-Student Loan Marketing Assn.
DEPCO-Rhode Island
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Administration +
DOl-Guam Power Authority
DOl-Virgin Islands
DON-Ship Lease Financing
Rural Electrification Administration
SBA-Small Business Investment Cos.
SBA-State/Local Development Cos.
TVA-Seven States Energy Corp.
DOT-Section 511
DOT-WMATA
sub-total*
grand-total*
*figures may not total due to rounding
+does not include capitalized interest

February 28. 1993
$ 7,202.3
4,500.0
35,987.4
6,825.0
10.439.9
64,954.6
42,979.0
55.2
59.9
4,598.9

January 31. 1993
$

7,202.3
7,000.0
36,984.1
6,825.0
10.439.9
68,451.2
42,979.0
55.2
63.1
4,598.9

Net change
2/1/93-2/28/93
$

0.0
-2,500.0
-996.7
0.0

FY '93 Net Change
1Q/1/92-2/28/91
-490.2
-5,660.0
-10,548.5
-350.0
$

2..t...Q

~;}§.~

-3,496.7

-16,512.2
0.0
0.0
-4.4
0.0
-Q.7
-5.0
-86.2
-30.0
-50.7
-28.2
-52.3
500.0
-27.0
-0.6
-47.9
-107.3
-25.3
-21.4
-462.8
-0.9
Q.Q
-440.5

47,696.5

47,699.9

0.0
0.0
-3.2
0.0
-Q.2
-3.4

4,258.1
4,790.0
74.3
146.2
1,801.0
1,276.9
0.0
23.1
1,528.3
18,035.7
118.2
612.3
1,954.0
18.1
177.Q
34,813.2
=========
$147,464.2

4,272.3
4,790.0
74.3
147.2
1,801.0
1,203.8
0.0
23.1
1,528.3
18,037.1
121.3
616.6
2,096.9
18.5
111·Q
34,907.4

-14.2
0.0
0.0
-1.0
0.0
73.1
0.0
0.0
0.0
-1.5
-3.2
-4.3
-142.9
-0.4
....Q....Q
-94.3
=======:=

======-=:=

$151,058.6

$-3,594.4

$-16,957.7

l.i

J.§

---------

LB - 87

NOT FOR PUBLIC DISTRIBUTION

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
March 24, 1993

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Tenders for $15,259 million of 2-year notes, Series U-1995,
to be issued March 31, 1993 and to mature March 31, 1995
were accepted today (CUSIP: 912827K27).
The interest rate on the notes will be 3 7/8%. All
competitive tenders at yields lower than 3.92% were accepted in
full.
Tenders at 3.92% were allotted 59%. All noncompetitive and
sucessful competitive bidders were allotted securities at the yield
of 3.92%, with an equivalent price of 99.914. The median yield
was 3.89%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 3.79%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
25,505
33,331,665
18,245
29,940
96,460
41,585
1,086,930
39,910
27,385
73,925
10,815
684,405
392,255
$35,859,025

Accepted
25,505
13,884,655
18,240
29,940
84,460
31,570
260,930
39,910
27,385
73,925
10,815
379,405
392,255
$15,258,995

The $15,259 million of accepted tenders includes $999
million of noncompetitive tenders and $14,260 million of
competitive tenders from the public.
In addition, $428 million of tenders was awarded at the
high yield to Federal Reserve Banks as agents for foreign and
international monetary authorities. An additional $1,602 million
of tenders was also accepted at the high yield from Federal
Reserve Banks for their own account in exchange for maturing
securities.

LB-88

REMARKS AS PREPARED FOR DELIVERY
EMBARGOED UNTIL DELIVERY
EXPECTED ABOUT 3:30 P.M.
MARCH 24, 1993
REMARKS OF TREASURY SECRETARY LLOYD BENTSEN
THE COUNCIL ON COMPETITIVENESS
WASHINGTON, D.C.
We share a number of common interests -- we being the
Clinton administration and you -- and at the outset of my remarks
I want to congratulate the Council on the important contribution
you've made to the debate on how to restore vitality to our
economy.
You recognize, as does this administration, that changes are
needed, that the status quo is unacceptable. Together we're
going to strengthen our position as a world leader and provide an
improving standard of living for our citizens.
We're well on the way to making
economic direction of this country.
our stimulus and the outlines of our
resolution. The Senate's working on
progress.

a major change in the
Last week the House passed
program in the budget
it now. We're making rapid

Even before we put the first line of our program on paper we
began to see results. The bond market has been enthusiastic
about our plan, and since November long term rates are down about
a full percentage point.
Americans are benefitting already. Those who bought a new
home or refinanced a mortgage are saving sUbstantial amounts of
money. corporations are paying less to finance expansion and
modernization. And the government is realizing significant
savings in interest payments as we refinance our debt.
The stimulus portion of our program is the prec~rsor to our
longer range plan for restoring economic growth, encouraging
investment, producing jobs, and strengthening our leadership
position in world affairs. Some question its wisdom. I don't.
Let me tell you why.

LB-89

a major change in the
Last week the House passed
program in the budget
it now. We're making rapid

Even before we put the first line of our program on paper we
began to see results. The bond market has been enthusiastic
about our plan, and since November long term rates are down about
a full percentage point.
Americans are benefitting already. Those who bought a new
home or refinanced a mortgage are saving sUbstantial amounts of
money. Corporations are paying less to finance expansion and
modernization. And the government is realizing significant
savings in interest payments as we refinance our debt.
The stimulus portion of our program is the prec~rsor to our
longer range plan for restoring economic growth, encouraging
investment, producing jobs, and strengthening our leadership
position in world affairs. Some question its wisdom. I don't.
Let me tell you why.

First, $30 billion is not that much in a $6 trillion
economy. But more importantly, this recovery has been positively
anemic in terms of job creation. The recovery is two years old
this month, but we still have 9 million Americans unemployed -an unemployment rate of 7 percent. If this were a typical
recovery, we'd have seen job growth of about 6.5 percent by now,
but it is just 0.8 percent. Too much of our manufacturing
capacity is idle.
Our stimulus is intended to cement the success of this third
effort to break free of recession. It also is designed as the
building block of a longer term effort to restore growth and
efficiency, and thus competitiveness, to our economy.
We will concentrate on rebuilding our infrastructure, with a
program that will create about 500,000 jobs.
And, as both a short term and a long term encouragement to
business to invest in research, we are permanently and
retroactively extending the research and experimentation tax
credit. We're extending temporarily the incremental investment
tax credit for large businesses, and installing for small
businesses a permanent investment tax credit that drops from 7
percent to 5 percent in two years.
Also, we're simplifying the Alternative Minimum Tax. There
now are three depreciation schedules for the tax, but our plan
will use just one schedule. And that schedule has a shorter
period for depreciation. This should benefit many capitalintensive businesses.
In addition, by working together, the Federal Reserve, the
Comptroller of the Currency, the FDIC and the Office of Thrift
Supervision have taken some significant regulatory steps to ease
the credit crunch that small and medium-sized businesses have
been facing.
The bulk of our job growth will be coming from firms like
these, and the easier we can make it for them to get access to
capital, the easier it will be for them to grow.
These actions are the forerunners of longer range steps to
make the economy stronger by bringing down our deficits, freeing
up capital for investment, and encouraging investment.
I want to talk first about our investment program. The
deficit reduction plan will free money for investing. It is that
investment which will strengthen our economic position over the
long term.

The object, of course, is to restore to our economy the
growth and momentum that will lead us into the next century in
charge of our destiny. We don't want to find ourselves a decade
from now with hemorrhaging deficits that weaken our nation.
Any of you who have tried to cure insomnia by watching
reruns on C-SPAN will recall that I have a number of charts that
show in very stark terms just how much of what I like to call an
investment deficit we have in this country.
Let me review a few of those numbers. Personal savings by
Americans fell in 1992. The rate is about 4.5 percent right now.
The rate in Germany is twice that. In Japan, it's three times
that. In fact, let me quote back to you a figure from one of
your own pUblications: In July of last year, you reported that
the average household savings in Japan was $45,000, but in the
united states it was just $4,200.
Our private investment, when measured against Gross Domestic
Product, is just over 15 percent. In Japan, it's 32 percent.
Likewise, our public investment is also the lowest among the G-7
countries -- 1.7 percent of GDP against 6.1 percent for Japan.
These aren't just abysmal numbers. They're an indictment of
ourselves for neglecting our nation. Fortunately, this
administration, from President Clinton on down, recognizes that
we must make changes to turn around the direction in which our
economy is heading. I'm proud to say that we're receiving widespread support, from Americans, from Congress, from the financial
markets, and from our trading partners.
With our investment program, we are seeking to encourage
private investment in the areas that will create quality jobs, to
make targeted investments in our infrastructure, and to invest in
programs that will give us the better educated, healthier, more
productive work force we need.
We recognize that people, workers, are our nation's most
valuable asset. Our package includes $16 billion to follow
through on the president's commitment to provide lifelong
learning opportunities for Americans.
It includes money for things such as Head start, the Women,
Infants and Children's program, and childhood immunization.
These expenditures will save us money in the long run.
We have $4.6 billion to help dislocated workers -- the
people affected by the corporate downsizing we're seeing.
There's a youth employment training component, along additional
adult job training initiatives, and the National Service program.
In addition, our extension of the Earned Income Tax Credit will
ensure that working families stay above the poverty line.

One of the elements that interests me in particular is the
apprenticeship program. There are high school students who don't
intend to go to college, but they need good technical skills to
get decent-paying jobs in some of the more complicated
occupations. We want to give them that training.
A German industrialist once visited me in my Senate office
and told me that a similar program was one of the major reasons
Germany's work force is so productive. We intend to make certain
these young men and women are equipped with the skills they need
for today's jobs.
Our program has a number of elements designed to encourage
our businesses -- both large and small -- to make the investments
they need to both create jobs and improve their competitive
position.
If you recall, the stimulus package contains the permanent
small business investment tax credit, which by extension is part
of our longer term program. The same is true of our
simplification of the Alternative Minimum Tax. We're making the
research and experimentation tax credit permanent, which should
take uncertainty out of the planning process.
And there's a new capital gains exclusion for investors in
small businesses, which we're now defining as companies
capitalized up to $50 million. Individuals who sold qualified
small business stock after five years could see a capital gains
rate of just 14 percent, and that's the lowest rate since the
1930s.

We also are permanently extending the exclusion for
employer-provided educational assistance. We want to encourage
employers to provide their workers with educational assistance
that will improve our productivity.
Now, the program that will give our corporations access to
the capital they need to invest in the modern plants and
equipment that will help us lead in world economic circles, is
our deficit reduction plan.
I'm delighted at how rapidly it's moving through Congress.
The national demand to reduce the deficit has encouraged my
former colleagues to propose even deeper cuts to that deficit.
When we set out our plan, it had an equal amount in budget
cuts and revenue increases. Now it's likely to be weighted more
heavily toward spending cuts.

The obvious immediate impact is the sharp reduction in long
term interest rates. The other impact will be a government that
four years from now is running far more efficiently, and drawing
fewer dollars out of the capital marketplace to finance our
deficits and pay interest on our debts.
All of government is cut under our plan: defense, nondefense discretionary spending, and even entitlements. These are
real cuts, not a black box of choices that we're telling Congress
to pick fr0m. The president is reducing the size of the White
House staff, and taking 100,000 positions out of the federal work
force. We expect to cut the cost of government 14 percent over
four years.
Why?

Because we're tired of paying deficits that now exceed
Because we're paying $200 billion each year
in interest on our debt, and getting nothing but canceled checks
for it. Let me tell you, if we don't do anything, in a decade
our annual deficit will be more than $650 billion. And our
options will be fewer, and far more difficult.
$300 billion a year.

Cutting the cost of government is half the equation. It is
essential to raise revenues. Therefore, we've decided to raise
our top individual tax rate to 36 percent. It is only fair,
considering that in the past decade the wealthiest 1 percent of
Americans saw their income rise by nearly half, but their
effective tax rate fall by 25 percent. We're also putting a
surcharge of 10 percent taxable personal income of over $250,000.
The tax rate for our largest corporations is going to go up
by just 2 percent.
The top rate in Germany is 50 percent. In
Japan, it's 40 percent.
There's also our energy tax, but we worked hard to construct
it in such a way that it is a fair tax across our regions. And
the object isn't just to help reduce the deficit. It's to
effectively tax pollution and thus make our environment cleaner,
and to help reduce our dependence on foreign energy supplies. We
will reduce oil imports from a politically volatile region by
350,000 barrels per day.
The cost of our tax changes to a family with income of
$40,000 -- once everything is fully phased in -- is $17 a month.
Refinancing a $100,000 mortgage down from 10 percent to 7.5
percent will save you $175 a month, so many folks are ahead of
the game already. They could save as much as 10 times the cost

of the energy tax.

This program -- a stimulus, an investment package and a
deficit reduction package -- will bring down our annual deficits
by at least $140 billion a year by 1997, but at that point rising
health care costs will again start driving our deficits back up.
That's why we have the task force that Mrs. Clinton is directing
working on this important problem. Talk about a competitiveness
issue. This is the fastest rising expense for everyone in
government and industry alike.
A recent University of Michigan study tells us that among
our Big Three automakers, on average $1,100 of the cost of
building a new vehicle is health insurance expenses for the
manufacturers and suppliers. That's $500 more than comparable
costs in Japan. Attacking health care cost growth will provide
an additional improvement in our competitiveness.
We've laid out an aggressive program to attack our economic
ills and make this a stronger nation. We're doing what no
administration has done -- simultaneously reducing the deficit
and increasing investment.
Our plan is winning support both
here, and abroad, where our G-7 partners think it's about time we
do what they've been telling us to do for years.
I want to end with a little story. On Monday, a group of
youngsters from Arizona gave me a check for more than $2,200 they
collected to help reduce our debt. They showed remarkable
responsibility, and an understanding of our problems.
We have a unique opportunity now to exercise our
responsibility to put our economy on a path to renewed strength
and leadership. That path will make certain we can pass on a
better way of life to the generation represented by the
youngsters who brought me that check. The time to act is now.
Thank you very much.

* * *

UBLIC DEBT NEWS
•

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;

Department of the Treasury • Bureau of the

"1.:/

FOR IMMEDIATE RELEASE
March 25, 1993

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PublicDeb'j:;~

)"ashington, DC 20239

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Office of Financing

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202-219-3350

RESULTS OF TREASURY'S AUCTION OF 5-YEAR NOTES
Tenders for $11,008 million of 5-year notes, Series L-1998,
to be issued March 31, 1993 and to mature March 31, 1998
were accepted today (CUSIP: 91~827K35).
The interest rate on the notes will be 5 1/8%. All
competitive tenders at yields lower than 5.19% were accepted in
full.
Tenders at 5.19% were allotted 44%. All noncompetitive and
sucessful competitive bidders were allotted securities at the yield
of 5.19%, with an equivalent price of 99.717. The median yield
was 5.15%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 5.05%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
31,493
27,113,124
18,439
26,554
298,292
25,286
947,067
21,760
13,647
33,371
10,831
384,057
171,090
$29,095,011

Accepted
31,473
10,420,719
18,439
26,554
48,292
20,241
119,067
21,760
13,622
33,371
10,831
72,831
171,090
$11,008,290

The $11,008 million of accepted tenders includes $789
million of noncompetitive tenders and $10,219 million of
competitive tenders from the public.
In addition, $1,128 million of
high yield to Federal Reserve Banks
international monetary authorities.
of tenders was also accepted at the
Reserve Banks for their own account
securities.

LB-90

tenders was awarded at the
as agents for foreign and
An additional $1,000 million
high yield from Federal
in exchange for maturing

Embargoed Until Delivery
(Approximately 11 a.m.)
March 26, 1993

STATEMENT OP LAWRENCE H. SUMHERS
NOMINEB POR
UNDER SECRETARY POR INTERNATIONAL AFPAIRS
DEPARTMENT OP THE TREASURY
BEFORE THE SENATE BANKING COMMITTEE
MARCH 26, 1993
Mr. Chairman, distinguished members of the Senate Banking
Committee, ladies and gentlemen.
I come before you today as
President Clinton's nominee to be the Under Secretary of the
Treasury for International Affairs.
It is an honor to be here.
If I am confirmed, I look forward to serving President Clinton
and Secretary Bentsen and to working with the committee on the
critical international economic issues of the day.
President Clinton has introduced a domestic economic plan that
will do more to advance American foreign policy than the
negotiation of a new treaty, the production of a new weapon, or
the extension of additional security assistance.
The President
set the tone of the Administration's international vision in his
speech to American University last month when he said that "only
a prosperous America can prepare us for new global challenges".
By restoring fiscal responsibility and promoting long term
investment and growth, the President is seeking to build a more
competitive America, to maintain and enhance the leadership we
exercise in the global community into the 21st century.
The Under Secretary of the Treasury for International Affairs is
charged with helping the President and the Secretary formulate
and implement U.s. international economic strategy.
The Under
Secretary's responsibilities include the formulation of policies
in the areas of macroeconomic policy coordination, exchange rate
policy, trade and investment policy, international debt strategy,
and U.s. participation in international financial institutions.
The Under Secretary also serves as the G-7 Financial Deputy, with
primary responsibility for coordinating econo~ic policy between
other industrial nations, and as the financial "Sherpa" in
preparation for the annual Economic Summit.
At my confirmation hearing before the Senate Finance committee
last week, I outlined four critical policy areas in my portfolio:
macroeconomic coordination among the industrialized democracies;
LB-91

efforts to open foreign markets to U.S. exports of goods and
services; ensuring the success of Russia's democratic and
economic reform effort; and promoting environmentally sustainable
and hUmane development strategies.
Today, with your permission Mr. Chairman, I would like to expand
upon two specific issues of particular interest and importance to
the Banking Committee: the Administration's efforts (1) to
realize greater international macroeconomic coordination; and (2)
to liberalize international financial markets.
First, this Administration is determined to reinvigorate the
macroeconomic coordination process among the Group of Seven major
industrial countries. We are committed to this process because
we recognize that the United States cannot grow and prosper alone
in the world. We now have a particularly important stake in the
G-7 process. with the projected reductions in the U.S. budget
deficit, we also have an opportunity to address the trade
deficit. The best way to bring down our external deficit is
through growth in exports. And the best way to achieve export
growth is to restore growth in foreign markets.
secretary Bentsen's approach to reviving the G-7 process has
three critical elements. First, he emphasizes that our
international credibility depends on the credibility of our
domestic economic program. Policy coordination cannot succeed if
the United states simply depends on other countries to rescue us
from our domestic failures. President Clinton's commitment to
deficit reduction, to domestic renewal, and to increasing the
productivity of the u.s. economy dramatically strengthens the
Secretary's position at the G-7 negotiating table. The
Administration's economic program matches to a remarkable degree
the prescription offered to us for years by our major economic
partners.
Second, the Secretary has made it clear that discrete, private
communications are likely to be more effective in improving
cooperation than the public hectoring that has occasionally
colored our exchanges in the past. He also has taken the
initiative to inject a new element of informality into the
process. The G-7 has spent too much time in the past negotiating
the placement of commas in communiques and too little time
charting a course to return the global economy to prosperity. We
hope this will change.
The" third element in the Secretary's approach is a recognition
that policy coordination does not mean the pursuit of common
policies in each country. The policies we pursue must reflect
the specific conditions in each of our economies and our own
national interests. Fortunately, where economic growth is
concerned, national imperatives and international interests
increasingly coincide.

The u.s. economy is likely to grow more rapidly than our major
trading partners over the next two years. While we can take some
satisfaction from this, slow growth abroad means slower growth
for u.s. exports and rising trade imbalances. This is why it is
important that our major economic partners take actions in the
short term to strengthen growth in their own economies.
Secretary Bensten and the President have both made it clear that
they hope to see real progress by the time of the Economic Summit
in Tokyo.
The second policy area I would like to focus on is Treasury's
efforts to open foreign markets to u.S. financial institutions.
Secretary Bentsen expressed concern in his confirmation hearings
that some foreign countries still do not give u.S. banks and
securities firms a fair opportunity to compete in their financial
markets. The Treasury Department is committed to defending the
interests of the u.S. financial community in these markets.
Promoting financial liberalization abroad is important not just
for our banks and securities firms.
It is important to our
manufacturing companies as well. Because by promoting
deregulation in foreign financial markets we help ensure that
foreign manufacturers do not benefit from artificially low costs
of capital.
Financial deregulation and liberalization in Japan,
for example, has helped deprive Japanese manufacturers pf the
competitive benefits derived from regulated deposit interest
rates.
Treasury is engaged in a global effort that combines multilateral
negotiations in the Uruguay Round of the GATT with a broad number
of bilateral financial market talks. Much of these efforts will
be concentrated in the major financial markets of East Asia,
where u.S. firms face a number of challenges to market access.
In Japan, for example, u.s. investment banks remain effectively
excluded from the corporate underwriting business dominated by
the big four Japanese houses, and u.s. fund managers have been
allowed to compete for only a tiny fraction of the pension fund
business.
In Korea, to cite just one other case, the Finance
Ministry is drafting a blueprint for deregulation and
liberalization, but it is not yet clear whether this plan will
address critical restrictions on the foreign financial community,
such as limits on access to local currency funding and foreign
exchange controls.
Our financial service institutions are world class innovators.
They will prosper where they are given the opportunity to
compete. The financial market in the U.S. is so open and
competitive, that, to paraphrase Frank Sinatra, if our firms can
make it here, they can make it anywhere.

Mr. Chairman and distinguished members, the Department of the
Treasury is working to implement President Clinton's vision of an
engaged, enlightened, and hard-headed internationalism to
complement his program of domestic renewal. Secretary Bentsen
has said that as the departments of State and Defense were the
guarantors of military security during the Cold War, the Treasury
Department must be the guarantor of economic security in the
post-Cold War world. If confirmed, I look forward to serving at
Treasury during this historic period and to working with each of
you. Thank you.

FOR RELEAS E AT 2: 30 P. M.
March 26, 1993

.
II ... : '-

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CONl'l1.GT :
U ,j J , U L

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Office of Financing
202/219-3350

TREASURY'S 52-WEEK BILL OFFERING
The Treasury will auction approximately $14,250 million of
52-week Treasury bills to be issued April 8, 1993. This offering
will not provide new cash for the Treasury, as the maturing 52week bill is currently outstanding in the amount of $14,247
million.
In addition to the maturing 52-week bills, there are
$22,747 million of maturing 13-week and 26-week bills. The
disposition of this latter amount will be announced next week.
The Treasury will postpone the auction unless it has
assurance of enactment of legislation to raise the statutory debt
limit before the scheduled auction date of April 1, 1993. It may
be necessary to change the date of the auction depending on the
timing of enactment of legislation.
Federal Reserve Banks hold $8,312 million of bills for their
own accounts in the three maturing issues. These may be refunded
at the weighted average discount rate of accepted competitive
tenders.
Federal Reserve Banks hold $1,967 million of the three
maturing issues as agents for foreign and international monetary
authorities. These may be refunded within the offering amount at
the weighted average discount rate of accepted competitive
tenders. Additional amounts may be issued for such accounts if
the aggregate amount of new bids exceeds the aggregate amount of
maturing bills.
For purposes of determining such additional
amounts, foreign and international monetary authorities are
considered to hold $720 million of the maturing 52-week issue.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities is
governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about the new security are given in the attached
offering highlights.
000

Attachment

LB-92

HIGHLIGHTS OF TREASURY OFFERING
OF 52-WEEK BILLS

March 26, 1993
Offering Amount . . . . . .

$14,250 million

Description of Offering:
Term and type of security .
CUSIP number . . . . . . .
Auction date . . . . . . .
Issue date . . . . . . . .
Maturity date . . . . . . .
Original issue date . . . •
Maturing amount. . . . . .
Minimum bid amount . . . .
Multiples . . . . .

364-day bill
912794 J8 8
April 1, 1993
April 8, 1993
April 7, 1994
April 8, 1993
$14,247 million
$10,000
$5,000

Submission of Bids:
Noncompetitive bids
Competitive bids

Accepted in full up to $1,000,000
at the average discount rate of
accepted competitive bids
(1) Must be expressed as a discount rate
with two decimals, e.g., 7.10%.
(2) Net long position for each bidder
must be reported when the sum of the
total bid amount, at all yields, and
the net long position are $2 billion
or greater.
(3 ) Net long position must be reported
one half-hour prior to the closing
time for receipt of competitive bids.

Maximum Recognized Bid
at a Single yield

35% of public offering

Maximum Award . . . .

35% of public offering

Receipt of Tenders:
Noncompetitive tenders
competitive tenders
Payment Terms . . . . . . .

Prior to 12:00 noon Eastern time
on auction day.
Prior to 1:00 p.m. Eastern time
on auction day.
Full payment with tender or by charge
to a funds account on issue date

CONTACT:

FOR RELEASE AT 12:00 NOON
March 29, 1993

Office of Financing
202/219-3350

TREASURY TO AUCTION CASH MANAGEMENT BILL
The Treasury will auction approximately $15,000 million of
5-day Treasury cash management bills to be issued April 2, 1993.
Based on our current estimates, the short maturity on the
cash management bill is necessary to ensure that the public debt
will not exceed the statutory limit on April 7th.
Competitive tenders will be received at all Federal Reserve
Banks and Branches. Noncompetitive tenders will not be accepted.
Tenders will not be received at the Bureau of the Public Debt,
Washington, D. C.
Details about the new security are given in the attached
offering highlights.
000

Attachment
--, ..-

LB-93

HIGHLIGHTS OF TREASURY OFFERING
OF S-DAY CASH MANAGEMENT BILL
March 29, 1993

Offering Amount . . . . . .
Description of Offering:
Term and type of security .
CUSIP number . . . . . . .
Auction date . . .
Issue date . . . . . .
Maturity date .
.•..
Original issue date . . . .
currently outstanding . . .
Minimum bid amount . . . .
Multiples . . . . . . .
Minimum to hold amount
Multiples . . .

$15,000 million
5-day Cash Management Bill
912794 T7 9
March 31, 1993
April 2, 1993
April 7, 1993
April 2, 1993
$1,000,000
$1,000,000
$10,000
$5,000

Submission of Bids:
Noncompetitive bids . . . .
Not accepted
Competitive bids . . .
(1) Must be expressed as a discount rate
with two decimals, e.g., 7.10%.
(2) Net long position for each bidder
must be reported when the sum of the
total bid amount, at all discount
rates, and the net long position is
$2 billion or greater.
(3) Net long position must be determined
as of one half-hour prior to the
closing time for receipt of competitive tenders.
~'~~imum

Recognized Bid
at a Single yield

~imum

Award . . .

oeipt of Tenders:
~competitive tenders
~petitive tenders . . . .
. yment Terms . . . . . . .

35% of public offering
35% of public offering
Not accepted
Prior to 1:00 p.m. Eastern
time on auction day
Full payment with tender or by charge
to a funds account at a Federal
Reserve Bank on issue date

UBLIC DEBT" ,·NEWS
Department of the Treasury • Bureau of the

~ul?lic
I .j

pebt". Washington, DC 20239
!

FOR IMMEDIATE RELEASE
March 29, 1993

'-'I.i

5J:..;
.,

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $11,248 million of 13-week bills to be issued
April 1, 1993 and to mature July 1, 1993 were
accepted today (CUSIP: 912794D76).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.94%
2.96%
2.96%

Investment
Rate
3.00%
3.02%
3.02%

Price
99.257
99.252
99.252

Tenders at the high discount rate were allotted 32%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
20,360
38,056,740
5,470
22,530
31,335
45,120
1,622,960
9,850
6,010
16,830
13,930
546,485
771,795
$41,169,415

'Acce)2ted
20,360
10,108,700
5,470
22,530
31,335
26,080
168,960
9,850
5,705
16,830
13,930
46,475
771,795
$11,248,020

Type
competitive
Noncompetitive
Subtotal, Public

$36,212,935
1,220,645
$37,433,580

$6,291,540
1,220.645'
$7,512,185

2,739,935

995.900
$41,169,415

995,900
$11,248,020

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-94

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public,Rf,b,t "~. ~a~h~ngto.nl. DC 20239
I :'

FOR IMMEDIATE RELEASE
March 29, 1993

j'"

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CONTACT: Office of Financing
,
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RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $11,240 million of 26-weekbills to be issued
April 1, 1993 and to mature september 30, 1993 were
accepted today (CUSIP: 912794F82).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.03%
3.05%
3.04%

Investment
Rate
3.12%
3.14%
3.13%

Price
98.468
98.458
98.463

Tenders at the high discount rate were allotted 19%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas city
Dallas
San Francisco
Treasury
TOTALS

Received
19,680
37,305,100
2,140
21,615
23,650
47,425
1,862,755
10,340
3,530
23,540
10,045
960,485
643£830
$40,934,135

AcceQted
19,680
10,270,840
2,140
21,615
23,650
25,555
92,105
10,340
3,530
23,540
10,045
93,185
643£830
$11,240,055

Type
Competitive
Noncompetitive
Subtotal, Public

$36,087,785
972£650
$37,060,435

$6,393,705
972,650
$7,366,355

2,700,000

1 1 173 1 700
$40,934,135

$11,240,055

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-95

1 / 173 1 700

EMBARGOED UNTIL 10:00 A.M.
March 30, 1993
STATEMENT OF
SAMUEL Y. SESSIONS
DEPUTY ASSISTANT SECRETARY
(TAX POLICy)
DEPARTMENT OF THE TREASURY
BEFORE THE
WAYS AND MEANS SUBCOMMITTEE ON SELECT REVENUE MEASURES
AND THE
WAYS AND MEANS SUBCOMMITTEE ON HUMAN RESOURCES
U.S. HOUSE OF REPRESENTATIVES

Chairman Rangel, Chairman Matsui, and Members of the Subcommittees:
I am pleased to have this opportunity to present testimony today concerning elements
of the President's welfare reform program. I will focus on three proposals that were
included in the revenue component of the budget plan. These proposals are: (i) the
expansion and simplification of the earned income tax credit (EITC), (ii) the expansion and
permanent extension of the targeted jobs tax credit (TITC), and (iii) the permanent extension
of the exclusion from income of employer-provided educational assistance. An important
objective of all of these proposals is to provide individuals, especially those with low
incomes, with incentives to work and to invest in their human capital. As a consequence,
these provisions - particularly the expansion of the EITC and the extension of the TITC may help make work a more attractive alternative to welfare. Other witnesses will comment
today on other aspects of the President's agenda for welfare reform.
EXPANDING AND SIl\1PLIFYING THE EITC

Current Law
The EITC is a refundable income tax credit available to a low-income individual who
has a qualifying child, has earned income, and meets certain adjusted gross income (AGI)
thresholds. The EITC has three components: (i) a basic credit (which is adjusted for family
size), (ii) a supplemental young child credit for workers with a child under the age of one,
and (iii) a supplemental credit for certain health insurance premium expenses covering
qualified children. The basic credit and supplemental credits phase in and phase out at
certain income levels. These income levels are adjusted for changes in the cost of living. A
table summarizing the basic elements of the EITC under current law and the _Administration's
proposal is attached to my testimony.

LB-96

-2Basic Credit
The basic credit is determined by multiplying an individual's earned income by a
credit percentage. For a family with only one qualifying child, the credit percentage for
1994 is 23 percent. (The discussion of current law that follows focuses on 1994 in order to
facilitate comparison with the Administration's proposal.) The basic credit amount increases
as income increases, up to a maximum income threshold. For 1994, the income threshold is
projected to be $7,990. Therefore, if there is only one qualifying child, the maximum basic
credit amount for 1994 is projected to be $1,838 (23% of $7,990).
The basic credit is reduced and eventually phases out once AGI (or, if greater, earned
income) exceeds a certain phase-out threshold. For 1994, the phase-o'lt threshold is
projected to be $12,580. The phase-out is accomplished by reducing the basic credit by a
phase-out percentage. In 1994, for a family with only one qualifying child, the basic credit
is reduced by an amount equal to 16.43 percent of the excess of AGI (or, if greater, earned
income) over $12,580.
The basic credit is completely phased out and is no longer available to taxpayers with
incomes above the end of the phase-out range. In 1994, this income level is projected to be
$23,760. The projected phase-out range of $12,580 to $23,760 is the same for the basic
credit, the family size adjustment and the two supplemental credits.
The income thresholds for both the phase-in and phase-out ranges are adjusted for
changes in the cost of living. In the foregoing discussion, I have indicated the inflationadjusted income thresholds projected for 1994. For 1993, the basic EITC rate is 18.5
percent for a worker with one child. The corresponding phase-out rate is 13.21 percent.
The phase-out range for 1993 starts at $12,200 and ends at $23,050.
Basic Credit with Family Size Adjustment

If there are two or more qualifying children, the basic credit percentage and phase-out
percentage are increased. For 1994, the basic credit percentage for families with two or
more children is increased to 25 percent. For 1994, this is projected to result in a maximum
basic credit of $1,998 (25% of $7,990).
The phase-out percentage for families with two or more qualifying children is
increased to 17.86 percent. As indicated above, this percentage is applied to phase out the
credit over a projected income range of $12,580 to $23,760.
For 1993, the basic EITC rate is 19.5 percent for a worker with two or more
children. The 1993 phase-out rate is 13.93 percent.

-3SUp'plemental Young Child Credit
The supplemental young child credit is available to an individual with a qualifying
child who has not attained the age of one as of the close of the calendar year. This
supplemental credit increases the basic credit by 5 percentage points. For 1994, the
maximum supplemental young child is projected to be $400 (5% of $7,990) for qualifying
taxpayers. 1
Families receiving the supplemental young child credit are also subject to a higher
phase-out percentage. The phase-out percentage for these families is 3.57 percentage points
higher that it would otherwise be.
The supplemental young child credit and the child and dependent care tax credit may
not be claimed for the same child.
Smmlemental Health Insurance Credit
The supplemental health insurance credit is available for premiums paid to provide
health insurance coverage of a qualifying child. This supplemental credit increases the basic
credit by 6 percentage points, but the increased amount may not exceed the actual amount
expended for such health insurance premiums. The amount of the expem,es against which
the credit is allowed are not deductible as medical expenses. For 1994·, the maximum
supplemental health insurance credit is projected to be $479 (6% of $7,990) for qualifying
taxpayers. 2
This supplemental credit also increases the phase-out percentage, in this case by 4.285
percentage points.
Reasons for Chan&e
In 1991, 14.2 percent of the population had income below the poverty level. About 5
million individuals lived in households containing a full-time, year-round worker and yet
were counted among the nation's poor. Many others worked during the year but were unable
to earn sufficient amounts to escape poverty.

The Federal government assists low-income workers in a number of ways.
Employers are required to pay at least the minimum wage. Through expenditures for job
training and education, the Federal government promotes the long-term earning capacity of
workers. The Federal government also directly supplements the earnings of low-income

For 1993, the maximum supplemental young child credit is $388 (5% of $7,750).

For 1993, the maximum supplemental health insurance credit is $465 (6% of $7,750).

-4persons through the tax and transfer systems. Most low-income persons are eligible for food
stamps, while those who both work and have children may be entitled to the BITC.
Reliance on the minimum wage alone results in income above the poverty level only
for full-time, single workers. In combination, a minimum-wage job, food stamp benefits,
and the EITC lift a single parent with one or two children above the poverty level.
However, the income (including the EITC and food stamps) of a family of four with only
one full-time, minimum wage worker falls below the official poverty threshold. The
Administration is committed to pulling more working families out of poverty, while
providing individuals who are currently outside of the workforce with greater incentives to
work.
The effectiveness of the EITC is hindered by its complexity. A major source of that
complexity is contained in the rules for determining eligibility for the two supplemental
credits.

The Administration's Proposal
The Administration's proposal would expand the EITC and increase the credit by the
amount necessary to lift a four-person family out of poverty. The increase in the credit
amount would take place over a two-year period and be completed by 1995. As under
current law, the income thresholds for both the phase-in and phase-out ranges would be
adjusted each year for changes in the cost-of-living. (To facilitate the comparison with
current law, I will focus on our proposal as fully phased-in for 1995 and thereafter by
reference to 1994 dollars.)
Basic Credit
Under the Administration's proposal, the basic credit when fully phased-in would be
increased for families with one child to 34.4 percent of the first $6,000 of earned income (in
1994 dollars). Therefore, where there is only one qualifying child, the maximum basic
credit amount would be $2,062 (34.4% of $6,000).3
The basic credit would continue to be phased-out once AGI (or, if greater, earned
income) exceeds a certain phase-out threshold. Under the Administration's proposal, the
phase-out range for families with one child would begin at $11,000, a lower level than
current law, but would end at $23,760, the same as projected under current law. The phaseout percentage would be 16.16 percent.

3 For 1994, the Administration's proposal would increase the basic credit to 26.6 percent
of the first $6,000 of earned income.

-5Basic Credit with Family Size Adiustment
For families with two or more qualifying children, the basic credit percentage and
phase-out percentage would also be increased under the Administration's proposal. When
fully phased-in (in 1994 dollars), the basic credit percentage would be increased to 39.7
percent of the first $8,500 of earned income. Filers with earnings between $8,500 and
$11,000 would be entitled to the maximum credit of $3,371 (39.7% of $8,500).
The phase-out percentage would also be increased to 19.83 percent. As in the case of
the credit for families with one child, the credit would be phased out starting at $11,000.
However, the phase-out range for families with two or more children would extend to
$28,000, an increase of $4,240 over current law. 4
Supplemental Young Child Credit
Under the Administration's proposal, the supplemental young child credit would be
replaced with the increase in the basic credit described above.
SUl)plemental Health Insurance Credit
Under the Administration's proposal, the supplemental health insurance credit would
also be replaced with the increase in the basic credit described above. In addition, as is well
known, the Administration is in the process of developing a comprehensive health care
proposal.
Credit for Childless Workers
Under the Administration's proposal, the EITC would be extended for the fust time to
low-income workers who do not have children. Qualifying workers must be age 22 or older
and may not be claimed as a dependent on another taxpayer's return. For these workers, the
basic credit would be 7.65 percent of their first $4,000 of earned income. In 1994, the
phase-out range for these workers would be between $5,000 and $9,000 of AGI (or, if
greater, earned income). The phase-out percentage would also be 7.65 percent.

Effects of Proposal
When combined with other forms of federal assistance to low-income workers (in
particular, the minimum wage and food stamps), the proposed increase in EITC would lift
many families containing a full-time worker out of poverty. For example, the "poverty gap"

<4 Under the Administration's proposal, for 1994 the credit rate would be increased to 31.6
percent of the first $8,500 of earned income, and the phase-out percentage would be 15.8
percent. The phase-out range would extend from $11,000 to $28,000.

-6-_ the difference between the official poverty threshold and the sum of earnings (after the
employee share of social security taxes), EITe amounts, and food stamp allotments -- would
be eliminated for four-person families. For larger families the poverty gap would be
reduced.
The increase in the rate of the EITe, together with lowering the earnings level at
which the maximum credit is reached, would provide a larger credit to low-income families
in the current-law phase-in ranges. This combination would provide low-income families,
particularly those outside of the workforce, a greater incentive to work.
In addition, the increase in the EITe, together with the Administration's proposals to
expand food stamps and to provide low-income home energy assistance, will help offset the
impact of the energy tax on millions of low-income families.
The repeal of the supplemental young child and health insurance credits would relieve
low-income filers of significant filing and computational burdens. The Administration also is
in the process of developing a health care proposal that will address the health care needs of
low-income families in a more comprehensive manner.

PERMANENT EXTENSION, AND EXPANSION TO INCLUDE
YOUTH APPRENTICESHIP, OF THE TJTe

Current Law
The targeted jobs tax credit is available to employers on an elective basis for hiring
individuals from nine targeted groups. The targeted groups consist of individuals who are
economically disadvantaged, recipients of payments under means-tested transfer programs, or
disabled.
The credit generally is equal to 40 percent of the first $6,000 of qualified first-year
wages paid to a member of a targeted group. Thus, the maximum credit generally is $2,400
per individual. With respect to economically disadvantaged summer youth employees,
however, the credit is equal to 40 percent of up to $3,000 of wages, for a maximum credit of
$1,200.
The credit is not available for wages paid to a targeted group member unless the
individual either (1) is employed by the employer for at least 90 days (14 days in the case of
economically disadvantaged summer youth employees), or (2) has completed at least 120
hours of work performed for the employer (20 hours in the case of economically
disadvantaged summer youth employees). The employer's deduction for wages must be
reduced by the amount of the credit claimed. The credit expired on June 30, 1992.

-7-

Reasons for Chan2e
The targeted jobs tax credit is intended to encourage employers to hire workers who
otherwise may be unable to fmd employment and to subsidize training costs. Job creation
incentives are required in the current economic climate. In addition, a significant number of
youth in the United States lack the necessary skills to meet requirements for entry level
positions and, therefore, are unprepared to make the transition from school to the workforce.

The Administration's Proposal
The proposal would permanently extend the targeted jobs tax credit. The provision is
effective for individuals who begin work for the employer after June 30, 1992. In addition,
the targeted jobs tax credit would be expanded to include youth apprentices beginning work
after December 31, 1993, in connection with qualified youth apprenticeship programs
certified after that date. The certification would be made by a local educational agency or
other designated local agency.
A youth apprentice would be any individual aged 16 through 20 who was enrolled in
a qualified youth apprenticeship program beginning in the eleventh or twelfth grade. A
program would be considered to be a qualified youth apprenticeship program only if it is a
planned program of structured job training designed to integrate academic instruction
provided by an educational institution and work-based learning.
Before a youth· apprentice began work, the employer would have to receive or request
a certification from the local educational agency or other designated local agency that the
individual was enrolled in a qualified youth apprenticeship program. In addition, the
employer would have to receive periodic written assurances that the youth apprentice was
making satisfactory progress in completing the program.
Because the youth apprenticeship program is designed for part-time workers, the
credit would equal 40 percent of up to $3,000 of first-year wages, for a maximum credit of
$1,200. In addition, the number of apprentices that employers could take into account in
computing the credit would be subject to an annual cap. From 1994 through 1998, 805,000
youth apprentices could be taken into account in computing the credit (Le., 125,000 in 1994;
140,000 in 1995; 160,000 in 1996; 180,000 in 1997; and 200,000 in 1998).

MAKING THE EXCLUSION FOR EMPLOYER-PROVIDED EDUCATIONAL
ASSISTANCE PERMANENT
Current Law
Under current law, the value of employer-provided educational assistance is included
in an employee's income and employment tax wages unless the cost of the assistance would
qualify as a deductible expense of the employee if the employee had incurred the expense

-8directly. Education costs incurred by an employee are generally deductible if they maintain
or improve the employee's skills in his or her current job and do not qualify the employee
for a new trade or business. Thus, for example, the cost of retraining for a new job is
generally not deductible. As a result, such retraining is generally taxable to the employee
when paid for by his or her employer.
Under prior law, amounts paid by an employer with respect to an employee under an
educational assistance program were excluded from the employee's gross income and
employment tax wages to the extent that the value of the assistance did not exceed $5,250
per year, regardless of whether the expense would otherwise have been deductible. Such
programs were subject to nondiscrimination rules to ensure that the assistance was not
provided primarily to higher-paid employees. The educational assistance exclusion expired
for benefits provided after June 30, 1992.

Reasons for Chanee
The exclusion encourages employers to provide, and employees to take advantage of,
educational assistance and thereby increases the country's productivity. In addition, the
absence of the exclusion imposes significant administrative burdens on employers, workers,
and the IRS by forcing them to distinguish between job-related expenses (which are
excludable from gross income under current law when paid by the employer) and other
employer-provided educational expenses.
The absence of the exclusion may have a relatively greater effect on lower-income
and lower-skilled individuals. As noted above, without the exclusion the value of employerprovided educational assistance is excludable from gross income and employment-tax wages
only if the education directly relates to the employee's current job and does not qualify the
employee for a different trade or business. Higher-income, higher-skilled individuals may
more easily satisfy these requirements because of the breadth of their prior training and
current job responsibilities.

The Administration's Proposal
The proposal would permanently extend the general exclusion for employer-provided
educational assistance. The provision is effective for benefits provided after June 30, 1992.

This concludes my prepared remarks. I would be pleased to respond to your
questions.

Earned Income Tax Credit Parameters Under Current Law and Administration's Proposal
1994 Dollars

Credit
Rate

Plateau
Beginning
End
Point
Point

Maximum
Credit

Phase-out
Rate

Income
Cut-off

$1,838
$1,998
$479
$400

16.43%
17.86%
4.285%
3.57%

$23,760
$23,760
$23,760
$23,760

Current Law
1994 and after
Families with one child
Families with two or more chi Idren
Health Insurance Supplement
Young Child Supplement

23%
25%
6%
5%

$7,990
$7,990
$7,990
$7,990

$12,580
$12,580
$12,580
$12,580

Administration's Proposal
1994
Families with one child
Families with two or more children
Workers without children

26.6%
31.6%
7.65%

$7,750
$8,500
$4,000

$11,000
$11,000
$5,000

$2,062
$2,685
$306

16.16%
15.80%
7.65%

$23,760
$28,000
$9,000

1995 and after
Families with one child
Families with two or more children
Workers without chi Idren

34.4%
39.7%
7.65%

$6,000
$8,500
$4,000

$11,000
$11,000
$5,000

$2,062
$3,371
$306

16.16%
19.83%
7.65%

$23,760
$28,000
$9,000

Department of the Treasury
Office of Tax Analysis

March 30, 1993

ADDRESS BY LAWRENCE H. SUMMERS
UNDER SECRETARY-DESIGNATE OF THE TREASURY AND
TEMPORARY ALTERNATE GOVERNOR FOR THE UNITED STATES
AT THE ANNUAL MEETING OF THE
INTER-AMERICAN OEVELOPMENT BANK
HAMBURG, GERMANY
MARCH 30, 1993

Distinguished GovcrIloro, Mr. President, delegates and friends:
I am extremely pleased to be here in this historic city of
Hamburg and among so many friends of the Americas. I want to
thank our German hosts for their gracious hospitality which
has added so much to the quality of our deliberations. I also
want to offer our warmest congratulations to President Enrique
Iglesias on his recent reelection as President of the InterAmerican Development Bank.
Together, we look to the Inter-American Development Bank to be
a catalyst for sustaining and deepe~ing the truly historic
social and economic trends in the Latin American region that
have occurred over the last several years. We look to the lOB
as an institutional commitment of our hemispheric partnership
for prosperity.
As President Clinton's nominee to be the Under Secretary for

International Affairs at the Department of the Treasury, I
welcome this opportunity to underscore the commitment of
President Clinton and Secreta~ Bentsen to this strong and
growing relationship with Latin America and the Caribbean.
Presidents from Roosevelt to Clinton have understood the
shared destiny of our peoples. The new Administration in
Washington sees Latin America as a partner, and we are working
closely with our Congress to shape the many dimensions of our
partnership.
Our countries and cultures have much in common. We are a
young, vibrant hemisphere with an optimistic outlook. We
believe in markets. yet we also believe that governments have
an appropriate role to play. We have common interests in the
areas of trade, investment and debt. We share similar views
of problems and solutions. We are not plagued by the negative
aspects of nationalism, and we believe in the promise of the
modern state. Our hemisphere has a new generation or postCold War leaders, leaders committed to democratic principles.
lAs

Trc&soury.

!.B-97

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by James 11.

rall.

Deputy

A5~ 1:1 l.ftnl.

Sticrtttary of

the

- 2 -

For both Latin America and the United States, the early 1980s
were marred by high interest rates and record debts; the 19909
offer the promise of the opposite, low interest rates and
reduced debts. The 1980s saw regional disputes over contras,
commandant@s, and human rights; the 1990s will be devoted to
promoting greater regional integration. The early 19809
witn~ssed protectionism, government-led growth and burdensome
regulation in Latin America, but the 1990s can be a decade of
mutual accord over hemispheric growth, political plurality,
and environmental sustainability.
Th~re is a distinct echo in the reform efforts underway in
Argentina, Chile, Mexico, and elsewhere in Latin America and
President Clinton's economic plan for domestic renewal. Each
effort was thought to be politically impossible, but each
actually has received a broad base of public support.
President Clinton's program and the Latin American reform
plans also share an activist approach to economic policy, with
a two-pronged approach marrying pro-growth and anti-poverty
measures.

The President's plan has a number of critical components.
First, the President proposed the most serious deficit
.reduction package in the history of the United States. By
1997, when the provisions of the plan are fully phased in, the
annual deficit will be reduced by $140 billion. Second, the
package includes short-term stimulus measures to sustain and
push forward the nascent recovery. Third, the package
includes an investment component to start shifting the
composition of the federal budget from consumption to
investment. Finally, the President's plan includes a broadbased energy tax. This will not only help cut the deficit but
will promote environmental standards by effectively taxing
pollution.
The dom~stic economic plan will advance American foreign
policy. By restoring fiscal responsibility and promoting
long-term investment and growth, the United States is setting
a strong economic foundation for the 21st century.
The President's plan was designed to create jobs and spur
growth at home, but there are powerful benefits in its
adoption for all the Americas. The plan will be good for
Latin America in several important respects. It will secure
financial stability and growth in the United States economy,
offering larger markets for Latin exports. United States
imports from Latin America and the Caribbean were $70 billion
for 1992, with the prospect of reaching $100 billion by the
end of the century. A one percent increase in U.S. GOP would
boost regional non-fuel exports by $1 billion, and the
secondary effects of that export growth would boost regional
GDP by a further $2 billion.

- 3 -

Lower long-term world interest rates will have a major 1mpaCL
on Latin America. A one percentage point reduction in
interest rates would reduce annual debt service by at least $1
billion on the $430 billion in Latin American and Caribbean
debt. The economic plan has already had a significant impact
on long-term rates.
new focus on our national infrastructure and a promotion of
high-tech, high-wage industries, sharpens U.S. competitiveness
and strengthens our trade. This Administration is committed to
the maintenance of a free and fair trading system among the
Americas, and elsewhere, that will promote global export
opportunities for all. We believe in the benefits of an open
trading system. Where barriers to trade exist, we will work
vigorously to enforce existing agreements or, where necessary,
negotiate new ones.
A

In his recent speech at American University in Washington,
D.C., the President stated his desire for a strong Uruguay
Round agreement that will not only eliminate tariffs on goods,
but will also secure financial market liberalization on a
global scale. And we will work to ensure that just as our
market is generally open to foreign friends that wish to
invest in America, foreign markets should also be open to
American investment.
The President h~s also pledged his strong support for the new
North American Free Trade Agreement. To finalize NAFTA, we
are working with Canada and Mexico to reach key
understandings in the areas of environmental quality and
workers' rights. And we hope to be able to negotiate and
extend the benefits of NAFTA to other nations as well.
The President's vision of a new economic prosperity will
reinforce and accelerate three positive trends in Latin
America: 1) a redefined role of the state; 2) financial
stability; and 3) political openness. Let me touch on each of
these:
Redefined role of the state: There are serious efforts
now underway to de-regulate for higher productivity, a
willingness to abolish tariffs, a desire to accept
technology and allow market access to foreign firms, a
drive towards privatization and a commitment to regional
integration. These are mutually reinforcing actions that
imply and mean less state intrusion in economies.
Pinancial 8tabilization: This is a crucial ingredient for
regional economic growth. Latin America's finance
ministries have rationalized government spending, cut
deficits, improved tax collection, and, in some cases,
introduced fairness into the tax code. Exchange rates

- 4 -

are now more responsive to market forces. Inflation has
been cut. As a result, real GDP growth rates in 1992 are
up by roughly 10% in Chile, Argentina, and Venezuela, and
up by 3% in Mexico.
Political opann ••• : A new political process is ascendant

in Latin America. Popular, democratic elections and
institutions are the rule rather than the exception. The
entire region is more open -- politically, culturally,
socially and commercially. In the last two years,
intraregional trad~ has exploded. As both democracy and
capitalism are under siege in the former communist
states, the appeal and credibility of these ideas depend
importantly on whether Latin America continues to
succeed. The revolution in economics in Latin America is
no less sensational than the revolution in Russia, and
the immediate prognosis is far better in Latin America.
There has been profound progress and revolutionary change in
Latin America and the Caribbean over the last several years.
The Enterprise for the Americas Initiative (EAI) reflected a
bipartisan U.S. approach to help speed these changes. We
continue to support its goals in the areas of debt, investment
and trade. The IDS's Investment Sector Loan Program has made
a major contribution to the reform effort across the
hemisphere. The foreign debt problems affecting the region
have been reduced to manageable proportions with the help of
the IDB. The IDS has played a major role in the EAI and will
continue to do so in developing investment sector loans and
administering the Multilateral Investment Fund.
Indeed, much remains to be done. Many countries' physical
infrastructure is deteriorating, and in several countries th@
extent of poverty and suffering has increased. Millions still
struggle to scratch out a living on less than $1 a day.
Oistorted income distribution remains a potential source of
serious social conflict. In some places, the richest twenty
percent of the population controls over twenty-five times the
wealth of the poorest twenty percent. And inflation continues
to pose a threat, having refused, even in the best cases, to
drop back to single digits. Political and social inequality
persists where economic reforms have not been accompanied by
the modernization of political institutions.
several important countries in the region, including Brazil
and Peru, race serious political and economic chall@nges. If
the fledgling market reforms are to be sustained, Latin
leaders must address critical issues, including the
alleviation of poverty, human rights, environmental
protection, and removing government impediments to innovation
and growth.

- 5 -

To redress these problems, some would call tor a return to
state own@rship and a massive redistribution of wealth. But
statist economi~s and government-dominated enterprises are a
thing of the past. The fact is that over time. state control
has done more to damage their people than fair, efficient and
open markets ever did. The legacy of state economies is a
series of failed governments, repressed democracies, damaged
environments. economic stagnation and poverty. We cannot go
back. Governments clearly have a necessary role to play in
ensuring economic vitality and realizing human potential. But
governments must get out of those areas where markets and the
private sector work beeter.
Look at a success story. Chile is an excellent example of a
count~y that has implemented far-reaching macroeconomic
reforms, encouraged the development of the private sector and
markets, in part through an aggressive privatization program.
Now the government can concentrate its resources on the social
sector. As Minister Foxley stated here in Hamburg on Sunday,
the Alwyn Administration will spend $6 billion on social
programs this year, a thirty percent increase over 1991.
Chile's wide-ranging reforms have led to a substantial
increase in economic growth. Chile has demonstrated the
political will to make social programs a priority. This is a
good example for other countries and it is a good example for
the Bank.
We believe the Bank must now play a far more aggressive role
in advancing human welfare by supporting better programs in
basic education, health and sanitation. The Bank can be in
the vanguard in ensuring that education is broadly available,
especially to the poor. A vibrant private sector can ~ssume
greater responsibility for university education, freeing
scarce public resources for primary education. We believe the
Bank also has a critical role in advancing health care: there
are too many big hospitals that benefit the elite in Latin
America and too few primary health care facilities for the
poor and in rural areas. The Bank can help address judicial
reform and important issues such as land tenure.
For'the Eighth Replenishment, the United States is asking the
TDB to advance the quality of its lending program. We are
asking the Bank -- and more importantly its member governments
-- to maintain a strong commitment to structural reform and
the private sector. We are aleo asking the Bank to strengthen
its commitment to environmental protection and to support
social programs. There is no reason why structural adjustment
and environmental integrity cannot go hand in hand, and the
U.s. will work closely with member countries and Bank
officials to help realize this potential.

- 6 -

We are asking that the Inter-American Development Bank become
a leading force for transparency and accountability in public
finance. We ask the Bank to seek public participation in all
its development activities and decisions, especially among the
people who will be affected. We believe that the Bank should
be an institutional leader in providing prompt public access
to project information in donor and borrowing countries.
We are also asking the Bank Group to further rationalize its
lending practices, streamline its management operations and
increase the professionalization of its staff. We believe the
Multilateral Investment Fund must remain a lean operation and
the Inter-American Investment Corporation should restructure
its management to achieve cost savings. We believe the Bank
itself can reduce overhead expenses, and we encourage the
Board of Directors to lead the way in reducing its own costs.
Finally, we believe that the Bank and its members, both within
the Western Hemisphere and beyond, should change the way they
view the Bank and-the allocation of its resources. Notions of
fixed allotments and lending targets, along with inappropriate
use of concessional and grant funds should be retired once and
for all.
Governors and Friends, we believe this Bank can move to the
forefront of social, environmental and economic development
for the region. We depart Hamburg with full confidence that
Latin America and the Caribbean are on a path to sound social
and economic development.
I thank you again for your warm hospitality, and I look
forward to working with you all in a spirit of close
cooperation in the months and years ahead.

FOR IMMEDIATE RELEASE
March 30, 1993

CONTACT:

Michelle Smith
(202)

622-2960

TREASURY DEPARTMENT ANNOUNCES PENALTY AGAINST
DEXTER CREDIT UNION
The Department of the Treasury announced today that it
has collected a negotiated civil money penalty of $80,000 from
Dexter Credit Union, Central Falls, Rhode Island for failures to
file Currency Transaction Reports (CTRs) as required by the Bank
Secrecy Act (BSA). The violations, which occurred in 1987, were
identified by the Internal Revenue Service (IRS).
In announcing the penalty, Deputy Assistant Secretary
John P. Simpson stated, "In the past year, Treasury has assessed
BSA civil money penalties against banks, a credit union, currency
exchanges, check cashers and casinos. This reflects Treasury's
continued efforts to enforce and ensure BSA compliance by all
types of financial institutions."
The civil money penalty agreed to by the credit union
was based upon failures to comply with the requirements of the
BSA. The Treasury has no evidence that the credit union or any
of its employees or officers engaged in any criminal activities
in connection with these violations.
The BSA requires banks, credit unions and other
financial institutions to keep certain records, file CTRs on
currency transactions in excess of $10,000 and file reports on
the international transportation of currency, travelers checks
and other monetary instruments in bearer form.
The purpose of
these records is to assist the government in combatting money
laundering as well for use in civil, criminal, tax and regulatory
investigations.

000

LB-98

FOR IMMEDIATE RELEASE
March 30, 1993

Contact: Michelle smith
(202) 622-2960

TREASURY ANNOUNCES PENALTY AGAINST CHICAGO-RUSH
CURRENCY EXCHANGE, INC.
The Department of the Treasury announced today that ChicagoRush Currency Exchange, Inc., a check cashing service in Chicago,
Illinois, has paid a civil money penalty of $15,000 in settlement
of allegations that it failed to report to the Internal Revenue
Service (IRS) currency transactions as required by the Bank
Secrecy Act (BSA). The violations each involved purchase of
money orders in excess of $10,000 in cash. This case was
developed through a BSA compliance examination conducted by the
Internal Revenue Service.
John P. Simpson, Deputy Assistant Secretary for Regulatory,
Tariff and Trade Enforcement, who announced the penalty, said,
"The penalty represents a complete settlement of Chicago-Rush's
BSA civil liability for these violations. Treasury encourages
all financial institutions to implement effective Bank Secrecy
Act compliance programs."
The collection of a civil money penalty from Chicago-Rush
Currency Exchange, Inc. for BSA violations reflects Treasury's
continuing and enhanced effort to enforce BSA compliance by
nonbank financial institutions such as check cashers, currency
dealers and eXChangers, issuers and redeemers of money orders and
traveler's checks, and transmitters of funds.
The BSA requires banks and other nonbank financial
institutions to keep certain records, to file currency
transaction reports with the Treasury on all cash transactions by
or through the financial institution in excess of $10,000, and,
under some circumstances, to file reports on the international
transportation of currency, traveler's checks, and other monetary
instruments in bearer form.
The purpose of the reports and
records required under the BSA is to assist the government's
efforts in criminal, tax and regulatory investigations and
proceedings.
000

LB-99

PUBLIC DEBT NEWS
Department of the Treasury •

•

Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
March 30, 1993

Contact: Peter Hollenbach
(202) 219-3302

CUBES PROGRAM TO REOPEN JUNE 1, 1993
Treasury's Bureau of the Public Debt announced today that it is re-opening the Coupons Under
Book-Entry Safekeeping (CUBES) program on June 1, 1993. The reopening of the CUBES
program offers holders of coupons previously stripped from bearer Treasury securities the
opportunity to convert those coupons to book-entry form. Eligible coupons may be submitted
for conversion to CUBES during a six month period beginning June 1, 1993 and ending
November 30, 1993. All non-callable coupons with payment dates after January 1. 1994 are
eligible for conversion.
Some 1.4 million coupons with a value of $4.7 billion are outstanding and eligible for conversion
to book-entry. Conversion to CUBES benefits holders of coupons and the Treasury. Switching
to book-entry CUBES allows holders of these payments to eliminate the risk and expense
associated with safeguarding paper coupons. CUBES provides on-line trading of the book-entry
holdings contributing to market efficiency.
Depository institutions may present coupons for conversion at the Federal Reserve Bank of New
York (FRBNY). Institutions wishing to participate in the CUBES program should contact the
FRBNY at (212) 720-6972/73 as soon as possible to obtain information on how to present the
coupons.
Under the CUBES program, depository institutions that have notified the FRBNY of their
intention to participate can convert stripped Treasury coupons during the period from June
through November 30, 1993. No trading of CUBES balances will be permitted for the twelve
(12) business days from the deposit of the coupons to allow for verification and approval of the
submission by Treasury. Entities other than depository institutions that hold stripped Treasury
coupons and wisf( to convert those coupons to book-entry form under the CUBES program must
arrange for such conversion through a depository institution.
Participating institutions will be charged a fee of $4 per coupon and will bear the full cost and
risk associated with the delivery of the coupons to the Federal Reserve Bank of New York.

000

PA-118

FOR RELEASE AT 2: 30
March 30, 1993

P~'M:

i I 6 CONTACT:

Office of Financing
202/219-3350

TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $22,400 million, to be issued April 8,
1993. This offering will result in a paydown for the Treasury of
about $350 million, as the maturing 13-week and 26-week bills are
outstanding in the amount of $22,747 million.
In addition to the
maturing 13-week and 26-week bills, there are $14,247 million of
maturing 52-week bills. The disposition of this latter amount
was announced last week.
The Treasury will postpone the auction unless it has
assurance of enactment of legislation to raise the statutory debt
limit before the scheduled auction date of April 5, 1993. It may
be necessary to change the date of the auction depending on the
timing of enactment of legislation.
Federal Reserve Banks hold $8,312 million of bills for their
own accounts in the three maturing issues. These may be refunded
at the weighted average discount rate of accepted competitive
tenders.
Federal Reserve Banks hold $1,780 million of the three
maturing issues as agents for foreign and international monetary
authorities. These may be refunded within the offering amount
at the weighted average discount rate of accepted competitive
tenders. Additional amounts may be issued for such accounts if
the aggregate amount of new bids exceeds the aggregate amount
of maturing bills.
For purposes of determining such additional
amounts, foreign and international monetary authorities are
considered to hold $1,060 million of the original 13-week and
26-week issues.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. These are the first bill issues which
may be purchased and held in multiples of $1,000, for bills in
amounts above the minimum purchase amount of $10,000, as was
previously announced on January 26, 1993. This offering of
Treasury securities is governed by the terms and conditions set
forth in the Uniform Offering Circular (31 CFR Part 356,
published as a final rule on January 5, 1993, and effective
March 1, 1993) for the sale and issue by the Treasury to the
public of marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000

Attachment
LB- rtlo

HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
March 30, 1993
Offering Amount .

Description of Offering:
Term and type of security .
CUSIP number
. . • . . • •
Auction date
. • . . .
Issue date . . .
. . .
Maturity date . . . . . . • • .
Original issue date
....
Currently outstanding .
Minimum bid amount
. . . .
Multiples . . . . . . .

$11,200 million

91-day bill
912794 E7 5
April 5, 1993
April 8, 1993
July 8, 1993
January 7, 1993
$22,747 million
$10,000
$ 1,000

182-day bill
912794 F9 0
April 5, 1993
April 8, 1993
October 7, 1993
April 8, 1993
$10,000
$ 1,000

The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids .

Competitive bids

Maximum Recognized Bid
at a Single yield

35% of public offering

Maximum Award .

35% of public offering

• .

Receipt of Tenders:
Noncompetitive tenders
Competitive tenders .
Payment Terms .

Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date

PUBLIC DEBT"NEWS
,

Department of the Treasury •

~'-

)

Bureau of the Public Debt • Washington, DC 20239
;;;,,;

FOR IMMEDIATE RELEASE
March 31, 1993

0~' !,) ..;

CONTACT:

Peter Hollenbach
(202) 219-3302
or
L. Richard Keyser
(202) 708-1591

TREASURY AUTHORIZES HUD CALL OF
FHA INSURANCE FUND DEBENTURES
The Departments of Treasury and Housing and Urban Development announced today the call of
all Federal Housing Administration (FHA) debentures, outstanding as of March 31, 1993, with
interest rates of 7 percent or higher. Debentures that have been registered on the books of the
Federal Reserve Bank of Philadelphia as of March 31, 1993, are considered, "outstanding." The date
of the call for the redemption of the more than $210 million in debentures is July 1, 1993, with the
semi-annual interest due July 1, paid along with the debenture principal.
Debenture owners of record as of March 31, 1993, will be notified by mail of the call and given
instructions for submission. Those owners who cannot locate the debentures should contact the
Federal Reserve Bank of Philadelphia (215) 574-6684 for assistance.
No transfers or denominational exchanges in debentures covered by this call will be made on or
after April 1, 1993, nor will any special redemption purchases be processed. This does not affect
the right of the holder to sell or assign the debentures.
The Federal Reserve Bank of Philadelphia has been designated to process the redemptions and to
pay final interest on the called debentures. To ensure timely payment of principal and interest on
the debentures, they should be received by June 1, 1992, at:
The Federal Reserve Bank of Philadelphia
Securities Division
P.O. Box 90
Philadelphia, PA 19105-0090

000

PA--119

NR 93-19
- :';; /

- .-- (

~ ~
',-

:! 3: (Office of the Comptroller of the Currency

Joint Release
Iff, : L.J U..: 0 0 .!..
I

Federal Deposit Insurance Corporation
Federal Reserve Board
Office of Thrift Supervision

Interagency Policy Statement on Documentation of Loans
March 30, 1993
The four federal regulators of banks and thrifts - the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System, and the Office of Thrift Supervision - today announced further details on the
implementation of their March 10 program to increase credit availability. Today's policy
statement outlines changes in the area of loan documentation.
The strongest banks and thrifts, those with regulatory ratings of 1 or 2 and with adequate capital,
will now be able to make and carry some loans to small- and medium-sized businesses and farms
with only minimal documentation. The total of such loans at an institution will be limited to an
amount equal to 20 percent of its total capital. Eligible banks and thrifts will be encouraged to
make these based on their own best judgment as to the creditworthiness of the loans and the
necessary documentation. These loans will be evaluated solely on the basis of performance and
will be exempt from examiner criticism of documentation.
Each minimal documentation loan is subject to a maximum loan size of $900,000 or 3 percent
of the lending institution's total capital, whichever is less. If a borrower has multiple loans in
the exempt portion of the portfolio, those loans must be aggregated before the maximum is
applied. Loans to institution insiders - executive officers, directors, and principal shareholders
- are ineligible for inclusion, as are loans that are already delinquent.
The package also offers some relief for banks that do not qualify for the program, and for loans
that are not in the exempt portion of a bank's portfolio. The policy statement also includes
guidelines which provide institutions some additional flexibility in applying their documentation
policies for small- and medium-sized business and farm loans without examiner criticism.
Today's initiatives are directed at eliminating unnecessary documentation and reducing costs to
lending institutions and the time it takes to respond to credit applications. OTS will soon issue
a regulation to amend its current loan documentation requirements to comply with the statement.
For banks, the program requires no change in existing regulations and is effective with today's
release.
The complete program is being mailed to all regulated institutions and all examiners, and
additional copies are available from the agencies.

Office of the Comptroller of the Currency
Federal Deposit Insurance Corporation
Federal Reserve Board
Office of Thrift Supervision
Interagency Policy Statement on Documentation
for Loans to Small- and Medium-sized Businesses and Farms
March 30, 1993

Introduction
Problems with the availability of credit over the last few years have been especially significant
in the area of small- and medium-sized business and farm lending. This reluctance to lend may
be attributed to many factors, including general trends in the economy; a desire by both
borrowing and lending institutions to improve their balance sheets; the adoption of more rigorous
underwriting standards after the losses associated with some laxities in the 1980s; the relative
attractiveness of other types of investments; the impact of higher capital requirements,
supervisory policies, and examination practices; and the increase in regulation mandated by
recent legislation - specifically, the Financial Institutions Reform, Recovery, and Enforcement
Act and the Federal Deposit Insurance Corporation Improvement Act.
The four federal banking agencies - the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the
Office of Thrift Supervision - expect small- and medium-sized business and farm loans, like
all credits, to be made consistent with sound underwriting policies and loan administration
procedures. The agencies are concerned, however, that institutions may perceive that the
agencies are requiring a level of documentation to support sound small- and medium-sized
business and farm loans that is in excess of what is necessary to making a sound credit decision.
Unnecessary documentation raises the cost of lending to small- and medium-sized businesses and
farms, results in delays in bank lending decisions, and may discourage good borrowers from
applying. The agencies believe that the elimination of unnecessary documentation for loans to
small- and medium-sized businesses and farms will reduce costs to the institution and the time
it takes to respond to credit applications from small- and medium-sized businesses and farms
without adversely affecting the institution's safety and soundness.
The federal banking agencies expect fmancial institutions to maintain documentation standards
that are consistent with prudent banking policies. However, the maintenance of documentation
beyond that necessary for a credit officer to make a sound credit decision and to justify that
decision to the institution's management adds to loan administration costs without improving the
credit quality of the institution. Unnecessary documentation impedes the institution from

-2-

responding in a timely and prudent manner to the legitimate credit needs of small- and mediumsized businesses and fanns in its community. Accordingly, the agencies are taking steps to
correct any misunderstanding of regulatory requirements and to reduce regulatory impediments
to lending to creditworthy small- and medium-sized businesses and farms.

Documentation Exemption for Small- and Medium-sized Business and Farm
Loans
Well- or adequately capitalized institutions with a satisfactory supervisory rating will be
permitted to identify a portion of their portfolio of small- and medium-sized business and farm
loans that will be evaluated solely on performance and will be exempt from examiner criticism
of documentation. While bank and thrift management will retain responsibility for the credit
quality assessment and loan loss allowance for these loans, the lending institution will not be
subject to criticism for the documentation of these loans.
This exemption will be available only to institutions that are well- or adequately capitalized
institutions under each agency's regulations implementing section 38 of the Federal Deposit
Insurance Act and that are rated CAMEL or MACRO 1 or 2. These institutions are by
definition those that have demonstrated sound judgment and good underwriting skills; moreover,
their strong capital position insulates the deposit insurance funds from potential losses that may
be incurred through small- and medium-sized business and farm lending.
To qualify for the exemption, each loan may not exceed the lesser of $900,000 or three percent
of the institution's total capital, and the aggregate value of the loans may not exceed 20 percent
of its total capital. In addition, loans selected for this exemption by an institution must not be
delinquent as of the selection date, and each institution must comply with applicable lending
limits and other laws and regulations in making these loans. Furthermore, such loans may not
be made to an insider.
Small- and medium-sized business and farm loans that do not meet the criteria for exemption set
forth in this policy statement would continue to be reviewed and classified in accordance with
the agencies' existing policies.
The details of the exemption are as follows:

•

Documentation exemption. Each institution eligible for the exemption provided in this
policy statement may assign eligible loans, subject to the aggregate limit on such eligible
loans, to an exempt portion of the portfolio. Loans assigned to this exempt portion will
not be reviewed for the completeness of their documentation during the examination of
the institution. Assignments of loans to the exempt portion shall be made in writing, and
an aggregate list or accounting segregation of the assigned loans shall be maintained,
including the performance status of each loan.

-3•

Restrictions on loans in the exempted portion of the portfolio. The institution must
fully evaluate the collectibility of these loans in determining the adequacy of its
allowance for loan and lease losses (ALLL) or general valuation allowance (GV A)
attributable to such loans and include this evaluation in its internal records of its
assessment of the adequacy of its ALLL or GVA. Once a loan in the exempt portion of
the portfolio becomes more than 60 days past due, the loan may be reviewed and
classified by an examiner; however, any decision to classify would be based on credit
quality and not on the level of documentation.

•

Eligible institutions. An institution is eligible for the documentation exemption if (1)
pursuant to the regulations adopted by the appropriate federal banking agency under
section 38 of the FDI Act, the institution qualifies as well- or adequately capitalized, and
(2) during its most recent report of examination, the institution was assigned a composite
CAMEL or MACRO rating of 1 or 2.

•

Ineligible loans. Loans to any executive officer, director, or principal shareholder of
the institution, or any related interest of that person, may not be included in the basket
of loans.

•

Aggregate limit on loans. The aggregate value of all loans assigned to the basket of
loans provided for in the exemption may not exceed 20 percent of the institution's total
capital (as defmed in the capital adequacy standards of the appropriate agency).

•

Limit on value of lndividualloan. A loan, or group of loans to one borrower, assigned
to the basket of loans provided for in the exemption may not exceed $900,000 or 3
percent of the institution's total capital (as defmed in the capital adequacy standards of
the appropriate agency), whichever is the smaller amount.

•

Transition from eligibility to ineligibility. An institution that has properly assigned
loans to the exempt portion of its portfolio pursuant to this statement but subsequently
fails to qualify as an eligible institution may not add new loans (including renewals) to
this category.

Treatment of Small- and Medium-sized Business and Farm Loans Not
Qualifying for Exemption
The agencies will continue current examination practices with regard to documentation of smalland medium-sized business and farm loans at institutions not qualifying for the exemption and
loans at qualifying institutions that are not assigned to the exempt basket. The guiding principle
of agency review will continue to be that each insured depository institution should maintain
documentation that provides its management with the ability to:

-4(a)

make an informed lending decision and to assess risk as necessary on an ongoing
basis;

(b)

identify the purpose of the loan and the source of repayment;

(c)

assess the ability of the borrower to repay the indebtedness in a timely manner;

(d)

ensure that a claim against the borrower is legally enforceable; and

(e)

demonstrate appropriate administration and monitoring of a loan.

In prescribing the documentation necessary to support a loan, an institution's policies should take
into account the size and complexity of the loan, legal requirements, and the needs of
management and other relevant parties (such as loan guarantors).
In applying these standards, the agencies will continue to recognize the difficulty and cost of
obtaining some documents from small- and medium-sized businesses and farms. These
difficulties and costs could result in some deviations from an institution's own loan
documentation policy for small- and medium-sized business and farm lending. Such deviations
are frequently based on past experience with the customer. In such cases, the loan will not be
criticized if the examiner concurs that sufficient information exists to serve as a basis for an
informed credit decision.

Implementation
This policy statement will take effect immediately upon issuance. However, the agencies will
monitor how qualifying institutions implement its provisions and how those institutions and the
loans they designate for inclusion in the exempt basket perform. Changes to this policy
statement may be made based on the agencies' experience.

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Puhl~g b~6t' •. Washi~S'.t.q~, DC 20239

FOR IMMEDIATE RELEASE
March 31, 1993

CONTACT: O;fice of Financing
v '." .... -' J ,J U v
2 02 - 2 19 - 3 350

RESULTS OF TREASURY'S AUCTION OF 5-DAY BILLS
Tenders for $15,141 million of 5-day bills to be issued
April 2, 1993 and to mature April 7, 1993 were
accepted today (CUSIP: 912794T79).
RANGE OF ACCEPTED
~0MPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.06%
3.07%
3.07%

Investment
Rate
3.07%
3.14%
3.14%

Price
99.958
99.957
99.957

Tenders at the high discount rate were allotted 75%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas city
Dallas
San Francisco
Treasury
TOTALS
Type
Competitive
Noncompetitive
subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS

LB-l0l

Received

Accepted

60,640,000

15,141,250

o
o

1,995,000

1,700,000

o
o

o
o
o

o
o

o
o
o

$65,335,000

$15,141,250

$65,335,000

$15,141,250

1,000,000

$65,335,000

$15,141,250

$65,335,000

$15,141,250

A.·~:

TREASURY NEWS
Department of the Treasury

Washington,

FOR IMMEDIATE RELEASE
April 1, 1993

O.c.

felephone 202-62'2-2960

CONTACT: Michelle smith
202/622-2960

TREASURY POSTPONES AUCTION OF 52-WEEK BILLS
The Treasury Department announced that it is postponing the
auction of 52-week bills originally scheduled for today.

This

action is being taken because legislation to increase the
statutory debt limit has not been enacted.
Investors are advised to look for notice of rescheduling of
this auction in the financial press or to contact their local
Federal Reserve Bank or Branch for such information.

000

LB-102

TREASURY NEWS
Department of the Treasury

_.'0:

felephone 202-62'2-2960

Washington, D.C.

STATEMENT BY THE SECRETARY
APRIL 1, 1993
It is our intention that the energy tax be borne fairly and
equitably across the country and that the tax promote
conservation as well as increased reliance on domestic energy,
not foreign oil.
If the tax is to effectively promote energy conservation, it
must be borne by the ultimate consumer.

The Administration is

continuing to explore methods of assuring that the tax is in fact
passed through to those who use the energy.

LB-l03

THE ADMINIISTR:A.TIO~/~dVIODIFIED BTU ENERGY TAX PROPOSAL

OBJECTIVES

Deficit Reduction. The energy tax will raise $22 billion in FY 1997 (the first fiscal year the tax is
fully phased in) and over $70 billion for the FY 1994-1998 period. I
•

This revenue will help reduce the deficit and put the government on a pay-as-you-go basis for
needed public programs.

Reduction of Environmental Damages. The energy tax will improve the environment.
•

The tax will provide an incentive to use clean burning natural gas.

•

The tax will contribute to the Rio Summit goal, agreed to by the United States, of returning
greenhouse gas emissions to their 1990 levels by the year 2000.

•

Smog, acid rain, and toxic wastes will all be reduced.

•

The risk of oil spills will be reduced.

Energy Conservation. The energy tax when fully phased in will reduce projected growth in energy
consumption by over 7 percent.

Reduced Dependence on Foreign Sources of Energy. The energy tax will reduce U.S. dependence
on foreign oil.
•

The tax is projected to reduce oil imports in year 2000 by more than 400,000 barrels a day.

The revenue estimates for the energy tax are net of the" income offset," which is the reduction in income
and employment taxes because GOP and the price \evel are assumed to be unchanged in making the estimates (the
assumptIOn is standard for makmg all Budget estimates, including all revenue estimates). The effects of the energy tax
on product prices and consumers shown helow are not reduced by the .. income offset. ..

-2EFFECT ON

CONSl~fERS

Monthly direct energy expenditures (gasoline, home heating oil, electric bill, and natural gas) for
typical four-person families
Family
Economic
Income

Tax on Monthly Direct
Energy Expenditures
July I, 1996
July 1. 1994

$ 25,000

2.78*

8.33*

40,000

3.17

9.50

60,000

3.56

10.67

* Does not take into account offsets for increases in the earned income tax credit (EITC). For a
family of four with $25,000 of income, all from wages, the proposed increase in the EITe, when
fully phased in (1995), will be $595 per year ($49.58 per month), more than offsetting the energy
tax.
Residential energy prices
1994
Price
(Before Tax)

Tax July I, 1994
Percent
Amount
of Price

Tax July I, 1996
Percent
of Price
Amount

$ 67.60

$ .740

$ 2.219

Home Heating Oil (gallon)

1.04

.012

1.2

.036

3.5

Natural Gas (mcf)

6.51

.088

1.4

.265

4.1

Gasoline (gallon)

1. 31

.025

1.9

.075

5.7

Electric Bill (monthly)

1.1%

3.3 %

OFFSETS FOR LOW-INCOME·fA!\lILIES
The impact of the tax on 10w- and some moderate-income families is offset by other features of the
Administration's program.
• The earned income tax credit is expanded.
•

Funding for the Low Income Home Energy Assistance Program (LIHEAP) is increased.

•

Funding for Food Stamps is increased.

-3-

COMPETITIVENESS
•

U.S. energy prices, even when the tax is fully phased in, will remain the lowest or second
lowest (depending on the type of energy) in the G-7 countries.

•

The price effects of the energy tax would be very small.
For manufacturing as a whole, the energy tax (when fully phased in) will increase costs
an average of only 0.1 percent.
Even in very energy-intensive industries, such as aluminum smelting, the energy tax
(when fully phased in) will raise costs less than 4 percent.
Many energy-intensive industries arc also capital intensive, so may benefit from the
proposed alternative minimum tax relief and investment credit.

• The deficit reduction impact of the energy tax should reduce interest rates, thus reducing the
cost of capital to U.S. business and improving the competitiveness of u.S. firms.

REGIO:\!AL BALANCE
The proposed energy tax is better balanced regionally than alternative energy taxes such as an
increase in the gasoline tax or an oil import fee.
•

While the tax burden on a given region may be higher than the national average on a per capita
basis, it is often lower than the national average as a percentage of income.

• The tax does not have a disproportionate impact on coal producing regions (as a carbon tax
would have).
• The tax does not have a disproportionate effect on farm states.
E~ERG Y

•

PRODUCERS

Reduced oil consumption is projected to come almost entirely from imports.
The reduction in U.S. consumption will be spreaCt ave!' world oil production, with little
effect on domestic production.

•

Natural gas production will continue to increase.

•

Coal- production, led by growing export demand, will continue to increase.

•

Prices received by energy producers will decline only slightly -- less than 1 percent.
Department of the Treasury
Office of Tax Policy
April 1993

FREQUENTLY ASKED QUESTIONS REGARDING THE ADMINISTRATION'S
I~ i .:. v . ~'_ I ~~r?~SED MODIFIED BTU TAX
il

COMPARISON OF BTU TAX AND ALTERNATIVES
Question:

Why did the Administration include an energy tax in the economic package?

Answer:

The energy tax is more likely than any alternative revenue measure to advance
a combination of policy goals.
•

The energy tax would raise revenues to help reduce the deficit and put the
government on a pay-as-you-go basis for needed public programs.

•

The energy tax would reduce environmental damages, promote energy
conservation, and reduce dependence on foreign sources of energy. The
tax would encourage energy efficiency and fuel mix choices better
reflecting the true environmental and security costs of energy use.

•

The energy tax would help move the U.S. economy from income-based
to consumption-based taxation, with attendant benefits to saving and
investment.

Question: Why was a Btu form of energy tax selected?
Answer:

The Administration considered many energy tax options, but chose the modified
Btu tax for its relative neutrality on a regional basis, its environmental and
energy security benefits, and its balanced impact on market shares of energy
sources.
•

An ad valorem tax would exaggerate the effects of sudden changes in

energy prices.
•

A gasoline tax, an oil import fee or a carbon tax would have a
disproportionate economic impact on some regions (a carbon tax would
also have a disproportionate impact on one energy source, coal, which
was recently affected by the Clean'·Air Act Amendments of 1990).

•

An oil import fee would cause prices to increase by much more than the
tax and might, if applied to refmed products, violate our trade agreements

and treaties.

OIL SUPPLEMENT
Question:

What is the purpose of the extra tax on oil?

Answer:

Without the extra tax on oil, natural gas would be disfavored because the tax
would be higher, as a percentage of price, than the tax on petroleum products.
Natural gas is a clean-burning fuel, and abundant supplies of natural gas are
available domestically.
Oil use (particularly in the form of motor fuels) contributes to air pollution.
The rising level of oil imports risks environmental damages due to oil spills and
is an energy security concern.

COMPUTATION OF BTU CONTENT
Question:

Why is a national average Btu heat content used to calculate the rate for natural
gas and oil, but not for coal? Does the Btu content of natural gas differ?

Answer:

variation within a specific product is not significant.
In the past, natural gas has not been sold by Btu content but natural gas does

vary somewhat. The trend is to measure shipments in therms, a measurement
of heat content, so specific measurement may be administrable in the future.

PROPANE
Question:

How will propane be treated under the Btu tax?

Answer:

Liquefied petroleum gases (including propane) and natural gasoline will be taxed
at the basic rate of $0.257 per million Btus, the same rate that applies to natural
gas.
The oil supplement will not apply to these products, even when they are
produced from oil.

3
The Btu content used to determine the tax will be the national average Btu
content for each fuel.
HOME HEATING OIL
Question:

Why was home heating oil exempted from the oil supplement, and should oil
used to produce electricity for residential air conditioning be similarly
exempted?

Answer:

Under the Administration's proposal, residential use of heating oil is taxed at
the same rate as other fuels used for residential heating (natural gas and
propane).
•

Taxing home heating oil at the higher oil rate would impose a
disproportionate burden on many families, particularly in the Northeast
where switching to natural gas or propane for home heating is often not
a practical option.

•

A similar oil supplement exemption was not provided for oil used to
produce electricity for air conditioning because the tax is intended to
encourage utilities and industrial users to reduce oil usage.

•

Without the oil supplement the tax would have the opposite effect.

•

In any event, there is no practical way to determine when oil is used to
produce electricity that will be used for residential air conditioning.
ALTERNATIVE FUELS

Question:

Is biomass subject to tax?

Answer:

The energy tax applies only to fossil fuels ~, coal, petroleum products, and
natural gas) and hydro- and nuclear-generated electricity. Biomass fuels are not
subject to the tax.
Biomass includes any material (other than a fossil fuel) that is derived from
living matter and used as fuel. Thus, biomass includes ethanol, landfIll gas,
sugarcane waste, and wood waste.

Question:

Why are certain fuels, including ethanol and methanol, excluded from the Btu
tax?

Answer:

The energy tax is not imposed on oxygenates, such as ethanol, methanol, ETBE,
and MTBE (feedstocks used in their production are also exempt).

•

Ethanol and ETBE are derived in whole or part from renewable energy
sources. While methanol and MTBE are not, the Administration believes
that all oxygenates should be treated in the same manner to avoid
distortions in the oxygenate market.

•

This exemption is consistent with the Administration's objective of
encouraging the use of alternative fuels. All of the oxygenates, when
mixed with gasoline, promote cleaner burning and reduce our dependence
on foreign oil.

•

Note that the gasoline mixed with oxygenates is taxed at the oil rate U&.,
the basic rate plus the oil supplement). Thus, oxygenated fuels are taxed
at a higher rate than other alternative fuels, such as propane and natural
gas, which are taxed at the basic rate.
FLOOR STOCKS TAX

Question:

What is the floor stocks tax and who will be liable?

Answer:

Floor stocks taxes would be imposed on July 1, 1994, and on the date of each
subsequent rate change (including an index change). The tax would apply to
coal, natural gas, and refined petroleum products (including liquefied petroleum
gases and natural gasoline).
A floor stocks tax would be imposed if the product is held, beyond the point at
which the energy tax is normally imposed, for sale or for use as fuel. All
exemptions from the energy tax would apply, and a reasonable de minimis rule
would be provided.
The person holding the taxable product on the date the tax is imposed would be
liable for the tax and would remit the tax directly to the Government. The
applicable energy tax rates would apply.
USE TAX

Question:

What energy uses will be subject to the use tax and who will be liable?

Answer:

A use tax will be imposed on fuel uses of taxable products on which the energy
tax has not been imposed and on fuel uses of crude oil. This tax would apply
to fuel use of products that have not reached the point at which tax is normally
imposed, to nonexempt use of products purchased under a claim of exemption,
and to nonresidential use of home heating oil as a fuel.

5
The use tax would not apply to crude oil or natural gas used, on the premises
where it is extracted, to extract crude oil or natural gas. In addition, the use tax
would not apply to crude oil used in a refinery or to natural gas used in a
natural gas processing or fractionation plant. However, oil or natural gas
consumed in a pipeline would be subject to the use tax.
The person using the product would be liable for the tax and would remit the
tax directly to the Government. The applicable energy tax rates would apply.
HYDROELECTRICITY
Question:

Why is hydroelectricity included in the tax?

Answer:

Although environmental considerations influenced the design of the tax, it is a
deficit reduction measure.
Exempting hydroelectric power would lose
substantial revenue over the budget period.
A tax on hydroelectric power is necessary for regional balance.
•

It would not be appropriate to ask other regions of the country to pay a
tax on their residential energy costs while exempting regions in which
residential energy costs are currently the lowest.

Many hydroelectric power projects have benefitted from substantial Federal
subsidies.
Some hydroelectric power projects may have adverse environmental effects.
FEEDSTOCK EXEMYI'ION
Question:

What feedstocks were exempted from the tax and why? What are the mechanics
of the feedstock exemption?

Answer:

Fossil fuels used as a feedstock are exempt froijl tax.
•

In making petrochemicals, the atoms of the feedstock hydrocarbons
become the atoms of the polymers and other products. This is the
meaning of "feedstock" in the Administration's proposal.

•

The feedstock exemption does not apply to fossil fuels used solely as a
fuel in the manufacture of petrochemicals or other products.

An exemption for feedstock uses is consistent with a tax on energy. Feedstock
uses generally do not involve energy production Of carbon dioxide emissions.

6
The mechanics of the feedstock exemption are still being developed. Tax-free
transfers of feedstocks would be permitted in appropriate circumstances. In all
other cases, the exemption would be provided through downstream credits or
refunds.
Question:

Should electricity used
feedstock?

Answer:

In making petrochemicals, the atoms of the feedstock hydrocarbons become the

the production of aluminum be classified as a

atoms of the polymers and other products. This is the meaning of "feedstock"
in the Administration's proposal.
Aluminum smelting uses direct current electricity to split aluminum oxide into.
aluminum metal and oxygen. The molten aluminum collects at the bottom of
the cell where it is drawn off periodically. Electricity contributes the energy
that causes the chemical reaction to occur.
In contrast to petrochemical manufacture, the hydrocarbon atoms of the fuel

used to produce electricity used in aluminum smelting are not preserved in a
product, but rather are burned to raise steam, tum a turbine, and generate
electricity .
The Administration is continuing to study the impact of the tax on electricity in
the aluminum smelting process.
ENHANCED OIL RECOVERY

Question:

Will the tax unfairly burden enhanced oil recovery production?

Answer:

The tax is designed to minimize its effects on enhanced oil recovery.
•

The tax is not imposed on crude oil or natural gas used, on the premises
where it is extracted, to produce additional crude oil, whether through
enhanced oil recovery techniques or.9therwise.
,

•

The tax is not imposed on natural gas used in enhanced oil recovery of
heavy oil.

GOVERNMENTAL EXEMPTIONS
Question:

How will municipal power projects be impacted by the tax? Should they be
exempted?

Answer:

Municipal power projects will be subject to tax in the same manner as investorowned utilities.
It would be unfair to provide preferential treatment, in the form of a tax
exemption, to end users who are served by municipal power projects while end
users who are served by investor-owned utilities bear the full burden of the tax.
An exemption for municipal power projects would be inconsistent with the goals.
of encouraging energy conservation and the use of clean-burning, domestic
fuels.

Question:

Why was fuel used by the Department of Defense included in the tax base?

Answer:

The tax does not include exemptions based on the character of the purchaser of
an otherwise taxable product. Thus, fuel and electricity purchased by the
Department of Defense will be subject to tax.
An exemption for the Defense Department would detract from the
Administration's goal of encouraging energy conservation and the use of cleanburning domestic fuels.

To the extent the tax captures the environmental and energy security costs
associated with energy use, those costs should be reflected in the Defense
Department's budget.
COLLECTION POINT
Question:

What are the justifications for the point of collecting the tax for each fuel?

Answer:

The tax on each fuel is collected at a point that satisfies three criteria.
•

The point of collection minimizes the number of taxpayers (or tax
collectors). This reduces administrative burdens on both the IRS and
taxpayers.

•

The point is sufficiently far downstream to ensure that imported products
and domestic products are taxed at the same rate. It is for this reason, for
example, that petroleum products are taxed at the refinery tailgate rather
than at refinery input.

8
•

The point is sufficiently far downstream to ensure that fixed-price
contracts do not prevent passthrough of the tax to the end user.

Question:

Many energy companies and utilities argue it would be better to put the tax on
the ultimate consumer, which seems to be consistent with the Administration's
energy conservation goals. Why wasn't the tax imposed on the end user?

Answer:

The tax is generally imposed (or collected) upstream from the end user to
reduce administrative burdens by minimizing the number of taxpayers (or tax
collectors).
•

For example, taxing natural gas when it is received by the local
distribution company (instead of imposing the tax on LDC customers)
removes approximately 60 million taxpayers from the system. This
should significantly reduce IRS collection problems.

The tax must also be imposed upstream, particularly in the case of electricity,
to encourage energy efficiency and fuel switching.
•

Electric utilities and their regulators would have no incentive to change
current fuel-use patterns if, instead of taxing fuel used by the utility, a tax
on electricity were imposed on the ultimate consumer.
PASS THROUGH

Question:

What method does the Administration intend to use to ensure pass through of the
tax by utilities?

Answer:

Historically, a "normalization" requirement has been used to prevent the
passthrough of the tax benefits of accelerated depreciation to the end user. A
utility that attempted to pass the benefits through to end users was not allowed
to use accelerated depreciation. The Administration is studying a similar denial
of tax benefits to encourage passthrough of the energy tax to the end user.
In order to meet some of the Administn;.tion's· objectives of the energy tax,
namely energy conservation and energy security, the energy tax should be
allowed to be passed on to the end user.

The Administration is considering methods to achieve this objective and has
invited comments from the public.

Question:

Will the Btu tax put independent power producers with long-term contracts that
restrict passthrough at a competitive disadvantage?

Answer:

The energy tax provides a special rule to insure that
independent power producers would not be competitively disadvantaged by this
tax. The Btu tax will impose a special tax on electricity that an independent
power producer provides to a utility under a fIxed-price contract entered into
before the date of enactment.
The tax would be equal to the tax on the fossil fuel used to generate the
electricity (or, in the case of electricity from a source other than fossil fuels, to
the tax generally applicable to electricity from that source). The tax would be
imposed at the utility that receives the electricity; the utility would be liable for
the tax and would remit the tax directly to the Government. The independent·
power producer would not be liable for any tax on the electricity and would
receive a credit for any energy tax on fossil fuels used to generate the
electricity .
~ATIONALCO~E~S

u. s. exports?

Ouestion:

How will the Btu tax affect

Answer:

The Btu tax will raise manufacturing production costs by an average of just 0.1
percent. This is unlikely to hurt the competitive position of most u.s.
exporters.
•

Other elements of the Administration's economic proposals, especially
defIcit reduction, have already reduced interest rates and thus will reduce
capital costs for exporting industries.

•

Even after the Btu tax is fully phased in, the cost of energy will remain
the lowest or second lowest (depending on the type of energy) in the
G-7 countries.

Question:

Are energy imports treated in the same manner as domestic production in all
cases?

Answer:

Imported coal, natural gas, and refIned petroleum products will be taxed at the
same rate as equivalent domestic products.
Imported electricity will generalI y be taxed at the same rate as domestic
electricity generated from hydro- or nuclear power.

10
•

Importers of fossil-fuel-generated electricity will be permitted to pay tax
based on the actual amount of fossil fuel required to generate the
electricity .

•

Both domestic and imported electricity generated from solar, wind, or
geothermal power are exempt from tax.
ENERGY-INTENSIVE INDUSTRIES

Question:

Why didn't the Administration provide relief for energy-intensive industries?

Answer:

Two of the Administration's objectives in proposing the tax--increased energy
efficiency and conservation and increased energy security--would not be attained
to the extent tax relief were granted to energy-intensive industries. Further,·
providing certain industries any form of tax relief would require higher taxes on
other energy uses.

u.s. energy prices, even after imposition of the energy tax would be the lowest
or second lowest (depending on the type of energy) in the G-7 countries.
The deficit reduction impact of the energy tax should reduce interest rates, thus
reducing the cost of capital to all U.S. business. This would particularly benefit
the energy-intensive industries which also tend to be capital-intensive.
Moreover, the Administration's proposed investment tax credit and alternative
minimum tax relief should also have a favorable impact on these industries.
WW-INCOME HOUSEHOLDS
Question:

How will the energy tax affect low income households?

Answer:

The impact of the energy tax should be looked at in the context of the whole
Administration program.
•

The expansion of the earned in~~me tax credit (BITC) will provide
substantial relief to working poor families 'and more than offset increased
costs attributable to the energy tax. For a family of four with $25,000 of
income, all from wages, the proposed increase in the EITC, when fully
phased in (1995), will be $595 per year ($49.58 per month), more than
offsetting the energy tax.

•

The Administration's proposal increase.) funding for the low income home
energy assistance program (LIHEAP) by $1 billion per year. (This
amount is phased in with the energy tax.)

•

The Administration's proposal increases funding for the Food Stamp
program by $1.755 billion per year. (This amount is phased in with the
energy tax.)

•

The Administration's spending proposals include over $100 million per
year in weatherization assistance, primarily for low-income households.
This funding will provide for the weatherization of over 500,000 houses
over the budget period.

•

The Administration's proposal would extend the low-income housing
credit and the authority to issue mortgage revenue bonds. These programs
increase the availability and affordability of housing for low-income and
middle-income households.

Department of the Treasury
Office of Tax Policy
April 1993

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SUPPLEMENT TO SUMMARY
OF THE
ADMINISTRATION'S REVENUE PROPOSALS

Department of the Treasury
April 1993

SUPPLEMENT TO SUMMARY
OF THE
ADMINISTRATION'S REVENUE PROPOSALS

This report supplements and modifies certain of the revenue proposals described
in the "Summary of the Administration's Revenue Proposals" released by the Treasury
Department on February 25, 1993. Details regarding the modified Btu energy tax
proposal were separately released by the Treasury Department on April 1, 1993.

TABLE OF CONTENTS
Page
Provide targeted capital gains exclusion

Expand earned income tax credit

Deny deduction for executive pay over one million dollars

Increase corporate tax rate for taxable income over ten million dollars

Deny deduction for lobbying expenses

limit possessions tax credit

Eliminate working capital exception for foreign oil and gas
and shipping income

Transfer pricing initiative

Enhance earnings stripping and other anti-avoidance rules

Miscellaneous - H.R. 11 items

PROVIDE TARGETED CAPITAL GAINS EXCLUSION

Proposal
Investors who hold qualified small business stock for at least 5 years would be
permitted to exclude 50 percent of gains realized on the disposition of their stock. A
qualified small business is a subchapter C corporation with less than $50 million of
aggregate capitalization from January 1, 1993, through the date the taxpayer acquires
stock in the corporation, that uses substantially all of its assets in the active conduct of a
trade or business during substantially all of the taxpayer's holding period. Certain
activities, including personal service, banking, leasing, real estate, farming, mineral
extraction, and hospitality businesses, cannot be qualified small businesses. Qualified
small business stock must be acquired by an individual taxpayer (either directly or
through an investment partnership or other pass-through entity) after December 31,
1992, and at its original issue (either directly from the corporation or through an
underwriter). Subchapter C corporations that hold stock in a qualified small business
would not qualify for the exclusion.
Individuals would be allowed to exclude 50 percent of capital gains realized upon
the disposition of qualified small business stock held over 5 years, and would apply their
current statutory rate on capital gains (either 15 or 28 percent) to the reduced amount of
taxable gain. Gain eligible for the exclusion would be limited to the greater of ten times
the investor's basis in the stock or $10 million for each qualified small business. One
half of any exclusion claimed would be treated as a tax preference item under the
individual alternative mjnjmum tax.
The proposal includes safeguards to prevent large corporations from securing the
exclusion for their shareholders by spinning off new subsidiaries, to prevent existing small
corporations from redeeming outstanding shares in hopes of reissuing qualified small
business stock, to prevent the use of shell corporations to avoid the requirement that
stock be purchased at its original issue, and to prevent investors from securing the
exclusion for certain transfers, including the transfer of unrealized gains on appreciated
assets to a qualified small business.

EXPANSION AND SIMPLIFICATION OF
EARNED INCOME TAX CREDIT
posal
For families with two or more qualifying children, the earned income tax credit
rC) credit rate would be increased over a two-year period. For these families,· the
dit rate would be increased to 31.6 percent of the first 58,500 of earned income in
14. Families with earned income between 58,500 and 511,000 would be entitled to the
Kimum credit of 52,685. The maximum credit would be reduced by 15.8 percent of
usted gross income (or earned income, if greater) in excess of 511,000. Families with
usted gross income above 528,000 would not be eligible for the BITC. In 1995 and
reafter, the credit rate would be increased to 39.7 percent of the first $8,500 of
ned income. (All values are shown in 1994 dollars.) Families with earnings between
500 and 511,000 would be entitled to the maximum credit of 53,371. The credit
ase-out rate would be 19.83 percent, and families with adjusted gross income (or
med income, if greater) above 528,000 would not be eligible for the credit.
The BITC would also be increased for families with one child and would be
tended to low-income workers with no children. For families with one qualifying child,
~ credit rate would be increased in 1994 to 26.6 percent of the first 57,750 of earned
:ome. These families would be entitled to a credit of up to 52,062. The maximum
~dit would be reduced by 16.16 percent of adjusted gross income (or earned income, if
eater) in excess of 511,000. The credit would be completely phased out for such
milies with income above 523,760. In 1995 and thereafter, the credit rate would be
creased to 34.4 percent of the first 56,000 of earned income. The phase-out rate would
main the same as in 1994.
The EITC would also be extended for the first time to low-income workers who
, not have children, are age 22 or older, and who may not be claimed '~~, a dependent
1 another taxpayer's return. For these workers in 1994 and thereafte;~: ~ EITC would
~ 7.65 percent of their first 54,000 of earned income (for a maximum credit of 5306).
ae credit would be phased out at a rate of 7.65 percent. In 1994 the phase-out range
QuId be between 55,000 and 59,000 of adjusted gross income (or, if greater, earned
,come).
The supplemental credits for young children and health insurance expenditures
ould be repealed.

DENY DEDUCTION FOR EXECUTIVE PAY OVER ONE MILLION DOLLARS

Proposal
The proposal would preclude any publicly-held corporation from taking a
deduction under Internal Revenue Code section 162 for compensation in excess of $1
million for anyone of its top five executives. For this purpose, a corporation is treated
as publicly held if the corporation's common equity securities are registered under the
Securities Exchange Act of 1934. For this purpose, the corporation's top five executives
would be defined as under the SEC rules governing disclosure of executive compensation
<.i.&aa the chief executive officer and the four other most highly-compensated officers of
the corporation).
Certain types of compensation would not be subject to the deduction limit and
would not be taken into account in determining whether other compensation exceeds $1
million. Compensation that is not taken into account includes: (i) payments to a taxqualified retirement plan, (ii) fringe benefits that are excludable from the executive's
gross income, and (iii) qualified performance-based compensation. Qualified
performance-based compensation includes any compensation that is payable on a
commission basis and any performance-based compensation that meets certain
shareholder approval requirements.
Compensation payable on a commission basis. For this purpose, commissions are
defined as compensation paid solely on account of income generated directly by the
individual performance of the executive. Thus, for example, compensation that equals a
percentage of sales made by the executive or a percentage of business that is directly
attributable to the executive is treated as a commission. Because commissions must be
paid with regard to income that is traceable directly to the executive, commissions do not
include compensation that is paid on the basis of broader performance standards, such as
the performance of the business unit or an increase in the corporation's stock price.
Other performance-based compensation. Qualified performance-based
compensation also includes any compensation, other than commissions, that is paid solely
on account of the attainment of one or more performance goals, provided that (i) the
performance goals are established by a compensation committee consisting solely of two
or more independent directors; (ii) the material terms under which the compensation is
to be paid, including the performance goals, are disclosed to and approved by the
shareholders in a separate vote prior to payment; and (iii) prior to payment, the
compensation committee certifies that the performance goals and any other material
terms were in fact satisfied by the executive. Compensation will not be treated as
qualified performance-based compensation if the executive has a right to receive the
compensation notwithstanding the failure of the compensation committee to certify
attainment of the performance goal or the absence of shareholder approval. Under the
3

IpOSal, a performance goal is defined broadly to include any performance standard
t is applied to the individual executive, a business unit, or the corporation as a whole.
r example, stock options or other stock appreciation rights will be treated as qualified
formance-based compensation, provided that the requirements for independent
ector and shareholder approval are met, because the amount of compensation paid to
~ executive is based on the performance of the corporation's stock price.
Effective date. The proposal would generally apply to compensation that is
lerwise deductible to the corporation on or after January 1, 1994. However, the
oposal would not apply to compensation paid under a binding written plan or
reement in effect on February 17, 1993, and at all times thereafter. This grandfather
Ie does not apply to the extent that modifications to the terms of the plan or
~eement are made after February 17, 1993. For example, compensation that is
:ductible on account of stock options or restricted stock rights granted on or before
~bruary 17, 1993 would continue to be deductible without regard to the $1 million limit.

INCREASE CORPORATE TAX RATE FOR TAXABLE INCOME
OVER TEN MILLION DOLLARS
Proposal
The proposal would provide a new 36 percent marginal tax rate on corporate taxable
income in excess of $10,000,000. The maximum rate of tax on corporate net capital gains
would also be 36 percent.
A corporation with taxable income in excess of $15 million would be required to
increase its tax liability by the lesser of 3 percent of the excess or $200,000. This increase
in tax would recapture the benefits of the 34 percent rate in a manner analogous to the
recapture of the benefits of the 15 and 25 percent rates. Because the 36 percent rate would
apply only to income in excess of $10,000,000, the vast majority of corporations would not
be subject to the new rate.
The 36 percent marginal rate would be effective for taxable years beginning on or
after January 1, 1993. Under existing law provisions regarding changes in tax rates during
-a taxpayer's taxable year (section 15 of the Internal Revenue Code), a fiscal year
corporation would be required to use a "blended rate" for its fiscal year that includes
January 1, 1993. Accordingly, the corporation's tax liability would be a weighted average
of the tax resulting from applying the existing corporate rate schedule and the tax resulting
from applying the changes described above, weighted by the number of days before and
after January 1, 1993. Penalties for the underpayment of estimated taxes, however, would
be waived for underpayments of 1993 taxes attributable to the changes in tax rates.

DENY DEDUcnON FOR LOBBYING EXPENSES
(IOsa}
Businesses would no longer be allowed to deduct lobbying expenses. Lobbying
enses for this purpose would be defined similarly to the definition of expenditures to
uence legislation in Internal Revenue Code section 4911(d) and would include attempts
nfluence legislation through communications with the executive branch as well as the
lslative branch of the federal, or any state or local, government. This definition does not
lude the exceptions provided in section 4911(d) (2) except as provided in section
.1(d)(2)(B) (providing an exception for technical advice). The current restrictions on
luctions for expenses of grassroots lobbying and participation in political campaigns would
[lain. Existing rules which prevent charities from engaging in more than an insubstantial
.aunt of lobbying would also remain. No deduction would be allowed for the part of
,mbership dues that are used for lobbying, but as under current law, trade associations
:I similar organizations would not lose their exempt status for lobbying. Trade
,ociations and similar organizations would be required to report to their members the
rtion of their dues used for lobbying activities. The proposal would provide for penalties
an organization for materially misreporting its lobbying expenses to its members.
The proposal would be effective for taxable years beginning after December 31, 1993.

LIMIT POSSESSIONS TAX CREDIT
Proposal

The Internal Revenue Code section 936 credit would be determined as under current
law, but would be subject to the following limitations. First, the credit determined under
section 936(a)(1)(A) would be limited to 60 percent of the wages the possessions
corporation pays to its employees in the possession. Second, the credit determined under
section 936(a)(1)(B) for qualified possession source investment income would be limited to
80 percent of the possessions corporation's "qualified tangible business investment"
For this purpose, wages are defined by reference to the Federal Unemployment Tax
Act (FUTA) definition of wages. The amount of wages taken into account for each
employee would be limited to the amount of wages subject to federal social security
withholding (currently $57,600). Qualified tangible business investment is defined as the
average annual aggregate adjusted bases of tangible property used by the possessions
corporation in a possession of the United States in the active conduct of a trade or business
within that possession. Related possessions corporations would be permitted to consolidate
for purposes of determining their section 936 credit
The proposal would be effective for taxable years beginning after December 31, 1993,
except that, for 1994 and 1995, possessions corporations may elect to claim a reduced credit
not subject to. the two limitations descnbed above. Under this alternative, the credit will
be limited to 80 percent of the current law credit in 1994 and 60 percent in 1995.
The Administration continues to review this proposal and consult with representatives
of Puerto Rico.

ELIMINATE WORKING CAPITAL EXCEPTION FOR
FOREIGN OIL AND GAS AND SHIPPING INCOME

The proposal would prevent the cross-crediting of foreign taxes on foreign oil and
. extraction income (FOGEl), foreign oil related income, and shipping income by
.cing investment income related to these types of income in the passive category for
eign tax credit limitation purposes. In addition, the proposal would exclude passive
:ome related to foreign oil and gas extraction from the computation of the FOGEl
'eign tax credit limitation. The proposal would apply to income earned in taxable
iU'S beginning after December 31, 1992.

TRANSFER PRICING INITIATIVE

Proposal
Internal Revenue Code section 6662(e) would be amended to provide that the
reasonable cause and good faith exclusion will be satisfied if the taxpayer provides
contemporaneous documentation demonstrating the application of one or more
reasonable transfer pricing methodologies to the taxpayer's controlled transactions. In
order for the application of transfer pricing methodologies to be reasonable, any
procedural or other requirements imposed by section 482 regulations with respect to the
application of such method must be observed and documented. For example, if
adjustments required under a particular method were not made, the taxpayer's
application of such method would not be reasonable. In addition, methods other than
those specifically prescribed in the section 482 regulations may be reasonable if the
taxpayer could establish that, at the time of the controlled transactions, the prescribed
methods would not be likely to lead to an arm's length result, and that the method
actually applied was likely to lead to such a result
Section 6662(e) would be further amended to reduce the threshold for imposition
of the 20 percent substantial valuation misstatement penalty from a S10,OOO,OOO net
section 482 adjustment to the lesser of SS,OOO,OOO or 10 percent of gross receipts. In
addition, the threshold for imposition of the 40 percent gross valuation misstatement in
section 6662(h)(2)(A)(iii) would be the lesser of S20,OOO,OOO or 20 percent of gross
receipts.
The proposal would be effective for taxable years beginning after December 31,
1993.
This legislative proposal would be supplemented by a transfer pricing enforcement
initiative.

ENHANCE EARNINGS STRIPPING AND 01HER ANTI.AVOIDANCE RULES

posal
Any loan from an unrelated lender that is guaranteed by a related party would be
Lted as related party debt for purposes of the earnings stripping rules. Except as
vided in regulations, a guarantee would be defined to include any arrangement under
,ch a person directly or indirectly assures (on an unconditional or contingent basis) the
ment of another's obligation. For purposes of determining whether the interest paid
the guaranteed debt is exempt from United States tax, the fact that the unrelated
der is subject to net basis United States taxation (as opposed to United States
hholding tax) on its interest income would not be taken into account. This proposal
uld apply to any interest paid or accrued in taxable years commencing after December
1993. Moreover, for taxable years commencing after December 31, 1993, the
Engs stripping rules would apply to any indebtedness issued on or before July 10,
~9 (or issued after such date pursuant to a binding written contract in effect on such

tel·
The Secretary would be authorized to issue regulations that set forth rules
~plicable to any section of the Code) for recharacterizing multiple-party financing
rangements as a conduit arrangement. The regulations would apply not only to back·back loans, but also to other financing transactions that in substance constitute a
nduit arrangement.
Internal Revenue Code sections 871(h) and 881(c) would be amended to provide
at, except as provided in regulations, the portfolio interest exemption shall not apply to
:rtain contingent interest paid to a nonresident alien or foreign corporation. The
'ovision would apply to interest that is computed (directly or indirectly) on the basis of
~ gross or net income or cash flow (or any portion thereof, including income or cash
)w derived from particular property or a particular transaction) that is received or
:crued by the debtor or a related person or (ii) the fair market value of property owned
, the debtor or a related person (or the gain that would be realized from a disposition
: such property). For purposes of this provision, a related person would mean any
~rson who is related to the debtor within the meaning of section 267(b) or 707(b)(1).
The provision would not override existing U.S. income tax treaties that reduce or
iminate U.S. withholding tax on interest paid to foreign persons.
The proposal would apply to interest paid or accrued on debt obligations issued
fter April 7, 1993.

MISCELLANEOUS - H.R. 11 ITEMS
Proposal
The Administration's proposals include the following four items from H.R. 11 (the
Revenue Act of 1992):
1)

Substantiation and Disclosure Requirements Relating to Certain Charitable
Contributions;

Disallowance of Interest on Certain Overpayments of Tax (the 45-day
rule);

Denial of Deduction Relating to Travel by Spouse; and

Increase in Withholding From Supplemental Wage Payments.

Other than the proposals listed above and other proposals specifically described in
the Summary of the Administration's Revenue Proposals released on February 25, 1993,
no other revenue-raising proposals from H.R. 11 are included in the Administration's
proposals.

MINUTES OF THE MEETING OF THE
TREASURY BORROWING ADVISORY COMMITTEE OF THE PSA
MARCH 15, 1993
The Committee convened at 10:15 a.m. at the Federal Reserve
Bank of New York. All members were present except Messrs.
Bennett, Bentanzos, Lakefield, Menne, and Rosenberg.
Chairman
Stark took votes by telephone from Messrs. Bennett, Bentanzos,
Lakefield, and Rosenberg. A list of Committee members is
attached.
To facilitate discussion, the Chairman had requested in
advance of the meeting that a Committee member be prepared to
begin the discussion on each of the seven issues that the
Treasury had asked them to address. The whole Committee
discussed each of the points in turn.
1.
The changes, if any, that the Treasury could make to improve
the maturity composition of its marketable borrowing.
The current practice of auctioning debt in stable amounts
and in regular, predictable issues across the 3-month to 30-year
maturity spectrum developed to finance historically large
deficits and rollover maturing issues. The Committee consensus
was that the current maturity structure of Treasury's marketable
debt and of its debt offerings is broadly appropriate, given the
size of Treasury's borrowing requirements in the foreseeable
future.
Some members noted that if there were to be a change in the
maturity composition of new marketable issues, it would be
prudent to take advantage of the currently lower longer term
interest rates by offering modestly larger amounts of 10-year and
30-year securities. At the same time, the Treasury could take
advantage of low short-term rates by offering more bills, while
reducing offerings in the 3- to 7-year area.
While it was recognized that the average maturity of the
debt, taken by itself, is not necessarily a specific target of
debt management policy, a significant shortening of average
maturity would make the interest cost on the debt more sensitive
to changes in short-term interest rates.
2.
The specific potential advantages of shortening the maturity
distribution of Treasury borrowing.
It was observed that the main potential advantage of
shortening the maturity mix of Treasury securities would be

savings in interest costs. Any savings would depend on financial
market conditions generally and on the impact of the shift in
maturity on the shape of the Treasury yield curve.
3.
The specific potential disadvantages of shortening the
maturity distribution of Treasury borrowing.
The Committee suggested several disadvantages, including
that:
Changing the maturity mix may imply that Treasury is
changing to an opportunistic borrowing strategy based on an
interest rate forecast to replace regular, predictable issue
patterns.
Shortening the maturity mix of Treasury borrowing could
affect private issuers adversely because the private sector
usually borrows in short and intermediate maturities.
Shortening could put inordinate pressure on the Federal
Reserve to maintain an accommodative monetary policy. This
could increase inflationary expectations, leading to
subsequent increases in interest rates not only at the short
end but across the maturity spectrum.
4.
The spots on the yield curve where the Treasury should raise
additional funds, if it were to reduce issuance of longer term
securities significantly (could the current issue cycles be
increased in size or frequency? Would new cycles be needed? If
so, what new cycles?).
The Committee members suggested, first, that Treasury could
increase the sizes of offerings in the existing cycles. However,
the capacity to absorb new volume may differ at different points
on the yield curve.
In particular, it was suggested that:
There may be more capacity to absorb increased offerings in
the bills, particularly the 52-week bill, than in short-term
notes.
However, an associated risk is that the Treasury may
subject itself to the greater volatility of short-term
interest rates.
The 2- and 3-year maturities may have a lesser capacity for
increased offerings than bills; similarly for the 7-year
range.
Alternatively, it was suggested to increase the frequency of
existing auction cycles, for example, a bi-weekly 52-week
bill, or to offer securities at new maturities.

5.
The smallest viable issue size. if the Treasury were to
issue 10-year notes and 30-year bonds in reduced size.
In general, smaller issue sizes were thought to reduce
liquidity and increase price volatility.
It was noted that the
recent reductions in the 10- and 30-year issues have not had a
significant effect, but that a further reduction, especially in
the 10-year, may affect liquidity and price volatility.
An alternative suggestion was to reduce the frequency of
auctions for 10-year and/or 30-year securities.
For example, go
from a quarterly cycle to a semiannual cycle.
It was noted that a corollary issue is whether a reduction
in issue size is perceived as a one-time change or part of a
longer term process. The capacity of the market for each
maturity has been built up over a long period.
It may take time
to rebuild a cost-efficient investor base in the future if the
Treasury were to reduce significantly or to pullout of a
particular maturity sector.
6.
The value to the Treasury or to the
continuing to issue 30-year bonds,

u.s.

economy of

A number of points were raised supporting the continuance of
30-year bonds, including:
Given a very large and growing debt, it would be prudent to
take advantage of all sectors of the yield curve.
The liquidity and usefulness of the STRIPS market would be
hampered if 30-year bond issuance were cut further or
discontinued.
The 30-year bond provides a risk-free investment for longterm investors.
It provides a bellwether for the corporate and municipal
markets.
Based on the behavior of private profit-maximizing
corporations, the long term market is currently attractive
for raising low cost funds.
7.
The value to the Treasury of having a regular. predictable
schedule of auctions; how can this value be quantified?
It was noted that a primary objective of the Treasury's debt
management policy is to raise funds at a minimum cost over time.
One way to accomplish this is to minimize uncertainty and the
associated risk premium in interest costs.
Confidence in the
stability of Treasury's financing patterns has been built up over

4
many years. As a result, the Treasury's borrowing costs have
been lower than what they would have been otherwise.
It was noted that the empirical value of this benefit,
however, is unknown and attempts to measure it may be difficult.
At the end of discussion, the Chairman called for a vote on
the following two matters:
1.
In response to a recommendation that the Treasury
should not permit the average life of the debt to
decrease from current levels, the Committee voted in
favor, with one dissenting vote and no abstentions.
2. The Committee members voted unanimously in favor of
substituting short-term bills for 3- to 7-year
financing in lieu of a further absolute reduction in
the 10- and 30-year issues, if the Treasury were
inclined to reduce the average maturity of the debt.
The meeting adjourned around 1:00 p.m.

~(~
Paul F. Malvey
Assistant Director
Office of Market Finance

Attachment

1993

TREASURY BORROWING ADVISORY COMMITTEE OF THE
PUBLIC SECURITIES ASSOCIATION
CHAIRMAN

Morgan B. Stark
Managing Director
Granite International Capital Group
666 - 5th Avenue, 33rd Fl.
New York, NY 10103

VICE CHAIRMAN
Stephen C. Francis
General Manager
Fischer, Francis, Trees & Watts
18 Finsbury Circus
London EC2M 7BP England
laniel S. Ahearn
lartner
~llington Management Company
5 state street
,oston MA 02109

Kenneth de Regt
Managing Director, Governments
Horgan Stanley & Company
25 Cabot Square, Canary Wharf
London E14 4QA, England

'homas Bennett
artner
iller Anderson & Sherrerd
ne Tower Bridge
est Conshohocken, PA 19428

Richard Kelly
Chairman of the Board
Aubrey G. Lanston & Co., Inc.
1 Chase Manhattan Pl., 53rd Fl.
New York, NY 10005

ouis Betanzos
xecutive Vice President
ational Bank of Detroit
11 Woodward Avenue
etroit, MI 48226

Mark F. Kessenich, Jr.
President
Eastbridge Capital, Inc.
135 East 56th Street
New York, NY 10022

:m s. Corz ine
:irtner
)ldman, Sachs & Company
5 Broad Street
~w York, NY 10004

Bruce R. Lakefield
Managing Director
Lehman Brothers
200 Vesey Street, 9th Fl.
New York, NY 10285

llphael de la Gueronniere
lairman
Lscount Corporation of New York
3 Pine Street
~w York, NY 10005

Robert D. McKnew
Executive Vice President
Bank of America
555 calif~rnia Street, 10th Fl.
San Franc1sco, CA 94104

regory C. Menne
ice President
.G. Edwards & Sons, Inc.
ne North Jefferson
t. Louis, Missouri 63103

Joseph Rosenberg
President
Lawton General Corporation
667 Madison Avenue
New York, NY 10021-8087

aniel T. Napoli
enior V. President & Director
errill Lynch Capital Markets
& Risk Management
orld Financial Ctr., N. Tower
ew York, NY 10281

Stephen Thieke
Managing Director
Morgan Guaranty Trust Co.
60 Wall street, 4th Fl.
New York, NY 10260

3.rcy Recktenwald
3.naging Director
r Securities, Inc.
30 Liberty Street
~w York, NY 10006

craig M. Wardlaw
Executive Vice President
NationsBank Corporation
NationsBank Corporate ~enter
Mail Code NC! 007-0606
Charleston, NC 28255-0001

lchard B. Roberts
<ecutive Vice President
lchovia Bank & Trust Co., NA
. 0. Box 3099
Lnston-Salem, NC 27105

Patricia Zlotin
Executive Vice President
H3ssachusetts Financial
Services Co •
500 Boylston street
Boston, MA 02116

REPORT TO THE SECRETARY OF THE TREASURY
FROM THE TREASURY BORROWING ADVISORY COMMITTEE OF THE
PUBLIC SECURITIES ASSOCIATION
March 15,

1993

The Treasury Borrowing Advisory committee of the Public
Securities Association, comprised of a group of professionals from
money managers, commercial banks, and securities dealers, met at
the Federal Reserve Bank of New York, along with various officials
from the Department of the Treasury and the New York Federal
Reserve Bank.
The purpose of the meeting was to solicit the
Committee's views and recommendations in connection with Treasury's
ongoing study of the maturity mix of new issues of marketable u.S.
Treasury securities.
To this end, the Committee addressed the
following seven broad questions posed by the Treasury.
if any, that the Trea~;ury could make to
maturity composition of its marketable

The changes,
improve the
borrowing;

The specif ic potential advantaqes of shorten in;
maturity distribution of Treasury borrowing;

The specific potential disadvantages of shortening the
maturity distribution of Treasury borrowing;

The spots on the yield curve where the Treasury should
raise additional funds, if we were to reduce issuance of
longer term securities significantly (could the current
issue cycles be increased in size or frequency? would new
cycles be needed? if so, what new cycles?) ;

The smallest viable issue size, if the Treasury were to
issue lO-year notes and 30-year bonds in reduced size;

The value to the Treasury or to the U. S.
continuing to issue 30-year bonds; and

The value to the Treasury of having a
predictable schedule of auctions; how can
quantified?

the

economy of
regular,
this be

The Committee has contributed to a number of debt management
innovations over the years as part of an ongoing effort to aid in
the development and maintenance of open and broad distribution
channels in order to minimize interest expense. This study is the
current initia~ive in a series of steps that include the reliance
on competitive auctions, lifting of the 4 1/4% debt ceiling,
movement to yield auctions, adoption of new cycles, experimentation
with Dutch auctions, and the elimination of cycles that no longer
meet Treasury or investor needs, all as a part of the judgements
and refinements required to most efficiently finance the growing
deficit.

2 -

The present analysis takes place within the framework of
record marketabl~ privately held Treasury debt at $2.456 trillion,
annual interest expense of approximately $200 billion, and recent
deficits in a range of $300 billion. Since the election of a new
Administration, Treasury yields have dropped some 30 basis points
for the longest bills and approximately 85 basis points for
intermediate coupon issues out to the 30 year bond, taking many
Treasury yields to the lowest levels in nearly 30 years.
In fact,
after inf lation, short-term rates are now near zero; only the
inflation premiums on longer debt maturities have not been reduced,
as the yield curve has remained positively sloped with the 2 to 30
year yield spreads near 300 basis points.
Inflation, notwithstanding the recent "aberrant" behavior of
the PPI, cpr and the CRB, seems to many to have troughed around 3%.
GDP has posted seven consecutive quarters of growth, capped with a
4.8% increase in the final quarter of 1992, and is likely now
achieving the eighth positive quarter with growth in the 2 - 2 1/4%
range. Substantial refinancing and debt repayment is occurring as
corporations , individuals, and state and local governments are
reducing debt burdens at interest rates which are perceived low.
At the same time, monetary policy is seen to be stable and likely
to remain so for a protracted period. There is even a reasonable
balance of uncertainty as to whether the next movement might be to
lower or higher rates. The greatest evidence of change lies in the
Administration's new ini tiati ves stressing def ici t cutting and
stimulus.
As part of the House Budget committee recommendations,
within a roughly $6 trillion economy, there is planned $16 billion
in near-term stimulus, approximately $500 billion debt reduction
over five years and expenditure savings to be found or counted
later in 1996, 1997 and 1998.
Even with these initiatives, over
the next five years Treasury demands for net new financing are
expected to total $1 trillion.
Lastly, it is noted that the average life of the public debt
has centered recently at about 6 years, and is currently at 5 3/4
years with 50% of privately held marketable debt maturing within
two years.
As such, the Treasury has been a major beneficiary of
the declines in interest rates. This benefit is evidenced by the
fact that, though the national debt will grow by over $300 billion,
or approximately 11%, in the current fiscal year, the interest
expense paid by the government has stabilized at roughly $200
billion a year.
The committee references the above points to underscore its
belief that the questions posed by the Treasury Department cannot
be best answered in isolation, but must be considered within the
broad fiscal initiatives planned for the next five years and in an
environment that does not place undue demands upon a complimentary,
but independent, monetary policy.

3 -

The Committee also underscores its belief that Treasuries play a
unique and vital role in the nation's, indeed the world's, capital
markets where t~ey are the instruments of choice for investors,
funding risk managers, hedgers, arbitragers, swap departments,
portfolio managers and underwriters of sovereign issues.
This
pivotal benchmark role of Treasury debt substantively contributes
to the lowering of Treasury interest costs and the interest costs
of all private and domestic debt which is vital to the growth of
the U.S. economy.
The Committee's intention at this meeting was to identify and
weigh contrasting views and perspectives in open discussion among
its membership, with Treasury and Federal Reserve officials
present. The Committee's report is divided into four broad
sections. The first section will address discussions surrounding
Questions 1 and 7; the second Questions 2 and 3; the third Question
4; and, the fourth Questions 5 and 6.
SECTION I:

Questions 1 and 7

While the U.S. deficit has been growing for more than 30
years, in the last twelve years the pace has greatly accelerated.
This pace of accumulating debt cannot be quickly reversed. Even if
the def ici t trend is turned for the better, approximately $1
trillion of net new borrowing, as noted previously, will be
required over the next five years. Further, the Treasury's recent
borrowing has occurred in a favorable environment with the yield
curve sloping upward, a monetary policy permitting interest rates
to fall to ever lower levels, and competition from other domestic
and international borrowing sources muted by the ongoing period of
s low growth and even recess ion.
Today, recovery in the united
States is at hand and in the not too distant future maybe abroad as
well. As the economy expands, competition from other governmental
and private sources will likely intensify to make the coming
borrowing
environment
for
the
Treasury
increasingly
less
hospitable.
The current maturity structure of the Treasury's debt, its
monthly and quarterly patterns of financing, and the stabilizing
and cost-reducing role of predictability have developed out of the
need for the Treasury to borrow in all maturity sectors to finance
the unprecedented growth in the deficit.
Even with the present
constructive shift in fiscal policy, Treasury's deficit will be
substantial for the rest of the decade and beyond. The Committee
believes that the present maturity composition of the Treasury's
publicly-held marketable debt is broadly appropriate.

- 4 -

It ~s the Committee's strong view that there should be no
significant movement
away
from
the general
principles
of
predictability . . During the period of the 1960s and early 1970s,
p~edictability was not a priority.
The Committee believes that
s~nce
then the Treasury has created and nurtured, through its
consistent behavior, a very valuable asset for the taxpayer, and
that this hard-won -- but always fragile -- asset of predictability
has contributed to a material lowering of overall borrowing costs.
Investor confidence in the predictability of the Treasury's pattern
and composition of borrowing is based on a lengthy accumulation of
hard evidence which can be lost in an instant. Then, if ever newly
desired, it will take years to re-gain. Fortunately, Treasury has
been clear in its commitment to this policy and any increase in the
premiums that might have occurred across the maturity spectrum
seem, so far, to have been held to a minimum.
However, the
marketplace would become instantly sensitive and concerned
expressing this apprehension with price deterioration -- if it is
perceived that, for reasons of political expediency, changes in the
composi tion and pattern of borrowing of doubtful or debateable
virtues are sought in a reach for near-term interest savings at the
expense of savings in future years.
One of the important and nearly unique features of short-term
Treasury securities is the role these instruments playas nearmoney equivalents, second only to money itself, as a basic
instrument of liquidity for the domestic and, in fact, world
economy.
Excessive reliance by T~easury on short-term debt could
stimulate, across all markets, fears of potential inflation and
undermine global market confidence in the fiscal policy of the U.S.
government. With 50% of the publicly-held marketable debt maturing
within two years, any greatly enlarged refinancing demands could
become a fatal defect, as in recent years it was seen to be for
some
government,
private
borrowers
and
major
financial
institutions. Particularly given the gradual deterioration in the
fiscal rectitude of the U.S. government, it is important to always
bear in mind that in an open and competi ti ve financial market,
investment in Treasury securities cannot be compelled, only induced
through the payment of higher yields.
Though the value of predictability is difficult to quantify,
the Committee feels any significant deregularization of the
Treasury auction schedule and composition would create an
uncertainty that has a cost. With $650 billion of Treasury bills
outstanding, and another $600 billion in maturing notes and new
financing due within one yea~, every additional basis point in
required interest on this $1.~50 trillion debt would carry direct
costs of $125 million in marginal debt service within one year.

5 -

Beyond the risks that a short-sighted policy might create, the
committee notes. that market volatility surrounding Treasury
announcements in recent years has been low, when normalized for
prevailing volatility, as measured against the period of the 1960s
and 1970s when the now persistently followed and publicly affirmed
policy of predictability was not followed. The premium the market
charges for uncertainty, in the form of yields higher than they
would be otherwise, can be viewed as an imbedded option that the
Treasury pays investors.
Predictabili ty reduces this cost as
investors worldwide have become conf ident in the rational and
consistent behavior of U.S. borrowing patterns.
The committee also draws attention to the substantial current
correlation shared between the U. S. and its principal trading
partners as it relates to the duration of sovereign debt of each.
Were a country to deliberately embark on a plan of meaningful
change, this would draw investor attention and could lead to
substantial market consequences.
Thus, in broad and firmly held
terms, the Committee sees an important value to the Treasury of
promptly removing any newly introduced uncertainty concerning the
commi tment to predictability, which has materially lessened the
interest expense to the Treasury as a cornerstone of Treasury's
impressive financing success in recent years. Predictability,
however, need not be adhered to slavishly. Refinements, discussed
and described in an open and clearly articulated fashion, will
always be necessary as a part of gradual and carefully orchestrated
changes that seek, long-term, to lower interest costs.
SECTION II:

Question 4

The Committee continues to believe that the U.S. Treasury, as
the world's largest borrower both in gross and net terms,
should
remain cautious in considering, and especially implementing, major
changes to either its debt management techniques or its financing
patterns. Given the perpetual status of U.S. Treasury debt, as a
by-product of the continuing additional borrowing needs that are
visible even beyond the end of this century, the Committee believes
the Treasury should use all available maturity sectors and avoid
the temptation of excessive dependency on short-term financing.
The paramount requirement is to formulate a strategy of how best to
raise approximately $1 trillion of net new debt over the next five
years, giving consideration to the new Administration's budget
plan.
A strategy concentrating on raising money in maturities
which are nominally lower cost short-term maturities, at the
moment, offset by significant reductions in the issuance of longerterm secur i ties to lower near-term interest expense, entails a
substantial risk of backfiring.

6 -

And, even if eventually it did not, and were successful, when
combined with the regrettable record evident to all worldwide, that
we have failed to corne to grips with our fiscal excesses, the
strategy would likely be seen by the financial markets as just
another step in the direction of fiscal irresponsibility.
The
committee applauds the Administration's attention to deficit
reduction as an overdue and necessary step in the direction of
first reducing, and ultimately eliminating, the Federal budget
def ici ts.
Greater Treasury f lexibili ty, eff iciency, and debt
management strategies could then be possible which today are
precluded by the massive borrowing needs ahead.
If there is to be any additional reduction in the issuance of
longer term securities, the committee recommends that the Treasury
first stress existing auction cycles to raise the funds required.
The market has, for extended periods, accepted in a smooth and
efficient fashion,
SUbstantial increases
in existing cycle
offerings because of the credibility earned through the predictable
nature of Treasury financing.
Growth in existing cycles may
continue for a reasonable period, even in the face of increasing
private credit demands before new cycles may be necessary.
Obviously, any SUbstantial further reductions in the issuance of
longer-term securities would shorten the period of time before new
cycles will be necessary.
The Committee has noted on several occasions, in the past,
that the one-year (52-week) bill offers the Treasury the most
significant new borrowing potential with the least market
disruption.
But, while there is substantial flexibility, it is
vital to note that just a small increase in short-term rates can
have an enormous impact on Treasury's interest cost given the
present concentration of Treasury debt under two years.
In
addition, particularly if the concentration were increased, any
rise in short rates might have an immediately greater effect on
closely related maturity sectors for the Treasury and private
borrowers.
This could pose a material risk to the benefits of
deficit reduction and economic growth.
If the one-year bill cycle were raised to the level of current
two-year note offerings ($15 billion monthly), in excess of $50
billion could be raised from private market participants(excluding
Federal Reserve and official foreign account purchases) in the first
year. This one-time increase would not raise significant net new
cash beyond the first year.
The Treasury might also consider
increasing the frequency of the one-year bill offerings to biweekly (twice a month). Consideration here should be given to the
magnitude of the borrowing requirement, the eventual resulting debt
average life, related market impact and economic factors.

- 7 -

If the bi-weekly plan were pursued, rather than increasing the size
of the one-year bill to $15 billion, it would be appropriate to
hold the offering size to around $10 billion.
This alternative
could raise up to about $125 billion of net new cash from private
market participants (excluding Federal Reserve and foreign account
purchases) over the first year and would have the same limitations
in terms of the cash raising potential beyond the first year as is
noted above.
As concluding points relative to the one-year sector, the
Commi ttee believes that more substantial offerings of one-year
bills will likely encourage enhanced investor interest in this
maturity in much the same fashion as has occurred with two-year
notes. Also, there has been consideration and discussion over time
concerning the possibility of offering a 52-week coupon-bearing
security for those investors who prefer "current income"; further
study could determine the preference of investors for a coupon
obligation versus a discount obligation of the same maturity.
The Committee further recommends that the auctioning of all
bills
three months, six months, and one year -- should be
conducted on the same basis as coupon issues.
Providing full
information as to what will be sold to private market participants
(excluding Federal Reserve and official foreign account purchases)
would reduce uncertainty about the net size of Treasury's issuance.
The Committee believes this additional information would likely
lower the Treasury's interest expense.
Lastly, should the Treasury need a further new cycle to either
augment our primary suggestions, in aggregate or in combination
wi th other options, the Committee notes the possibility of reinstituting the quarterly four-year note cycle.
Current note
cycles offer one open date each quarter, the 15th day of the third
calendar month.
Thus, the middle of March, June, September and
December could be utilized to re-institute a quarterly four-year
note cycle. There would be minimal effect on the present average
life of the debt if this maturity is selected, and the cash raising
potential would approximate $50 billion a year for a four-year
period. The maturity itself falls within the popular two to five
year maturity range and should not materially affect the
noticeable, but marginal, distortions that have accompanied the
monthly five-year note sales.

SECTION III:

8 -

Question 2 and 3

The Committee continues to support the general principle that
over the long-term Treasury can achieve the lowest interest expense
to the taxpayers by employing techniques and financing patterns
that are routinely followed and generally anticipated by market
participants. The measurement period should not be a single period
in time, where one particular form of borrowing or another could
have saved money.
Calculations of this sort are always easy In
retrospect. In prospect, the judgement is much more difficult. As
an example, when the 40-year Treasury 3% due in 1995 were issued in
1955 at roughly three times the Treasury bill rate prevailing at
the time, they were initially perceived to be costly, but they have
proved to be cheap if contrasted with 38 years of roll-over expense
in three-month Treasury bills.
Under economic and deficit projections implicit in the
Administration's plan and CSO forecast, it is useful to point out
that if the present mix of current coupon offerings were held
constant, the average life of the national debt would shorten to
5.3 years by the end of fiscal 1998. More importantly, because of
significant coupon maturities first in fiscal 1994 and then in
fiscal 1997 and 1998, principally because of the increased two and
five year note cycles, the requirement for net new Treasury bills
would surge dramatically.
Fiscal 1994 would show an increase of
approximately $65 billion net over fiscal 1993 and fiscal 1997 and
1998 would rise to approximately $175 billion annual net new money,
almost three-fold the net new issuance in this current fiscal year.
The sheer scale of aggregate bill borrowing that would result would
initially distort the yield curve and spread to other near
maturities.
Precise quantification of this is difficult, but professionals
generally feel that three and six month bill auctions of $30
billion would require at least five additional basis points and $40
billion bill sales might require an additional five basis points.
Since most short-term markets,
as well as adjustable rate
mortgages, are quoted at spreads over bill yields, this increased
interest cost would spread directly to the private market,
potentially affecting spending, investment and general economic
activity.
In particular, with 50% of all corporate debt
outstanding
maturing
within
one
year,
the
consequence
of
disproportionate borrowing by the Treasury in this maturity range
would be manifest.

- 9 -

Excessive reliance on short-term debt also could stimulate
market fears of potential inflation, could actually become a source
of inflation itself, and could conceivably undermine market
confidence in overall government policy.
Private investors would
likely demand high premiums for excessively concentrated borrowing.
Should the auctions then fail to take up fully the Treasury's
requirement, Federal Reserve open market support could possibly be
called into play. That, at least, would be the market's fear. The
history of central bank financing of public deficits has typically
been poor public policy and, ultimately, bad for the economy.
Clearly, with $1 trillion in net new debt anticipated over the next
five years, coupon issues will have to grow.
A disproportionate
reliance on bills would be a risky path to follow.
These comments are offered to underscore the importance of
coupon issuance, the limitations of bill financing even with the
seductive nature of near-term interest savings, and the importance
of finding the proper balance among financing alternatives under
various assumptions.
A current further cutback in longer term marketable borrowing
might, though not necessarily, foster lower interest rates for
specific securities and maybe even the sector as a whole. However,
older, larger issues will likely still trade at higher yields to
newly reduced offerings as is the case today.
Even if the yield
curve remains positively sloped, longer term borrowings (not just
the long bond), when coupled with increases in shorter term
borrowing, could over time lead to reduced total interest cost to
the Treasury. Further, these reduced costs might likely spread to
the debt and equity capital raising for households and businesses
alike.
A cost/benefit analysis can be done to more fully quantify the
gains and risks inherent in reduced coupon financing versus
increased bill financing. The key is to establish the measurement
period and the magnitUde required for short rates to rise above the
long-term rates.
Generally, following a cyclical extreme in the
slope of the yield curve, it does not take long before short-term
rates approach or exceed the levels of long and intermediate rates.
The following table illustrates this by comparing three-month bills
versus ten year notes:

- 10 Period Required for Short Rates to Rise Above
Levels Prevailing at yield Curve Peak
C3-Month Bills versus 10-Year Notes)

Long-Term~ate

Month yield
Curve
Peaked

June
July
Sept
June
Feb
Feb
Sept

1954
1958
1961
1967
1972
1976
1982

3 Month

Bill
Rate

0.64%
0.91%
2.28%
3.53%
3.20%
4.88%
7.92%

10 Year
Note
yield

2.38%
3.20%
3.98%
5.02%
6.08%
7.79%
12.34%

Spread
(Basis
Points)

Period Before
Bill Rates Rose
That Amount
Months

174
229
170
149
288
291
442
Average:
Median:

18
11
49
9
13
31
3
21.8
15.5

However, even assuming that short-term rates rise steadily
over the next few years, some shift of borrowing from intermediate
and longer term debt to bills could cut Federal interest costs and
the def ici t by modest amounts in fiscal year 1994 and a larger
amount cumulatively over fiscal years 1994 - 1998. As an example,
using 1993 CBO budget deficit and interest rate assumptions, and a
Committee member's calculation of interest savings, it is possible
the Treasury could save $7.5 billion in interest expense over
fiscal years 1993 - 1997 by cutting all note and bond auctions by
one-sixth even if short-term bills rise by 100 basis points per
year over the period.
As CBO interest rate assumptions are less
pessimistic, rising 50 basis points per year on average through
1997, greater savings may be possible.
As a particular suggestion, the Committee believes that there
are modest distortions in connection with the five and seven year
cycles and between the three to seven year sector which could be
saved by modest auction size reductions in favor of bill issuance
which, while keeping longer term issuance fundamentally unchanged
or proportionate to new borrowings, would not incur undue risk to
the Treasury and possibly achieve some interest rate savings.

- 11 As most of the spending cuts are "back loaded" in the
Administrations's program into fiscal years 1996, 1997, and 1998,
there likely are·substantial premiums still built into longer-term
maturities reflecting skepticism of the Administration's ability
and determination to cut spending. Thus, there may well be hidden
savings to be gained from lightening Treasury financing in longerterm matur i ties under the assumption that the Administration's
program is implemented and proven successful. Unfortunately, the
temptation to shorten the average life of the public debt,
achieving near and intermediate-term interest savings by reducing
longer term borrowing in favor of increased short maturity
borrowing, may actually occur at precisely the wrong point in time
as yield curves are often the steepest just before short-term rates
begin a cyclical rise.
The table below shows that over the last 40 years,
encompassing seven major interest rate cycles, short-term rates
have almost always bottomed within a month or two of peak steepness
in the yield curve:
yield Curve steepest at Short Rate Troughs
C3-Month Bills Versus lO-Year Notes)

Month Yield
Curve Steepest
June
July
Sept
June
Feb
Feb
June
Sept

1954
1958
1961
1967
1972
1976
1980
1982

Month Short Rates
Troughed
June
June
July
June
Feb
Dec
June
Oct

1954
1958
1961
1967
1972
1976
1980
1982

Difference
(Months)

- 0 1 before
2 before
- 0 - 0 10 later
- 0 1 later

As has been noted already, the adoption of a short maturity
financing strategy may result in a serious rollover problem which
could become particularly acute if Treasury debt is rising relative
to GOP or, with the free flow of capital among markets, domestic
and foreign investors grow uneasy about U.S. fiscal pOlicies. Were
this to lead to political or other pressures on the central bank to
pursue an easy monetary policy to hold down near term costs, this
debt monetization would almost inevitably lead to higher inflation,
eventually forcing potentially even sharper and more economically
wrenching rises in short-term rates.

- 12 -

The Committee, having taken many points into consideration,
believes it is an inappropriate policy to at this time shorten the
average life of 't.he national debt.
To the question, "Should the
Treasury permit the average life to decline from present levels?",
the Committee voted 18-1 in opposition (and the one dissenting vote
would have been in favor if the question had been rephrased to
read, "to decline materially").
SECTION IV:

Questions 5 & 6

The U. S. Government, because it possesses superior credit
characteristics and the most liquid secondary market of all
sovereign debt issuers, has the unique ability to raise funds in
the long-term capital markets. Given the continuing large deficit
anticipated and the consequent near perpetual nature of existing
Treasury debt, all maturity sectors available for financing should
be used, including the 10 and 30 years. The existence of the 30year bond not only tempers the impact from continuing large
deficits but, as well, holds down long-term interest expense, keeps
the U.S. in a comparatively good international position, while
serving as a vital benchmark for the pricing and hedging of longterm debt issued by state and local governments,
private
corporations, and other Federal government entities.
These
domestic markets and global sovereign issuers would suffer if the
liquidity of the long-term U.S. Treasury bond markets were
impaired, which would be the result of a discontinuance or
meaningful
further reduction in the issuance of
long-term
securities.
Given the extreme uncertainty of long-term credit evaluation,
there 1S particular value in long-dated, risk-free assets for
investors with comparable long-dated maturity liabilities.
A
number of internatic~al and domestic investor groups (e.g.,
insurance companies and pension funds) have needs for high quality
long duration assets to offset long-dated liabilities.
They are
willing to pay a premium for the opportunity to receive U.S.
guaranteed cash f lows at distant future dates to address these
liability exposures.
Further, the existence of growlng futures markets provides
this country with a significant edge over foreign competitors in
global finance, enhancing the liquidity of all of our primary and
secondary securities markets. Excessive reduction or cancellation
of the 3D-year issue would be a major blow to the development of
these markets and may spread consequent costs well beyond the
markets themselves. The liquidity and usefulness of stripped U.S.
Treasury obligations would, as well, be impaired if there was
further meaningful change in the supply of 3D-year bonds.
The
effect of this would spread across the full spectrum of U.S.

- 13 Treasury debt, as the existence of stripping affords the market the
very useful ability to reflect in the pricing of all debt, out to
thirty years, the value of cash flows free of credit risk.
It was noted by several Committee members that risk capital
has already been withdrawn from the long-term markets as a direct
consequence of the rapid reduction over the past year in long-term
Treasury debt issuance.
It took many careful years of measured
small additions to build the 30 and 10-year issues to $12 billion.
Investor participation and conf idence and intermediary underwriting
commitments worked hand in hand to meet the government's needs.
The recent reductions, nearly $3 billion per quarter for the 30year bond, have caused some risk capital to be withdrawn, raising
the specter that the long-term Treasury market might become the 10year note.
This reduction in supply comes on top of pr ior
cancellations in 20-year Treasury bond auctions and the completion
of the Resolution Trust Corporation and Financial Assistance
Corporation long-term borrowings.
While marginal additional
reductions of up to a maximum of $1 billion, may be possible in
both cycles without impairing these markets, this step cannot be
taken without longer-term consequences. It is the Committee's view
that depriving the long-term bond market of an adequate supply to
sustain its viability would eliminate a financing option which has
proved very useful to the Treasury and valuable to the financial
markets.
As other outstanding long-term Treasury issues have failed to
follow fully the lower yields of recently reduced offerings, the
Treasury might, instead, consider trying semi-annual auctions of
larger sizes in order to maintain the scale of liquidity and value
of the 30-year market within the framework of predictability and
the present average life.
The Committee also notes that further
reducing auction sizes to lower levels, particularly approaching $8
billion, risks the re-occurrence or the appearance of "squeezes"
and consignment abnormalities in related markets.
Because of the above points and heavy dealer hedging of
corporates, mortgages and related securities positions, as well as
broad based demand for stripped securities, the Committee concludes
that it could be unwise to further reduce either the 10 or 30 year
issues below their present levels.

14 -

The Committee is pleased to have been able to contribute to
the Department of the Treasury's analysis of debt issuance and
innovation. The Committee stands ready to address any additional
specific issues or analysis that Treasury would feel appropriate.
Mr. Secretary, this concludes our report.
Respectfully submitted,

Morgan B. Stark
Chairman of the Treasury
Borrowing Advisory Committee
of the Public Securities
Association

The White House
Office of the Press Secretary
For Immediate Release

April 1, 1993

PREPARED REMARKS OF PRESIDENT WILLIAM J. CLINTON
TO THE AMERICAN SOCIETY OF NEWSPAPER EDITORS
"A Strategic Alliance with Russian Refonn"
Annapolis, Maryland
Today I want to speak with you about the events in Russia, our policies toward the new
independent states, and my meetings with President Boris Yeltsin this weekend. But first, I
wish to speak of America's purposes in the world.
That is not something we often examine. For it is human nature to focus most on daily
affairs. In our own lives, we do our jobs, raise our children, and nurture our relationships
one day at a time. Yet we are each guided by some sense of purpose, drawn from our
families and our faith, which shapes the million small events of our life into a larger work
that bears the imprint of our character.
So it is in the lives of nations. Decisions command attention. Crises drive actions. But it is
only with an overriding sense of purpose, drawn from their history and culture, that great
nations can rise above the daily tyranny of the urgent to construct their security, build their
prosperity, and advance their interests.
A clear sense of purpose is most essential, yet most elusive, at times of global change. A
half century ago, our nation emerged victorious from the Second World War to discover
itself on unfamiliar terrain. The old empires of Europe and Asia were gone. A new
communist empire loomed. Ours was the only economy still strong. Dean Acheson later
described it as a time of "great obscurity." Yet he, George Marshall, Harry Truman, and
other leaders in both parties saw the stakes clearly enough. They acted decisively. They
accepted the mantle of leadership. Their sense of purpose helped rescue Europe, rebuild
Japan, contain aggression, and foster two generations of unprecedented prosperity and peace.

Now, thanks to their vision, carried forward through succeeding generations -- and to the
courage of the people of the former Soviet Union -- freedom has once again won a great
victory. Over the past four years, the Berlin Wall crumbled. The Cold War ended. The
Soviet Union gave way to fifteen sovereign states. Millions threw off the constricting yoke
of communism so they could assume instead the ennobling burdens of democracy.
Yet these victories also confront us with a moment of profound change. The collapse of the
Sovir{ empire cnangea the inrernational order. The emerging economic powerhouses of the

2
Pacific are chang ing the financial order. The proliferation of demon
ic weapons threatens to
chang e the distribution of military power . Resurgent ethnic confli
ct is challenging the very
meaning of the nation state. The rise of a global economy has chang
ed the linkages between
our domestic and foreign policies and made them indivisible.
In a time of drama tic global chang e we must define Amer ica's broad
er purposes anew. Part
of that purpo se consists of reviving economic growth at home, for
it is the ultimate basis of
our influence abroa d. Congress is acting this week to break gridlo
ck and to build our
prosperity by passing the heart of our economic progra m. After
years of policies that
diminished our future, Washington has finally recognized that the
best social progra m is a
good job, and the best route to deficit reduction is a growing econo
my founded on a bold
plan of chang e to cut spending, increase investment, and empo wer
working families.
Our progra m invests in people -- by changing our tax code to rewar
d work and investment
and ensure that anyon e who works a forty hour week won't have
to live in poverty; by
providing our children with the education, nutrition, and immunizatio
ns they need to start life
right; by reinventing the way we educate and train our workers for
the new global economy;
and by creating jobs now through investments in infrastructure, safe
streets, and comm unity
development. The American people had the courage to call for chang
e in Novem ber, and I
am hopeful Congress will have the courag e to vote for change this
week -- for both the long
term deficit reduction and investment plan and the short term jobs
progra m to create 500,0 00
new jobs over the next two years.
As I said so often in the global village there is no clear dividing line
between domestic and
foreign policy. We can't be strong abroad unless we are strong at
home. And we can't be
strong at home unless we engage actively abroad. There fore, we
also need a new sense of
Amer ica's purposes abroad. The world remains a dangerous place,
and our pre-em inent
imperative is to ensure our security. That is why we are working
to assure that our military
is not only the finest in the world , but also specifically tailored for
the challenges of this new
era. For the central fronts of our fight for a safer world have moved
from the plains of
northern Europ e, to our efforts to stem weapons proliferation, reliev
e ethnic turmoil,
promo te democ racy, expand markets, and protect the global enviro
nment .
During the Cold War, our foreign policies largely focused on the
relations among nations.
Our strategies sought a balance of power to keep the peace. Today
, our policies must also
focus on relations within nations. A nation 's form of governance
, econo mic structure, and
ethnic tolerance are of concern to us, for they shape how it treats
its neighbors as well as its
own people. In partic ular, democracies are far less likely to wage
war on other nations than
dictatorships.
Emphatically, the international community cannot seek to heal every
domestic dispute or
resolve every ethnic conflict. But within practical bounds, and with
a sense of strategic
priorities, we must do what we can to promote the democratic spirit
and economic reform s
that can tip the balanc e for progress in the next century.
From the first hours of my administration, several critical situations
have demanded our
attention -- in Iraq, Somalia, Haiti, the Mideast, the former Yugos
lavia, and elsewhere. We
have developed strategies to address these and other imme diate challe
nges and I am
encouraged by progre ss we have made. Yet all of us must also focus
on the larger questions

3
that this new era presents. For if we act out of a larger sense of purpose and strategy, our
work on the crises of the late Twentieth Century can lay the basis for a more peaceful and
democratic world at the start of the Twenty-first.
The end of the long, twilight struggle does not ensure the start of a long peace. Like a wise
homeowner who recognizes that you cannot stop investing in your house once you buy it, we
cannot stop investing in the peace now that we have obtained it. That recognition was the
triumph of Truman's era. But unlike then, we lack the specter of a menacing adversary to
spur our efforts. Now, not fear but vision must drive our investment and engagement in this
new world.
Nowhere is that engagement more important than in our policies toward Russia and the new
independent states. Their struggle to build free societies is one of the great human dramas of
our day. It presents the greatest security challenge for our generation. It offers one of the
greatest economic opportunities of our lifetime. That is why my first trip out of the country
will be to Vancouver, Canada to meet with President Yeltsin.
Over the past month, the tumultuous events in Russia have filled our headlines. President
Yeltsin has been at loggerheads with the People's Congress of Deputies. Heated political
standoffs have obstructed economic change. Meanwhile, neighboring states, such as Ukraine
and the Baltic nations, have watched Russia anxiously while they grapple with their own
reforms.
For most Americans, these events, while dramatic, are remote from their immediate
concerns. We have our own problems and needs. We face a stagnant economy and the
dislocations brought about by the end of the Cold War. Why should we help a distant people
when times are hard at home?
My argument today is this: we cannot guarantee the future of reform in Russia or the other
states. Ultimately, that will be determined by what they do. Yet, for our own part, we must
do what we can, and we must act now. It is not an act of charity. It is an investment in our
own future. While our efforts will entail new costs, we can reap even larger dividends for
our safety and prosperity.
To understand why, we must grasp the scope of the transformation occurring in Russia and
the other states. From Vilnius on the Baltic to Vladivostok on the Pacific, we have
witnessed a political miracle -- heroic deeds -- without precedent in human history. The
other two world-changing events of this century, World War I and World War II, exacted a
price of over 60 million lives. By contrast, this world-changing event has been remarkably
bloodless, and we pray it remains so.
Now free markets and free politics are replacing repression. Central Europe is in command
of its own fate. Lithuania, Latvia, and Estonia are again independent. Ukraine, Armenia,
and other proud nations are free to pursue their own destinies.
At the heart of it all is Russia. Her rebirth has begun. A great nation, rich in natural and
human resources, Russia is again moving to rejoin the political and economic cultures of the
West. President Yeltsin and his fellow reformers throughout Russia are courageously leading
three modem Russian revolutions: to transform their country from a totalitarian state into a

democracy; from a command economy into a market; and from an empire into a modern
nation-state.
Russia's rebirth is not only material and political, but also spiritual. As the Librarian of
Congress, James Billington, observed: "evil has been transcended by repentance without
revenge; innocent suffering in past gulags has been given redemptive value; and the
amazingly non-violent breakthrough of August 1991, which occurred on the Feast of the
Transfiguration, was indeed a 'miracle' through which ordinary people rediscovered a moral
dimension to their lives. Across what was the Soviet Union, the freedom to pray has been
met by a resurgence of worship.
01

Nothing could contribute more to global freedom, security, and prosperity than the peaceful
progression of Russia's rebirth. It could mean a modern state, at peace with itself and the
world, productively and prosperously integrated into the global economy, a source of raw
materials and manufactured products and a vast market for American goods and services. It
could mean a populous democracy contributing to the stability of both Europe and Asia.
The success of Russia's renewal must be a first-order concern to our nation because it
confronts us with four distinct opportunities. First, it offers us an historic opening to
improve our own security. The danger is clear if Russia's reforms turn sour -- if it reverts
to authoritarianism or disintegrates into chaos. The world cannot afford the strife of the
former Yugoslavia replicated in a nation spanning eleven time zones and armed with a vast
arsenal of nuclear weapons.
But there is great opportunity here as well. Across most of our history, our security was
challenged by European nations, set on domination of their continent and the high seas that
lie between us. The tragic violence in Bosnia reminds us that Europe has not seen the end of
conflict. Now, we could at last face a Europe in which no great power harbors continental
designs. Land wars in Europe cost hundreds of thousands of American lives in this century.
The rise of a democratic Russia, satisfied within her boundaries, bordered by other peaceful
democracies, could ensure that our nation never needs to pay that kind of price again.
We also face the opportunity to increase our own security by reducing the chances of nuclear
disaster. Russia still holds over 20,000 strategic and tactical nuclear warheads. Ukraine,
Belarus, and Kazakhstan have nuclear weapons on their soil as well. We are implementing
historic arms control agreements that for the first time will radically reduce the number of
strategic nuclear weapons. Now, by supporting Russia's reforms, we can help turn the
promise of those agreements into a reality for ourselves and our children, and for Russians
and their children.
Second, Russia's reforms offer us the opportunity to complete the movement from having an
adversary in foreign policy to having a partner in global problem- solving. Think back to the
Cold War. Recall the arenas where we played out its conflicts. Berlin. Korea. The
Congo. Cuba. Vietnam. Nicaragua. Angola. Afghanistan. We competed everywhere.
We battled the Soviets at the U.N. We tracked each other's movements around the globe.
We lost tens of thousands of our sons and daughters to hold freedom's line. Those efforts
were worthy. But their worth was measured in prevention more than creation, in the
containment of terror rather than the advancement of human happiness.

5
Now reflect on what has happened since Russia joined us in a search for peaceful solutions.
We cooperated in the U.N. to defeat Iraqi aggression. We co-sponsored promising peace
talks in the Mideast. We worked together to foster reconciliation in Cambodia and El
Salvador. We joined forces to protect the global environment. Progress of this kind
strengthens our security and that of other nations. If we can help Russia remain increasingly
democratic, we can leave an era of standoff behind us and explore expanding horizons of
progress and peace.
Third, Russia's reforms are important to us because they hold one of the keys to investing
more in our own future. America's taxpayers spent trillions of dollars to prosecute the Cold
War. Now we can reduce that pace of spending, but only because the arms of the former
Soviet Union pose a diminishing threat to us and our allies. If Russia were to revert to
imperialism or plunge into chaos, we would need to reassess our plans for defense savings.
That could mean billions less for other uses. Less for creating new businesses and new jobs.
Less for preparing our children for the future. Thus, our ability to put people first at home
requires that we put Russia and its neighbors first on our agenda abroad.
Fourth, Russia's reforms offer us an historic economic opportunity. Russia is in economic
crisis today. But Russia is inherently a rich nation. She has a wealth of oil, gas, coal, gold,
diamonds, and timber for her own people to develop. The Russian people are among the
most well educated and highly skilled in the world. We must look beyond the Russia of
today and see her potential as a prosperous nation of 150 million -- able to trade with us in a
way that helps both our peoples. Her economic recovery may be slow, but it is in the
interest of all who seek more robust global growth to ensure that, aided by American
business and trade, Russia rises to her great economic potential.
The burning question today is whether Russia's progress toward democracy and free markets
will continue or be thwarted. I believe that freedom, like anything sweet, is hard to take
from people once they have tasted it. The human spirit, once released, is hard to bottle up
again. Yet if we cannot be certain of how Russia's affairs will proceed, we are nonetheless
certain of our own interests. Our interests lie with efforts that enhance our own security and
prosperity. That is why our interests lie with Russian reform and Russian reformers.
America's position is unequivocal. We support democracy and free markets. We support
freedom of speech, conscience, and religion. We support respect for ethnic minorities in
Russia and for Russian and other minorities throughout the region.
I believe it is essential that we act prudently but urgently to do all that we can to strike a
strategic alliance with Russian reform. That will be my goal in Vancouver. That will be my
message to the man who stands as the leader of reform, Russia's democratically elected
president, Boris Yeltsin. I will not describe today all the specific ideas I plan to discuss with
him. But I do want to describe the principles on which our efforts to assist reform will rest.

First, our investments in Russian reform must be tangible to the Russian people. Support for
reform must come from the ground up. That will only occur if our efforts are broadly
dispersed, and not focused just on Moscow. I plan to talk with President Yeltsin about
measures intended to help promote the broad development of small businesses, accelerate the
privatization of state enterprises, assist local food processing and distribution, and ease the

6
transition to private markets. Our goal must be to ensure that the Russian people soon come
to feel that they are the beneficiaries of reform, not its victims. We must help them to
recognize that their sufferings are not the birth pangs of democracy and capitalism, but the
death throes of dictatorship and communism.
Second, our investments in Russian reform must be designed to have lasting impact.
Russia's economic vessel is too large and leaky for us to bail it out. Our challenge is to
provide some tools to help the Russians do that work for themselves. A good example is
Russia's energy sector. Russia is one of the world's largest oil producers. Yet millions of
barrels of the oil Russia pumps each month seep out of the system before reaching market.
Just the leakage from her natural gas pipelines could supply the entire state of Connecticut.
The Russians must make many reforms to attract energy investments. And by helping
introduce modern drilling practices and repair Russia's energy infrastructure, we can help
Russia regain a large and lasting source of hard currency. Over the long run, that effort can
even help protect the environment and moderate world energy prices.
Third, our efforts must be people-to-people, not just government-to-government. We have
entered a new era, in which the best way to achieve many of our goals abroad is not through
diplomats or dollars, but private citizens who can impart the skills and habits that are the
lifeblood of democracy and free markets. We need expanded efforts so retired American
business executives can work with Russian entrepreneurs to start new businesses; so our
farmers can teach modern farming practices; so our labor leaders can share the basics of
trade unionism; so Americans experienced in grassroots activities can impart the techniques
that ensure responsive government; so our armed forces can engage in more exchanges with
the Russian military; and so thousands of young Russians, who will be reform's primary
beneficiary and constituency, can come to America to study our government, economy, and
society.
Fourth, our investments in reform must be part of a partnership among the new independent
states and the international community. They must be extended in concert with measures
from our allies -- who have at least as much at stake in the survival of Russian reform as we
do -- working through the international financial institutions. This principle is especially
important as we help Russia stabilize its currency and its markets. Russia's central bank
prints too many rubles and extends too many credits. The result is inflation that has been
nearly one percent a day. Inflation at such levels gravely impairs Russia's emerging
markets. In Vancouver, I plan to discuss the progress we are making among the major
industrialized nations to help Russia make the leap to a stable currency and a market
economy. While we cannot support this effort alone, and while we must insist on
commensurate Russian reforms, American leadership is essential.
Fifth, we must emphasize investments in Russia that enhance our own security. I plan to
talk with President Yeltsin about steps we can take together to ensure that denuclearization
continues in Russia and her neighboring states. We will explore new initiatives to reassure
Ukraine so that it embraces the START treaty, and to move toward the goal of the Lisbon
Protocol agenda, which was intended to ensure that Russia is the only nuclear armed
successor state to the Soviet Union. Ukraine will playa special role in the realization of
these objectives, and we recognize our interest in the success of reform in Ukraine and the
other new states. I will talk with President Yeltsin about new efforts to realize the two-thirds
reductions in U.S. and Soviet strategic nuclear arsenals envisioned under START. And I

will suggest steps both our countries can take to stem the proliferation of weapons of mass
destruction.
Sixth, we must recognize that our policies toward Russia and the other states comprise a
long-term strategy that may take years to work completely. That was the key to our success
in the Cold War. As the Soviets veered from the terror of Stalin, to the thaw of
Khrushchev, to the grey days of Brezhnev, to the perestroika of Gorbachev, our purpose
remained constant: containment; deterrence; human freedom. Our goals must remain
equally fixed today. Above all, our security and that of our allies. But also: democracy;
market economies; human rights; and respect for international law. In this regard, I
welcome President Yeltsin's assurances that civil liberties will be respected and continuity in
Russia's foreign policy maintained as Russia strives to determine her future.
The path that Russia and the other states take toward reform will have rough stretches.
Their politics may seem especially tumultuous today, in part, because it is so much more
public than in decades past. Then, the ruler of the Kremlin had only subjects; now, he has
constituents. We must be concerned over every retreat from democracy, but not every
growing pain within democracy. Our own early history was marked by revision of our
governing charter and fist-fights in our Congress. As Vaclav Havel noted, democracy is not
a destination, but a horizon toward which we make continual progress. As long as there are
reformers in the Russian Federation and the other states leading the journey toward
democracy's horizon, our strategy must be to support them; our place must be at their side.
Moreover, we and the Russian people must not give up on reform due to the slow pace of
economic renewal. Recall how many of the world's economic success stories were written
off too soon. Western visitors to Japan in 1915 dismissed its economic prospects as dismal.
Korea's economy was described as a "hopeless case" by American experts in 1958. Many
Germans after World War II anticipated decades of national poverty; a German Minister of
Economic Affairs noted: "Few realized that if people were allowed once more to become
aware of the value and worth of freedom, dynamic forces would be released." The miracle
of prosperity that Japan, Korea, and Germany have discovered awaits those who are willing
to sustain democratic and economic reform in Russia and her neighboring states.
Despite today's troubles, I have great faith that Russian reform will continue and eventually
succeed. Let me here address directly the Russian people who will read or hear my words.
You are a people who understand patriotic struggle. You have persevered through an
unforgiving climate. Your history has been punctuated with suffering unknown to us. You
heroically withstood murderous invasions by Napoleon and Hitler. Your great literature and
music, which have so enriched our own culture, were composed with the pen of longing and
the ink of sorrow. Your accomplishments of education and science speak to your faith in
progress. Now, as you seek to build a great tomorrow for Russia upon a foundation of
democracy and commerce, I know I speak for Americans everywhere when I say: we are
with you. For we share this bond: the key to each of our futures is not in clinging to the
past, but in having the courage to change.
As we look upon Russia's challenges, we should remember all that the American and
Russian people have in common. We are both rooted in our land. We are both built of
diverse heritages. We are both forever struggling with the responsibilities that come with
vast territory and power. We both have had to deal with the dilemmas of human nature on

8
an imme nse scale. That may be why there has been so little real
hatred between our people,
even across decades when we pointed weapons of nightmarish destru
ction at each other' s
lands.
Now, as in the past, Amer ica's future is tied in important ways to
Russi a's. Durin g the Cold
War, it was tied in negative ways. We saw in each other only dange
r. Now that the walls
have come down we can see hope and opportunity.
In the end, our hope for the future of Russian reform is rooted in
our faith in the institutions
that have secured our own freedom and prosperity. But it is also
rooted in the Russian
people. The diversity of their past accomplishments gives us hope
there are divers e
possibilities for their future. The vitality of Russian journa lism and
public debate today gives
us hope that the great truth-seeking traditions of Russian culture will
endur e, and that
Russi a's anti-democratic demagogues will not in the long run prevai
l. And the discipline of
Russi a's military, which proved itself anew in August of 1991, gives
us hope that Russi a's
transition can continue to be peaceful.

Removal Notice
The item identified below has been removed in accordance with FRASER's policy on handling
sensitive information in digitization projects due to copyright protections.

Citation Information
Document Type: Transcript

Number of Pages Removed: 27

Author(s):
Title:

President Clinton Address to the American Society of Newspaper Editors

Date:

1993-04-01

Journal:

Volume:
Page(s):
URL:

Federal Reserve Bank of St. Louis

https://fraser.stlouisfed.org

A
.··~:
VI

TREASURY NEWS
Department of the Treasury

Washington,

O.c.

felephone 202-62'2-2960

Text as Prepared for Delivery
Embargoed until delivered
Expected about 12:35 p.m.
April 2, 1993
REMARKS OF TREASURY SECRETARY LLOYD BENTSEN
AMERICAN SOCIETY OF NEWSPAPER EDITORS
BALTIMORE, MD.
You know, I've had to talk to some tough audiences in my
public career, but I think yours may take the prize. You've got
to be careful with a group that titles a seminar: "Fix Local News
Or Die!" I'm not sure what to make of the fact that this
seminar comes right after my speech.
We've been watching the saga of the New York Post closely at
Treasury since it was founded by Alexander Hamilton, our first
Treasury Secretary. That was quite a stroke to print a drawing
of Hamilton with a tear in his eye over what was happening to the
paper. Of course, if he could see what our national debt looked
like, he'd probably be crying a river.
I can't help but recall that Hamilton was killed in a duel
with Aaron Burr. The next time the opposition up on Capitol Hill
takes a pot-shot at me or our economic plan, the New York Post
headline will probably read, Bentsen: Fix Deficit or Die.
I'm delighted to join you today. I don't know if it's
politically correct anymore to quote H.L. Mencken, but he did
have a way with words.
Sixty years ago Mencken made an observation that may be
truer today than it was then. He wrote in what was then the
Evening Sun, "Unless I err gravely, what the people really want
is a sweeping reduction in the cost of government."
We're on track now toward what he was talking about, a
smaller, less expensive government, and we're also on track
toward changing the course of our economy.
I think he would understand that we're changing the status
quo, not to benefit ourselves, as he suspected of politicians,
but to benefit our nation, and in turn to benefit the world. We
are facing our future, and we are doing something about it.
That change is taking place already. Congress has now
agreed to the Budget Resolution. We've taken the first step
toward deficit reduction of about $500 billion.
LB-l04

Before a single law has been signed we have aftected both
lr economy and on our position in the world.
Anybody in here refinanced a mortgage or bought a new house
itely? Anyone here changed credit cards to one charging lower
~terest?

You're saving a bundle of money already. Since the election
ong term interest rates have come down about 80 basis points.
y friend Alan Greenspan tells me that a drop of 10 basis points
s the equivalent of a $10 billion shot in the arm for the
conomy.
America's businesses -- your newspapers, our major
orporations, and our small businesses -- are all paying less to
lorrow. Even the government, we're saving billions of dollars as
'e rollover our debt at each auction.
Abroad, our G-7 partners are applauding our actions.

They

~old us for years to get our own house in order.
We've done just
~hat.
The president's plan marks a new era of global cooperation

Lnd coordination so that all economies can grow. Our economy is
.eading the way, and with cooperation and coordination, others
rill follow.
On the issue of international economies, if I could diverge
:or a moment, I'd like to mention Russia.
The president and I will meet with Russian President Yeltsin
:omorrow. This is an important session. The world community has
l significant stake in the future of Russia, and in the future of
:he other former republics now trying to make it on their own.
fe are assembling an important package of assistance to Russia,
III of it aimed at getting their economy stabilized. The
)resident discussed this with you yesterday.
I'd like to reiterate that from my perspective, one of the
;teps that can help is for the Russian Central Bank to quit
)rinting so much money and fueling inflation.
We had a Marshall Plan to rebuild Europe after World War II,
lnd then we saw the Cold War. That period and its heavy military
;pending is over, but the economic situation in Russia has not
;tabilized. They are, in effect, still undergoing a revolution.
Our assistance -- and that of the rest of the developed
iorld -- will assist the Russian transformation.

As part of the effort to assist Russia, the United states
and other Western creditor governments today agreed to reschedule
some $15 billion in Russian and Former soviet Union debt.
The United states welcomes this accord. It is the first
step in a multilateral process to support the forces of democracy
and economic reform in Russia.
This will help enable Russia to rebuild its
creditworthiness, and renew access to credits that it can use to
buy food and capital equipment to support Russia's drive to a
market-based economy.
All of us have an interest in what happens over there. No
one wants to see economic or political chaos. No one wants to
see questions raised about the safety and security of the nuclear
stockpile over there. That's why we're paying so much attention
to these problems -- here and at other departments. It is in
everyone's interest to see that Russia and the other new nations
succeed.
Now, I'd like to talk briefly about the major elements in
our economic plan, and then perhaps I can.answer some questions.
Let me anticipate one of them. Yes, we still need a stimulus,
and let me tell you why.
The employment figures this morning showed the jobless rate
still at 7 percent. We lost 22,000 jobs last month. Nine
million Americans are out of work.
The Consumer Confidence report Tuesday showed Americans less
confident about the economy for the third straight month. It's
been two full years since the trough of the recession. Since
then, job growth has been under 1 percent. In a normal recovery
it would have been about 6.5 percent.
Twice during the Bush administration our economy tried to
recover, but nothing was done. You know what happened? Twice we
fell right back into that recession. We're 0-2 right now. I
sure don't want to go 0-3. We must guarantee that we don't fall
back a third time.
What we're doing differs from what you might consider a
traditional stimulus. It is a building block to our longer term
program to revitalize the economy, stimulate investment, pay
attention to our people, and eliminate our internal roadblocks to
international competition.
We want to create 500,000 jobs by starting to repair our
infrastructure. We want to prepare Americans for new jobs in new
careers. And, we want to encourage the private sector investment
that creates jobs.

To invest in our youth, there's youth job training and a
mmer jobs program for nearly 700,000 disadvantaged youngsters.
ld, we want to put money into childhood immunization, the Women"
lfants and Children program, and Head start. A dollar invested
lere means as much as a $10 savings later.
We are extending emergency unemployment benefits into
:tober. Job creation and job growth doesn't happen overnight.
e simply must help our work force weather this period.
To help our businesses begin making the
ill strengthen our growth, we are proposing
mall business investment tax credit. We're
empo~ary marginal investment tax credit for

investments that
to make permanent a
also proposing a
all businesses.

The tax side of the stimulus also will simplify and
treamline the depreciation portion of the alternative minimum
ax system. Right now we have three different depreciation
chedules, and our plan will end up with one schedule -- and a
borter one at that.
We've also taken rapid regulatory steps to ease the credit
runch. Talk to the owners of the small and medium-sized
usinesses in your cities and towns. They'll tell you it bas
,een just too hard, too time consuming and too expensive to get
redit. Talk to your bankers. They'll tell you they've been
eluctant to lend because they're afraid of the government.
We've probably accomplished a Washington first by getting
he Fed, the FDIC, the Comptroller of the Currency and the Office
If Thrift Supervision to work together on this plan. This
,rogram already is ending the paperwork and regulatory
oadblocks. And it does not endanger the safety or security of
ur financial institutions. The excesses of the '80s will not be
epeated in the '90s.
For the longer run, we want to encourage additional
nvestment by the private sector. And, as a government, we need
o invest in our infrastructure and people to make us more
fficient competitors on the world scene. We expect to create 8
illion new jobs.
We have had what I call an investment deficit in this
ountry. We do not compare well at all to our G-7' partners. For
nstance, public investment as a share of Gross Domestic Product:
tis 6.1 percent in Japan. It's just 1.7 percent here. Private
nvestment in the United States is just half what it is in Japan.

For the private sector, we're doing the things businesses
have been asking us to do for years. For instance, we are a
high-tech nation, the world's leader, and high-tech takes
research. We will permanently extend the research and
development tax credit. That will let research managers plan
their spending with the confidence of knowing that credit will
always be available to them.
Two items from the stimulus package carry forward into our
longer range program -- the permanent small business investment
tax credit, and the simplified alternative minimum tax.
Not only that, but we also will permanently extend both the
low-income housing credit and the mortgage revenue bond
provisions.
A well-educated and trained work force is important to our
success in competing in the world. That's why we will
permanently extend the targeted jobs tax credit to include
workers in apprenticeship programs. And, we will also
permanently extend the exclusion for educational assistance that
employers provide.
You'll notice that much of our tax program is aimed at small
businesses. There's a reason for that. It is expansion in small
and medium-sized businesses that will be producing the bulk of
our job growth in the future. If you track the large corporate
restructuring going on now, you'll see that the growth we need is
likely to come from the smaller firms.
To encourage investment in those businesses, we are
proposing capital gains tax relief for those who invest in
businesses capitalized at $50 million or less. We want to
exclude 50 percent of the gain on new investment that is held at
least five years. This should stimulate job creation and
investment over the long run.
As government's part of the
we'll invest in infrastructure,
help communities emerge stronger
help dislocated workers find new

long term investment package,
technology and people. We'll
from defense downsizing. We'll
jobs and train for new careers.

And, to reward work and be certain that no one who works has
to raise a family in poverty, we are going to expand the Earned
Income Tax Credit.
It is an ambitious
our businesses have the
enterprises that create
make the investments as

program. But the goal is to make certain
incentives they need to invest in
jobs and strengthen our economy, and to
a government that assist in those goals.

The final part of our plan is the deficit reduction package.
re, I think we deserve some credit. We grabbed hold of what is
, effect the third rail of American politics -- entitlements,
,ong with a variety of outdated subsidies.
The size and cost of government are coming down -- 100,000
)rkers and 14 percent in spending. I'm feeling the pinch at the
~easury Department.
We're making those who benefitted the most in the 'SOs pay
)re now in taxes. Not only are we boosting the top individual
!te to 36 percent, our surtax effectively makes the rate almost
o percent for those with taxable incomes over $250,000, or an
1justed gross income of over $300,000.
And the corporate rate is going to go up by 2 percent, to 36
ercent for our largest corporations. But that's not much when
ou consider that Germany's corporate rate is 50 percent, and
apan's is 40 percent.
Our energy tax is a fair one. We did not go after anyone
uel, but rather went after the BTU content. We've kept it as
'eographically neutral as we can.
Our tax has three aims: to bring down the deficit,
Ibviously, but also to help clean up our atmosphere and reduce
lur dependence on imported energy.
The effect of our taxes on a family with an income of
year will be minimal -- just $17 a month. It's about
phone out for a couple of medium pizzas and give the
lriver a tip. A family that refinanced a home mortgage is saving
,ell over that already.
~40,000 a
~nough to

What's the upshot of our entire package? It means deficits
lre headed downward. By 1997, our annual deficit will be
lpproximately $140 billion lower than what it is today. But if
Ie do nothing, in a decade our annual deficit will be not the
~200 billion we project now, but more than $650 billion.
If we
10 nothing, interest payments on our debt will be not 14 percent
)f our budget, but 20 percent a year and climbing.
And let me remind you, if we do nothing to get health care
:osts under control, even with our program, deficits will be
~eaded upward again after 1997.
President Clinton has a significant program laid out.
are changes that we must make.

These.

We cannot continue on the path we were on. We've taken the
important first steps by getting our plan started in Congress.
There's a considerable amount of heavy lifting that remains
before we can be certain we have succeeded. And let me tell you,
we must succeed, because the price of failing to act is far too
high, and the choices narrow the longer we wait.
Thank you very much.

* * *

A.·~:

TREASURY NEWS
Department of the Treasury

Washington,

O.c.

CONTACT:

FOR IMMEDIATE RELEASE

felephone 202-62'2-2960

Office of Financing
202/219-3350

April 5, 1993

TREASURY POSTPONES AUCTION OF WEEKLY BILLS
The Treasury Department announoed that it is postponing the
auctions of 13-week and 26-week bills originally sl!heduled for
today.

This action is being taken beoause legislar.ion to

increase the statutory debt limit haa not been enacted.
Investors are advised to look for notice of rascheduling of
the auctions in the finanoial press or to contact their local
Federal Reserve Bank or Branch for suoh information.

000

LB-10S

A.·~:

TREASURY NEWS
Department of the Treasury

Washington.

FOR IMMEDIATE RELEASE
April 6, 1993

O.c.

felephone 202-62'2-2960

i
V

CONTACT:

Office of Financing
Bureau of the Public Debt
202/219-3350

TREASURY RESCHEDULES AUCTIONS AND
ANNOUNCES AUCTION OF CASH MANAGEMENT BILL
Given assurances that the statutory debt limit bill will be
signed by the President before the scheduled settlement of the
affected securities, the Treasury Department today announced that
it is rescheduling the bill auctions that had been postponed
pending a debt cap hike. In addition, the Treasury announced that
it will auction a cash management bill today.
Treasury 52-Week Bill Auction
The Department of the Treasury hereby amends its offering
announcement of March 26, 1993. The auction of $14,250 million of
52-week bills, originally scheduled for and postponed on Thursday,
April 1, 1993, has been rescheduled for Tuesday, April 6, 1993.
The closing time for receipt of noncompetitive tenders is prior to
12:00 noon and for competitive tenders is prior to 1:00 p.m.,
Eastern Daylight Saving time.
The bills will be issued on
Thursday, April 8, 1993, as originally announced.
All other terms and conditions in the announcement of March
26, 1993, remain the same, including the provision that bills in
amounts above the minimum purchase amount of $~O, 000 must be
purchased in multiples of $5,000.
Treasury Weekly Bill Auctions
The Department of the Treasury hereby amends its offering
announcement of March 30, 1993.
The auction of two series of
Treasury bills totaling $22,400 million, originally scheduled for
and postponed on Monday, April 5, 1993, has been rescheduled for
Wednesday, April 7, 1993.
The closing time for receipt of
noncompetitive tenders is prior to 12:00 noon and for competitive
tenders is prior to 1:00 p.m., Eastern Daylight Saving time. The
bills will be issued on Thursday, April 8, 1993, as originally
announced.
All other terms and conditions in the announcement of March
30, 1993, remain the same, including the provision that bills in
amounts above the minimum purchase amount of $10,000 will be
available for purchase in multiples of $1,000.

r.p ... 106

rreasury to Auction Cash Management Bill
The Treasury will auction approximately $17,000 million of
15-day Treasury cash management bills to be issued April 7, 1993.
Competi ti ve tenders will be received only at the Federal
Reserve Bank of New York prior to 11: 00 a.m. Eastern Daylight
Saving time, Tuesday, April 6, 1993. Noncompetitive tenders will
not be accepted. Tenders will not be received -at -the Bureau of the
Public Debt, Washington, D. C.
Details about the cash management bill are given in the
attached offering highlights.
This offering of Treasury securities is governed by the terms
and conditions by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
000

Attachment

HIGHLIGHTS OF TREASURY OFFERING
OF lS-DAY CASH MANAGEMENT BILL

April 6, 1993
Offering Amount . . . . . .

$17,000 million

Description of Offering:
Term and type of security .
CUSIP number . • . . . . .
Auction date . . .
Issue date . . .
...
Maturity date . . . . . . .
Original issue date . . . .
Curre~tly outstanding .
Minimum bid amount . . . .
Multiples . . . . . . . . .
Minimum to hold amount
Multiples . . .

15-day Cash Management Bill
912794 C3 6
April 6, 1993
April 7, 1993
April 22, 1993
October 22, 1992
$34,365 million
$10,000,000
$1,000,000
$10,000
$1,000

Submission of Bids:
Not accepted
Noncompetitive bids . . . .
competitive bids . . .
(1) Must be expressed as a discount rate
with two decimals, e.g., 7.10%.
(2) Net long position for each bidder
must be reported when the sum of the
total bid amount, at all discount
rates, and the net long position is
$2 billion or greater.
(3) Net long position must be determined
as of one half-hour prior to the
closing time for receipt of competitive tenders.
Maximum Recognized Bid
at a single yield

35% of public offering

Maximum Award . .

35% of public offering

Receipt of Tenders:
Noncompetitive tenders
competitive tenders . .

Payment Terms .

. . . . . .

Not accepted
Prior to 11:00 a.m. Eastern Daylight
Saving time on auction day at the
Federal Reserve Bank of New York
Full payment with tender or by charge
to a funds account at a Federal
Reserve Bank on issue date

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
I . :

;~.:

::.

:-..

,-~, ~I. I~ J

FOR IMMEDIATE RELEASE
April 6, 1993

CONTACT: Office of Financing
202-219-3350

•.• i,

RESULTS OF TREASURY'S AUCTION OF 15-DAY BILLS
Tenders for $17,129 million of 15-day bills to be issued
April 7, 1993 and to mature April 22, 1993 were
accepted today (CUSIP: 912794C36).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.04%
3.07%
3.07%

Investment
Rate
3.09%
3.12%
3.12%

Price
99.873
99.872
99.872

Tenders at the high discount rate were allotted 91%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS

LB-l07

Received

57,193,000

o
o

o
o
o
o
o
o

Accepted

o
17,129,350

o
o
o
o

o
o

$57,193,000

$17,129,350

$57,193,000

$17,129,350

$57,193,000

$17,129,350

$57,193,000

$17,129,350

UBLIC DEBT NEWS
Department of the Treasury .,
,I

~ureau
I

~I '~'

FOR IMMEDIATE RELEASE
April 6, 1993
!J;;

,.;

of the Public Debt • Washington, DC 20239
',I

','

)"/

,_,j

'.1

:J I

(}

CONTACT: Office of Financing
202-219-3350

I I ;j

RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
Tenders for $14,353 million of 52-week bills to be issued
April 8, 1993 and to mature April 7, 1994 were
accepted today (CUSIP: 912794J88).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.22%
3.24%
3.24%

Investment
Rate
3.35%
3.37%
3.37%

Price
96.744
96.724
96.724

Tenders at the high discount rate were allotted 61%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
14,120
40,658,945
5,145
18,195
41,130
19,955
1,167,980
12,915
2,230
26,935
9,680
698,550
332,345
$43,008,125

Acce12ted
14,120
13,532,315
5,145
18,195
32,160
12,565
132,585
6,915
2,230
26,935
9,680
227,650
332,345
$14,352,840

Type
Competitive
Noncompetitive
Subtotal, Public

$38,745,600
605,425
$39,351,025

$10,090,315
605,425
$10,695,740

3,200,000

457,100
$43,008,125

457,100
$14,352,840

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-l0B

UBLIC DEBT NEWS
Department of the Treasury • Bureau of (he Public Debt •

FOR IMMEDIATE RELEASE
April 7, 1993

Wash~ngton.

DC 20239

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURV'S AUCTION OF 13-WEEK BILLS
Tenders for $11,236 million of 13-week bills to be issued
April 8, 1993 and to mature July 8, 1993 were
accepted today (CUSIP: 912794E75).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High

Average

Discount
Rate
2.89'
2.92%
2.92'

Investment

Rate
2.95'
2.98%
2.98'

Price
99.269
99.262
99.262

Tenders at the high discount rate were allotted 65%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
.
New York .
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

!31~,257

1~1,5v7

900,845

900, 84 2

$43,267,389

$11,235,547

Type
Competitive
Noncompetitive
Subtotal, Public

$38,716,600
1,427,799
$40,144,399

$6,684,758
1,427,799
$8,112,557

2,611,830

511,160
$43,267,3B9

511.1~Q

Federal Reserve
Foreign Official
lnstitutions
TOTALS

Received
25,042
39,347,253
8,6S8
30,720

30,430
22,606
1,996,022
11,111

5,502
29,188
14,745

Accepted
25,012
9,655,289
8,668
30,720
30,430
21,906

310,594
11,111
5,502
29,188
14,745

$11,235,5"7

An additional $51,440 thousand'of bills will be
issued to foreign official institutions for new cash.

TREASURY NEWS
Department of the Treasury

Washington,

FOR RELEASE AT 2: 30_>
April 6, 1993
I., ,;

P.M~,
~,

'J J

TREASURY'S

'I·

I 'f
1\'

WEEK~Y

O.c.

CONTACT:

A.·~:

felephone 202-62'2-2960

Office of Financing
202/219-3350

BILL OFFERING

The Treasury will auction two series of Treasury bills
totaling approximately $22,000 million, to be issued April 15,
1993. This offering will result in a paydown for the Treasury of
about $1,225 million, as the maturing weekly bills are
outstanding in the amount of $23,214 million.
Federal Reserve Banks hold $5,195 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $1,991 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000

Attachment

LB-l09

April 6, 1993
Offering Amount . . . • .

•

DescriRtion of Offering:
Term and type of security .
CUSIP number •
•
•
Auction date
Issue date
•
Maturity date • . . •
original issue date .
Currently outstanding .
Minimum bid amount
Multiples •
• •

· ····
. ·· · ·· ·· ·· ·· ··
· · ·
·
·
· · ·
.
··

·
·
·
·
·

·
·
·
·
·
·
·
·

·• •
·•
·
·• ·
·
··
··
· · ·

$11,000 million

91-day bill
912794 E8 3
April 12, 1993
April 15, 1993
July 15, 1993
January 14, 1993
$12,068 million
$10,000
$ 1,000

182-day bill
912794 G2 4
April 12, 1993
April 15, 1993
october 14, 1993
April 15, 1993
$10,000
$ 1,000

The following rules aRR1y to all securities mentioned above:
Submission of Bids:
Accepted in full up to $1,000,000 at the average
Noncompetitive bids .
•
discount rate of accepted competitive bids
Competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single yield
35% of public offering
• •
Maximum Award . . • . . .
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders • .
Payment Terms • . .

•
•

•

PUBLIC DEBT NEWS
Department of the Treasury ~: ~B'u'r~~~ (jf~ht
FOR RELEASE A 4:3.:00 ,PM i,j ..: \
April 6, 1993

PGbiic Debt

I 2. \

• Washington, DC 20239
Contact: Peter Hollenbach
(202) 219-3302

PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR MARCH 1993

Treasury's Bureau of the Public Debt announced activity figures for the month of March 1993,
of securities within the Separate Trading of Registered Interest and Principal of Securities
program (STRIPS), are as follows:
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)

$680,104,950

Held in Unstripped Form

$507,304,880

Held in Stripped Form

$172,800,070

Reconstituted in March

$17,634,920

The accompanying table gives a breakdown of STRIPS activity by individual loan description.
The balances in this table are subject to audit and subsequent revision. These monthly figures
are included in Table VI of the Monthly Statement of the Public Debt, entitled "Holdings of
Treasury Securities in Stripped Form."
Information about "Holdings of Treasury Securities in Stripped Form" is now available on the
Department of Commerce's Economic Bulletin Board (EBB). The EBB, which can be
accessed using personal computers, is an inexpensive service provided by the Department of
Commerce. For more information concerning this service call 202-482-1986. Because this
information will be readily available on the Economic Bulletin Board, as of May 1, the STRIPS
table will no longer be available through a recorded message.

000

PA-120

TABLE V1-HOLDINGS OF TREASURY SECURmES IN STRIPPED FORM, MARCH 31, 1993
(In thouundS)

Mal.nv Dalo

ToUli

~:=Ii

C·I994

11115/94

"-1995

2115195

8-1995

S/15195

7.1Z7.0B6

C·I995

8<15195

7955.901

':.550

11115195

0-1995
"·1996

2115196

8 41 ti.lf49

CI996

SI5196

20085.643

S4.7711.554

5,641.D61 .
4.410.286

5.283.901
3.982.150

7,440.949 1

I12JID

$1'-'000

I."

1.292.100

2IDJIIID

2.71&.Il00

ZUllI

2.672.000

3.331S.4OO

.0-

976.000

142._
3UI1D

19_336.843

748.8CO

0-1996

.20.258.810

18,036.410

2.222.400

S7.2IIID

"·1997

9.921237

8.676,037

1245.200

2401._

R 1'1'17

1111!w'!l1

C·I991

11115197

'1 :JG2.1tlG

1998

.().

2.198.8DO

ll1U11O

515.520

.".,

9.165.387 1

131,C1lO

11.342.646 I

10.468.246

874.400

47.2IIID

1.955.675

1.947.200

75.200

9.274.823

444.800

11.2011

5115.99

10047.103

8.567,103

1,480.000

4.400

8-15199

10 163.644

9.912.144 1

251,500

.().

9.839.560 I

934,400

6.400

302,000

.().

211.2IIID

:.:::il

11115198
2115199

1999

un.600

1.383.200

,0·1998

18-1999

7.611, 529
7,782.187

811!)'~

, "·1999

B.I85.2:16

B.643.548

S/15198

C·I998

I
9.159.068 I
9.808,329

2!15198

, "·1998

t 0-1999

10,773.960 I

11 '15199

10,673.033 I

• "'·2000

10.371.033

a 8·2000

511Som

10.496.230

9.385,830

1,110,400

a C·2OOO

8I1Som

11.080,646 I

10.513286

567,360

140.IDD

l111Som

11.519.682

10.523282

996.400

.().

• "·2001
·2001

2115101

11.312.802

11.246.402

66.400

.().

s/15101

12.398.083

12,085.058

313.025

.0-

• C2001

8115101

12.339.185

12.182.385

156,800

.().
.().

I
1

• 0-2000

• 0-2001

11115101

24.226.102

24,204,902

21.200

• "-2002

51IMI2

11,714,397

11.460.797

253.600

.().

• 8-2002

8115102

23.859.015

23.822.215

36.800

.().

• ".2OOJ

2115103

11.970,158

11.970.158

.().

>nil 2004

11115104

11301.806

6.093.806

2.208.000

1.342.400

2005
>nil 200S

S/15I05

~260.158

3.269.908

990.850

361.100

8115105

9.2m.713

B.759,313 1

510,400

17.Il00

lid 2006
one!

4155.916

.().

3.610,384 1

2.395.200

1.844.000

4.755276
I

11115114

200914

640

6.005,584 1

one! 2015

2, IS/IS

12.667.199

3.050.039 I

9,617.760

1.".780

one! 2015

8I1s/15

1.149.916

5,474,560

ncI 2015

1111'\115

6,899.859

,,675. 356 1
2.019.859

4,8110.000

635.IMO
163.200

ncI 2016

2/1S/16

5.261254 I

2,005,600

73.Il00

1.266.854 I
18.823.551 I

ncI 2016

11'15116

na 2017

5Il!>!11

18.864,4411
18.194.169

nd .2011

8.'15117

14,016.858

na 2018

5.'1S/18

8.108.639

2018

11115118

9.032.870

i
I
I
I

I
I

ncI 2016

18.169.951
17,479.968

653.600

2O.IDD

1.384.480

105.&00

4485. 209 1

13,708,960

160.160

7.686,400

600.000

6,330,458
2.441.439

6.267.200

123.200

1,674270

7,358.600

411,400

4.853,996

14.396,800

315.200

14816.072

5,397.760

1.375,()40
1,104.000

2019

2/15:19

19.250.796

nd 2019

811S/19

20.213.832

nd 2020

2i15J20

'0.228.868

4.556.068

5.672.800

nd 2020

51 15120

10.158.883

J,I66.563 I

6.992,320

IOd 2020

'1:15120

21.418.606

4579.566 I

16.839,040

2:15121

11.113.373

10,126.173

IOd 2021

I ~ 15'21

• 1958.888

4.956.648

IOd 2071

(l,15t21

IIld 2021

)nd

2022

lI1d 2022

11 1')2:"

.. ", 2U2J

'1 t. .': I

19fP

mon,h;"t ""·'.r .... ' 01 1.11"'r

v. wWIllP .... v.... lllIIC ;tiler J

1,947.700

10 :152.790

10191190

161,600\

10699.626

10646,826

52,800

8\7.275

153,1iOO

2,218. 880 1
15.816.575

9944602

1,09'1.11110
188.480

'6981.819

Sf!'Ct.n1lf!"S hPIr1 FI .... Irl(1()P'(1 Irwllt WPf" I"tIf'1lt'ltC l{)f rPCOnShhdlOf1 10 tl'lf..-

::::;,.w:::;;=n

1,008.&40

987.200
7.002.240 I

163.482

r,R() 1001 950 I

M;tv I

J:? 198.394

2021

889.920
512.000
.().

.().
o
--------~------------~----------507304.880 I
172.800.070 II
17.634.920

9817.275

IJlStrlJOP.d lom"I

00 nm ca~ler" IImC The Il.>teptlorle num,lCf IS (202) 874-4023 The balances

lhIs . . . . . . subfIc:IlD

-..:M.,.,

.A.·~:

TREASURY NEWS
Washington,

Department of the Treasury

O.c.

CONTACT:

FOR IMMEDIATE RELEASE
April 7, 1993

felephone 202-62'2-2960

Office ot Financinq
Bureau of the Public Debt
202/219-3350

AMENDED WEEKLY BILL OFFERING

The weekly bill offerinq announcement made on March 30, 1993,
misstated the amount currently outstandinq for the
then beinq offered.

month bill

The total amount outstandinq for the bill

maturinq 3uly 8, 1993, should have been shown as $12,588 million
rather than the $22,747 million given in the press release.

All other particulars in the announcement, other than the
April 5, 1993, auction date which has since been changed to April
7,

1993, recaln thQ same.

000

LB-ll0

.A.·~:

TREASURY NEWS
Department of the Treasury

Washington,

FOR RELEASE AT 2:30 P.M.
April 7, 1993

O.c.

CONTACT:

felephone 202-62'2-2960

Office of Financing
202/219-3350

TREASURY TO AUCTION $9,750 MILLION OF 7-YEAR NOTES
The Treasury will auction $9,750 million of 7-year notes
to refund $6,211 million of 7-year notes maturing April 15, 1993,
and to raise about $3,550 million new cash. The $6,211 million
of maturing 7-year notes are those held by the public, including
$943 million currently held by Federal Reserve Banks
as agents for foreign and international monetary authorities.
The $9,750 million is being offered to the public, and
any amounts tendered by Federal Reserve Banks as agents for
foreign and international monetary authorities will be added
to that amount. Tenders for such accounts will be accepted at
the average price of accepted competitive tenders.
In addition to the public holdings, Federal Reserve Banks
for their own accounts hold $300 million of the maturing securities that may be refunded by issuing additional amounts of the
new notes at the average price of accepted competitive tenders.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D.C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356, published as a final rule on January 5, 1993, and
effective March 1, 1993) for the sale and issue by the Treasury
to the public of marketable Treasury bills, notes, and bonds.
Details about the new security are given in the attached
highlights of the offering.
000

Attachment

LB-lll

$9,750 million
Offering Amount . • • . •
Description of Offering:
Term and type of security .
. • 7-year notes
series • • . . . . . . . .
. . F-2000
CUSIP number . . . . . • . . • •. 912827 K4 3
Auction date • . • . . . • . . . . April 13, 1993
Issue date • • . . . . • . . . . . April 15, 1993
Dated date • . • . . • . .
. • April 15, 1993
Maturity date
..•..
April 15, 2000
..
.
Interest rate . . . • . . . . •
Determined based on the average of accepted compet1t1ve b1ds
yield . . • . • . . . . . •
Determined at auction
Interest payment dates . • • . • . October 15 and April 15
Minimum bid amount . . . . • . • . $1,000
Multiples. . . . • . . . • • . . . $1,000
Accrued interest payable by investor None
Premium or discount . . . . . • . . Determined at auction
The following rules apply to the security mentioned above:
submission of Bids:
Accepted in full up to $5,000,000 at the weighted average yield
Noncompetitive bids •
of accepted competitive bids
competitive bids
(1) Must be expressed as a yield with two decimals, e.g.,
•
7.10%
(2) Net long position for each bidder must be reported when
the sum of the total bid amount, at all yields, and the
net long position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour
prior to the closing time for receipt of competitive
tenders.
Maximum Recognized Bid
at a Single yield
35% of public offering
•
Maximum Award . • . . •
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Prior to 12:00 noon Eastern Daylight Saving time
•
on auction day
competitive tenders •
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Payment Terms . . .
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date

UBLIC DEBT NEWS
Department of the Treasury • Bureau oflliie RubJ.ic gebt • Wasllington, DC 20239

FOR IMMEDIATE RELEASE
April 7, 1993

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $11,236 million of 13-week bills to be issued
April 8, 1993 and to mature July 8, 1993 were
accepted today (CUSIP: 912794E75).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.89%
2.92%
2.92%

Investment
Rate
2.95%
2.98%
2.98%

Price
99.269
99.262
99.262

Tenders at the high discount rate were allotted 65%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
25,042
39,347,253
8,668
30,720
30,430
22,606
1,996,022
11,111
5,502
29,188
14,745
845,257
900,845
$43,267,389

Acce12ted
25,042
9,655,289
8,668
30,720
30,430
21,906
310,594
11,111
5,502
29,188
14,745
191,507
900,845
$11,235,547

Type
Competitive
Noncompetitive
Subtotal, Public

$38,716,600
1,427,799
$40,144,399

$6,684,758
1,427,799
$8,112,557

2,611,830

511,160
$43,267,389

511,160
$11,235,547

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-112

UBLIC DEBT NEWS
Bure~u of the Publi~ Debt • Washington, DC 20239

Department of the Treasury

FOR IMMEDIATE RELEASE
April 7, 1993

"
"

',_., \ \ 'J

\ c, '-

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $11,299 million of 26-week bills to be issued
April 8, 1993 and to mature October 7, 1993 were
accepted today (CUSIP: 912794F90).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
3.03%
3.04%
3.04%

Investment
Rate
3.12%
3.13%
3.13%

Price
98.468
98.463
98.463

Tenders at the high discount rate were allotted 53%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas city
Dallas
San Francisco
Treasury
TOTALS

Received
23,165
45,138,384
10,264
23,200
29,184
50,105
1,999,176
9,785
8,375
29,061
17,332
722,167
664 1 115
$48,724,313

AcceQted
23,165
10,058,084
10,264
23,200
29,184
28,635
286,779
9,785
8,375
29,061
17,332
111,067
664 1 115
$11,299,046

Type
Competitive
Noncompetitive
Subtotal, Public

$44,734,165
1 1 071 1 928
$45,806,093

$7,308,898
1 1 071 1 928
$8,380,826

2,500,000

418 1 220
$48,724,313

418 1 220
$11,299,046

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-113

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
April 7, 1993

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $11,299 million oC 26-week bills to be issued
April 8, 1993 and to mature october 7, 1993 were
accepted today (CUSIPz 912794F90).
RANGE OF ACCEPTED
COMPETITIVE BIOSt
Low
High
Average

Discount
Rate
3.03'
3.04'
3.04\

Investment
tHa+-o

"M_=

3.12'
3.13'
3.13\

...
""
98.468
n_':_,..

...

98.463
98.463

Tenders at the high discount rate were allotted 53\.
The-investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
1.tgs:iS\t.i.onDoston
New York
Philadelphia
Cleveland
Richmond
Atlanta
chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

B~~e1ved

23,165
45,138,384
10,264
23,200
29,184
50,105
1,999,176
9,785
8,375
29,061
17,332
722,167
664,.l..ll
$48,724,313

AcceQted
23,165
10,058,094
10,~G4

23,200
29,lA4
28,635
286,779
9,785
8,~75

29,061

17,332
111,067
66~ll15

$11,299,046

Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions

TOTALS

$44,734,165
1,071.2,a
$45,806,093

$7,308,898

2,500,000

~1121,2Q

$48,724,313

1,071,928

$8,380,826

4112."Q

$ll,299,046

An additional $38,080 thousand ot bills will be
issued to foreign officiaf institutions for new cash.

statement by the Honorable Lloyd M. Bentsen
Budget Press Briefing
April 8, 1993
Let me get right to the point. The news on revenues is,
there is no news.
We've made some refinements since February, some changes in
the details and I'm sure there will be more. But the revenue
side has basically stayed the same.
That makes for a pretty dull headline, doesn't it?
But think for a minute what that means to our country.
We've turned Washington's most intolerable task -- raising
taxes -- into at least a tolerable process.
I know from experience the hardest vote to cast is the vote
to raise a constituent's taxes.
I think if you ask any
congressman, he or she will tell you the same thing.
It's not hard to propose tax cuts. In fact, what we've
often seen is a bidding war, where Congress and the President try
to outdo each other on tax cuts. As a result of that kind of
process, over the past decade tax revenues went down, spending
went up, and the national debt virtually tripled.
We didn't do that this time. The House passed the revenue
increases. The Senate rejected amendments to change the energy
tax. They added more revenues in the package, but in conference
they were dropped.
So the tax package now is basically what it
looked like in February.
The whole process was made tolerable because President
Clinton led the way with fair taxes: an energy tax that will
help conserve energy, clean up the environment, is fair to every
region in the country, and will cost a family earning $40,000
under $17 a month; an income tax rate increase on the wealthiest
one or two percent of Americans; and corporate tax rate increases
that are minimal -- 2 percent -- and still way under rates in
Germany and Japan. And these will be offset by business tax
incentives that will help get our economy moving again.
You know, one week from today is April 15th -- the day when
117 million Americans must file income tax forms.
It's the time
of year when Americans think about their government and what they
get out of it. And this year, I think Americans will be asking
two questions:
One: "When are they going to stop deficit spending in
Washington?"
And two: "How much will it cost me?"
I believe we have good answers.
The progress on the deficit is real. And for 98 percent of
Americans their income tax rate will not increase. The rate this
April 15 will be the rate on April 15, 1994, and '95, and '96,
and '97.
Again, that makes for a dull headline, but that's certainly
good news for all Americans.
# # #
LB-114

Page 1

, \3 t ~

;l~

"':

;v!

,.~

,-,

""' ..

.' j.:

t I
\)

IUS 7

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993

Proposal

Fiscal years
1995
1996
($ millions)

1997

1998

1993-98

22,713

26,026

27,396

124,765

6,374
553
3,437
255
111
814

6,808
598
3,697
262
131
855

7,200
647
3,960
265
161
897

29,162
2,785
16,089
1,177
539
3,645

382

394

406

417

1,675

372

7,518

4,959

5,093

5,236

5,343

28,521

0
0
622
0
0

112
968
438
0
235

196
1,090
-24
0
930

210
1,106
-35
0
1,655

223
1,126
181
3,886
2,110

237
667
67
793
2,271

978
4,957
1,249
4,679
7,201

1993

1994

a Increase tax rates paid by high-income individuals (1)
1,580
1 Add fourth bracket at 36% rate for taxable income over $140,000
(joint returns), $127,500 (heads of households), $115,000 (single)
2 Impose a 10% surtax on regular taxable income over $250,000 (not applicable
to capital gains)
3 Increase in minimum tax rate to 26% for AMTI of less thal $175,000 ald
28% for AMTI over $175,000; increase AMTI exemption to $45,000
(joint returns) ald $33,750 (single)
4 Extend itemized deduction limitation ald personal exemption phaseout
scheduled to expire for 1996 ald 1997, respectively
0
b Repeal Health Insuralce wage base cap
0
c Reinstate top estate tax rates at 53% ald 55% (2)
d Reduce deductible portion of buSiness meals ald entertainment from 80% to 50%
0
0
e Deny deduction for club dues
-18
f Deny deduction for exerutive pay over $1 million
0
g Reduce compensation that Cal be taken into account for purposes of benelts ald
contributions under qualified retirement plals to $150,000 in 1994 (1993 cap is $235,840)
h Disallow moving deductions for meals ald real estate expenses
0

27,463

19,587

2,750
475
1,816
147
111
304

6,030
512
3,179
248
43

REVENUE RAISING PROVISIONS
1 Provisions That Improve the Fairness of the Income Tax System

2 Provisions Affecting Businesses
a Increase corporate tax rate to 36% for taxable income above $10 million
(phase -out benefit of 34% rate beginning at $15 milHon) (1)
b Deny deduction for lobbying expenses
c Require securities dealers to mark-to-market [3]
d Prohibit double -dip related to FSLlC assistance [4)
e Extend corporate estimated tax rules
f Umit 936 credt

Page 2

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993
Proposal

Fiscal years
1995
1996
($ millions)

1997

1998

1993-gq

419
895
667
182
220

461
1,010
699
178
220

484
1,095
735
174
220

2,28Z
3,885
3,106
880
1,080

16,678
2,627

22,147
2,614

22,700
2,632

72,781
7,873

616
551

1,343
418

1,858
332

2,155
349

6,119
1,971

147

171

180

189

952

1993

1994

176

362
240
370
156
200

380
645
635
186
220

°°

1,954

9,293

°°
°

147
321
265

3 Provisions Affecting International Businesses
a
b
c
d
e

Reform foreign tax credit for oil and shipping companies (2]
Transfer pricing complance initiative (enhanced penalty provision)
Royalties in passive basket of foreign tax credt; 100% R&E allocation
Enhance "earnings stripping" rules, etc.
Repeal deferral for excessive accumulated foreign earnings

4 Energy Provisions [8]
a Modified BTU tax
b Extend gasoHne tax currently scheduled to expire on 9/30/95

5 Compliance Initiatives
a Service industry non-compliance initiative
b Modified substantial understatement penalty

6 Miscellaneous

TOTAL

°°
°
4

---- ---- ---- ---- ---- ---2,736

46,428

50,580

66,300

81,244

----

81,063

328,351
-~

------

Page 3

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993
Fiscal years
1995
1996
($ millions)

1997

1998

1993-98

-492
-296
-118

-528
-344
-152

-565
-414
-190

-2,938
-1,535
-566

-7,207

-3,467

-1,678

-2,405

-27,872

-1,207
-17
-142
0
-23

-1,503
-124
-383
-1
-33

-1,750
-594
-6
-37

-1,977
-276
-756
-17
-39

-2,200
-329
-648
-38

-9,581
-952
-2,523
-54
-176

-73

-347

-772

-1,228

-1,699

-4,119

-335

-4,300

-7,734

-7,996

-8,282

-28,647

-36
-50
0

-108
-233
-224

-150

-171
-841
-49

-184
-1,184
164

-187
-1,532
430

-836
-4,348
11

1993

1994

-470
-28
0

-425
-175
-27

-458
-278
-79

-4,152

-8,963

-944
0
0
0
-6

3 Enterprise Zones
4 Expand Earned Income Tax Credit [5]

Proposal

STIMULUS /INVESTMENT PROVISIONS
1 Training and Education
a Extend employer -provided education assistance permanently [7)
b Extend targeted jobs tax credt permanently [7)
c Youth apprenticeshipcredt

2 Capital Investment and Economic Growth
a Temporary incremental tax credt for large businesses and permanent investment
tax credt for businesses with gross receipts of under $5 milfion [6)
b Extend research & experimentation credit permanently [7)
c Incentives for investment in small businesses
d Modify AMT depredation schedule
e Incentives for high -speed rail
f Extend small-issue manufacturing and agricultural bonds permanently (7)

-206

-30

5 Investment in Real Estate
a Extend mortgage revenue bonds permanently [7)
b Extend low-income housing credit permanently (7)
c Modify rules governing tax treatment of investments in real estate
(passive loss rules, pension investments, and increase recowry period for
non - residential real property to 37 years)

-508
-310

Page 4

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993
Proposal

1993

1994

-26
0
-263

-70
0
-313

Fiscal years
1996
1995
($ millions)

1997

1998

1993-9ff

-77
0
0

-79
0
0

-400

6 Other
a Extend AMT treatment of gifts of appreciated property to charities permalently [7]
b Extend general fund transfer to railroad re.rement fund permalently (7)
c Extend 25% deduction for self -employed health insuralce through 12/31/93 [7]

-73
0
0

-75
0
0

---- ---- ---- ---- ---- ----

TOTAL

-5,975 -12,335 -15,754 -16,600 -16,272 -18,168

NET TOTAL:

-3,239

Note:

o
-576

==== ==== ==== ==== ==== ====
34,093

34,826

49,692

64,972

62,895

Provisions effective 1/1/94 unless otherwise noted.
(1) Effective 1/1/93, but no penalties for underwithholding or estimated tax in 1993.
(2) Effective 1/1/93.
(3) Effective for tax years ending on or after 12/31/93.
(4) Effective 3/4/91. Estimate does not include effect on OMB outlays.
(5) Estimale includes effect on outlays.
(6) Effective 12/4/92.
(7) Effective 7/1/92.
(8) Impact on low-income households offset by increases in the low-income home energy assistalce ~ (UHEAP) ald food stamps.

-85,112

====

243,239

FOR IMMEDIATE RELEASE
April 8, 1993

CONTACT:

Office of Financing
Bureau of the Public Debt
202/219-3350

AMENDED RESULTS OF TREASURY'S
WEEKLY BILL AUCTIONS

The press release dated April 7, 1993, announcing the weekly
bill auction results improperly stated that there were additional
issues made to foreign official institutions in the amounts of
$51,440 thousand for the 13-week bill and $38,080 thousand for the
26-week bill.

In fact, there were no "foreign add-ons" (foreign

new cash) in the auctions.

All other particulars in the auction results press release
remain the same.

000

LB-115

FOR IMMEDIATE RELEASE
April 8, 1993

Contact:

Chris Peacock
(202) 622-2960

BENTSEN ANNOUNCES SELECTIONS FOR TREASURY POSTS
Treasury Secretary Lloyd Bentsen announced Thursday
that the President intends to nominate George Munoz as Assistant
secretary (Management).
Bentsen said the President also named three Deputy Assistant
secretaries: Joyce Carrier (public Liaison), Joan Logue-Kinder
(Public Affairs), and Marina L. Weiss (Health Policy).
Munoz, 41, has been owner and manager of George Munoz &
Associates, a chicago firm. He is a graduate of Harvard Law
School and holds masters degrees from Harvard's Kennedy
School of Government and DePaul University, and a B.A. from the
University of Texas.
carrier, 35, has been Manager of Public Affairs and Public
Relations at Bull Worldwide Information Systems. She received a
B.S. from the university of South Carolina.
Logue-Kinder, 51, has been a Vice President at Edelman
Public Relations Worldwide. She received a B.A. from Adelphi
University.
Weiss, 48, has been the section chief for Health and Income
Security under the Senate Finance Committee. She received a
Doctorate in Urban and Regional Planning from Texas A&M
university, an M.A. from the University of Texas, and a
B.A. from American University.
LB-116

-30-

THE ADl\lINISTRATION'S MODIFIED BTU ENERGY TAX PROPOSAL

OBJECTIVES

Deficit Reduction. The energy tax will raise $22 billion in FY 1997 (the first fiscal year the tax is
fully phased in) and over $70 billion for the FY 1994-1998 period. 1
•

This revenue will help reduce the deficit and put the government on a pay-as-you-go basis for
needed public programs.

Reduction of Environmental Damages. The energy tax will improve the environment.
•

The tax wilf provide an incentive to use clean burning natural gas.

•

The tax will contribute to the Rio Summit goal, agreed to by the United States, of returning
greenhouse gas emissions to their 1990 levels by the year 2000.

•

Smog, acid rain, and toxic wastes will all be reduced.

•

The risk of oil spills will be reduced.

Energy Conservation. The energy tax when fully phased in will reduce projected growth in energy
consumption by over 7 percent.

Reduced Dependence on Foreign Sources of Energy. The energy tax will reduce U.S. dependence
on foreign oil.
•

•

The tax is projected to reduce oil imports in year 2000 by more than 400,000 barrels a day.

The revenue estimates for the energy tax are net of the "income offset," which is the reduction in income
and employment taxes because GDP and the price level are assumed to be unchanged in making the estimates (the
assumption is standard for making all Budget estimates, Including all revenue estimates). The effects of the energy tax
on product priC'p." and consumers shown below are not reduced by the "income offset."

-2EFFECT ON CONSmfERS
Monthly direct energy expenditures (gasoline, home heating oil, electric bill, and natural gas) for
typical four-person families
Family
Economic
Income

Tax on Monthly Direct
Energy Expenditures
July I, 1996
July I. 1994

$ 25,000

2.78*

8.33*

40,000

3.17

9.50

60,000

3.56

10.67

* Does not take into account offsets for increases in the earned income tax credit (EITC). For a
family of four with $25,000 of income, all from wages, the proposed increase in the EITC, when
fully phased in (1995), will be $595 per year ($49.58 per month), more than offsetting the energy
tax.
Residential energy prices
1994
Price
(Before Tax)

Tax July I, 1994
Percent
Amount
of Price

Tax July I, 1996
Percent
Amount
of Price

67.60

$ .740

$ 2.219

Home Heating Oil (gallon)

1.04

.012

l.2

.036

3.5

Natural Gas (mcf)

6.51

.088

1.4

.265

4.1

Gasoline (gallon)

1. 31

.025

1.9

.075

5.7

Electric Bill (monthly)

1.1%

3.3 %

OFFSETS FOR LOW-INCOME.FAMILIES
The impact of the tax on low- and some moderate-income families is offset by other features of the
Ad ministration's program.
•

The earned income tax credit is expanded.

•

Funding for the Low Income Home Energy Assistance Program (LIHEAP) is increased.

•

Funding for Food Stamps is increased.

-3-

COMPETITIVENESS

• u.s.

energy prices, even when the tax is fully phased in, will remain the lowest or second
lowest (depending on the type of energy) in the G-7 countries.

•

• The deficit reduction impact of the energy tax should reduce interest rates, thus reducing the
cost of capital to u.s. business and improving the competitiveness of u.s. firms.

REGIONAL BALANCE
The proposed energy tax is better balanced regionally than alternative energy taxes such as an
increase in the gasoline tax or an oil import fee.
•

While the tax burden on a given region may be higher than the national average on a per capita
basis, it is often lower than the national average as a percentage of income.

• The tax does not have a disproportionate impact on coal producing regions (as a carbon tax
would have).
• The tax does not have a disproportionate effect on farm states.
E~ERG Y

•

PRODUCERS

Reduced oil consumption is projected to come almost entirely from imports.
The reduction in U.S. consumption will be spreaCi' oveIi world oil production, with little
effect on domestic production.

•

Natural gas production will continue to increase.

•

Coal- production, led by growing export demand, will continue to increase.

•

Prices received by energy producers will decline only slightly -- less than 1 percent.
Department of the Treasury
Office of Tax Policy
April 1993

FREOUENTLY ASKED OUESTIONS REGARDING THE ADMINISTRATION'S
PROPOSED MODIFIED BTU TAX
COMPARISON OF BTU TAX AND ALTERNATIVES
Question:

Why did the Administration include an energy tax in the economic package?

Answer:

The energy tax is more likely than any alternative revenue measure to advance
a combination of policy goals.
•

The energy tax would raise revenues to help reduce the deficit and put the
government on a pay-as-you-go basis for needed public programs.

•

The energy tax would help move the u.s. economy from income-based
to consumption-based taxation, with attendant benefits to saving and
investment.

Question: Why was a Btu form of energy tax selected?
Answer:

An ad valorem tax would exaggerate the effects of sudden changes in
energy prices.

•

An oil import fee would cause prices to increase by much more than the

tax and might, if applied to refined products, violate our trade agreements
and treaties.

OIL SUPPLEMENT
Question:

What is the purpose of the extra tax on oil?

Answer:

COl\lPUTATION OF BTU CONTENT
Question:

Why is a national average Btu heat content used to calculate the rate for natural
gas and oil, but not for coal? Does the Btu content of natural gas differ?

Answer:

Coal differs radically in Btu heat content depending upon whether it is
bituminous, sub-bituminous, lignite, or anthracite, and even within each of these
types of coal. Therefore, a national average would significantly disadvantage
some coal while providing an advantage for others. In addition, coal is sold by
Btu content and actual measurement of Btus would not create a new
administrative burden.
In contrast, refined petroleum products are not sold by Btu content and Btu
variation within a specific product is not significant.
In the past, natural gas has not been sold by Btu content but natural gas does
vary somewhat. The trend is to measure shipments in therms, a measurement
of heat content, so specific measurement may be administrable in the future.

PROPANE
Question:

How will propane be treated under the Btu tax?

Answer:

3
The Btu content used to determine the tax will be the national average Btu
content for each fuel.

HOME HEATING OIL
Question:

Why was home heating oil exempted from the oil supplement, and should oil
used to produce electricity for residential air conditioning be similarly
exempted?

Answer:

Under the Administration's proposal, residential use of heating oil is taxed at
the same rate as other fuels used for residential heating (natural gas and
propane).
•

Taxing home heating oil at the higher oil rate would impose a·
disproportionate burden on many families, particularly in the Northeast
where switching to natural gas or propane for home heating is often not
a practical option.

•

Without the oil supplement the tax would have the opposite effect.

•

In any event, there is no practical way to determine when oil is used to
produce electricity that will be used for residential air conditioning.

ALTERNATIVE FUELS
Question:

Is biomass subject to tax?

Answer:

The energy tax applies only to fossil fuels (Le., coal, petroleum products, and
natural gas) and hydro- and nuclear-generated electricity. Biomass fuels are not
subject to the tax.
Biomass includes any material (other than a fossil fuel) that is derived from
living matter and used as fuel. Thus, biomass includes ethanol, landfill gas,
sugarcane waste, and wood waste.

Question:

Why are certain fuels, including ethanol and methanol, excluded from the Btu
tax?

Answer:

The energy tax is not imposed on oxygenates, such as ethanol, methanol, ETBE,
and MTBE (feedstocks used in their production are also exempt).

•

Note that the gasoline mixed with oxygenates is taxed at the oil rate (i&.,
the basic rate plus the oil supplement). Thus, oxygenated fuels are taxed
at a higher rate than other alternative fuels, such as propane and natural
gas, which are taxed at the basic rate.
FLOOR STOCKS TAX

Question:

What is the floor stocks tax and who will be liable?

Answer:

Question:

What energy uses will be subject to the use tax and who will be liable?

Answer:

Why is hydroelectricity included in the tax?

Answer:

It would not be appropriate to ask other regions of the country to pay a
tax on their residential energy costs while exempting regions in which
residential energy costs are currently the lowest.

Many hydroelectric power projects have benefitted from substantial Federal
subsidies.
Some hydroelectric power projects may have adverse environmental effects.
FEEDSTOCK EXEMPTION
Question:

What feedstocks were exempted from the tax and why? What are the mechanics
of the feedstock exemption?

Answer:

Fossil fuels used as a feedstock are exempt frorp. tax.
•

In making petrochemicals, the atoms of the feedstock hydrocarbons
become the atoms of the polymers and other products. This is the
meaning of "feedstock" in the Administration's proposal.

•

The feedstock exemption does not apply to fossil fuels used solely as a
fuel in the manufacture of petrochemicals or other products.

An exemption for feedstock uses is consistent with a tax on energy. Feedstock
uses generally do not involve energy production or carbon dioxide emissions.

Should electricity used in the production of aluminum be classified as a
feedstock?

Answer:

In making petrochemicals, the atoms of the feedstock hydrocarbons become the
atoms of the polymers and other products. This is the meaning of "feedstock"
in the Administration's proposal.

Aluminum smelting uses direct current electricity to split aluminum oxide into.
aluminum metal and oxygen. The molten aluminum collects at the bottom of
the cell where it is drawn off periodically. Electricity contributes the energy
that causes the chemical reaction to occur.
In contrast to petrochemical manufacture, the hydrocarbon atoms of the fuel
used to produce electricity used in aluminum smelting are not preserved in a
product, but rather are burned to raise steam, turn a turbine, and generate
electricity .

The Administration is continuing to study the impact of the tax on electricity in
the aluminum smelting process.
ENHANCED OIL RECOVERY
Question:

Will the tax unfairly burden enhanced oil recovery production?

Answer:

The tax is designed to minimize its effects on enhanced oil recovery.
•

The tax is not imposed on crude oil or natural gas used, on the premises
where it is extracted, to produce additional crude oil, whether through
enhanced oil recovery techniques Of ptherwise .
•

•

The tax is not imposed on natural gas used in enhanced oil recovery of
heavy oil.

GOVERNMENTAL EXEMPTIONS
Question:

How will municipal power projects be impacted by the tax? Should they be
exempted?

Answer:

Question:

Why was fuel used by the Department of Defense included in the tax base?

Answer:

To the extent the tax captures the environmental and energy security costs
associated with energy use, those costs should be reflected in the Defense
Department's budget.
COLLECTION POINT
Question:

What are the justifications for the point of collecting the tax for each fuel?

Answer:

The tax on each fuel is collected at a point that satisfies three criteria.
•

The point of collection minimizes the number of taxpayers (or tax
collectors). This reduces administrative burdens on both the IRS and
taxpayers.

•

8
•

The point is sufficiently far downstream to ensure that fixed-price
contracts do not prevent passthrough of the tax to the end user.

Question:

Answer:

The tax is generally imposed (or collected) upstream from the end user to
reduce administrative burdens by minimizing the number of taxpayers (or tax
collectors) .
•

The tax must also be imposed upstream, particularly in the case of electricity,
to encourage energy efficiency and fuel switching.
•

Question:

What method does the Administration intend to use to ensure passthrough of the
tax by utilities?

Answer:

Historically, a "normalization" requirement has been used to prevent the
passthrough of the tax benefits of accelerated depreciation to the end user. A
utility that attempted to pass the benefits through to end users was not allowed
to use accelerated depreciation. The Administration is studying a similar denial
of tax benefits to encourage pass through of the energy tax to the end user.
In order to meet some of the Administra"tion' s •objectives of the energy tax,

namely energy conservation and energy security, the energy tax should be
allowed to be passed on to the end user.
The Administration is considering methods to achieve this objective and has
invited comments from the public.

Question:

Will the Btu tax put independent power producers with long-term contracts that
restrict passthrough at a competitive disadvantage?

Answer:

The energy tax provides a special rule to insure that
independent power producers would not be competitively disadvantaged by this
tax. The Btu tax will impose a special tax on electricity that an independent
power producer provides to a utility under a fIXed-price contract entered into
before the date of enactment.
The tax would be equal to the tax on the fossil fuel used to generate the
electricity (or, in the case of electricity from a source other than fossil fuels, to
the tax generally applicable to electricity from that source). The tax would be
imposed at the utility that receives the electricity; the utility would be Hable for
the tax and would remit the tax directly to the Government. The independent
power producer would not be liable for any tax on the electricity and would
receive a credit for any energy tax on fossil fuels used to generate the
electricity .
~ATIONALCO~E~S

Question:

How will the Btu tax affect U.S. exports?

Answer:

The Btu tax will raise manufacturing production costs by an average of just 0.1
percent. This is unlikely to hurt the competitive position of most U. s.
exporters.
•

Qther elements of the Administration's economic proposals, especially
deficit reduction, have already reduced interest rates and thus will reduce
capital costs for exporting industries.

•

Even after the Btu tax is fully phased in, the cost of energy will remain
the lowest or second lowest (depending on the type of energy) in the
G-7 countries.

Question:

Are energy imports treated in the same m"anner as domestic production in all
cases?

Answer:

Imported coal, natural gas, and refined petroleum products will be taxed at the
same rate as equivalent domestic products.
Imported electricity will generally be taxed at the same rate as domestic
electricity generated from hydro- or nuclear power.

•

Importers of fossil-fuel-generated electricity will be permitted to pay tax
based on the actual amount of fossil fuel required to generate the
electricity .

•

Both domestic and imported electricity generated from solar, wind, or
geothermal power are exempt from tax.
ENERGY-INTENSIVE INDUSTRIES

Question:

Why didn't the Administration provide relief for energy-intensive industries?

Answer:

Two of the Administration's objectives in proposing the tax--increased energy
efficiency and conservation and increased energy security--would not be attained
to the extent tax relief were granted to energy-intensive industries. Further,
providing certain industries any form of tax relief would require higher taxes on
other energy uses.

How will the energy tax affect low income households?

Answer:

The impact of the energy tax should be looked at in the context of the whole
Administration program.
•

The expansion of the earned income tax credit (EITC) will provide
substantial relief to working poor fainilies'and more than offset increased
costs attributable to the energy tax. For a family of four with $25,000 of
income, all from wages, the proposed increase in the EITC, when fully
phased in (1995), will be $595 per year ($49.58 per month), more than
offsetting the energy tax.

•

The Administration's proposal increases funding for the low income home
energy assistance program (LIHEAP) by $1 billion per year. (This
amount is phased in with the energy tax.)

•

The Administration's proposal increases funding for the Food Smmp
program by $1.755 billion per year. (This amount is phased in with the
energy tax.)

•

Department of the Treasury
Office of Tax Policy
April 1993

Page 1

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993
Proposal

Fiscal years
1995
1996
($ millions)

1997

1998

1993-98

22,713

26,026

27,396

124,765

6,374
553
3,437
255
111
814

6,808
598
3,697
262
131
855

7,200
647
3,960
265
161
897

29,162
2,785
16,089
1,177
539
3,645

382

394

406

417

1,675

372

7,518

4,959

5,093

5,236

5,343

28,521

0
0
622
0
0

112
968
438
0
235

196
1,090
-24
0
930

210
1,106
-35
0
1,655

223
1,126
181
3,886
2,110

237
667
67
793
2,271

978
4,957
1,249
4,679
7,201

1993

1994

a Increase tax rates paid by high-income individuals [1]
1,580
1 Add fourth bracket at 36% rate for taxable income over $140,000
Ooint returns), $127,500 (heads of households),$115,ooo (single)
2 Impose a 10% surtax on regular taxable income over $250,000 (not applicable
to capital gains)
3 Increase in minimum tax rate to 26% for AMTI of less than $175,000 and
28% for AMTI over $175,000; increase AMTI exemption to $45,000
Ooint returns) and $33,750 (single)
4 Extend itemized deduction limitation and personal exemption phaseout
scheduled to expire for 1996 and 1997, respectively
b Repeal Health Insurance wage base cap
0
c Reinstate top estate tax rates at 53% and 55% [2]
0
d Reduce deductible portion of business meals and entertainment from 80% to 50%
0
e Deny deduction for club dues
0
f Deny deduction for executive pay over $1 milHon
-18
g Reduce compensation thal can be taken into account for purposes of benelts and
0
contributions under qualified retirement plans to $150,000 in 1994 (1993 cap is $235,840)
h Disallow moving deductions for meals and real estate expenses
0

27,463

19,587

2,750
475
1,816
147
111
304

6,030
512
3,179
248
43

REVENUE RAISING PROVISIONS
1 Provisions That Improve the Fairness of the Income Tax System

2 Provisions Affecting Businesses
a Increase corporate tax rate to 36% for taxable income above $10 million
(phase-out benefit of 34% rate begnningat $15 million) (1]
b Deny deduction for lobbying expenses
c Require securities dealers to mark-to-market [3]
d Prohibit double -dip related to FSlIC assistance [4]
e Extend corporate estimated tax rules
f Umit 936 credt

Page 2

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993
Proposal

Fiscal years
1996
1995
($ millions)

1997

1998

1993-9~

419
895
667
182
220

461
1,010
699
178
220

484
1,095
735
174
220

2,282'
3,885
3,106
880
1,080

9,293
0

16,678
2,627

22,147
2,614

22,709
2,632

72,781
7,873

147
321

616
551

1,343
418

1,858
332

2,155
349

6,119
1,971

265

147

171

180

189

952

1993

1994

176
0
0
4
0

362
240
370
156
200

380
645
635
186
220

0
0

1,954
0

0
0
0

3 Provisions Affecting International Businesses
a
b
c
d
e

Reform foreign tax credit for oil and shipping companies [2]
Transfer pricing comp.ance initiative (enhanced penalty pro\lision)
Royalties in passive basket of foreign tax credt; 100% R&E allocation
Enhance "earnings stripping" rules, etc.
Repeal deferral for excessive accumulated foreign earnings

4 Energy Provisions

[8]

a Modified BTU tax
b Extend gasoline tax currently scheduled to expire on 9/30/95
5 Compliance Initiatives
a SeMce industry non -compHance initiative
b Modified substantial understatement penalty

6 Miscellaneous

TOTAL

---- ---- ---- ---2,736

46,428

SO,stKl

66,300

---- ---81,244

81,063

---328,351

Page 3

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993
Fiscal years
Proposal

1993

1994

1995

1996

1997

1998

1993-98

($ millions)

STIMULUS /INVESTMENT PROVISIONS
1 Training and Education
-470
-28
0

-425
-175
-27

-458
-278
-79

-492
-296
-118

-528
-344
-152

-565
-414
-190

-2,938
-1,535
-566

-4,152

-8,963

-7,207

-3,467

-1,678

-2,405

-27,872

-944
0
0
0
-6

-1,207
-17
-142
0

-1,503
-124

-1,750

-383

-2,200
-329
-648

-23

-1
-33

-594
-6
-37

-1,977
-276
-756

3 Enterprise Zones

-73

-347

-772

4 Expand Earned Income Tax Credit [5]

a Extend employer - provided education assistance permanently [7]
b Extend targeted jobs tax credt permanently [7]
c Youth apprenticeshipcredt

2 Capital Investment and Economic Growth
a Temporary incremental tax credt for large businesses and permanent investment
tax credt for businesses with gross receipts of under $5 mil60n [6]
b Extend research & experimentation credit permanently [7]
c Incentives for investment in small businesses
d Modify AMT depreciation schedule
e Incentives for high-speed rail
f Extend small-issue manufacturing and agricultural bonds permanently [7]

-17

-30

-39

-38

-9,581
-952
-2,523
-54
-176

-1,228

-1,699

-4,119

-335 -4,300 -7,734 -7,996

-8,282

-28,647

-108
-233
-224

-187
-1,532
430

-836
-4,348
11

-206

5 Investment In Real Estate
a Extend mortgage revenue bonds permanently [7]
b Extend low-income housing credit permanently [7]
c Modify rules governing tax treatment of investments in real estate
(passive loss rules, pension investments, and increase recovery period for
non-residential real property to 37 years)

-36
-50
0

-150
-508
-310

-171
-841
-49

-184
-1,184
164

Page 4

ADMINISTRATION'S REVENUE PROPOSALS
Fiscal Year 1994 Budget Proposals
Submitted April 8, 1993
Proposal

1993

1994

-26
0
-263

-70
0
-313

Fiscal years
1995
1996
($ millions)

1997

1998

1993-91

-75
0
0

-77
0
0

-79
0
0

-400

6 Other
a Extend AMT treatment of gifts of appreciated property to charities permanently [7]
b Extend general fund transfer to railroad re.rement fund permanently (7)
c Extend 25% deduction for self -employed health insurance through 12/31/93 [7]

-73
0
0

---- ---- ---- ---- ---- ----

TOTAL

-5,975 -12,335 -15,754 -16,608 -16,272 -18,168

NET TOTAL:

-3,239

Note:

o
-576

---- ---- ---- ---- ---34,093

34,826

49,692

64,972

====
62,895

Provisions effective 1/1/94 unless otherwise noted.
[1] Effective 1/1/93, but no penalties for underwithholding or estimated tax in 1993.
[2] Effective 1/1/93.
[3] Effective for tax years ending on or after 12/31/93.
[4] Effective 3/4/91. Estimate does not include effect on OMB outlays.
[5] Estimate includes effect on outlays.
[6J Effective 12/4/92.
[7J Effective 7/1/92.
[8J Impact on low-income households offset by increases inthe low-income home energy assistanceprogrwn (Ut£AP) and food stamps.

-85,112

----

243,239

TREASURY NEWS
Department of the Treasury

Telephone 202-622-2960

Washington, D.C.

FOR IMMEDIATE RELEASE
April 12, 1993

.' .tn .
.

contact: Michelle Smith
(202) 622-2960

TREASURY AND IRS ANNOUNCE NEW COMPUTER
BULLETIN BOARD SYSTEM IN DETROIT
The Treasury Department's Office of Financial Enforcement
and the Internal Revenue Service's (IRS) Detroit computing center
today announced the implementation of a Bank Secrecy Act (BSA)
Bulletin Board System. This specially designed automated system
offers access to timely information about the BSA to computer
users with a modern.
The BSA Bulletin Board allows financial institutions and the
public to obtain information about commonly asked BSA questions,
administrative rulings, magnetic filing specifications and other
issues concerning the BSA and related anti-money laundering
initiatives. The information may be viewed on a computer monitor
or downloaded onto a computer disk. The stand-alone Bulletin
Board system is entirely distinct and has no access to the
separate system that stores and retrieves BSA data.
The telephone number for accessing the BSA Bulletin Board
System is (313) 961-4704. Users are responsible for paying all
related telephone expenses. The system is available seven days a
week, 24 hours a day. The system may be accessed with any
computer and communications' software from a 300 through a 9600
baud modern.
The BSA Bulletin Board system is maintained at the
IRS Detroit Computing Center (DCC) and has four incoming
telephone lines.
User-friendly instructions will guide first-time users and a
systems operator is available on-line by accessing the "Page"
option. The systems operator is available from 7 a.m. to 4 p.m.
EST, Monday through Friday (government holidays excluded). The
IRS help desk is also available for assistance at (313) 226-3293.
-30-

LB-117

PUBLIC DEBT NEWS
r

Department of the Treasury • Bureau of the

•

I·

Publi~ Debt()

FOR IMMEDIATE RELEASE
April 12, 1993

Washington, DC 20239

CONTACT: Peter Hollenbach
(202) 219-3302

AUTOMATED BIDDING IN TREASURY AUCTIONS FOR LARGE BIDDERS
Treasury's Bureau of the Public Debt announced that the automated tender submission and
processing system for large bidders will go live on April 29, 1993 with the auction of 52 week bills tentatively scheduled for that day. The Treasury Automated Auction Processing
System (TAAPS) will permit large bidders to submit time-critical tenders by computer using
specially designed software.
T AAPS provides large bidders with the option of submitting tenders by computer to Federal
Reserve Banks for processing. Until now, bids from these large bidders were submitted on
paper, in many cases by messengers who maintained telephone contact with their firms from
the Federal Reserve lobby. TAAPS permits Public Debt and the Federal Reserve Banks
of New York, Chicago and San Francisco to review and process bids with greater efficiency.
TAAPS is the second phase of Treasury's on-going effort to automate its auctions. More
than 600 institutional bidders now submit computer tenders using a system that was made
available in the summer of 1992. With the implementation of TAAPS, an enhanced
processing system, most of the volume of commercial tenders submitted in Treasury auctions
will be submitted by computer.
In the coming months, Public Debt plans to expand TAAPS to other Federal Reserve Banks
around the country. This will allow Reserve Banks to summarize bid information from
paper and computer tenders and enter those bid summaries into T AAPS for processing.
The T AAPS tender submission and processing module is also the foundation for future
developments that will further automate the auction and issuance of marketable securities.

000

PA - 121

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the' Public Debt. Washington, DC 20239

FOR IMMEDIATE RELEASE
April 12, 1993

CONTACT: Office of Financing
J j
202-219-3350

", d

.,J

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $11,094 million of 13-week bills to be issued
April 15, 1993 and to mature July 15, 1993 were
accepted today (CUSIP: 912794E83).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.88%
2.90%
2.89%

Investment
Rate
2.94%
2.96%
2.95%

Price
99.272
99.267
99.269

Tenders at the high discount rate were allotted 24%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
25,371
41,699,685
6,250
33,106
34,525
22,392
1,786,421
7,195
3,275
23,762
13,563
1,003,493
801,765
$45,460,803

AcceQted
25,371
9,967,276
6,250
33,106
30,725
19,352
83,661
7,195
3,275
23,762
13,563
78,693
801,765
$11,093,994

Type
competitive
Noncompetitive
Subtotal, Public

$40,373,488
1 1 321 1 495
$41,694,983

$6,006,679
1 1 321 1 495
$7,328,174

2,695,120

1 1 070 1 700
$45,460,803

1 1 070,700
$11,093,994

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-118

UBLIC DEBT NEWS
Department of the Treasury • Bureau of tlil' 'Public Debt :,.' Washington, DC 20239

FOR IMMEDIATE RELEASE
April 12, 1993

,,,,i

','

I (~:S:)N'TACT : Office of Financing
v

202-219-3350

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $11,056 million of 26-week bills to be issued
April 15, 1993 and to mature October 14, 1993 were
accepted today (CUSIP: 912794G24).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.98%
3.00%
3.00%

Investment
Rate
3.07%
3.09%
3.09%

Price
98.493
98.483
98.483

Tenders at the high discount rate were allotted 41%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
20,605
40,837,829
5,130
25,430
33,296
40,004
1,802,577
8,877
7,379
23,713
6,840
890,119
591 1 225
$44,293,024

Acce12ted
20,605
9,918,941
5,130
25,430
27,396
31,154
174,837
8,877
7,379
23,713
6,840
214,079
591 1 225
$11,055,606

Type
Competitive
Noncompetitive
Subtotal, Public

$40,394,570
925 1 654
$41,320,224

$7,157,152
925 1 654
$8,0'82,806

2,500,000

472 1 800
$44,293,024

472 1 800
$11,055,606

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-119

UBLIC DEBT NEWS
Department of the Treasury • Bureau ofthc,: Public Debt .• Washington, DC 20239
: I,

~ ~

, "

'.,.

FOR IMMEDIATE RELEASE
April 13, 1993

..'

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 7-YEAR NOTES
Tenders for $9,761 million of 7-year notes, Series F-2000,
to be issued April 15, 1993 and to mature April 15, 2000
were accepted today (CUSIP: 912827K43).
The interest rate on the notes will be 5 1/2%. The range
of accepted bids and corresponding prices are as follows:
Low
High
Average

Yield
5.50%
5.58%
5.54%

Price
100.000
99.542
99.770

Tenders at the high yield were allotted 56%.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
7,967
17,508,992
10,722
14,846
41,577
25,091
761,810
6,988
5,069
14,856
11,056
401,882
7,112
$18,817,968

Accepted
7,967
9,114,992
10,722
14,846
41,577
25,091
342,810
6,988
5,069
14,836
11,056
157,882
7,112
$9,760,948

The $9,761 million of accepted tenders includes $440
million of noncompetitive tenders and $9,321 million of
competitive tenders from the public.
In addition, $468 million of tenders was awarded at the
average price to Federal Reserve Banks as agents for foreign and
international monetary authorities. An additional $300 million
of tenders was also accepted at the average price from Federal
Reserve Banks for their own account in exchange for maturing
securities.

LB-120

FOR RELEASE AT 2:30 P.M.
April 13, 1993

CONTACT:

Office of Financing
202/219-3350

TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $21,200 million, to be issued April 22,
1993. This offering will result in a paydown for the Treasury of
about $30,300 million, as maturing bills total $51,495 million
(including the 48-day cash management bills issued March 5, 1993,
in the amount of $11,091 million and the 15-day cash management
bills issued April 7, ~993, in the amount of $17,129 million).
Federal Reserve Banks hold $5,747 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $5,805 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000

Attachment

LB-121

Aprl.L

Offering Amount • • • • •
Description of Offering:
Term and type of security
CUSIP number . • • • • •
Auction date • • • • • •
Issue date • • • • • • •
Maturity date • • • • • •
original issue date • • •
CUrrently outstanding • •
Minimum bid amount • • •
Multiples • • . • • • • •

• • •

•

•
•
•
•
•
•
•
•
•

L.J,

~~~~

$10,600 million

91-day bill
912794 E9 1
April 19, 1993
April 22, 1993
July 22, 1993
January 21, 1993
$11,684 million
$10,000
$ 1,000

182-day bill
912794 E4 2
April 19, 1993
April 22, 1993
October 21, 1993
October 22, 1992
$14,279 million
$10,000
$ 1,000

The following rules apply to all securities mentioned above:
Submission of Bids:
Accepted in full up to $1,000,000 at the average
Noncompetitive bids • • • •
•
discount rate of accepted competitive bids
competitive bids •
(1) Must be expressed as a discount rate with
• ••
•
•
two decimals, e.g., 7.10%
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid .
at a Single Yield • • • • •
35% of public offering
•
Maximum Award • • • • • • • • • • • 35% of public offering
Receipt of Tenders:
Noncompetitive tenders • • • • • • Prior to 12:00 noon Eastern paylight Saving time
on auction day
Competitive tenders • • • •
Prior to 1:00 p.m. Eastern Daylight Saving time
•••
on auction day
Payment Terms . • • • • •
Full payment with tender or by charge to a funds
•
account at a Federal Reserve Bank on issue date

FOR IMMEDIATE RELEASE

ARRIVAL STATEMENT
BY
U.S. SECRETARY OF TREASURY LLOYD BENTSEN
Hotel Okura/Tokyo, Japan
Tuesday, April 13, 1993

SECRETARY BENTSEN: Thank you very much, and I am very
appreciative of the gracious hospitality and welcome that I
received in coming to Japan. We are certainly grateful to our
Japanese hosts for having the G-7 Ministers of Finance and
Foreign Affairs at this historic moment with what we see
happening in Russia today. The Finance and the Foreign Ministers
of the G-7 countries have come to Japan this week to build upon
the spirit and the substance of the Vancouver Summit meeting of
the United States and Russia.
We are here -- building on the U.S. assistance package that was
announced last week in Vancouver -- to develop a coordinated and
sustained program of bilateral and multilateral assistance for
Russia.
Last week Presidents Clinton and Yeltsin met for a different kind
of a summit in Vancouver.
For the first time, we were talking
about balance sheets and not balance of power. There was one
dealing with the economic concerns of our two countries.
Now, we
-- the G-7 representatives of the world's most powerful
democracies -- must act in concert to bolster Russia's reforms
and its reformers.
Japan has taken a leading and a critical role in our multilateral
deliberations on Russia. And we welcome the Japanese initiative
to invite the G-7 to Tokyo to address these important, mutual
concerns unfolding just across the Sea of Japan, from Vladivostok
to st. Petersburg.
In the post-Cold War world, Japan's leadership and support are
increasingly vital as the alliance confronts the challenges of
this new era. And Russia's rebirth and reconstruction is the
great drama that is now unfolding.

LB-122

-2~esident Clinton is already anticipating the
~ held by the leaders of the G-7 in Tokyo in

summit meeting to
July, and the visit
E Prime Minister Miyazawa next (this) week to Washington. This
iministration will work with Japan, in the coming weeks and
Jnths, towards progress in Russia and continued economic growth
Jr the G-7 countries.
hank you very much.

I'll take questions if you like.

***
What did the President say to the Prime Minister of Japan
hat made Japan change its hard focus with Russia? How did he
onvince them to end this tying of aid to the recovery of the
our Northern Islands?
ECRETARY BENTSEN:
I don't think it was a matter of convincing
apan.
I think it was the realization by Japan of the importance
f what is taking place in Russia today and how important it is
or the entire world that we see a peaceful transition to a
arket economy and the democratization of the country.
Mr. Secretary, you mentioned in your opening statement
bout the importance of Japan's leadership as being increasingly
ital.
In that regard, how would you evaluate the stimulus
,ackage that is being unveiled today by the Japanese Government?
10 you see that making an important contribution to world growth?
10 you think it's adequate to address some of the concerns you
,ad previously ... ?
:ECRETARY BENTSEN:
I just landed.
I have had no chance to look
.t the details and I will be looking forward to visiting with the
'r ime Minister and the Finance Minister tomorrow and going into
.he details then.
: would say -- all the G-7 countries
in our last meeting, we
rere encouraging them to do what they could to contribute to
rrowth. Japan is in a very fortunate position to be able to do a
rreat deal in that regard with their surplus in their budget,
rith the fact that their national debt is but a fraction of the
)ther G-7 countries, and because they have a very sUbstantial
iurplus in trade.
It is our hope that the stimulus package will
)e one that will generate demand and consumption in Japan and
~ncourage imports coming into the country and get a better
)alance in the benefits of trade, particularly between the united
;tates and Japan.
I would further say that, for this
~dministration, you have seen in the past sometimes tough
~hetoric that has been confused with economic policy.
I believe
:hat this Administration is going to have a serious economic
)olicy and exchange with Japan to work for the benefit of both
:ountries.

-3-

Q:
What is it about the international aid package that is
being assembled here in Tokyo this week that makes it more likely
to be implemented than the one that was assembled last year?
SECRETARY BENTSEN: Well I've been encouraged by the fact that
Minister Federov feels that he has made some serious headway with
the Central Bank. That is an encouragement.
I hope that it
works out to be the case. What you had in the past -- they were
making sUbstantial headway on reform until about May of last
year, and then you saw the Central Bank beginning to vastly
expand credit, a major increase in the printing of rubles, and
you saw the value of the ruble go downhill, you saw inflation
going at about 25 percent a month bordering on hyper-inflation.
You saw the total economy of Russia valued in dollars at 75
billion dollars as compared to the United states being 6
trillion. you saw the average monthly wage go to approximately
39 dollars a month because of what happened to the ruble.
It's
had a devastating effect.
So it was critical that they begin to
stabilize that currency and that they have some influence with
the Central Bank, and hopefully that is the case.
SECRETARY BENTSEN:

I have time for one more question.

Q:
Can you have a successful reform program with the Bank under
the control of the legislature?
SECRETARY BENTSEN:
Well, obviously, there has to be some
compromise in that regard to be able to pull it off.
No
question about that. And I see a couple of my friends out there
yawning.
I hope it's because of the long trip.
Thank you very much.

-30-

CIQSING PRESS STATEMENT
BY U. S. TREASURY SECRETARY 1·1QYD BENTSEN
BQ'1'EL HEW OTAHI« TOKYO, JAPAH
~DAY.

This

~eek's

APRIL 15, 1993

meetinq in Tokyo is the first joint G-7

Foreign/Finance Ministers meeting ever held.
only thing that makes it unique.

And that's not the

Our agenda is no longer

dominated by nuclear security and the balance of power; it is one
of economic cooperation and partnership that advanoes global
peace and prosperity.
Our meetings were extremely productive.
Seven nations sat down and crafted a $28.4 billion
multilateral economic support package for Russia. It will provide
assistanoe tailored to help Russia succeed in one of the greatest
political and economio challenges in history: creating a
democracy and a vibrant market economy.

The process will require

sustained transformation in RUssia and continuing support from
the rich G-7 nations and international financial institutions.
It will take many years, so we must qet started quickly.
Secretary Christopher spoke about the bold, bilateral
initiatives President Clinton has put forth to assist Russia. I
will briefly describa the multilateral support package assembled
here in Tokyo.
o

We welcome the proposed Systemic Transformation Faoility,
which wa expect the IMP to create in cominq weeks.

It could

provide Russia with up to $3 billion, half of that as soon
a& Russia takes the first steps toward stabilizing its economy.
LB-123

a
In addition, the IMF and Russia are workinq on a $4.1
billion standby loan, which would clear the way to
activate the $6 billion Ruble Stabilization FUnd.
We also urge the World Bank to step up its support for
Russian structural reform.

The Bank can furnish $4 billion

in new commitments to help Russia rebuild key sectors,
••pecially energy and aqriculture.
The EBRD also must play a qreater role in supportinq
Russia's private entrepreneurs.

We urge the EBRD to develop

a $300 million fund that will finance small- and mediumsized privata companies in Russia.
We welcome indications from our G-7 partners that their
export credit agencies also will provide resources in the

range ot $10 billion. The recently concluded

u.s.

Export-

Import Bank oil and qas framework should help provide up to
$2 billion for rehabilitating Russia's oil wells while

boosting

u.s.

exports.

With this tar-reaching multilateral program we can walk with
,asia down the road of reform, with each step backed by

'propriate G-7 financial support.
The multilateral effort we are announcinq today represents

dor, coordinated effort to bolster Russia·. flreform revolution"
I

well as its reformers.
Thank you.

u. S.

q ~~ , (. '" ,.
' ...

DIPAR'I'MtNT JQE '-.'IgE~~~¥

Office of the Spokesman J
(Tokyo, Japan)

FOR IMMEDIATE RELEASE

ON-THE-RECORD PRESS BRIEFING
BY
U.S. SECRETARY OF TREASURY LLOYD BENTSEN
Hotel Okura/Tokyo,Japan
Weane.day, April 14, 1993

1 just had an interestinq exchanQ8 and
Mini.ter and, in turn, I also met with th.
Finance Minister. ot course, the issue waa the economic
relationship with our two oountries. It's an 1nterest1nq
me.tinq of the G-7 where this time we have not been talxing
abou~ .ecur1~y issues, but we have bean talking about
economics. As I maid laat nigbt, it ie not _ question Of
balance of power -- it'. a quaation of balance ,beet. and
what's to be done about it.

SECRETARY BENTSEN:
visit

wi~

the

P~~me

On. of tho •• ia.\lea,

c;:aurse, was

th~

.t'i'ftlu~u.

paokQ.~o

l.LL.

It'. a step fo~arQ. I think it's ene, though,
you have to look beyond the headlines and qet into some of
the detail. What we want to ••e on the part of Japan is a
continuing stimulu. to increa.a demana within the country.
They ara in a unique ~os1tion, amonq&t the G-7 countri •• , with
their strong fisoal position and yet with a aubatantial trade
SUrpluS against the entire world, and particularly against the
unitad stat... And attantion has to ~e directed to that. It
i. important that they st1.ulat. demand and that they work to
opan up ~arKets: that they play an inerea ••d role in the GATT
neqotiations which the Pre.ident has endorsed our moving to a
conclu.ion of the negotiations DY the end of the Y.&~ and,
hopetully, pa •• aqe by the conqre •• early next year; that Japan
have themselves ~or. involved in qu •• tiona like aarvic •• , in
open1nq up the markets. An~ to have a continued strateqic,
good relationship, it i . an imperative that concern be
expressed for tnat trade surplua -- and a continuinq concern -not just a short term one. That was the principal issue of the

~A.~
th~t

at Japan.

tliscU8sion.

Question: Are you satisfied with th. stimulu. package, and if
it seems a little high it's a good first step, you say, b~t •..

- 2 -

SECRETARY BENTSEN: Well, I think that what you are qoinq to
have is a continuing emphasi. that's neca •• ary on the part of
Japan to encourage demana ~ithin their own country. And they
are in a unique position. They have the low.at debt by a very
.ubstantial percenta9_ of any of the G-1 co~ntr1e.. And if you
take all of their budqet and put it together, they have
aotually haa • Dudqet 8urplus to work tram.
Question: Is the .timulua program -- is it a real proqram? Do
you see any what you'd call back home Itsmoke and mirrors" in it?
SECRETARY

BENTSENt

Well, I haven't qone into that detail on it

but it is obviously a good first step.
Question:
this?

Do you think they might have hired Dick Oarman for

(Laughter)
SECRETARY BENTSEN:

I haven't heard that name betore.

Question: But if you're calling it a first step, then you are
sugqestinq that ••.•.
SECRETARY BENTSEN:
Qu.ation:

I'm saying it just that way.

Sorry?

SECRETARY BENTSEN~
firat .t.ep.

I'm saying it just that way.

It'. a good

Qu•• tion: What did you m.an, Mr. Secretary, .ayinq we have to
look beyond the neaglines ••• ?

SECRETARY BENTSEN: We have to look at the detall of a budqet
like that to ••• how much of it i& a stimulus. But I'm pleased
that they went beyond ••• See, the first budget that they had
was actually one that contracted and this is ~ stimulu. bu4qet
that th.y have brouqht forth this •• cond time.
Queation;

What would

qood second atep be?

Qu •• tionl Miya~awa said a little while aqo at the baqinnlng of
your meetinq that he thought this would certainly stimulate
aemand in Japan over a lonq period ot time. Is that what you
have in mind?
SECRETARY B~NTSEN: I think what we need is a stimUlus over a
long period or time. I Agree with that objective very much. I
thinx that i8 very important that that be don ••
Question:

... but that waan't quite What he said.

- 3 -

SECRETARY BKNTSiN:
atep.
Question:
time?

And I said I think this i. a good first

Will this atimulat. demand over a lonq periQd of

SECRETARY BENTSEN:
is.

I think I'll leave my atatement the way 1t

Question: But ai4 they qive you an impression that they
thought they have 40ne enough for a period of time?
SECRETARY BENTSEN: Certainly they qav. me the imprel.ion they
~houqht they had done enough tor this year.

Question: It's a tvo-way street, Mr. Secretary. What xinas of
thin9s did they have to say about us an~ about the clinton
A4ministr.tion's promisee?
SECRETARY BENSEN: They were oomplimentary as to what the
Clinton A~min1.tration has dona on the budget.

Qu.at!on: Were they co.plimentary in the .ame way you
»cinq complimentary about their atimulus package?
Que.tion:

ar~

Good first step, 1s that what ••. 7

(Laughter)
SECRETARY BENTSEN:

Without equivocation.

What did you ~ean, sir, when you .aid that it'.
important for a continued qood .trateqic relationship?

Q~e.t1on:

SECRETARY B!NTSEN: That you have a better balance of the
benefits of the relationship, and that's particularly true of
trade.

Qu••tion: By strategic, are we 8ayin9 that keepinq American
military forc •• in ....
SECRETARY BENTSEN: No, no, no. I'm speaking, when I use that
term, I'm speakinq in terms of economic well-baing, not of a
military connotation to it.
Question:

But did you qet into specific sectoral and

.tructural iasu •• ?
SECRETARY BENTSBN: No,
time ;oe. on, obviou.ly.

w. did not.

Did not.

But we will as

- 4 -

Question: ~arican. are goinq to be raa4in9 in the new.papera,
ir th.y read this stuff at all, agout 20 percent ... and hearin;
en televi.ion, it they pay any attention at all to it, about a
20 percent increase in the trade deficit •..•
SECRETARY BENTSEN: ••• whioh obViously is a mA~~Qr of
concern anQ why we emphasize the economic
relation.hip and that they had to do those things to stimulate
local demand. That that 11 an imperative.
aUbot.nt1.~

Question: But my qu•• tion i. -- they ara gOinq to be reading
about thia just as Miya;awa coma. to wa.hinqton and Clinton i .
about to ~eet with him. Ara tbey goinq to be aatiatied?
Should American. be aatisfiad with what Miyazawa tells Clinton
acout thia stimulus program?
SECRETARY BENTSEN: I thinx it has to be a continuation of that
of stimulus over a period Of years, that we are not
looking at soma Short-term solution to the problem. It can't
be corrected overnight. 1 non' 1: wane to I I . . U6 n:v.rt DaOK 1n
our country to protectionism to re&tore that Kind ot a
balance. Or to have to qo into recession to r •• tor. that kind
ot a balance. It is much better that they proctic. a atimulus
ot their economy. And they are in • pOSition to afford it.
They have low inflation rate.. They owe just a fraction of
what other 0-7 countries owe. They have the maneuverability to
accomp11ah that. And for ~hem to hay. a oontinu1ng 9004
relationship with the nations aro~nd the world, they must
address this.
~ind

Question:

Did you mention that wora Uprotectionism" in that

phraseolo9Y in your meetinq?

SECRETARY BENTSEN: ~.s, I .aid that. You'll qet the forces of
protectionism around the world that will beqin to re.ist and
that is a poor sOlution, and we should avoid that. What we are
tal~inq abou~ i . 9rowth around the world.
Looxing at Europe
with, in most instances, negative qrowth for this year. The
united states, with a qrowth of about 3.1 percent oannot lead
the world out ot a racesaion by itself. It must have
as.istanca. And, in that regard, obviously Japan has the
flexibility becau •• ot the financial ~t-.l"'.n"th of tn. ¥Quntl.)" \.g
p~.~ ~~8 cOle ana ita part.
And that's an imperative.
Question: Did you get beyond the atimulus packaqe?
baqin to preview the visit that is comin~ up?

Oid you

SECRETARY BENTSEN: Yes.
Que.tion:

••• and did you talk about access to their marxet.?

SECRETARY BBNTSEN: I talked about ~hat, tOQ, but then I alao
tAlke4 about what they are doing insofar a. the a •• istance to
Rus.ia and the privatization and the 4emocr4ti&at1on and th.

support of the retorm_rs. But the Pre.ident wou14 be speaking
to him about •••• I oan't get into that detail, obviously. I
miqht alao say, I noticed one of these number. floated out
there .e to how much the U.S •• timulu8 wa. going to be -- I
would urqe you very strongly not to accept the numbers that are
being floated.
Question:

You

m.a~

the 2 and the 2-1/2 o111ion aOllara?

SECRETARY BENTSEN: Oon't accept those n~.rs Qecause they are
mixin9 apples and oranq•• in some of this and you'll want to
wait until you look at that detail which the President will
annOUnce tomorrow.
Question;

He h •• n/t ma4. his mind up y.t, hae he?

SECRETARY BENTSEN:

of the Congress ...

Queat1on:

Well,

he'. talking to some of the

congressional?

SECRETARY BENTSEN: ... conqresaional proces$.
bas that kind ot •••
Question:

~embers

I'm sure that he

well, are those numbers too hiqh or too low or •.•

SECRETARY BENTSEN:
that tomorrow.

Now, now, now.

The President Will announce

Que.tion: •.• those number. out there. We are going to 90 with
those numbers ~ntil wa qet something Qlse.
SECRETARY BENTSEN:

Qu •• tion:

You're saying -- don't go (inaudible) ..•

SECRETARY BENTSEN:
Question:
SECRlI!T-..RY

Ott,.~tionf
bac~ home

Goocl luck.

Don't qo with those numbers.

Are they wrong?
.EN~SE}1 c

Q.on ~

want

you to be embarra5sad.

Hr. Coc;r.t.o.... )', we aSK.~ you abOu.t what is goin; on
with that economio news today and the que.tion that
this COUld all be caused by one snowstorm. I mean ••. the way we
will all file thi. a. it Japan 1s the biq problem for the
American .cono.y. What'. wrong with the American .conomy that
Dusin.ss can't make a turnaround? They're terrible rlqures
this mornin;. EVerything's off. Autos, home •••.

6 -

SECRETARY BENTSEN; ••• 1 saw those numbers early thia ~orninq.
But, overall, it you look at tha underlying numbers and the
etabi11ty, the United State. 1s cominq out Of a reoession. But
by the sam. token, I think the President i8 quite right in his
.tl~ulus packa9G becau•• we saw the previous Adminatration
twice think that they were eominq, in all sincerity, thinK that
they were cominq out ot that recession and decide to ••ttla tor
the statu. quo. So they went 0 for 2. I surely don't want to
aee ue go 0 tor 3. So it is iDportant that We qive some
stimulus in the short term for the creation of job•.
Quastion: What was your reaction to what Japan 1s plannlnq to
do in terms of aid to Ruesia? How do you feal about it? Is it
also

Anm.t-hin~

-eo l.oak behLnd tbe h.a(11ineSl

SECRETARY BENTSEN; I think that's another one where you have
to look at the detail of it. We di.cU5 •• ~ the po •• 1b111t1e. ot
other th1nge to do in a bilateral way. That'. one the
President will ba discussing with tha Prime Mini.~er and !#~1
wait 'til th. Pra.1dent's atatement after.
Que.tion:

It looks a little heavy on loans and not credit•.

SECRETARY BENTSEN: .•• which i . not unusual. That'. if you
look at ~h~tr previous off.~.. They've b.en quite heavy on
credits • • . • looked at tho •• numbers, I think that ... grants
which ia approximately 300 =illion.
Que-tiona 00 you think that there are other thing. they ought
to be doing .•• ?
SECRETARY BENTSEN: I thinK there are other thing. that the
Pr•• ident will be talk1n9 about as his second Vancouver II.

ou••tion:

Other thinis ha'll b. talkinq about that he thinqs

Japan should be doing?

SECRETARY BENTSEN: Well, he hopes that they'll partioipate
with him and the other G-7 countries.
Question: Is your concern about the internal composition of
the package as oppos.d to the overall number?
SP.CRETARY BENTSEN:

Question:

No, I

j~.t

citeQ

Wha~

You aeem to be underwhelmad

SECRETARY BENTSEN:

the

by it.

Those are your worda.

nu~ar8

war •.

- 7 -

Question: Do you sense they are holdin9 back either gecaua. of
the island.? Aren't they tailorinq their contribution to the
U.S.'. and sort of holding half of it back until they get .ome
-- well, recover the i.lands?
SECRETARY BENTSEN, Well, I think the Prime Minister'.
comm1tment on that •• that'. two different iasu•• , two
ditf.ren~ tracks that they are running on.

Qu.etion:
morning?
SECRETARY

Did be make that commitment in your me.ting tbi.
BENTSF.~!

~id

not.

Qu•• tion:

Is it correct for us to assume that -- maybe I
hear you juet right -- when the Prime Minist.r meets the
Pr •• i4.nt on Friday, that the Pr.aident will ~e reque.ting
aa4itional help on ~he i •• ue or Ru.eia. Is that a .•. ?
~idn't

SECRETARY BENTSEN: There ia no question in ~y mind but what
he'll be tal~1n9 about what hi. second propoaal insofar es
••• 1stanee to Ru•• ia, and he'll be apeakinq to the Prime
Minister concerning participation in that ra9ard.
Question:

In the next tranche of .8.ietance?

SECRETARY BENTSEN:

Yel.

Qu•• t1on: .•• so, whatevar Japan ha. done today, two day. later
~.Y are qoinq to get a little more pr ••• ura?
SECRETARY BIN'l'SEN: He'. 90in9 to get an example ot the
••• iltanee that the United State. has given and with the
strength of their econo~y, I am eure that the President will be
ur9in; the= to participate in some of the ••.
Qua.ticn: ... there was some hope that all of this would be
worked out. I mean, the impre.aion they ware oivan at
Va~~~UVQ~ wa~ ~at all ot ~hi. would be worke4 out in time for
todaY or tomorrow'. moc_1n9_' KQW ~he .uqqestion that somehow
it'. 90in9 to continue. Thera's goinq to be more lobbying and
more request. afterwards. Do you feel certain diaappointment
that it isn't qoing to work out in time tor this?
SECRETARY BENTSEN: No, no, no. When I look at the ection. ot
the Japanese government in this kind of request, and What
~roc.8. thay iO through, it is not one that 91ve& you an early
deci.ion •••• I thin~ they've done vary w.ll in coming up with
their offer in what to a •• iat in thi. ahort period of time.
But I don't think the proce.s is over.

- B -

Qu•• tion: Do you think the summit will be advanced? W. heard
that last week at Stat.. That conceivably the July date will
~e brought forward?
Is that still ••• ?
SECRETARY BENTSEN: I don't anticipate that. We advanced this
G-7 . . .tin9, and I think it's wall that we did because I think
the G-~, which W~. somewhat moribund betore, 15 now cominq baok
a. an .ffective mechanism to &ddr••• 80me of theBe world
concern., and I'm encouraqed by that.

Qu •• tion: Mr. Secretary, if I mi9ht come back to tha meetinqa
that you had today with the Japan •• e o!t1cials -- I 4on't know
if you CAn Answer th1., but di~ they raise any complalnt. about
the yen?
(Laughter)
SECRETARY BENTSEN:

I have no comment on that.

Question: Mr. Secretary, when the Japan ••• bri.ted on that
m••tinq this morninq at the Ministry ot Finance, they indicated
that ~hey felt that both Bides a~re.d that the yen has been
movin9 too rapidly recently.
SECRETARY BENTSEN:

Qu•• tion:

That what?

That the yen has been movinq too rapidly recently.

SECRETARY BENTSZN:

Beth si4es said that?

Question: They didn't say that it was said. They aa1~ they
felt both sides aqreed or had the aame feeling about the
(in.udible) ....

SECRETARY BENTSEN:

I have no comment on ••• (inaudibl.)

Question: Mr. Secretary, Japan••• officials are telling ua
that Pre.ident Clinton .poke with Prime Minister Miyazawa laat

tor ten m1nutes and outlined the u.s. additional aid
proqr&m, And after t911ing us th&t, the SAme Japanese officials

ni9h~

then outlined the 2 to 2-1/2 billion dollar figure which you
say i . mixinq apples and orange ••
SECRETARY BENTSEN:

Don't rely on that number.

Question; 5hg~lQ~. not rely on the conver •• tion part
then either?

Question:

The Whit. House has confirmed that they spoke, that

Miyazawa .•..

- 9 -

Que.tion: I gue •• what I'm try!nq to get at is, how 40 we sort
out, help u• • ort out, what it ia that they are ••y1n9 that i .
right ang what it is that they are ••yin; that is wronq.
SECRETARY BENTSEN:

Question:

No, no ....

Did the President have •.• (inaudible)

SECRETARY BBNTSEN: Let's laave it to the President to make his
announcamant tomorrow.
I don't want to (ina~dible) ...

Quastions

You atarte4 to say th.t they did apeak and •..

SECRETARY BENTSEN:

They

41~

apeak.

I started to say that the

Prime Minister speaks Znqli8h and so you get a lot mora in tan
mi.nutes. As I listene4 ~o the ~r.n81.t!on when I ape.k ~o one

of them, ! can never believe I .poke that Ion;.
(Lauqhter)

Qu••tion:

Can I just ask you a little more about the stimulus
an4 the relationship to ••ctoral i.au.. becau.. they
are takinq a ratber h.~g line on the 14ea of anythinv that
r.motaly r •• embl •• manaqed ~rade. Did you 4iaouaa with ~hem
the need tor tni. new framework that they are talking about
that would replace the SII proce •• , this kind ot thin~? Did
you t.ll them that the Pre.id.nt will be ins1stin9 on .0••
results-oriented policy in cartaib sactors?
p.cKa~e

SECRETARY BENTSEN:

7 told them thoro would be a discussion of

sectoral issues as we qo alonq. The biq concern to ua -~ and
part at it hopefully c~n be resolved in tb. GATT naqotlat10na
-- and in addition to that, then bilateral discussiona. That
would be a

contin~in9,

onqoing

4i.c~ •• ion

and concern.

OUe.tion: Do you think the macro i.sues are the more important
ot the two in terms of u.s. joba?
SECRETARY BENTSEN:

Thank you vary much.

Yes, I

~o.

I think that they are.

DRAF7
:.' "\ ~

,"lnd

II;; I

=th' C'

G 7 J 0 1 n t Min 1 s t C rIa 1 Me e tIn g
Follow1ng ~~etln~ wi th RussIan r.l1nIsters
ChAirmen's Statement

tht~

lOb 3

~ u

L j.

~ ',',

15 April, 1993
1,

lilt r

(hI ('

10 n

the reQllcst

till' .. evcn major
Pr~sldcnt

1ndustria] tzcd c.oulltrles and of the

the EC COCIllLll:;sion, and 1n the process of
the Tohyo Sur=mit,

prepR,"atlon of
~l1nlslcr'i

the HeRds of Sta.te and Government of

of G7 countrIes and

Forelc-n and Finance

n~presentatlves

of the

f-'urOpel1l1 C.ommunity met In Tokyo April 14, IB93 to discuss
for reform tn the RUSS1<.111 Fp.deratlolL

<;IJpport
~11l16ter

~Iyl\7.awa

KI1chi

of Japnn opened the meetIng, whIch

.... ns cllAlrccl Jointly by Kllbull

Affn I
qt'

r~;

.
anc1 Yosl11 reo

of Jdpan

~111to,

Minister for Foreign

Hl\ynshl, Minister of Finance

.Jnpttll,

lJn April
~vnrlorov.
[(\JS~jJ.1.

1:-:',

~r.

c;ltuntlon
(' () cr.::111 n

Andre!

KozYI"ev.

collca~ues

Pr~s1r1t"nt

the economic and political

,; u ~

p () r t

reaff1rmed

Ru s s i a's

ref 0 r m pro g ram"

0 U I"

the determina.tion of

\'('ltsln and his government to move forward with

rpform. They
~crnro

Foreign Minister of Russia

Russia ana to rp\'tew how the 1nternational

1 ~ Y ': 0 u 1 d he," t

~u~sinn

Borls

Prime Minister and Finance Minister of

D~puty

and

tile ,\l1llisters Illet with Mr.

199:3.

for Ilr: extj!"n(1pd d!SC'us51on of

Prime

wclco~ed

pro~es~

,~I;PPOrT

for

way~

our deterolnatlon to support the
whlcil complement the efforts of

Ru~slu'

s ref Of 0

pr()(~f>SS

wi til

psrabllshln~

tlit>

Aim at'

buildln~

democratic society.

a market economy and improving the welfare of

Its people under the leadership of President Yeltsin.
la has made COUrlU::p.ous and extraordinary progress in

RIISS

the last two

HIlss1an reform and proj:!"ress towards

yc~rs.

democratization arc essential to world peace.
SPf'o

We want to

de::nocrl1tlc-. stal>lc allu economically strong Russia,

firmly

1nteirllted 1nto the cOllllDunity of democratic states
We are confident that the G7

and illto the world economy.
and Russia wtll continue
rp~pon~ll>lY

to cooperate constructively and

1n international

aff~irs.

Thp Russ1an pp.ople thewselves must bear primary
1·p.sponslbll1ty for economic and political reform.
df'ovelopwent of
:~rr1\lOIJS

lDl:lrket economy in Russia will bc a long,

undertakln~ w)Ilch will require difficult

adJustments
i)t>opl~

The

()f

IltHctsh1~s

l>y the Russian people.

We assure

the Russian

our support in coping ",lth the inevitable
of the transition period.

We remain resolved to

work with Russia to develop lasting cooperation based on
the prlnclple~ of partnership and help for self-help laid
nllt

;-\1.

the '1un1ch Summi t.

prll~ati~.

v1sible.

RUSfilBn absorpt1vp

Our assistance will be

tanr,-lble ar.d effective. tailored to
c8p~clty

and phased with the progreSS of

We welcome the recognit1on by the Russian government
ttl1\t

hoth

refort:.

:!lonet~ry

stabl1 lzatiol1 and further structural

!ncllldlng privatization. are critical.

.' n \' 1 ron rn t" n t

:' 0

1 vat c

1 n v est r:: e nt,

1 n c 1 u d 1 n gap r

positive
0

per

1 .... ~:-."\ I

.11 i

d m 1 II

rat 1 ve

r r .:l £:l e w 0 r k.

tnil1sr'or'm.:ltIol1 of the economy,
[!1

ark P. t s I s 1 n c1I s t: en 5 a b 1 c

i s

c r u c 1 a 1 for the

Better access to export

r uc t u ra

1 ref 0 r m 1 n RU 5 S 1 a .

Bl1ntcrRl and MultIlateral Actions
R~recd

Wp have

.... 111ch -Ire closely

cl)untrles anti the
~losc

r It! r

Interlinkeu with our bl1atenll p.fforts.

1n tIle Annex.

de"c::crllJ(~ti

;lS

on u scrles of multIlateral actions

Close coordinat1on .:lmongst our

Internat10nal organisations as well as

cOnllt('ts wIth the RI1Ssi.:1I1 authorities will be

t~ ~> ~ :\

ry .

RII~s1i\

~urrel\tlY

I s

d1fflcult sltllFltion.
challengfng tasks
They

100

part1cularly

We are .:1150 mindful of the

facln~

,',"\n continue

eX[1cI"fpnc1nJ; a

other economies In traIlsition.
r~lY

on our support.

Tr.c: 1->ucceSS of the Russinn reform program Is In the
1 :1 r

p ..

r. s:'

r () 11 t r I 2 IH e

tall

co un t r' 1 e s .

encoura~e

others to

t o t hen c t 1 ens w t~ h a vet a ken to day ,

Our Q(>ct1ng 1n Tokyo t1Rs helped lay the foundation for

:. t>: ;::,' t' T 1 n ~ to be he t d .... 1 t h Pre sId en t

r(') k yo .
'1,1

lor

TtH' HeRd s of S tnt e and Cove rnmen t
industr!al

(',")r..m15s1on of
t~

1 (') ~ ('

Ye 1 t

11 t :- (' 11 t

t'.Jrwnrd

1 n 1 n July 1 n

of the seven

democracies und the Pres1dent of the

the European Co::rumtnltles w1ll continue to pay

1 0 n to d e v €I lop m~ n t s

fruitful

1 n Rus s 1 a .

rt>\'1ew 1n July.

They look

UfO
Annex
SllOQort to he Provided to Ruc;siu

s..upD..Q..l:..t llY t.h£ IMF fur..MacroecOllOmlc s..tahl11zat1on

Progress towards macroeconomic stabilization.
especially the reduction of l<ussia's high rate of inflation
by br 1 nging

rnonetal'Y a.nd c redi t expans ion un de r con trol, 1 s

of paramount importance to the success of Russia's economic

reforms.
We elleD\] rage the

I~1F

to play a more ae t 1 ve role In

th1s area, and we agree thElt IMF shoul(i be prepared to

provide tangible support for the steps towards
staLJll ization.

(a)

We warmly welcome the proposal to create a new

IMP SystemiC Transformation Facility which could hclp

cOllntries in transition and provide Russia with up to
$3 billion in finanCial support made ilval1aLJle in two
tranches.

We urge that the first tranche be disbursed when
Russia makes a political commitment to adopt an

appropriate adjustment policy, as indicated by a
policy statement.

The second tranche should be disbursed when there
ha~

been satisfactory policy implementation with a

focus on monetarY policy measures to contain

inflat1on, paving the way for a stand-by arrangement.
(b)

The IMF and Russia are strongly encouraged to

develop a

5~nd-by

arrangement of up to $4.1 billion

'J
"-

1n more intensive support for economic stabilization,
on the basis of a comprehensive

macroeconomic

stabll1zaLIon program, as soon as possible and 1n any
event before October I, 1993.
(c)

We reaffirm our commitment to make available the

currency stabilization fund of S6 billion to boost
confidence in the rouble market, once macroeconomic
conditions have stabilized.
Support by the War] d

(a)

B.a.n.k f..!ll" Str1lctlJra] Reforms

Structural reform measures nre essential for
effe~tively

building a market economy nnd can most

implemented 1n the context of wacrocconomic
stllblli7,ation.
(b)

The World Bank as a provider of long term support

1s well pos1tioned to take the lead in supporting
Russian sLructural and sectoral reform.
(c)

We urge the Russian authorities to improve their

cooperation with the World Bank and to accelerate
their efforts to utilize existing support by drawing
down funds under last year's import rehabilItation
loan, and to conclude the

ne~otiation

of the $500

m1llion oil sector loan, which carries an additional
$500 mIllion co-financIng, as rapidly as possible.
(d)

We back the World Bank's efforts to increase

support for structural and sectoral reforms in
parallel with the IMF's new Systemic Transformation
Facility, Includ1ng a second crit1cal imports loan.
We welcome the World Bank's w1ll1ngness to provide,

for the coming 15 months, up to $4 billion in new
commitments in the form of loans to support
investment, the strengthening of institutions, and
reform in several key sectors such as energy,
agriculture and hOlJsing which will directly lJenefit
the Russian people .
.3..~

SUODort mainly throwrh the EBRD for

Sma)) and Medi!lm

Sized rntcruriscs
(a)

Small and medium sized enterprises are crucial

for the development of a private sector In Hussia.
The EHRD should have a key role in this tlrea.
We ask the EBRD to establish.

(b)

in close

coopertltlon with us, a $300 million fund financed half
by with its own funds to promote Russian small and
medium sized enterprises.
to contrJbute to this fund.

We invite other countries
We also request the

EBRD

to prepare the ground for cretlting a RussIan Bank for
small and medium si7.ed enterprises.
4.

support for privatization of Lare-e Enteror1ses
One of the crucial areas of structural adjustment in

Russia Is the restructurIng and the privatization of large
scale enterprises.

We agree to set up a working group to

explore how best to assist this process including possibly
by combining bilateral and International Financial

InstItutions resources, with a v1ew to report1ng at the
Tokyo Summit.
5,

Debt
We

Reschedu]1n~

wel~ome

the agreement between 19 creditor countries

- 4 -

and Russia on the rescheduling of the debts of the former
Soviet Union. concluded at Paris on April 2. 1993. which
represents a support of over $15 billion and which puts a
heavy burden on creditor countries' budgets.

The relief

will substantially ease balance of payments constraints in
the l)rcscnt stage of the reform process and paves the way
for maintaining creditworthiness and for new capItal
inflows.
6.

Export
(a)

Cr~1t

Agency Actlvltles

and-Coon~rBtjon

The activ1ties of the ECAs represent a major

!";ollrce of financing 1n our support for Russia.
(lJ)

It is important to ensure that their ECA

financing supports Russia's structural reforms
especially industrial restructuring In such key areas
as energy.
(c)

To this end • .it is highly desirable that there be

opportllnlty for cooperation between the World Bank and
the ECAs.
(d) We are confident that the ECAs can provide export
credits and guarantees for viable projects In an
amount in the range of $10 billion.
~

~xpans1on

of Trana

Improvement of access for Russian products to
international markets strongly reinforces RussIan
structural reform.
open our markets.

We intend to take measures to further
We will work with the Russian

authorit1es for Russia's full integration into the

£xisting trade regulations 1n the area of advanced
technologies (including COCOM-related regulations) should
be gradually 11bcralized, providcd that Russia establishes
effective export controls.
B.....

EncrC-y Setlol:.

We urge the rapld creation.

in Russia, of an

environment which encourages private investmcnt and trade
In the energy sector.

In stcp with this, we intend to

encourage relevant companies in our countries to expand
their invcstment In Russia's cnergy sector.

We emphasize

the jmportlince of an early conclusion of the Energy Ch,Hter

Treaty.
~_

---.lilJ c) ell r S afut)!.

(a)

Recent incidents highlight the urgency of

achieving Improved safety of nuclear power plants In
RURsia.

This requires in thc first place resolute

action from Hussia itself.

We are

co~nlttcd

cooperate through the fu]l and timely implementation
of the multilateral program of action agreed at the
Munich Suwmit.

Concrete projects for safety

improvements need to be undertaken without delay.
We will work through the improved G-24
coordinat10n mechanism to achieve early and
s1gnificant safety gains.

We also emphasize the

importance of fully utilizing the Nuclear Safety
Account managed by the EBRD in pursuing this aim.

call upon the 1nternational community to contribute to
t-hp

A",('('Hmt.

We emphasize the importance of close

- G

coordination between thc EI3RD and the G-24 in the
operations of the Nuclear Safety Account.

We will

examine appropriate measures with our RUssian
colleagues on the basis of the World Bank and IEA
studies and will carry forward the process initiated
at Munich at the forthcoming Summit In Tokyo.
(b)

Ocean dumping of radioactive waste Is a matter of

grea t concern.

We agree tllA. t

thIs should be studied

fllrther.

mSlIll1n tl f ne' Nuc 1 ea r Weapon s
The 1mportance of aSsistance to dismant11ng of nuclear

weapons and the disposition and control of

fissIle

materials derived from them is recognized as an issue
relating to the security of the whole world.

National

cooperation with Russia in this area constitutes a part of
multl1at~ral

workln~

efforts.

with Russia.

Some G7 countries are already
We agree to consider how this work

could be furthered and how other countries could be
involved in these efforts.
lJ.

ScIence nnd
(a)

TecbnQ1Q~~

Wlth respect to the International Science and

Technology Center, whose establishIng agreement was

signed last November, we

st~ess

the importance of

necessary procedures to be taken in Russia to enable
the International Science and Technology Center to
commence 1ts activIties at the earliest possible date.
(b)

We see poss1bilities to proceed with new forms of

cooperatl~

in science and technology, including

- 7
pro~rarus

In the field of outer space.

Eood and Medlenl Asslst8D~e

We are now providing food and medical assistance and
remain ready. as In the past.

to consider additional

sllpport in case of emergency.
~

TechnLcal AssIstance
We stand ready to ass1st RUSSia In attracting a broad

flow of know-how and experience to benefit concrete
projects and individual enterprises In the regIons and
localities.

Teams of experienced advisors should engage In

long-term cooperation on the spot nnei more Russians should

come to our countries for 'trailling.

The Russ1an GOvernment

should ~trengthen its a.bility to direct technica.l

assistance to where :It is needed.

We urge the World Gank

to activate without delay nnd make full use of the
ConSUltative Group process agreed at the Munich Summit in

order to achieve a more effective coordination.
14.

B1lateral Cooperation

We welcome the recent decisions of G7 countries to
increase their bIlateral support.
are fln Intagral part

Russian reforms.

Our bllateral efforts

of our common strategy to assist

We stand ready to continue our ·b1lateral

efforts. which are closely linked with and complement the
above outlined action program.
~

Sugport ImplementatiQn
RecognizIng that greater efforts to improve the

effectiveness of our support arc needed, we w1ll work
"r~p-ntly

e~ure

such support is implemented as

- 8 ~fficiently

ac possible.

To that end we will seek. 111

close consultation with the Russll111 l1uLhorltles and

relevaul lulernational ofltanlzatlons. to p.st.Ahllsh
arran~emcnts

fA~11ttnt~

the

u~e

of toehnical cooperation

and financial support. snd to cooperate with the Russlau

authorities In

~emovin~

bottlenecks SU as Lo improve the

efficient 1wV1t!1IIt:llll1l1on of support.

Support Program for Russia

Reference
paragraph
In the Annex

Initial support for stabilization

--IM~

Systemic Transformation Facility

--World Rank Import Rehabililaion Loans

Full stabi

lizati~n

program

S1. 1 I) i I I ion

$3.0 billion

1-(a)

$1.1 billion

2-(c)(d)

$10. 1 bi II ion

--IMP stand-by loan

$4.1 billion

)- (b)

--IMP CurrencY Stabilization Fund

$G.O Lillian

}- (c)

Structural l'eform and essential imports

$14.2

oillion

--World Bank lORn romruitmf'nts

$3. 4 bill ion

2- Cd)

--Cofinancing of World Bank oil sector loan

SO. 5 bill ion

2-(c)

--BBRD small and medium enterprise fund

SO. 3 bill ion

--Export credit agency credits and guarantees

S10.0 billion

6-(d)

SI5. 0 bill ion

Debt rescheduling

--Public debt rescheduling
--Private debt rescheduling

Bilateral

A~~jslance

...

Elements of the G-7 Multilateral Support package for Russia
Breakdown by Timing of Commitments

New commitments of support in 1993

$21.4

bil1io~

--IMF Systemic Transformation Facility
--New World Dank commitments'
--Cofinancing of World Bank loans
--EBRD small and medium enterprise fund
--Export credits and guarantees
--IMF standby loan 2

$3.0
$3.5
SO.5
$0.1
$10.0
$4.1

billion
billion
billion
billion
billion
billion

____ .$7.0

billion

Reneved commitments of support from 1992
--World Bank loan pipeline J
--IM~ currency stabilization fund'

$1.0 billion
$6.0 billion

Memo item:
$15.0 billion

Debt rescheduling

'Thc World Bank expects $3 billion in new IOnn commitments to
Ru~sia

this year, above

~hat

was expected last year.

tThe 1993 standby loan is expected to differ from last year in
two respects.
First, the loan will be larger (Last yeal..-'s IMf
standby loan was expected to total $3 billion, but only $1 billion
was disbursed due to the lack of progress in Russian stabilization
efforts).
Second, the IMF will negotiate a fast-track standby.
streamlined to focus only the central issue of stahilization.
}Thc World Bank wi 11 move quickly to approve and disburse trl('
funds planned for last year that remain unutilized. Includes $500
million in undisbursed funds under the import rehabilitation loan
approved last year, and $500 million for an energy sector loan
pr0-parcd, but not approved, last yeQT.
'This fund was prepared last year, but not activated due to
the lack of progress in Russian stabilization efforts.
It will be
activated when Russia has an IMF standby loan and is prepared to
stabilize the ruble exchange rate.

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
April 19, 1993

CONTACT: Office of Financing
202-219-3350

RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $10,661 million of 13-week bills to be issued
April 22, 1993 and to mature July 22, 1993 were
accepted today (CUSIP: 912794E91).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.81%
2.82%
2.82%

Investment
Rate
2.87%
2.88%
2.88%

Price
99.290
99.287
99.287

Tenders at the high discount rate were allotted 55%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS

Received
23,412
50,267,390
9,140
37,799
31,692
18,260
1,995,870
10,930
18,335
23,554
13,280
854,981
785 1 855
$54,090,498

Acce12ted
23,412
9,542,811
6,974
37,799
24,692
15,360
72,120
10,930
8,275
23,554
13,280
95,971
785 1 855
$10,661,033

Type
Competitive
Noncompetitive
Subtotal, Public

$49,108,265
1 1 261 1 533
$50,369,798

$5,678,800
1 1 261 1 533
$6,940,333

2,847,160

873 1 540
$54,090,498

873 1 540
$10,661,033

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-124

UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239

FOR IMMEDIATE RELEASE
April 19, 1993
.-

CONTACT: Office of Financing
202-219-3350

~)-

RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $10,706 million of 26-week bills to be issued
April 22, 1993 and to mature October 21, 1993 were
accepted today (CUSIP: 912794E42).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average

Discount
Rate
2.95%
2.96%
2.96%

Investment
Rate
3.04%
3.05%
3.05%

Price
98.509
98.504
98.504

Tenders at the high discount rate were allotted 35%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st. Louis
Minneapolis
Kansas city
Dallas
San Francisco
Treasury
TOTALS

Received
17,996
50,767,233
6,104
26,541
28,649
17,550
2,034,010
8,786
5,310
25,135
8,510
765,283
555,755
$54,266,862

Acce2ted
17,996
9,763,201
6,104
26,541
24,099
15,250
94,010
8,786
5,310
25,135
8,510
154,983
555,755
$10,705,680

Type
Competitive
Noncompetitive
Subtotal, Public

$49,971,530
889,632
$50,861,162

$6,410,348
889,632
$7,299,980

2,900,000

505,700
$54,266,862

505,700
$10,705,680

Federal Reserve
Foreign Official
Institutions
TOTALS

LB-125

U.S. DEPARTMENT OF STATE
,S ::,', -",' " 9~f~ ~C:~ (of the Assistant Secretary/Spokesman
,: :i

I ,;

FOR IMMEDIATE RELEASE

{r j~

IL ~

U U

07I
PRESS BRIEFING

BY
U.S~

SECRETARY OF STATE WARREN

CHRISTOPH~R

Enroute Andrews AFB to Anchorage, Alaska
Monday, April 12, 1993
SECRETARY CHRISTOPHER:
I wanted to come back a little earlier
than I might have because I understand you all have a filing
deadline in Anchorage and so, here goes.
First, rId like to say that this visit should be put in the
broader context of three important parts of the framework of
u.s. foreign policy in the Clinton Administration. I made some
notes here as you can see because I wanted to be able to record
for you some of the feelings that I have as I go into Tokyo.
As I say, I think that this visit has to be put in the context
of these three key parts of our framework.
First, that our
fundamental oVerriding goal around the world is to promote
democracy, human rights and tree markets and no where is this
issue more trenchantly involved than in the case of Russia and I
will come back to that in just a moment.
Second, we want to
remain a Pacific power and are determined to shoulder our
responsibility in this area. And, third, in the new era, the
economic aspects of our relationship with Japan must be
addressed with a new intensity.
In this context, let me mention some particular aspects of the
meetings in Japan.
First, they will certainly highlight the
importance of the economic and political reform in Russia -and, as we have been trying to do over the last several weeks
will provide support or are intended to provide support for
Yeltsin's courageous efforts.
Second, as President Clinton
emphasized the last few days, we are now moving to a new stage
-- the multilateral stage -- in which we intend to build on the
momentum created in Vancouver and in the related bilateral
endeavors that have gone forward since Vancouver.
Third, in a
multilateral sense, we expect substantial additional support for
the multilateral institutions -- the World Bank, the EBRD, the
IMF. The (background briefers) will spell this out further, but
the particular kinds of aid that we expect to come forth in ttlis
meeting and in those arenas are cooperative assessed assistance
to stabilize inflation, structural reform in energy and
agriculture, and support for privatization, that is, lending
support for private business through privatization.

Hfjr

1~'

S13

13:47 No.036 P.03

-2-

We think that this meeting can provide joint action for the G-"/
to maximize the efforts of each of the countries and, I want to
say that I have a positive feeling about the results that will
corne out of the bilateral efforts in Tokyo.
Clearly, this is a
cooperative effort that will need the assistance of Russia and
for that reason, of course, it's essential that the Russian
'
Finance Minister Fedorov and the Foreign Minister Kozyrev are
arriving tomorrow to join in the discussions with the G-7
Foreign Ministers
and Finance Ministers.
And, as hosts , the
.
Japanese w~ll undoubtedly play a particularly important role -they are not only hosts but they are the chair of the G-7 this
year and they have played a major role in organizing these
meetings and will continue to playa major role as we move
through the remainder of this year.
Now, beyond ~hcse multilateral efforts, lid like to mention the
bilateral efforts that have gone on in the last several days
since Vancouver.
First, as you know, a number of countries have
indicated additional bilateral support for Russia -- the Unjted
Kingdom, Canada, Germany -- and we expect that this trip, or
even before we arrive, there may be indication of further
bilateral efforts or assistance by Japan.
As y011 know, in
Vancouver, President Clinton indicated that the United states
would be considering additional bilateral assistance based upon
his conversation with President·Yeltsin.
Consultations on those
additional bilateral efforts are going on actually, as we are
flying.
President Clinton was necessarily diverted from those
conSUltations for a couple of days over the weekend, but we arc
back at that effort now and I think we can expect to hear
something from that although I'm going to be a little uncertajn
about the exact timing as to when that will emerge.
I

Finally, in addition to the multilateral efforts of the G-7 and
the bilateral efforts, this trip inevitably has some U.S./Japan
bilateral aspects to it.
1111 be meeting as soon as we arrive
tomorrow -- almost as soon as we arrive -- with the new Foreign
Minister Muto and I'm looking forward to that. And, then on the
following morning, 11m going to be received by Prime Minister
Miyazawa and those meetings will obviously have signific~nce as
preludes to President Clinton's meeting on Friday ~ith Miyazawa.
Once again, I stress the importance of the U.S./Japan
relationship and the very significallt role that Japan is going
to be playing in these meetings. One point I'd want to make
about this is that these meetings should certainJy not prejudice
Japan's position with respect to the Northern Territories.
Japan has cooperated by putting that issue to one side, but the
United states continues to(support the Japanese position and
nothing in these meetings should prejudice the Japanese position
on that subject.

-3-

With respect to the Japanese bilateral, I'd come back to the two
points that I made at the beginning and that is that the United
states will be affirming or stressing its intention to remain d
Pacific power and to shoulder our responsibilities in that
regard and the second is that the economic aspects of the
U.S./Japan relationship must be addressed with new intenSity in
this current period. r think that's all I have to say by way of
a prelude and you'll be hearing more from (background brief~rs),
but I ' l l be glad to take any questions you have.
I wonder what you thought of the way Yeltsin's playing
politics with the economy as the April 25th referendum
approaches? As one newspaper had it, he's sweetening the pot.
He's doing things that both fuel inflation and he's doing
contrary things.
If your policy depends on him helping himself,
is he helping himself or is he making it tougher to bring about
the reform you want?
Q:

SECREThRY CHRISTOPHER: President Yeltsin's a very experienced
and skillful politician.
I assume he's taking the right baJancc
of steps to maximize his chances of prevailing on the 25th of
April and, as I've said so many times, we have a very large
stake in his prevailing and I wouldn't want to second guess his,
what inevitably, is something very closely akin to a campaign
strategy.
•
Mr. Secretary, can you tell us while you are not free yet to
Q:
divulge the details or the size of the package -- the bilateral
second step that the U.s. is going to take.
How will it be
different from what we did in Vancouver?
SECRETARY CHRISTOPHER: Well, I can't get into details on that
John, as you indicate, but it may well have some aspects that
will be closely coordinated with our G-7 allies and it will be
even more closely attuned to what we heard from President
Yeltsin in Vancouver, aid that will go right into the
bloodstream of the Soviet economy in a very impressive way We
hope.
But, I do want to emphasize that the President is still
consulting on those matters, consulting as we fly here and so I
do not want to try to foreshadow any of the -- with any
precision.

Q:
Mr. Secretary, you said last weak when you had d BACKGROUND
briefing with us that you expected the Security council to pass
the sanctions resolution on nosnia today or early this week.
Now , President Yeltsin has sent a letter to President Carter
(sic) and the Russians are indicating that they -- they a~e
stalling -- they are indicating that there are problems With
it.
Do you have any intention of linking the package of soviet
aid -- of aid to Russia -- to their cooperation on Bosnia,
either on this particular resolution or on their cooperation in
the future?

-4-

SECRETARY CHRISTOPHER:
Elaine, I talked with Foreign Minister
Kozyrev both on Friday and then this morning before ~e left and
the ~u6sians are working very intensively to try topersuad~ the
Bosn~an Serbs to negotiate and to come to agreement ~ith the
other two parties. They feel that there are enough prospects of
that happening that they have asked for a delay. TherQ are a
number of things in play. Karadzic, the negotiator ,for the
Bosnian Serbs, has written to Mr. Vance, asking to cpntinue the
discussions.
Reggie Bartholomew, our negotiator, has gone to
the area to meet with various parties. And, under the
circumstances, it seemed to us to be prudent to honor the
request that carne from the Russians to have a two week delay in
the vote.
I would also say that the way the matter ~s
structured, the two week delay is not likely to result in any
delay in actual enforcement if the resolution is adopted on the
26th of May -- the 26th of April. The reason for that is that
the resolution earlier had a two week grace period in it and it
would be our intention not to have that grace period in the new
resolution that will be considered by us and that would be voted
on according to our intention on the 26th.
We find working with the Russians much more satisfactory in the
new situation, no doubt resulting from our cooperation and
partnership on a number of issues~and I think that there
certainly is no direct linkage, but I would have to say that our
working together does provide new opportunities for us to
consult on matters such as the vote in the U.N. After all,
these are multilateral decisions and when you work in a
multilateral context you have to be understanding of the views
of the other parties.

Q: Mr. Secretary, still on Bosnia, what did the United states
know about and did the u.s. have any role in the provision of
ammunition and other related armaments that wer~ mixed in with
humanitarian assistance and found in eastern Bosnia last week?
Some of that ammunition and materiel as I understand it, is
compatible with U.S.-manufactured and perhaps U.s.-shipped
assistance.
SECRETARY CHRISTOPHER: As far as I know, we knew nothing about
the ammunition that was hidden in the humanitarian supplies that
went forwar.d.
Certainly, I knew nothing about it.
It was a
complete surprise and, naturally, a disappointment to me.
Thank you very much.
briefers. )

I'll turn this over to (the background

# # #

'::','. '''.
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dl~.-::.jd;;bi ~~lant S\.:'(_·r(~lary /:~Jluh"~;Illc1!l
(Tokyo, .]upe.n)

'. - -- ' - - - . - - - - -

'J .) J LJ

'I 2 . - - - - - -

BACKGROUND BRIEFING
BY
SENIOR U.S. OFFICIALS
Okura Hotel
Tokyo, Japan
Tuesday, April 13, 1993
OFFICIAL #1:
Welcome to this intimate briefing here.
The
meeting lasted about an hour which was considerably longer than
planned.
It was the first meeting with the new Foreign Minister
for Secretary Christopher and I think it's fair to say that it
was a very cordial first encounter.
And we should note it's the
first of several meetings this week with Japanese leaders.
Both
Secretary Christopher and Secretary Bentsen will be meeting with
their counterparts and, of course, the Prime Minister will be
meeting with them as well as with the President this coming
Friday.
And, as the Secretary said, these intense consultations
on global regional bilateral issues will be a hallmark of the
relationship.
Now, this initial meeting had a heavy emphasis on economic
issues.
And I think, if you break it down, the two main areas
are bilateral economic relations and the G-7 process.
Foreign Minister Muto led off and he noted that right after this
meeting with the Secretary, he would be going to a meeting with
all the Japanese (Cabinet) ministers to put in final shape the
Japanese stimulus package.
And he briefed Secretary Christopher
on the broad outlines of that package.
Foreign Minister Muto
noted that it was important for the U.S. to rebuild its economic
base and he welcomed President Clinton's efforts at domestic
renewal both in reducing the deficit and making America more
competitive.
Secondly, he noted that it is important for Japan
to boost its domestic demand for Japan's economic recovery.
Thirdly, he noted that it is important for both countries to
combine their efforts to promote world economic recovery.
Secretary Christopher then responded.
After some grace notes
about the sadness that Watanabe had to leave his post, noted
that this meeting foreshadowed the one coming up on Friday
between the President and the Prime Minister and that the
President looked forward to that meeting and pledged again to
work closely with the Japanese.

N~ 1 said,
there was a very di:::;tiIlc_l \.::,_unurnic \.::'mphasl~ III tlllS
meeting.
The Secretary affirmed that the U.S. will remain a
Pacific power and shoulder our responslbilities in this region.
But, he also emphasized that this is a new period where economic
relations must be addressed '-"ith great intensity.
In order to
maintain and indeed expand our partnership with Japan, we are
going to have to make progress on economic issues, reduce the
large trade imbalances necessary for economic growth and he was
pleased to have the preview of the Japanese stimulus package
that the Foreign Minister provided.
We do look to the Japanese
macroeconomic policies as well as other policies to help on our
economic challenges.

Secretary Christopher noted that the two nations -- have great
responsibilities for the world economic system, 40 percent of
the world'S GNP.
He said that the stimulus package was a useful
first step.
But, he added that Japan needs several years of
economic growth for the world economic system to be fully
revitalized.
secretary Christopher also said that it was important to address
various structural and sectoral issues.
He welcomed some of the
elements of the package that were described, but he didn't
comment on the specifics of the package, he just (described it)
as __~~eful first ste~.
But, he picked up on the point about
governnlenr---procurement being part of this package and he
inquired, as a specific exchange on whether personal or small
computers would be included in this package as well as super
computers which the Foreign Minister had cited.
Secretary
Christopher noted the disparity of the market share for
foreigners between the public and private purchases of these
c0mputers.
So, it was a particular point that they had an
exchange on.
Q:

What was the answer?

OFFICIAL #1:
Well, why don't
the briefing here?

l~ave

that until I get through

Secretary also emphasized til\.:: importance of the Uruguay
Round and noted that the President had requested fast track
authority from the congress but that we are going to have work
hard and there's going to have to be substantial compromises by
key countries to bring this to a successful conclusion.

T1H?

We then went on to the G-7 conferenc0.
Foreign Minister ~uto
said that the purpose of this confer~nce and process was t')
support President Yeltsin a~d help h~m succeed in his refor~
efforts and he cited three r~asons w~y this was important.
First, to help Russia mOVE- tOward ci~!'locracy; second, toward 0.
market economy; and, thiro, to help ::ct to conduct a moderate.foreign policy, as he put it lon,-;ist",--I1t with law and justiCE.
And he noted the major RUSSin!! eff01::5 underway already in all
three of "t.r:ese ClJ"eas_

In this context, he appreciated the American package announced
at Vancouver -- the Sl.G billion program.
And, he also
expressed Japanese gratitude for the President's solid support
on Japan's position on the Northern Territories.
And, again, he noted that the President and America's leadership
on assistance to Russia was very important and said that, in
addition to multilateral efforts, Japan is deciding on a
bilateral assistance package and he gave some preview of that,
but he made it clear that it's up to the Prime Minister to
announce this package which he will do at the opening of the
session tomorrow.
So, I think that covers the main important
points in the meeting and (Official #2) and others here will be
glad to respond to any questions.

(,):
What'~. tll"
private is~ue,
part of.

1«-P()I1~:;'_o un ~11l:' smell computl-l,
pu))li(: v('rsus
was there a response or was it just noted on the

OFFICIAL #1:
Well, I tI1ink it's fair to say that the Foreign
Minister asserted that it was open to foreign bidding on that,
but the Secretary didn't respond to that.
The Secretary was
very clear to make the point that we wish to have fair access on
the small computers as well as on the supercomputers.
OFFICIAL #2:
I might make one additional point.
When he said
the importance of sustained growth over several years, the
emphasis was on domestic demand, not growth.
Q:
Did you talk at all about the Northern Territories issue and
exactly how Ja0an is approaching it? Have they just put that
issue aside for the moment, do they hope that once they get by
this aid issue, Russia, and Yeltsin in particular, will be more
apt to start new talks on resolving that dispute.
OFFICIAL #2:
I think (the other official) has described the
exchange on the Northern Territories, the expression of
appreciation for our support, and an indication that they have
an interest in the reform process, but there wasn't an extended
exchange on the subject.
Could I just follow up -- what's your impression? Do you
think that Japan is putting this aside indefinitely or just for
th(~ moment?

0FFICIAL #2:
I don't think they're putting it aside, but I
think they recognize the importance of what is happening in
Russia, and are attempting to play their own part within the G-7
context in supporting the reform efforts, which Yeltsin
represents. But, that doesn't mean they're going to put the
Northern Territories issue on the shelf.
OFFICIAL #1:
And the U.S. support for the Japanese position on
this issue remains very solid and that was appreciated by the
Japanese side and the Secretary made clear that continues.
There was a report that Yeltsin might come here in May,
which seemed to suggest that there might be some backchannel
negotiations on the territories going on, but has that become
clear at all?

OFF I C I AL It 2 :
I can' l i 11 urn ina t e .
I ' v l' see nth e sam ere po r t s .
You ought to ask the Foreign Ministry.
They hoped to arrange
such a rnec"t ing before the:> Summi t if it were possible.
When Muto welcomed Clinton's efforts to rebuild the American
economy, can you be more specific about that? Did he sound
wildly enthusiastic, or ...

OFFICIAL #1:
I think you should ask him what their
characterization is.
The impression I think we had is they
generally admired what the President is seeking to do, and
specifically, trying to reduce the deficit and trying to make
America more competitive.
Q:

Is that t'nusual for him to do something like that?

OFFICIAL #2:
Well, I think that there has been a real
enthusiasm for seeing America step up to its problems.
As
politicians, they understand when you ask the public to accept
higher taxes and lower government spending, you're taking on a
big burden.
Interestingly, what they're doing here is adding
public expenditures politically.
They're facing a different set
of problems than we are, and I think their politicians know that
this takes some guts and they appreciate that.
Q:
How is it read when someone like the Secretary of State
comes and says, we have to work on the economic issues with
greater intensity than the last administration and trying to
differentiate the economic policies of the last with this in
tErms of U.S.-Japanese bilateral rela~ions.
Does that create
tension? Is there interest in having more pressure put on by
the United States?

OFFICIAL #2:
I think it represents an acknowledgment that
surpluses have been piling up, and that the economic issues need
to be addressed and this is reinforcing a message that they've
been hearing from Washington for several months.
OFFICIAL #1:
I might add that there wasn't any specific
reference to the previous administration, I think it's a
reference to a longer term trend, namely, that economics assumes
increasing importance in the post-cold war era.
And, this is
not just directed at the previous administration, but a couple
of decades where, in a different environment, you might have
different relative emphasis.
Well, Bentsen just fin~shed saying this administration was
differentiating tough rhetoric from and confused economic policy
with real economic policy.
You guys are not as political as he
is, but he was definitely making an effort to distinguish thls
administration from the past.

OFFICIAL #1:
There is a distinction, but my point is that this
distinction is with a couple of decades of where, perhaps tile
economic problems did not get quite the attention and intensity,
so it isn't just the previous administration, that's the only
point I'm making.
I would agree with the Secretary that it
would also be different than the previous adminstration.
Q:
Just to follow up on that issue, were there any other
specific things that the Secretary asked of the Japanese on the
trade surplus issue? Did he come with some ideas that he wanted
to see implemented or he wanted to see followed up at the
Miyazawa meeting?
OFFICIAL #1:
As I recall, he mentioned of course, the
macroeconomic dimension, but he also said sector and structural
issues have to be addressed, and he noted the Uruguay Round as
well.
So, I think he was noting there were several elements
here.
There had been a lot of suggestions over the last several
weeks that sort of an appropriate level of Japanese contribution
to a G-7 package would be somewhere around $3 billion.
Now,
we're seeing reports that it will be far smaller than that,
about half of that, that the Japanese are thinking that an
adequate level would be to match what the United States
committed at Vancouver, the $1.6 billion.
Will we be
disappointed if the number is that small?

OFFICIAL #1:
We're not talking any numbers.
It was very clear
that this will be announced by the Prime Minister tomorrow, so
it's not appropriate for US to be out in front of their Prime
Minister on this, so I think we should wait and see what the
P!ime Minister has to say tomorrow.
Q:
I'll tell you, it's somewhere in the neighborhood of $1.8
billion.
Is that a disappointment to the United States?
OFFICIAL #1:
As I have Just said, I think we should wait and
see what the Prime Hinister says tomorro·w, becClUs\~ il' ,OJ not
right for US to preview what he's going to say.
Back on trade, are there any particular sectors that the
Secretary pressed 01 introduced ideas on?

OFFICIAL #1:
No, there was one specific exchange but that was
sort of a spontaneous response to some of the details the
Foreign Minister set forth about their package, but it was just
a general point that we have to attack these economic problems
on several levels.

Why, if I may ask, did you decidl:: not to press specific
trade issues in this forum at this time?

OFFICIAL #1:
First, let me say that this is the first of many
meetings that will be held, and there will be other issues,
including beyond economics, obviously, as well, as the economic
issues that dominated this session.
And I think it was
important, in their first encounter to get out the broader
themes.
Was there any mention at all of the U.S.-Japan security
treaty or security issues, or was it, as you said, pretty much
on economics~
Q:

OFFICIAL #1:
Well, the Secretary led in the context, and I
think his airport statement also made very clear, that we will
remain a Pacific power and obviously, this includes our security
alliance with Japan, and that's a broad context.
But again,
this was an initial encounter.
They had an hour only, and
although that was longer than planned, and I'm sure other issues
will come up in subsequent meetings this week.
Well, the Foreign Minister told the Secretary -- broad
outlines as you put it -- about the dimensions about the
contribution to helping Russia, what was the Secretary's
reaction')

OFFICIAL # 1 :
the details.

Well,

I think he would want to wait until he sees

He gave him an outline, did the Secretary jump out of his
chair and say, for a poor country, you're really knocking
yourself out? Or?

OPFICIAL #1:
I think he noted the importance of Japan's making
a significant contribution.
I think we should wait until we see
what the Prime Minister has to say before we even start
commenting on it.
Q:
Why does the United States keep repeating this mantra that
we're going to remain a PaClfic power.
What is the background
on this?

OFFICIAL #1:
Well, the background is that in the first place,
it has the added virtue of being true.
We are going to remaln a
Pacific power.
It's extremely -- seriously, it's an important
point. We have tremendous interests in the Pacific -- security,
economic, political -- I don't have to elaborate them for this
group, and we don't leave any doubt in the minds of the Pacific
nations, including the most important one for us, Japan, that we
are going to stay on in Asia because of our self-interest.
So,
it's very important to -- with a new administration, at the end
of the Cold W~. -- to reassert and affirm our staying power ln
'...11e Pacific.

HdS

ll1c:ll

de:t'.c'rmir:ation been calle:ci into questio:e

OFFICIAL #1:
I think it's fair to say, whether it's scholars or
journalists, they ",'onder with, at the end of the Cold War and
the domestic emphasis and so on, whether somehow the U.S. is
going to lose interest in the Pacific.
~ don't think
governments question unneccessarily, but we want to preempt any
such question.
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