[Budget of the U.S. Government ]
[From the U.S. Government Printing Office, www.gpo.gov]


 


------------------------------------------------------------------------
 
                 BUDGET OF THE UNITED STATES GOVERNMENT 

------------------------------------------------------------------------

                            Fiscal Year 1997 





                          THE BUDGET DOCUMENTS 

                                    

    Budget of the United States Government, Fiscal Year 1997 contains a 
summary of the President's budget proposals.                            
                                                                        
The following additional budget documents should be available the week  
 of March 18, 1996.                                                     
                                                                        
    Budget of the United States Government, Fiscal Year 1997--Supplement 
contains the Budget Message of the President and information on the     
President's FY 1997 budget proposals.                                   
                                                                        
    Analytical Perspectives, Budget of the United States Government,    
Fiscal Year 1997 contains analyses that are designed to highlight       
specified subject areas or provide other significant presentations of   
budget data that place the budget in perspective.                       
                                                                        
    It includes economic and accounting analyses; information on Federal 
receipts and collections; analyses of Federal spending; detailed        
information on Federal borrowing and debt; the Budget Enforcement Act   
preview report; current services estimates; and other technical         
presentations. It also includes information on the budget system and    
concepts and a listing of the Federal programs by agency and account.   
                                                                        
    Historical Tables, Budget of the United States Government, Fiscal   
Year 1997 provides data on budget receipts, outlays, surpluses or       
deficits, Federal debt, and Federal employment covering an extended time 
period--in most cases beginning in fiscal year 1940 or earlier and      
ending in fiscal year 2002. These are much longer time periods than     
those covered by similar tables in other budget documents. As much as   
possible, the data in this volume and all other historical data in the  
budget documents have been made consistent with the concepts and        
presentation used in the 1997 Budget, so the data series are comparable 
over time.                                                              
                                                                        
    Budget of the United States Government, Fiscal Year 1997--Appendix  
contains detailed information on the various appropriations and funds   
that constitute the budget designed primarily for the use of the        
Appropriations Committee. The Appendix contains more detailed financial 
information on individual programs and appropriation accounts than any  
of the other budget documents. It includes for each agency: the proposed 
text of appropriation language, budget schedules for each account, new  
legislative proposals, explanations of the work to be performed and the 
funds needed, and proposed general provisions applicable to the         
appropriations of entire agencies or group of agencies. Supplemental and 
rescission proposals for the current year are presented separately.     
Information is also provided on certain activities whose outlays are not 
part of the budget totals.                                              
                                                                        
    A Citizen's Guide to the Federal Budget, Budget of the United States 
Government, Fiscal Year 1997 is an Office of Management and Budget      
publication that provides general information about the Budget and the  
budget process for the general public.                                  
                                                                        
    Budget System and Concepts, Fiscal Year 1997 contains an explanation 
of the system and concepts used to formulate the President's budget     
proposal.                                                               
                                                                        
                 AUTOMATED SOURCES OF BUDGET INFORMATION                
                                                                        
  The information contained in these documents is available in          
electronic format from the following sources:                           
                                                                        
     The budget documents are available on CD-ROM from STAT-USA 
             and the Government Printing Office. For more information,  
             see the order form at the back of this document.           
                                                                        
     The budget documents can be accessed using a computer modem 
             as well as on the Internet through the U.S. Department of 
             Commerce's STAT-USA information service. There is no charge 
             for use of this service when used to obtain budget 
             information.  

               BBS Access: Set your computer communications software 
             parameters to 8-bit words, no parity, and 1 stop-bit, then 
             use your computer to contact STAT-USA's Economic Bulletin 
             Board (EBB) at one of the following modem numbers: 
                    
                 2400 bps (202) 482-3870 
                 9600 bps (202) 482-2584              
                 14400 bps (202) 482-2167             
                                                                         
               When connecting to the EBB, use the word GUEST as your 
             login userid. At the EBB's main information menu, select 
             the [P]residential option for a list of budget documents 
             that are available for online viewing or downloading to 
             your computer.         
                                                                        
               Internet Access: Budget documents are available through 
             STAT-USA's Internet service using the file transfer 
             protocol (ftp), gopher, and the World Wide Web (WWW) at the 
             following addresses:                            
                                                                        
               STAT-USA ftp address......  ftp.doc.gov/pub/BudgetFY97  
               STAT-USA gopher address...  gopher.doc.gov/BudgetFY97    
               STAT-USA WWW URL..........  http://www.doc.gov/BudgetFY97
/index.html                  
                                                                        
               For more information on access to STAT-USA information 
             services, call (202) 482-1986. 

     Copies of the database used to generate the budget numbers 
             may be purchased from the U.S. Department of Commerce, 
             National Technical Information Service, Springfield, VA 
             22161, telephone (703) 487-4650. Refer to stock number 
             PB95-502340.             
                                                                        
------------------------------------------------------------------------

                            GENERAL NOTES 

  1. All years referred to are fiscal years, unless otherwise noted. 
  2. Detail in this document may not add to the totals due to rounding. 

------------------------------------------------------------------------

     --------------------------------------------------------------
           For sale by the U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328 
                           ISBN 0-16-048495-2 



                             THE WHITE HOUSE 

                               WASHINGTON 

                            February 5, 1996 


To the Congress of the United States: 

    In accordance with 31 U.S.C. Sec. 1105(a), I am transmitting my 1997 
Budget to Congress. 

    This budget provides a thematic overview of my priorities as we 
continue to discuss how to balance the budget over the next seven years. 
It also includes the Administration's new economic assumptions.  

    Because of the uncertainty over 1996 appropriations as well as 
possible changes in mandatory programs and tax policy, the Office of 
Management and Budget was not able to provide, by today, all of the 
material normally contained in the President's budget submission. 
I anticipate transmitting that material to Congress the week of 
March 18, 1996. 

                                       William J. Clinton 




                            TABLE OF CONTENTS

                                                                    Page 
    AN AGE OF POSSIBILITY.........................................     1

    AMERICA AND THE WORLD.........................................     5

    A STRONGER NATION AT HOME

            Strengthening Medicare................................     8

            Strengthening Medicaid and Expanding Health Coverage..     9

            Reforming Welfare.....................................    10

            Making Work Pay.......................................    11

            Meeting America's Challenges..........................    12

            Providing Tax Relief..................................    13

            Closing Corporate Loopholes and Other Tax Measures....    14

    SUMMARY TABLES................................................    15




                          AN AGE OF POSSIBILITY

    The President's 1997 Budget achieves two basic objectives:

  It reaches balance in seven years, making real cuts in 
          entitlements and discretionary spending while providing modest 
          tax relief; and
  It maintains our commitments to economic growth and to 
          protecting the most vulnerable Americans, including senior 
          citizens, working families, and children.

    The budget strengthens Medicare and Medicaid; invests in education 
and training, the environment, science and technology, and other 
priorities; reforms the welfare system; provides for a strong defense; 
and provides tax relief to help families raise their children, send 
their children to college, and save for the future.

Reaching Balance

    The budget reflects the President's most recent proposal in his 
budget negotiations with the bipartisan congressional leadership. 
Because it reaches balance in 2002 by basically using the economic and 
technical assumptions of the Congressional Budget Office (CBO), it 
fulfills a goal that the President shares with Congress. Using the 
economic and technical assumptions of the Office of Management and 
Budget, this budget projects a surplus of $40 billion in 2002.

    The President believes that Congress should quickly enact the 
savings that he and congressional leaders have in common in their budget 
proposals--savings that are sufficient not only to balance the budget in 
seven years, but to provide a modest tax cut. As the President said in 
his State of the Union address, we should make permanent deficits a part 
of yesterday's legacy.

    To reach balance, this budget saves $596 billion over seven years by 
reforming Federal entitlement programs, cutting deeply in discretionary 
spending, and limiting corporate subsidies. It saves $124 billion in 
Medicare, $59 billion in Medicaid, $40 billion in welfare programs, $56 
billion in other mandatory programs, $297 billion in discretionary 
spending, and $59 billion in corporate subsidies and other revenue 
provisions.

    The budget also includes a mechanism, known as a ``trigger,'' to 
ensure that the budget reaches balance under either CBO or OMB 
assumptions. Under this trigger, most of the tax cuts end after 2000 if 
the deficit is not at least $20 billion below CBO's initial estimate for 
that year. If, on the other hand, the deficit is at least $20 billion 
below estimates, then (1) the tax cuts remain in place, and (2) the 
amount that exceeds $20 billion is applied, first, to reduce the 
discretionary spending cuts and, then, to a larger tax cut and more 
deficit reduction.

Spurring Economic Growth

    From the start, the President's economic program has emphasized one 
primary concern--to raise the standard of living for average Americans 
now and in the future. His budget policy has played a central role.

    By cutting the deficit nearly in half in the last three years, we 
have reduced Federal borrowing, making more funds available in the 
private markets so that businesses can invest, grow more productive, 
expand, and create jobs. We also have shifted resources to education and 
training, science and technology, and other priorities, not only to make 
businesses more competitive but to give Americans the skills they need 
to compete in the new economy.

    Like the President's previous budgets, this budget maintains his 
investments in education and training, science and technology, 
environmental protection, law enforcement, and other key priorities. 
These include the Head Start program for disadvantaged children; the 
Safe and Drug-Free Schools and Communities program to create safe 
learning environments; Goals 2000, which helps States and school systems 
extend high academic standards, better teaching, and better learning to 
all students; AmeriCorps, through which 25,000 Americans a year serve 
their communities and earn money for college; lower cost student loans 
with greatly increased flexibility for repayment; Pell grant 
scholarships for needy students; and Skill Grants (or job training 
vouchers) for dislocated workers and low-income adults.

    The budget also protects environmental enforcement through the 
Environmental Protection Agency's operating program; programs to protect 
national parks and other sensitive resources; and basic and applied 
research and technology development. It funds the Community Oriented 
Policing Services (COPS) initiative to put 100,000 more police on the 
street by 2000; more border patrols to prevent illegal immigration and 
more inspections to prevent the hiring of illegal immigrants; and the 
Community Development Financial Institutions fund to spur growth and 
create jobs in communities that have been left behind.

    In addition, the budget includes funds to launch the important 
initiatives that the President outlined in his State of the Union 
address. In education, the budget funds an educational technology 
initiative to connect every classroom to the information superhighway by 
2000; expanded work-study to help one million students work their way 
through college by 2000; a $1,000 merit scholarship for the top five 
percent of graduates in every high school; and charter schools to let 
parents, teachers, and communities create public schools to meet their 
own children's needs.

    For workers, the budget funds an initiative, which the White House 
Conference on Small Business recommended, to make it easier for small 
businesses and farmers to establish their own pension plans. For the 
environment, it funds tax incentives to encourage companies to clean up 
abandoned, contaminated industrial properties in distressed areas. And 
for law enforcement, it provides funds with which the FBI and other law 
enforcement agencies will launch a war on juvenile crime and gangs that 
involve juveniles.

A Period of Change

    The Nation has entered a period of profound change--from an economy 
based on traditional manufacturing to one based on information--the most 
profound change since the transformation from agriculture to 
manufacturing a century ago. It is a period of great opportunity and 
great uncertainty, a period that demands new thinking and new responses.

    In this age of possibility, the United States must continue to 
provide leadership across the globe and cooperate in the community of 
nations, not retreat from it. At home, the public and private sectors 
must work together; we cannot rely on just one or the other. Americans 
of all generations must come together in the interests of all.

    For this new era, we need the right kind of Government and the right 
kind of policies. We need a Government that creates opportunity, not 
bureaucracy, one that works with State and local governments, 
businesses, and religious, charitable, and civic associations. We need 
policies that grow the middle class and shrink the underclass. And we 
need to invest in our future, both by balancing the budget and by 
finding additional resources for education and training, the 
environment, science and technology, and other priorities.

    Government should not do for individuals what they can do for 
themselves. We must ask more of ourselves, expect more of one another, 
and meet the challenges that confront us together. We must strive to 
enable all of our people to make the most of their lives with stronger 
families, more educational opportunity, economic security, safer 
streets, a cleaner environment, and a safer world.

The Record to Date

    Three years into this Administration, the Nation is stronger and 
moving in the right direction. The economy continues to grow, with the 
lowest combined rates of unemployment and inflation in nearly three 
decades. We have created nearly eight million new jobs--over seven 
million of them in the private sector, and a million of those in basic 
industries like construction and automobiles. Exports are at an all-time 
high. And we have cut the budget deficit nearly in half, bringing down 
interest rates and, in turn, the costs of home mortgages, car payments, 
and credit card rates.

    We are also cutting the size of Government. We have reduced the 
Federal workforce by more than 200,000 employees in less than three 
years, and we will continue to reduce the workforce in the years ahead. 
Already, we have the smallest Federal workforce in 30 years; as a share 
of the Nation's civilian workforce, it is the smallest since 1933.

    With the help of Vice President Gore's National Performance Review, 
we are streamlining the bureaucracy, overhauling the procurement system, 
and delivering better service--that is, creating a Government that 
``works better and costs less.'' And to ease the burden on small 
businesses and average Americans, we are cutting 16,000 pages of Federal 
regulations.

    Meanwhile, communities across America are coming together. Crime is 
down in most major cities and, across America, the poverty rate is down, 
the welfare rolls are down, the Food Stamp rolls are down, the teen 
pregnancy rate is down, and the divorce rate is down.

    In the world at large, American leadership is strong, bringing new 
hope for peace. Today, more people than ever live free and, with our 
help, peace is taking root in Haiti, in Northern Ireland, in the Middle 
East, and even in Bosnia, where U.S. soldiers are enforcing an historic 
settlement. We are safer at home as well; today, not a single Russian 
nuclear missile is aimed at America's children.

Honoring Our Commitments

    To remain strong, we must do more than play a leading role on the 
military and diplomatic front. We also must honor our financial 
obligations. The President urges Congress to send him a straightforward, 
full-year extension of the Nation's debt limit, ensuring that the United 
States can honor our obligations, make timely payments to Social 
Security, veterans, and other beneficiaries, and meet other commitments.


                          AMERICA AND THE WORLD 

    The President's budget provides the resources to sustain the 
leadership role of the United States in the struggle for freedom and 
peace throughout the world.

    While some voices call for a U.S. retreat into isolationism, we have 
chosen to engage. Our diplomatic leadership continues to be critical to 
keeping the peace and defending our interests in major regions of the 
world.

    We have stimulated and led the peace process in the Middle East, 
helping achieve peace between Israel and Jordan and an interim agreement 
between Israel and the Palestinians and fostering continuing discussions 
between Israel and Syria. In Eurasia, we have strengthened our 
relationship with Russia and the other New Independent States and worked 
to secure free markets and democracy in that critical region. In Europe, 
we have crafted a comprehensive peace agreement among the warring 
factions in Bosnia and led a cooperative NATO effort to enforce that 
agreement. We also lent critical support to efforts to achieve a 
settlement of the long-running conflict in Northern Ireland. In Asia, we 
negotiated an agreement with North Korea that halted, and will 
eliminate, its nuclear weapons program and created an international 
coalition to carry out that agreement. Throughout the globe, we lead in 
the struggle to strengthen democracy and free markets, with singular 
successes in central Europe, Asia, Latin America, and South Africa. 

    Not only does our leadership secure our interests and promote our 
values, it is a key ingredient in dealing with the new threats of the 
post-Cold War era. Leading the global effort for arms reductions and 
nonproliferation continues to be an integral element of our diplomacy 
and national security strategy. Our efforts support a broad range of 
programs to reduce the threat of nuclear and chemical weapons. We are 
making our children's future safer by reducing existing arsenals and 
ensuring that rogue states and terrorist groups do not acquire these 
terrible weapons or the materials and technologies needed to make them.

    Other threats know no national borders; America must lead in 
confronting such problems as ethnic and national conflicts which 
threaten regional stability; terrorism, international crime, and drug 
trafficking, which directly threaten our free and open society; and 
large-scale environmental degradation.

    More than ever, our domestic and foreign economic interests are 
closely intertwined, and mutually reinforcing. Economic and trade issues 
are increasingly at the forefront of our diplomacy. We need a strong 
economy to sustain our military forces and diplomatic strategy. And we 
must be global leaders in trade and investment if we are to open foreign 
markets and create the high-wage jobs that will raise the living 
standards of our people.

    With regard to trade, we have created new markets across the world 
for our exports, which have reached an all-time high. Along with 
securing legislation to implement the General Agreement on Tariffs and 
Trade and the North American Free Trade Agreement, we have completed 
over 80 other trade agreements.

    Our defense capability is the bulwark which sustains and supports 
our diplomacy. This budget continues our critical support for the 
world's strongest and most ready military force--a force designed to 
fight successfully two nearly simultaneous regional conflicts. Our 
weapons are state-of-the-art, and our military is the best equipped, 
best trained, and best prepared in the world.

    When necessary, we have sent the men and women of our military into 
action. Only when U.S. forces were about to land could our negotiators 
convince the unwelcome dictators to leave Haiti; we then reinstalled the 
democratically-elected leader and, in the process, stemmed the large-
scale migration from Haiti to our borders. We worked with NATO forces to 
bring a cease-fire to Bosnia. With Iraq once again threatening Kuwait, 
we moved quickly to send additional forces to the region. And we saved 
hundreds of thousands of lives by employing our military forces in 
humanitarian efforts in Rwanda.

    America cannot be everywhere, nor can we do everything. But where 
our interests and values are sufficiently at stake and our action can 
make a difference, the United States must act. In this age of 
possibility, it is clear that this Nation must continue to lead; our 
leadership has not only helped to bring peace to long-warring nations, 
but it also builds on a half-century of security and prosperity that 
Americans continue to enjoy.


                        A STRONGER NATION AT HOME

    This budget reaches balance in seven years in the right way--by 
cutting wasteful spending while upholding our commitments to senior 
citizens, to children, to working families, and to the needy.

    It achieves a balanced budget in 2002, a goal to which the President 
is committed, by basically using the economic and technical assumptions 
of the Congressional Budget Office; and it achieves a surplus of $40 
billion under economic and technical assumptions of the Office of 
Management and Budget. But it also protects our fundamental values as 
Americans.

    The President and congressional leaders have worked hard to find 
agreement on a plan to balance the budget over seven years. While they 
have not finished the job, the President believes strongly that their 
negotiations have been productive and have brought the two sides closer 
together. He is committed to doing whatever he can to complete the task.

    In their talks, the President and the leaders have outlined a 
variety of proposals. The minimum amounts of savings which the plans 
have in common in the major budget categories (e.g., $124 billion in 
Medicare, $297 billion in discretionary spending) add to some $700 
billion--enough to balance the budget and also provide a modest tax cut.

    To be sure, significant policy differences remain in the 
negotiations--over the size and distribution of a tax cut; whether 
Medicaid continues to guarantee health coverage to senior citizens, the 
poor, and people with disabilities; and so on. But the President 
believes the Administration and Congress should balance the budget now, 
setting aside the remaining policy differences for another day. He has 
proposed that the two sides quickly enact the savings that they have in 
common and give the American people a balanced budget.

    The President's budget saves $596 billion over seven years. Among 
its major elements, the budget:

   saves $124 billion in Medicare, strengthening and improving 
          the program and guaranteeing the solvency of the Part A trust 
          fund for over a decade;
   saves $59 billion in Medicaid, reforming the program but 
          continuing the guarantee of meaningful health and long-term 
          care coverage for the most vulnerable Americans;
   saves $40 billion through real welfare reform, moving 
          recipients to work while protecting children;
   saves $297 billion in discretionary spending, cutting 
          wasteful and lower priority spending but investing in 
          education and training, the environment, science and 
          technology, law enforcement, and other priorities that will 
          raise living standards and improve the quality of American 
          life;
   cuts taxes by $99 billion, providing tax relief to tens of 
          millions of middle-income Americans and to small businesses; 
          and
   saves $59 billion by ending corporate subsidies and other tax 
          loopholes.

    These major elements of the President's budget are described in more 
detail below.


                         STRENGTHENING MEDICARE 

    The President's Medicare plan strengthens and improves the program, 
reducing spending by a net $124 billion over seven years and 
guaranteeing the solvency of the trust fund for more than a decade. 
Specific reforms give seniors more choices among private health plans, 
make Medicare more efficient and responsive to beneficiary needs, attack 
fraud and abuse through programs praised by law enforcement officials, 
cut the growth rate of provider payments, and hold the Part B Premium at 
25 percent of program costs.

Provider Payment Reforms and Program Savings

  Hospitals. The budget reduces the annual inflation increase or 
          ``update'' for hospitals and payments for capital; reforms 
          payments for Disproportionate Share Hospitals; and reforms the 
          payment method for outpatient departments while protecting 
          beneficiaries from increasing charges for those services.
  Managed Care. The budget reforms payments by using reasonable 
          rate-of-growth limits on updates for managed care payments and 
          reducing the current geographic variation in payments.
  Physicians. The budget reforms physician payments by paying a 
          single update for all physicians and replaces current ``volume 
          performance standards'' with a sustainable growth rate.
  Home Health Care/Skilled Nursing Facilities. The budget 
          implements a series of interim payment reforms before the 
          establishment of separate prospective payment systems for home 
          health care and skilled nursing facilities.
  Fraud and Abuse. The budget introduces aggressive and 
          comprehensive policies to stamp out Medicare waste, fraud, and 
          abuse, and extends and enhances Medicare secondary payor 
          policy to ensure that Medicare pays only when it should.
  Other Providers. The budget freezes or reduces payments for 
          durable medical equipment and ambulatory surgical centers.
  Beneficiaries. The budget continues, but does not increase, 
          the requirement that beneficiaries pay 25 percent of Part B 
          costs.

Provisions to Improve Rural Health Care

    The President's plan enhances access to, and the quality of, health 
care in rural areas. To do so, it extends the Rural Referral Center 
program, directs Medicare reimbursement for nurse practitioners and 
physician assistants, improves the Sole Community Hospital program, and 
expands the Rural Primary Care Hospital program.

Program Improvements That Expand Choices and Add Preventive Benefits

    The President's plan transforms the traditional fee-for-service 
program from a bill-paying insurance program into a responsive health 
plan by giving Medicare the authority to adopt many of the purchasing 
and quality techniques pioneered by private sector payors.

    The budget also expands and improves Medicare managed care by:

   ensuring beneficiary protections while increasing the types 
          of plans--including Preferred Provider Options (PPOs) and 
          Provider Service Networks (PSNs)--available to seniors; and
   instituting a coordinated annual open enrollment process--
          similar to that used by the Federal Employees Health Benefits 
          Plan (FEHBP)--during which beneficiaries use comparative 
          information to choose among managed care and supplemental 
          insurance options.

    In addition, the budget expands coverage of preventive benefits to 
include annual mammograms and the elimination of mammography 
coinsurance, colorectal cancer screening, and increased payments for flu 
shots. Finally, the budget introduces a respite care benefit to provide 
some relief for families caring for relatives with Alzheimer's disease.


          STRENGTHENING MEDICAID AND EXPANDING HEALTH COVERAGE

    The President's plan for Medicaid reforms the program but preserves 
the guarantee of health and long-term coverage for the most vulnerable 
Americans. It saves $59 billion over seven years responsibly, by 
limiting spending on a per-person basis (a ``per capita cap'') and 
reducing Disproportionate Share Hospital payments and retargeting them 
to hospitals that serve large numbers of Medicaid and uninsured 
patients.

    The plan provides special payments for States to transition into the 
new system, and to meet the most pressing needs. It also gives States 
unprecedented flexibility to administer their programs more efficiently. 
Finally, this plan retains current nursing home quality standards and 
continues to protect the spouses of nursing home residents from 
impoverishment.

Program Savings

  Per capita cap. Under the budget, a per capita cap limits 
          Federal spending growth per person while retaining current 
          eligibility and benefit guidelines. This approach guarantees 
          that the elderly, people with disabilities, and pregnant women 
          and children who depend on Medicaid will remain eligible for 
          health benefits while it cuts the rate of increase in spending 
          to a level that States and the Federal Government can support. 
          In contrast to a block grant, the Administration's plan 
          protects States facing population growth or economic 
          downturns.
  Disproportionate Share Hospital Payments (DSH). The budget 
          reduces DSH payments and retargets them to hospitals that 
          serve a large proportion of Medicaid and uninsured patients, 
          including children's and public hospitals. It provides special 
          payments for Federally Qualified Health Centers, Rural Health 
          Clinics, and States with large numbers of undocumented 
          immigrants.

Provisions to Increase State Flexibility

    The budget includes a number of policies to give States more 
flexibility in managing their Medicaid programs, such as:

  Boren amendment. The plan repeals the so-called ``Boren 
          amendment,'' eliminating Federal provider payment requirements 
          for hospitals and nursing homes.
  Managed care. The plan allows States to enroll beneficiaries 
          in managed care without Federal waivers.
  Home- and community-based care. The plan allows States to move 
          populations who need long-term care from nursing homes to 
          home- and community-based settings, without having to seek 
          Federal waivers.
  Coverage expansions without waivers. The plan enables States, 
          without waivers, to expand coverage to any person whose income 
          is less than 150 percent of the poverty line.

Protections for Low-income Seniors and Native Americans

    The President's plan retains the policy of helping low-income 
seniors through the shared Federal-State responsibility for their 
Medicare premiums, copayments, and deductibles. It also retains payment 
protections for Medicaid-eligible Native Americans treated in Indian 
Health Service facilities. These protections are not subject to the per 
capita cap.

Reforms to Make Health Coverage More Accessible and Affordable

    In his State of the Union address, the President challenged Congress 
to enact insurance reforms that would enable more Americans to maintain 
health insurance coverage when they change jobs, and stop insurance 
companies from denying coverage for pre-existing conditions. This budget 
requires that plans make coverage available to all groups of businesses, 
regardless of the health status of any group members. Insurers would 
have to provide an open enrollment period of at least 30 days for all 
new employees (whether or not they were previously insured), and 
insurers could not individually underwrite new enrollees--i.e., their 
premiums would have to match other enrollees' with similar demographic 
characteristics.

    To increase affordability, the President's insurance reforms phase 
out the use of claims experience, duration of coverage, and health 
status in determining rates for small businesses. To put the self-
employed on a more equal footing with other businesses, the reforms 
gradually raise the self-employed tax deduction from 30 to 50 percent. 
And to help give small businesses the purchasing clout that larger 
businesses have, the budget gives technical assistance and $25 million a 
year in grants with which States can set up voluntary purchasing 
cooperatives.

Health Insurance for the Temporarily Unemployed

    The budget gives individuals who lose their health insurance when 
they lose their jobs premium subsidies to pay for private insurance 
coverage for up to six months. States would receive funding to design 
and administer the program, which would provide coverage for about 3.8 
million Americans a year. During the four-year period for which this 
program is authorized, a Commission would study and provide 
recommendations to the Administration and Congress as to making it 
permanent.


                            REFORMING WELFARE

    For too long the welfare system has undermined the values of work 
and family, not strengthened them. The Administration has made steady 
progress in reforming welfare. In 1993, the President's economic plan 
gave tax cuts to 15 million working families through the Earned Income 
Tax Credit, which rewards work over welfare. The Federal Government 
collected a record $10 billion in child support in 1994. The 
Administration has given 35 States the freedom to experiment with 
welfare initiatives to move people from welfare to work and protect 
children.

    The President is determined to keep working with Congress to enact a 
bipartisan welfare reform bill that moves people from welfare to work 
and protects children. The President's plan repeals the existing system, 
replacing it with one that requires work and provides child care so 
people can leave welfare for work. It saves $40 billion over seven years 
while promoting sweeping work-based reform and protecting children.

Time-Limited Employment Assistance and Child Protection

    Everyone who can work should go to work, and no one who can work 
should be able to stay on welfare forever. The budget repeals Aid to 
Families with Dependent Children (AFDC) and replaces it with a new, 
time-limited, conditional entitlement in return for work. Within two 
years, parents must go to work or lose their benefits, and after five 
years, benefits end. The budget gives States new flexibility to design 
their own approach to welfare reform. At the same time, the plan 
provides vouchers for children whose parents reach the time limit, and 
protects States in the event of economic downturn or population growth.

    The budget authorizes $3.8 billion above current law for child care 
to move recipients from welfare to work, and to help the working poor. 
It also includes an $800 million performance bonus fund to reward States 
that move people from welfare to work. It has tough new child support 
enforcement measures and a new Work First program to make welfare a 
transitional work-based system. And it preserves the national commitment 
to foster care and adoption assistance programs, preserving States' 
ability to respond to growing caseloads.

Supplemental Security Income (SSI) For Disabled Children and Others

    The budget tightens eligibility standards for childhood disability 
benefits; retains full cash benefits for all eligible children; tightens 
eligibility for children now on the rolls, but provides that children 
found ineligible would not lose benefits until January 1998; trims cash 
benefits of children in families with relatively higher incomes; 
eliminates eligibility for SSI on the basis of drug addiction or 
alcoholism; adds resources for more continuing disability reviews; and 
provides new tools to collect SSI overpayments.

Food Stamps and Child Nutrition

    The budget maintains the national nutrition safety net for the Food 
Stamp and Child Nutrition programs, enabling them to respond to the 
changing circumstances of families and children they serve.

    Under the budget, the Food Stamp program continues to index basic 
benefits to inflation; all energy assistance counts as income; a work 
requirement makes adults aged 18 to 50 with no dependents ineligible for 
Food Stamps after six months of each year unless they work 20 hours a 
week or participate in workfare or training (although eligibility 
continues if a State fails to supply a training or workfare slot); and 
new integrity measures crack down on fraudulent Food Stamp trafficking 
and reduce program waste.

    The budget better targets food subsidies for Family Day Care Homes, 
and makes other minor changes in Child Nutrition programs.

Title XX

    The President's plan cuts the Social Services Block Grant by 10 
percent, beginning in 1996.

Benefits for Legal Immigrants

    The budget tightens sponsorship and eligibility rules for SSI, Food 
Stamps, and AFDC for non-citizens, forcing sponsors to bear greater 
responsibility for those they encourage to come to the United States. It 
counts (or ``deems'') sponsors' income in determining whether immigrants 
are eligible for benefits--until immigrants become citizens.

    It also preserves eligibility for Medicaid; maintains the exemption 
for the disabled and the very elderly from deeming; and establishes a 
uniform definition of eligibility across the AFDC, Food Stamps, SSI, and 
Medicaid programs.


                             MAKING WORK PAY 

    Reward should follow responsibility. Those who play by the rules--
who work hard, especially to support a family--should see the benefit of 
their efforts. With wages at the low end of the income scale often 
lagging, and with the task of parenting only getting harder, the budget 
provides support to make that hard work pay.

The Earned Income Tax Credit (EITC)

    The budget ensures that low- and moderate-income taxpayers are 
rewarded for work and helped in meeting their family responsibilities 
through the EITC. The budget protects the EITC's dramatic expansion of 
1993 that helped reward work for over 15 million families and 
households. Consistent with the Administration's multi-faceted efforts 
to improve compliance, the budget saves $5 billion by improving both the 
targeting of the EITC and compliance while continuing to ensure that 
eligible and deserving workers can claim and receive the EITC.

The Minimum Wage

    In terms of purchasing power, the minimum wage is near a 40-year 
low. It is well below the minimum needed for a full-time, full-year 
worker to support a family. The best economic evidence suggests that a 
moderate increase in the minimum wage would improve the standard of 
living of millions of workers at little or no economic cost. The 
President proposes to increase the minimum wage from $4.25 to $5.15 per 
hour, in two equal steps.


                      MEETING AMERICA'S CHALLENGES

    The budget cuts discretionary spending by $297 billion over seven 
years, while investing in education and training; the environment; 
science and technology; law enforcement; and other priorities to help 
raise living standards and the quality of life for average Americans.

    While shifting available resources to high-priority investments, the 
budget also makes choices among non-investment programs. It limits cuts 
in the most important of those non-investments by eliminating others and 
applying recommendations of the National Performance Review on cutting 
red tape and bureaucracy.

    Nothing is more important to future living standards than education 
and training. The workers of today and tomorrow will need the best 
education and skills they can get to acquire high-wage jobs in the new 
global economy. The budget funds a broad agenda of life-long learning by 
investing in Head Start for disadvantaged children; the Safe and Drug-
Free Schools and Communities program to create safe learning 
environments; Goals 2000 to help States and school systems extend high 
academic standards, better teaching, and better learning to all 
students; AmeriCorps to help young Americans serve their communities and 
earn money for college; expanded college scholarships to cover more 
recipients and increase the maximum grants; and, finally, expanded 
School-to-Work opportunities and improved job training for dislocated 
workers and low-income adults. It also funds an educational technology 
initiative to make children technologically literate and connect every 
classroom to the information superhighway by 2000; expanded work-study 
to help one million students work their way through college by 2000; a 
$1,000 merit scholarship for the top five percent of graduates in every 
high school; and charter schools to let parents, teachers, and 
communities create public schools to meet their own children's needs.

    The budget protects the environment and public health, placing a 
priority on environmental enforcement and increasing funds for the 
Environmental Protection Agency's operating program--the backbone of our 
efforts to protect the environment. It continues the President's 
commitment to protect the national parks and forests, wildlife refuges, 
other public lands, sensitive ecosystems (such as the Northwest Forests 
and South Florida Everglades), and marine sanctuaries. The budget funds 
Superfund to protect residents near toxic waste sites, and gives States 
more flexibility to ensure water quality by consolidating the Clean 
Water and Safe Drinking Water revolving funds. In addition, the budget 
supports the Agriculture Department's Water 2000 initiative to bring 
clean water to rural areas. It also promotes energy efficiency in 
Government-owned and operated buildings and in privately-owned buildings 
through voluntary partnerships, and promotes the use of alternative 
energy sources. It provides funds to address a wide range of research 
and international environmental challenges, including global climate 
change, ozone depletion, and commitments under the North American Free 
Trade Agreement. It also funds tax incentives to encourage companies to 
clean up ``brownfields''--abandoned, contaminated industrial properties 
in distressed areas.

    The budget also invests in science and technology, through a 
balanced mix of basic research, applied research, and technology 
development, including through cooperative projects with private 
industry and universities. It adds funds for biomedical and behavioral 
research at the National Institutes of Health, for basic research and 
education at the National Science Foundation, for basic research at NASA 
(including Mission to Planet Earth) and other agencies, and for such 
important initiatives as the Advanced Technology Program and the 
Technology Reinvestment Project.

    Finally, the budget continues the President's aggressive efforts to 
combat crime, which have helped to dramatically reduce violent crime in 
major cities. The budget fully funds the President's Community Oriented 
Policing Services (COPS) initiative, adding 23,000 more police in local 
communities across the country, bringing the total additional police 
under COPS to 100,000 by 2000. Also, it funds the Violent Crime 
Reduction Trust Fund that, among other things, will expand support for 
State and local crime-fighting activities and prisons. It provides funds 
with which the FBI and other law enforcement agencies will launch a war 
on juvenile crime and gangs that involve juveniles. And it funds more 
border patrols to prevent illegal immigration and more inspections to 
prevent the hiring of illegal immigrants.


                          PROVIDING TAX RELIEF 

    The President's plan targets tax relief to middle-income Americans 
through his Middle Class Bill of Rights, which he originally proposed in 
last year's budget. This new plan also includes estate tax relief for 
small businesses and family farms, expanded expensing for small 
businesses, pension simplification, and the ``brownfields'' initiative 
cited in the previous section.

Middle Class Bill of Rights

    The President again proposes the three features of his Middle Class 
Bill of Rights, and enhances the proposed child credit.

    (1) The budget phases in a $500 tax credit for dependent children. 
The full credit is available for families with incomes of under $60,000, 
and the credit is phased out at incomes of $75,000. The taxpayer will 
first calculate the effect of the child credit (and all other credits) 
and then calculate the EITC; this makes the EITC more valuable to 
moderate-income working families with children.

    (2) The budget phases in a $10,000 tax deduction for education and 
training expenses, including college tuition.

    (3) The budget expands Individual Retirement Accounts (IRAs), such 
as by doubling over time the income limits for tax-deductible IRAs and 
allowing families to make tax-free withdrawals for a range of 
educational, housing, and medical needs.

Small Business Estate Tax Relief Act of 1996

    To address the liquidity problems that may arise upon the death of a 
farmer or small business owner, the budget increases the amount of 
property eligible for a favorable four percent interest rate on deferred 
estate tax from $1,000,000 to $2,500,000. It also extends the 
eligibility for deferral to additional entities, and it extends the 
five-year interest-free deferral period and four percent interest rate 
provision to certain entities that cannot now take advantage of them.

Small Business Expensing

    As the President advocated in 1993, and as Congress has now agreed 
by including it in the Balanced Budget Act, the budget increases the 
amount of tangible depreciable property that small businesses can 
expense each year from $17,500 to $25,000. (The increase will be phased 
in by annual increments.)

Pension Simplification

    Building on bipartisan efforts in Congress, the President proposes 
to simplify rules (and expand coverage) for pension plans sponsored by 
businesses of all sizes, nonprofit organizations, and State and local 
governments, as well as for multiemployer plans. The budget includes a 
new, simple retirement savings plan (the National Employee Savings Trust 
or the NEST) for small businesses that combines the most attractive 
features of the IRA and the 401(k) plan, minimizes administrative and 
compliance costs, and eliminates the need for employer involvement with 
the Government. 


           CLOSING CORPORATE LOOPHOLES AND OTHER TAX MEASURES 

    The budget saves $59 billion by cutting corporate tax subsidies, 
closing loopholes, and improving tax compliance. It includes provisions 
that the President proposed in December and others.

    For example, the budget prevents corporations from achieving tax 
arbitrage by deducting interest on borrowings against life insurance 
policies on their employees or where the corporation owns tax-exempt 
obligations; addresses recent developments in tax-motivated financial 
products; curtails manipulation of the tax accounting rules; and 
tightens existing rules that are designed to prevent tax avoidance 
through expatriation and the use of foreign trusts.

    The Administration continues to support revenue neutral initiatives 
to promote sensible and equitable administration of the tax laws. These 
include tax simplification initiatives and technical corrections.

    In addition, the Administration supports, and wants to work with 
Congress to provide, revenue neutral extension of various tax provisions 
that have expired.


                             SUMMARY TABLES 

                                                                                                                
  The Congressional Budget Office has not estimated all of the proposals in the President's budget. Therefore,  
the following tables that use CBO December economic and technical assumptions include: (1) CBO estimates of     
proposals where available and (2) OMB estimates based on CBO's December baseline where specific CBO estimates   
are not available.                                                                                              
                                                                                                                
  The remaining tables use OMB's July technical assumptions because OMB and the agencies have not completed     
their revisions. The budget documents to be released in March will contain estimates using the economic         
assumptions contained in this budget and updated technical assumptions.                                         
                                                                                                                

                                     

                        Table 1.  The President's Budget Proposals Under CBO Assumptions                        
                 (Uses CBO December economic and technical assumptions, in billions of dollars)                 
----------------------------------------------------------------------------------------------------------------
                                               1996    1997    1998    1999     2000     2001     2002    7 Year
----------------------------------------------------------------------------------------------------------------
Baseline deficit \1\........................   172.8   180.7   179.9   192.2    199.9    204.3    221.1  1,350.8
Savings:                                                                                                        
  Discretionary.............................   -12.5   -10.4   -18.6   -34.5    -50.9    -73.9    -96.6   -297.4
                                                                                                                
  Mandatory:                                                                                                    
    Medicare................................    -2.6    -5.7    -9.1   -16.6    -22.9    -27.3    -40.1   -124.2
    Medicaid................................  ......    -2.0    -3.1    -8.2    -10.3    -16.0    -19.4    -59.0
    Welfare reform..........................      -*    -4.9    -6.0    -6.4     -6.9     -7.1     -8.4    -39.8
    EITC \2\................................      -*    -0.7    -0.8    -0.8     -0.8     -0.9     -0.9     -5.0
    Other mandatory.........................    -4.4    -1.9    -1.5    -3.6     -5.4     -8.1    -26.0    -51.0
                                             -------------------------------------------------------------------
      Total, mandatory......................    -7.0   -15.3   -20.6   -35.6    -46.3    -59.4    -94.9   -279.0
                                                                                                                
  Tax cuts..................................     3.3    14.2    16.1    18.5     24.8     19.5      2.1     98.5
                                                                                                                
  Corporate loopholes and other.............    -1.7    -7.1    -8.7    -9.5    -10.2    -10.4    -11.9    -59.4
                                             -------------------------------------------------------------------
  Total, policy proposals...................   -18.0   -18.5   -31.9   -61.2    -82.5   -124.2   -201.2   -537.4
                                                                                                                
  Debt service..............................    -0.5    -1.6    -3.0    -5.5     -9.2    -14.7    -23.6    -58.1
                                             -------------------------------------------------------------------
Total savings...............................   -18.5   -20.1   -34.9   -66.7    -91.7   -138.9   -224.8   -595.5
Deficit/surplus.............................   154.4   160.6   145.0   125.5    108.1     65.4     -3.7    755.3
                                                                                                                
----------------------------------------------------------------------------------------------------------------
* Less than $50 million.                                                                                        
\1\ OMB has adjusted CBO's December baseline to remove the directed scorekeeping of student loan administrative 
  costs and to reflect the pending Supreme Court review of a lower court decision on accounting for             
  ``goodwill''.                                                                                                 
\2\ Includes EITC revenues.                                                                                     


   Table 2.  The President's Budget Proposals Under OMB Assumptions--Excluding Effects of ``Fiscal Dividend''   
                   (Uses OMB July economic and technical assumptions, in billions of dollars)                   
----------------------------------------------------------------------------------------------------------------
                                               1996    1997    1998    1999     2000     2001     2002    7 Year
----------------------------------------------------------------------------------------------------------------
Baseline deficit............................   185.4   196.8   194.5   202.2    208.4    206.5    215.5  1,409.3
  Adjustments:                                                                                                  
    BLS adjustments.........................  ......      -*    -1.0    -3.4     -6.4     -9.5    -13.6    -33.8
    Fiscal bonus............................    -1.6    -8.6   -17.5   -26.7    -36.4    -46.8    -56.0   -193.6
  Subtotal, adjustments.....................    -1.6    -8.6   -18.5   -30.0    -42.7    -56.2    -69.6   -227.4
December base...............................   183.8   188.1   176.0   172.2    165.6    150.2    145.9  1,181.9
Savings:                                                                                                        
  Discretionary.............................   -12.5   -10.4   -18.3   -35.3    -52.8    -77.1   -100.5   -306.9
                                                                                                                
  Mandatory:                                                                                                    
    Medicare \1\............................    -2.6    -5.7    -9.1   -16.6    -22.9    -27.3    -40.1   -124.2
    Medicaid \1\............................  ......    -2.0    -3.1    -8.2    -10.3    -16.0    -19.4    -59.0
    Welfare reform..........................    -0.3    -5.1    -5.7    -6.1     -6.8     -7.1     -8.5    -39.5
    EITC \2\................................    -0.0    -0.9    -1.1    -1.1     -1.0     -1.0     -1.0     -6.1
    Other mandatory.........................    -6.8    -0.8    -4.8    -5.1     -7.3    -11.8    -30.5    -67.1
                                             -------------------------------------------------------------------
      Total, mandatory......................    -9.6   -14.5   -23.8   -37.1    -48.4    -63.2    -99.4   -295.9
                                                                                                                
  Tax cuts..................................     4.6    13.5    14.5    17.7     22.8     14.8      0.8     88.6
                                                                                                                
  Corporate loopholes and other.............    -1.9    -6.3    -7.7    -9.1     -9.8    -10.1    -11.7    -56.6
                                             -------------------------------------------------------------------
  Total, policy proposals...................   -19.5   -17.7   -35.3   -63.7    -88.2   -135.6   -210.8   -570.9
                                                                                                                
  Debt service..............................    -0.6    -1.7    -3.2    -5.9    -10.0    -16.2    -25.3    -62.7
                                             -------------------------------------------------------------------
Total savings...............................   -20.1   -19.4   -38.5   -69.6    -98.2   -151.8   -236.1   -633.6
Deficit/surplus.............................   163.7   168.8   137.5   102.6     67.5     -1.5    -90.3    548.3
                                                                                                                
MEMORANDUM:                                                                                                     
Deficit/surplus with February economic                                                                          
 assumptions \3\............................   152.0   148.7   113.3    80.0     50.8     -9.9    -91.6    443.3
                                                                                                                
----------------------------------------------------------------------------------------------------------------
* Less than $50 million.                                                                                        
\1\ Administration estimates have not been completed for Medicaid and Medicare proposals; therefore, these      
  estimates use CBO December economic and technical assumptions.                                                
\2\ Includes EITC revenues.                                                                                     
\3\ Includes preliminary estimate based on the Administration's February economic assumptions and July technical
  assumptions.                                                                                                  


              Table 3.  Application of the ``Fiscal Dividend'' to the President's Budget Proposals              
                                            (In billions of dollars)                                            
----------------------------------------------------------------------------------------------------------------
                                              1996      1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Deficit or surplus assuming tax cuts expire on December 31, 2000:                                               
  CBO December economics..................   -154.4    -160.6    -145.0    -125.5    -108.1     -65.4       3.7 
  OMB February economics..................   -152.0    -148.7    -113.3     -80.0     -50.8       9.9      91.6 
                                           ---------------------------------------------------------------------
    Difference............................      2.4      11.9      31.8      45.4      57.3      75.3      87.9 
Trigger impact on OMB estimates:                                                                                
  Step 1--Continue tax cut................                                            (20.0)     -9.3     -23.7 
  Step 2--Increase discretionary spending.                                            (20.0)    -20.0     -20.0 
  Step 3:                                                                                                       
(3)Not applicable                                                                                               
    Further discretionary increases.......                                             (5.8)     -5.8      -5.8 
    Reserved for additional tax cuts......                                             (5.8)    (-5.8)    (-5.8)
    Reserved for deficit reduction........                                             (5.8)      0.0       0.0 
    Debt service..........................                                                       -0.8      -2.7 
                                           ---------------------------------------------------------------------
Total trigger.............................                                            (57.3)    -35.9     -52.1 
                                                                                                                
OMB February deficit or surplus...........   -152.0    -148.7    -113.3     -80.0     -50.8     -26.0      39.5 
----------------------------------------------------------------------------------------------------------------


   Table 4.  The President's Budget Proposals Under OMB Assumptions--Including Effects of ``Fiscal Dividend''   
                   (Uses OMB July economic and technical assumptions, in billions of dollars)                   
----------------------------------------------------------------------------------------------------------------
                                            1996     1997     1998     1999     2000     2001     2002    7 Year
----------------------------------------------------------------------------------------------------------------
Baseline deficit........................    185.4    196.8    194.5    202.2    208.4    206.5    215.5  1,409.3
  Adjustments:                                                                                                  
    BLS adjustments.....................  .......       -*     -1.0     -3.4     -6.4     -9.5    -13.6    -33.8
    Fiscal bonus........................     -1.6     -8.6    -17.5    -26.7    -36.4    -46.8    -56.0   -193.6
                                         -----------------------------------------------------------------------
  Subtotal, adjustments.................     -1.6     -8.6    -18.5    -30.0    -42.7    -56.2    -69.6   -227.4
                                         -----------------------------------------------------------------------
December base...........................    183.8    188.1    176.0    172.2    165.6    150.2    145.9  1,181.9
Savings:                                                                                                        
  Discretionary.........................    -12.5    -10.4    -18.3    -35.3    -52.8    -51.3    -74.7   -255.3
                                                                                                                
  Mandatory:                                                                                                    
    Medicare \1\........................     -2.6     -5.7     -9.1    -16.6    -22.9    -27.3    -40.1   -124.2
    Medicaid \1\........................  .......     -2.0     -3.1     -8.2    -10.3    -16.0    -19.4    -59.0
    Welfare reform......................     -0.3     -5.1     -5.7     -6.1     -6.8     -7.1     -8.5    -39.5
    EITC \2\............................     -0.0     -0.9     -1.1     -1.1     -1.0     -1.0     -1.0     -6.1
    Other mandatory.....................     -6.8     -0.8     -4.8     -5.1     -7.3    -11.8    -30.5    -67.1
                                         -----------------------------------------------------------------------
      Total, mandatory..................     -9.6    -14.5    -23.8    -37.1    -48.4    -63.2    -99.4   -295.9
                                                                                                                
  Tax cuts..............................      4.6     13.5     14.5     17.7     22.8     24.1     24.5    121.6
                                                                                                                
  Corporate loopholes and other.........     -1.9     -6.3     -7.7     -9.1     -9.8    -10.1    -11.7    -56.6
                                         -----------------------------------------------------------------------
  Total, policy proposals...............    -19.5    -17.7    -35.3    -63.7    -88.2   -100.5   -161.4   -486.3
                                                                                                                
  Debt service..........................     -0.6     -1.7     -3.2     -5.9    -10.0    -15.4    -22.6    -59.3
                                         -----------------------------------------------------------------------
Total savings...........................    -20.1    -19.4    -38.5    -69.6    -98.2   -115.9   -184.0   -545.5
Effect of February economic assumptions.    -11.7    -20.1    -24.3    -22.6    -16.6     -8.4     -1.4   -105.0
Deficit/surplus with February economic                                                                          
 assumptions \3\........................    152.0    148.7    113.3     80.0     50.8     26.0    -39.5    531.3
                                                                                                                
----------------------------------------------------------------------------------------------------------------
* Less than $50 million.                                                                                        
\1\ Administration estimates have not been completed for Medicaid and Medicare proposals; therefore, these      
  estimates use CBO December economic and technical assumptions.                                                
\2\ Includes EITC revenues.                                                                                     
\3\ Includes preliminary estimate based on the Administration's February economic assumptions and July technical
  assumptions.                                                                                                  


                             Table 5.  The President's Budget Under CBO Assumptions                             
                 (Uses CBO December economic and technical assumptions, in billions of dollars)                 
----------------------------------------------------------------------------------------------------------------
                                           1996     1997     1998     1999     2000     2001     2002    7 Year 
----------------------------------------------------------------------------------------------------------------
  Outlays:                                                                                                      
    Discretionary......................    539.0    543.5    537.4    537.6    537.9    531.9    527.4   3,754.8
    Mandatory:                                                                                                  
      Medicare.........................    173.9    189.2    203.9    216.7    231.9    250.9    263.5   1,529.9
      Medicaid.........................     97.2    105.2    115.0    121.5    132.2    140.8    153.2     865.1
      Other............................    522.1    554.3    585.7    617.1    649.0    671.5    688.5   4,288.2
                                        ------------------------------------------------------------------------
    Subtotal, mandatory................    793.2    848.7    904.6    955.2  1,013.0  1,063.2  1,105.2   6,683.2
    Net interest.......................    243.0    247.4    249.3    248.9    246.1    246.3    246.3   1,727.3
                                        ------------------------------------------------------------------------
  Total outlays........................  1,575.1  1,639.6  1,691.3  1,741.8  1,797.0  1,841.4  1,878.9  12,165.2
  Revenues.............................  1,420.8  1,479.0  1,546.3  1,616.3  1,688.9  1,776.0  1,882.6  11,409.9
                                        ------------------------------------------------------------------------
Deficit/surplus........................   -154.4   -160.6   -145.0   -125.5   -108.1    -65.4      3.7    -755.3
----------------------------------------------------------------------------------------------------------------

                                     

                                     

        Table 6.  The President's Budget Under OMB Assumptions--Excluding Effects of ``Fiscal Dividend''        
                   (Uses OMB July economic and technical assumptions, in billions of dollars)                   
----------------------------------------------------------------------------------------------------------------
                                          1996     1997     1998     1999     2000     2001     2002     7 Year 
----------------------------------------------------------------------------------------------------------------
  Outlays:                                                                                                      
    Discretionary.....................    539.0    543.5    537.4    537.6    537.9    531.9     527.4   3,754.8
    Mandatory:                                                                                                  
      Medicare........................    174.2    188.5    202.7    213.1    228.2    247.3     259.9   1,513.8
      Medicaid........................     96.1    102.5    111.3    116.3    126.1    132.8     143.0     828.1
      Other...........................    524.8    561.3    586.1    612.9    642.9    659.3     673.6   4,260.9
                                       -------------------------------------------------------------------------
    Subtotal, mandatory...............    795.0    852.4    900.1    942.3    997.2  1,039.4   1,076.5   6,602.9
    Net interest......................    244.6    249.3    252.2    255.1    254.4    251.0     242.9   1,749.4
                                       -------------------------------------------------------------------------
  Total outlays.......................  1,578.6  1,645.2  1,689.7  1,735.0  1,789.5  1,822.4   1,846.8  12,107.1
  Revenues............................  1,414.9  1,476.4  1,552.2  1,632.4  1,722.0  1,823.9   1,937.0  11,558.8
                                       -------------------------------------------------------------------------
Deficit/surplus.......................   -163.7   -168.8   -137.5   -102.6    -67.5      1.5      90.3    -548.3
----------------------------------------------------------------------------------------------------------------


                                  Table 7.  COMPARISON OF ECONOMIC ASSUMPTIONS                                  
                                                (Calendar years)                                                
----------------------------------------------------------------------------------------------------------------
                                                 1995    1996    1997    1998    1999    2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Nominal GDP \1\:                                                                                                
  Level, billions of dollars:                                                                                   
    1996 Mid-Session Review...................   7,091   7,470   7,879   8,310   8,765   9,245    9,745   10,268
    CBO December baseline.....................   7,079   7,418   7,788   8,173   8,577   9,002    9,447    9,915
    1997 Budget...............................   7,078   7,428   7,805   8,203   8,623   9,058    9,523   10,005
                                                                                                                
  Percent change, fourth quarter over fourth                                                                    
   quarter:                                                                                                     
     1996 Mid-Session Review..................     4.7     5.5     5.5     5.5     5.5     5.5      5.4      5.4
     CBO December baseline....................     4.3     5.0     5.0     4.9     5.0     4.9      5.0      5.0
     1997 Budget..............................     4.2     5.1     5.1     5.1     5.1     5.1      5.1      5.1
                                                                                                                
CPI-U, percent change, fourth quarter over                                                                      
 fourth quarter:                                                                                                
  1996 Mid-Session Review.....................     3.2     3.2     3.2     3.2     3.1     3.1      3.1      3.1
   CBO December baseline......................     2.9     3.2     3.1     2.9     2.9     2.9      2.9      3.0
   CBO December adjusted \2\..................     2.9     3.2     2.9     2.8     2.8     2.8      2.8      2.9
   1997 Budget................................     2.7     3.1     2.9     2.8     2.8     2.8      2.8      2.8
                                                                                                                
Unemployment rate, percent:                                                                                     
   1996 Mid-Session Review....................     5.8     5.9     5.8     5.8     5.8     5.8      5.8      5.8
   CBO December baseline......................     5.6     5.9     6.0     6.0     6.0     6.0      6.0      6.0
   1997 Budget................................     5.6     5.7     5.7     5.7     5.7     5.7      5.7      5.7
                                                                                                                
Interest rates, percent:                                                                                        
   91-day Treasury bills:                                                                                       
     1996 Mid-Session Review..................     5.7     5.4     5.2     5.0     4.8     4.6      4.6      4.4
     CBO December baseline....................     5.5     5.3     5.0     4.7     4.2     3.9      3.9      3.9
     1997 Budget..............................     5.5     4.9     4.5     4.3     4.2     4.0      4.0      4.0
                                                                                                                
  10-year Treasury notes:                                                                                       
     1996 Mid-Session Review..................     6.6     6.5     6.6     6.4     6.2     6.0      5.8      5.6
     CBO December baseline....................     6.6     5.8     5.6     5.5     5.5     5.5      5.5      5.5
     1997 Budget..............................     6.6     5.6     5.3     5.0     5.0     5.0      5.0      5.0
                                                                                                                
----------------------------------------------------------------------------------------------------------------
\1\ Assumptions do not reflect NIPA revisions announced on January 19, 1996.                                    
\2\ Reflects assumption that January 1997 correction for formula bias will reduce CPI growth by 0.3 percentage  
  points per year, as incorporated in CBO scoring of the Administration's January 6, 1996, offer.               




                        Need Additional Copies ??? 

Copies of the Budget and related Office of Management and Budget 
documents may be purchased at any of the GPO bookstores listed below. 
(Paper copies only.) 

                             GPO BOOKSTORES

ALABAMA                              MICHIGAN                             
O'Neill Building                     Suite 160, Federal Building          
2021 Third Ave., North               477 Michigan Avenue                  
Birmingham, Alabama 35203            Detroit, Michigan 48226              
(205) 731-1056                       (313) 226-7816                       
FAX (205) 731-3444                   FAX (313) 226-4698                   
                                                                          
CALIFORNIA                           MISSOURI                             
ARCO Plaza, C-Level                  120 Bannister Mall                   
505 South Flower Street              5600 E. Bannister Road               
Los Angeles, California 90071        Kansas City, Missouri 64137          
(213) 239-9844                       (816) 767-8225                       
FAX (213) 239-9848                   FAX (816) 767-8233                   
                                                                          
Marathon Plaza, Room 141-S           NEW YORK                             
3C3 Second Street                    Room 110, Federal Building           
San Francisco, California 94107      26 Federal Plaza                     
(415) 512-2770                       New York, New York 10278             
FAX (415) 512-2776                   (212) 264-3825                       
                                     FAX (212) 264-9318                   
COLORADO                                                                  
Room 117, Federal Building           OHIO                                 
1961 Stout Street                    Room 1653, Federal Building          
Denver, Colorado 80294               1240 East 9th Street                 
(303) 844-3964                       Cleveland, Ohio 44199                
FAX (303) 844-4000                   (216) 522-4922                       
                                     FAX (216) 522-4714                   
Norwest Banks Building                                                    
201 West 8th Street                  Room 207, Federal Building           
Pueblo, Colorado 81003               200 North High Street                
(719) 544-3142                       Columbia, Ohio 43215                 
FAX (719) 544-6719                   (614) 469-6956                       
                                     FAX (614) 469-5374                   
DISTRICT OF COLUMBIA                                                      
U.S. Government Printing Office      OREGON                               
710 North Capitol Street, NW         1305 SW. First Avenue                
Washington, DC 20401                 Portland, Oregon 97201               
(202) 512-0132                       (503) 221-6127                       
FAX (202) 512-1355                   FAX (503) 225-0563                   
                                                                          
1510 H Street, NW                    PENNSYLVANIA                         
Washington, DC 20005                 Robert Morris Building               
(202) 653-5075                       100 North 17th Street                
FAX (202) 376-5055                   Philadelphia, Pennsylvania 19103     
                                     (215) 636-1900                       
FLORIDA                              FAX (215) 636-1903                   
100 W. Bay Street                                                         
Suite 100                            Room 118, Federal Building           
Jacksonsville, Florida 32202         1000 Liberty Avenue                  
(904) 353-0569                       Pittsburgh, Pennsylvania 15222       
FAX (904) 353-1280                   (412) 644-2721                       
                                     FAX (412) 644-4547                   
GEORGIA                                                                   
First Union Plaza                    TEXAS                                
999 Peachtree Street, NE             Room 1C50, Federal Building          
Suite 120                            1100 Commerce Street                 
Atlanta, Georgia 30309               Dallas, Texas 75242                  
(404) 347-1900                       (214) 767-0076                       
FAX (404) 347-1897                   FAX (214) 767-3239                   
                                                                          
ILLINOIS                             Texas Crude Building                 
One Congress Center, Suite 124       801 Travis Street                    
401 South State Street               Houston, Texas 77002                 
Chicago, Illinois 60605              (713) 228-1187                       
(312) 353-5133                       FAX (713) 228-1186                   
FAX (313) 353-1590                                                        
                                     WASHINGTON                           
MARYLAND                             Room 194, Federal Building           
Retail Sales Outlet                  915 Second Avenue                    
8660 Cherry Lane                     Seattle, Washington 98174            
Laurel, Maryland 20707               (206) 553-4270                       
(301) 953-7974                       FAX (206) 553-6717                   
FAX (301) 498-8995                                                        
                                     WISCONSIN                            
MASSACHUSETTS                        The Reuss Federal Plaza              
Thomas P. O'Neill Fed. Bldg.         310 West Wisconsin Avenue            
10 Causeway Street, Rm. 169          Milwaukee, Wisconsin 53203           
Boston, Massachusetts 02222          (414) 297-1304                       
(619) 720-4180                       FAX (414) 297-1300                   
FAX (617) 720-5753                                                        

There is a 25% discount on all orders for 100 or more copies of a single 
title mailed to a single address. No discount is allowed if such orders 
are mailed to multiple addresses.


            Superintendent of Documents Publications Order Form

Order Processing Code: *7275

All prices include regular domestic postage and handling and are good 
through October 1996. After this date, please call the Order and 
Information Desk at (202) 512-1800 to verify prices. To fax your orders 
and inquiries--(202) 512-2250.
                                                                            Price      Total
Qty.      Stock Number     Title                                            Each       Price

          041-001-00464-5  Budget of the United States Government,          $1.75
                           Fiscal Year 1997
          041-001-00465-3  Budget of the United States Government,          15.00
                           Fiscal Year 1997--Supplement
          041-001-00466-1  Budget of the United States Government,          44.00
                           Fiscal Year 1997--Appendix
          041-001-00467-0  Analytical Perspectives, Fiscal Year             29.00
                           1997
          041-001-00468-8  Historical Tables, Fiscal Year 1997              16.00
          041-001-00469-6  A Citizen's Guide to the Federal                  1.25
                           Budget, Fiscal Year 1997
          041-001-00470-0  The Budget System and Concepts, Fiscal            1.50
                           Year 1997
          041-001-00471-8  The Budget on CD-ROM, Fiscal Year 1997           19.00
                           1st release
          041-001-00472-6  The Budget on CD-ROM, Fiscal Year 1997           19.00
                           2nd release
    
(International customers--please add                        Total for Publications 
an additional 25%.)



Please Print or Type                  Please choose method of payment:

___________________________________
(Company or personal name)              Check payable to the
                                             Superintendent of Documents
___________________________________
(Additional address/attention line)     GPO Deposit Account
                                             __ __ __ __ __ __ __ - __
___________________________________
(Street address)                        VISA or MasterCard Account
                                             __________________________
___________________________________
(City, State, ZIP Code)                      __________________________
                                           (Credit card expiration date)
___________________________________
(Daytime phone--including area code)         Thank you for your order!

Mail to: Superintendent of Documents        ____________________________
         Government Printing Office,        (Signature)
         Washington, DC 20402-9325