    [A Citizen's Guide to the Federal Budget]
    [Glossary]
    [From the U.S. Government Printing Office, www.gpo.gov]

    Appropriation
      An appropriation is an act of Congress that enables Federal agencies
      to spend money for specific purposes.

    Authorization
      An authorization is an act of Congress that establishes or continues a
      Federal program or agency, and sets forth the guidelines to which it
      must adhere.

    Balanced Budget
      A balanced budget occurs when total revenues equal total outlays for a
      fiscal year.

    Budget Authority (BA)
      Budget authority is what the law authorizes, or allows, the Federal
      Government to spend for programs, projects, or activities.

    Budget Enforcement Act (BEA) of 1990
      The BEA is the law that was designed to limit discretionary spending
      while ensuring that any new entitlement program or tax cuts did not
      make the deficit worse. It set annual limits on total discretionary
      spending and created ``pay-as-you-go'' rules for any changes in
      entitlements and taxes. (See ``pay-as-you-go.'')

    Balanced Budget and Emergency Deficit Control Act of 1985
    (Gramm-Rudman-Hollings, or GRH)
      The Balanced Budget and Emergency Deficit Control Act of 1985 was
      designed to end deficit spending. It set annual deficit targets for
      five years, declining to a balanced budget in 1991. If necessary, it
      required across-the-board cuts in programs to comply with the deficit
      targets. It was never fully implemented.

    Budget Resolution
      The budget resolution is the annual framework within which Congress
      makes its decisions about spending and taxes. This framework includes
      targets for total spending, total revenues, and the deficit, as well
      as allocations, within the spending target, for discretionary and
      mandatory spending.

    [[Page 38]]

    ``Cap''
      A ``cap'' is a legal limit on total annual discretionary spending.

    Deficit
      The deficit is the difference produced when spending exceeds revenues
      in a fiscal year.

    Discretionary Spending
      Discretionary spending is what the President and Congress must decide
      to spend for the next fiscal year through 13 annual appropriations
      bills. Examples include money for such activities as the FBI and the
      Coast Guard, housing and education, space exploration and highway
      construction, and defense and foreign aid.

    Entitlement
      An entitlement is a program that legally obligates the Federal
      Government to make payments to any person who meets the legal criteria
      for eligibility. Examples include Social Security, Medicare, and Medicaid.

    Excise Taxes
      Excise taxes apply to various products, including alcohol, tobacco,
      transportation fuels, and telephone service.

    Federal Debt
      The gross Federal debt is divided into two categories: debt held by
      the public, and debt the Government owes itself. Another category is
      debt subject to legal limit.

      Debt Held by the Public
        Debt held by the public is the total of all Federal deficits, minus
        surpluses, over the years. This is the cumulative amount of money the
        Federal Government has borrowed from the public, through the sale of
        notes and bonds of varying sizes and time periods.

      Debt the Government Owes Itself
        Debt the Government owes itself is the total of all trust fund
        surpluses over the years, like the Social Security surpluses, that the
        law says must be invested in Federal securities.

      Debt Subject to Legal Limit
        Debt subject to legal limit, which is roughly the same as gross
        Federal debt, is the maximum amount of Federal securities that may
        be legally

    [[Page 39]]

        outstanding at any time. When the limit is reached, the President and
        Congress must enact a law to increase it.

    Fiscal Year
      The fiscal year is the Government's accounting period. It begins
      October 1 and ends on September 30. For example, fiscal 1997 ends
      September 30, 1997.

    Gramm-Rudman-Hollings
      See Balanced Budget and Emergency Deficit Control Act of 1985.

    Gross Domestic Product (GDP)
      GDP is the standard measurement of the size of the economy. It is the
      total production of goods and services within the United States.

    Mandatory Spending
      Mandatory spending is authorized by permanent law. An example is
      Social Security. The President and Congress can change the law to
      change the level of spending on mandatory programs � but they don't have to.

    ``Off-Budget''
      By law, the Government must distinguish ``off-budget'' programs separate
      from the budget totals. Social Security and the Postal Service are
      ``off-budget.''

    Outlays
      Outlays are the amount of money the Government actually spends in a
      given fiscal year.

    ``Pay-As-You-Go''
      Set forth by the BEA, ``pay-as-you-go'' refers to requirements that new
      spending proposals on entitlements or tax cuts must be offset by cuts
      in other entitlements or by other tax increases, to ensure that the
      deficit does not rise. (See BEA.)

    Revenue
      Revenue is money collected by the Government.

    Social Insurance Payroll Taxes
      This tax category includes Social Security taxes, Medicare taxes,
      unemployment insurance taxes, and Federal employee retirement payments.

    [[Page 40]]

    Surplus
      A surplus is the amount by which revenues exceed outlays.

    Trust Funds
      Trust funds are Government accounts, set forth by law as trust funds,
      for revenues and spending designated for specific purposes.

    Unified Federal Budget
      The unified budget, the most useful display of the Government's
      finances, is the presentation of the Federal budget in which revenues
      from all sources and outlays to all activities are consolidated.