[Analytical Perspectives]
[Budget Enforcement Act Preview Report]
[13. Review of Direct Spending and Receipts]
[From the U.S. Government Printing Office, www.gpo.gov]


                              Introduction
  The Budget Enforcement Act of 1990 established caps to control 
discretionary spending and a pay-as-you-go requirement to control 
legislative changes to mandatory programs and revenues. It did not, 
however, control the growth of mandatory spending resulting from 
economic and technical factors. In August 1993, the President 
established procedures to control this growth in mandatory spending by 
issuing Executive Order 12857. The Order set targets on the level of 
mandatory spending, excluding deposit insurance and net interest, for 
1994 through 1997. The Order also specified actions that must be taken 
if the targets are exceeded. These actions may include specific revenue 
or direct spending changes or reductions in the discretionary caps. The 
savings to remove the excess in the prior, current, and/or budget years 
can be achieved over a six-year period covering the current year through 
four years beyond the budget year. The President also has the option to 
recommend breaching the targets because of economic conditions or other 
specific reasons. This chapter fulfills the Order's requirements for an 
annual review of direct spending and receipts.
  As required by the Order, OMB issued an initial report to the Congress 
in September 1993 setting the mandatory targets for 1994 through 1997. 
The initial targets were based on the economic and technical assumptions 
used in preparing the congressional budget resolution for 1994. They 
were consistent with the policies in the resolution as adjusted by final 
congressional action on the Omnibus Budget Reconciliation Act of 1993 
(OBRA93). The Order requires annual adjustment of these targets. In the 
1995 and 1996 Budgets, the targets were revised. This review provides 
the next annual revision of the targets.
                         Adjustments to Targets
  The targets must be adjusted each year for increases in the estimated 
numbers of beneficiaries of mandatory programs, and for changes in 
receipts in legislation enacted during the year. Table 13-1 shows the 
targets as revised for these circumstances. As the table shows, the 
targets have increased by $20.6 billion over the three year period 1995 
through 1997 since February 1995.

  Table 13-1.  SUMMARY OF CHANGES TO MANDATORY TARGETS AND CURRENT LAW  
                                 OUTLAYS                                
                        (In billions of dollars)                        
------------------------------------------------------------------------
                                        1995     1996     1997   1995-97
------------------------------------------------------------------------
                                                                        
    Changes to mandatory targets                                        
                                                                        
Mandatory targets as of February                                        
 1995...............................    793.2    833.3    900.8  .......
                                                                        
Adjustments for:                                                        
   Increase in beneficiaries........      0.2      0.2      1.1      1.5
   Changes in receipts..............     -0.1     -0.1      0.2       -*
   Reclassification of Universal                                        
   Service Fund.....................      4.3      4.3      4.3     12.9
   Changes due to category shifts...      1.8      2.3      2.1      6.3
                                     -----------------------------------
  Total adjustments.................      6.2      6.7      7.7     20.6
                                                                        
Mandatory targets as of March 1996..    799.5    840.0    908.5  .......
                                                                        
  Changes to outlays under current                                      
                laws                                                    
                                                                        
Outlays under current laws as of                                        
 February 1995......................    763.2    813.8    873.9  .......
                                                                        
Adjustments for:                                                        
   Cost of living adjustment........     -1.5     -3.9     -5.5    -10.9
   Increases in beneficiaries.......      0.2      0.2      1.1      1.5
   Decreases in beneficiaries.......    -11.0    -11.9    -15.3    -38.1
   Reclassification of Universal                                        
   Service Fund.....................      4.3      4.3      4.3     12.9
  Changes due to category shifts....      1.8      2.3      2.1      6.3
   Enacted paygo legislation........        *      1.1      1.9      3.1
   Other adjustments................      2.1      2.7      5.1      9.9
                                     -----------------------------------
  Total adjustments.................     -4.0     -5.2     -6.2    -15.4
                                                                        
Outlays under current laws as of                                        
 March 1996.........................    759.2    808.6    867.7  .......
Amount over (+) or under (-) the                                        
 current target.....................    -40.3    -31.4    -40.8   -112.5
                                                                        
Memorandum:                                                             
  Initial mandatory targets                                             
   (Executive Order 12857)..........    784.7    823.7    887.7  .......
------------------------------------------------------------------------
*$50 million or less                                                    
[[Page 210]]
  Table 13-1 also shows the major changes in current law estimates since 
1996 Budget. Over the three years, current law estimates have declined 
by $15.4 billion. Most of this difference is the result of downward 
reestimates for Commodity Credit Corporation, Social Security, Earned 
Income Tax Credit, Supplementary Security, Income, and Food Stamps 
programs.
  The Order requires an adjustment to the targets to reflect increases 
in estimated beneficiaries. Table 13-2 shows the current estimates of 
beneficiaries of major benefit payment programs as well as the level 
implicit in the 1996 Budget targets. In six programs the estimates of 
beneficiaries have increased. Therefore, the targets have been increased 
by applying the percentage change in the number of beneficiaries to the 
target level of the program. The largest adjustments are for 
Unemployment insurance, Military retirement, and Veterans' pensions. In 
total, the targets have been increased by $1.5 billion for the three-
year period because of increases in beneficiary estimates.
  An adjustment to the mandatory targets is also required for any 
enacted changes in receipts. This allows for tradeoffs between receipt 
increases and outlay reductions. In the last year, legislation has not 
significantly increased receipts over the three-year period.
  The mandatory targets are adjusted for reclassifications of spending. 
As a result of review, while scoring the Telecommunications Act of 1996, 
the universal service fund of the Federal Communications Commission has 
been reclassified as budgetary to more accurately reflect its 
governmental nature. Inclusion of the fund's pre-Telecommunications Act 
outlays in the budget increases mandatory outlays and the targets by 
$4.3 billion each year. In addition, certain Federal-aid highway 
projects that are exempt from limitations imposed by the Appropriations 
Committee have been reclassified from discretionary to mandatory. This 
change increases the mandatory targets by $1.8 billion in 1995, $2.3 
billion in 1996, $2.1 billion in 1997. The targets have also been 
adjusted for several minor categorical shifts.

                         Table 13-2.  BENEFICIARIES ESTIMATES FOR MAJOR BENEFIT PROGRAMS                        
                                          (Annual average, in thousands)                                        
----------------------------------------------------------------------------------------------------------------
                                            1995     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
 Family education loans:                                                                                        
   Level implicit in 1996 Budget target.    5,394    3,898    3,695       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............    4,309    3,392    2,918    2,709    2,395    2,453    2,518    2,588
 Direct loans:                                                                                                  
   Level implicit in 1996 Budget target.    1,694    3,451    3,940       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............    1,031    2,151    2,773    3,146    3,594    3,678    3,771    3,872
 AFDC work programs:                                                                                            
   Level implicit in 1996 Budget target.      708      721      727       NA       NA       NA       NA       NA
   OMB March 1996 estimate\1\...........      641      631      627      624      624      624       NA       NA
 Foster care and adoption assistance:                                                                           
   Level implicit in 1996 Budget target.      365      392      410       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............      368      387      416      436      458      482      503      528
 Medicaid:                                                                                                      
   Level implicit in 1996 Budget target.   36,500   37,715   39,146       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............   36,168   37,516   38,674   39,763   40,825   41,808   42,719   43,548
 Medicare:                                                                                                      
   Hospital insurance:                                                                                          
     Level implicit in 1996 Budget                                                                              
     target.............................   37,009   37,625   38,206       NA       NA       NA       NA       NA
     OMB March 1996 estimate............   36,934   37,528   38,073   38,578   39,054   39,548   40,046   40,554
   Supplementary medical insurance:                                                                             
     Level implicit in 1996 Budget                                                                              
     target.............................   35,651   36,244   36,760       NA       NA       NA       NA       NA
     OMB March 1996 estimate............   35,498   36,006   36,490   36,923   37,324   37,740   38,163   38,576
 Railroad retirement:                                                                                           
   Level implicit in 1996 Budget target.      805      783      761       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............      799      778      755      731      708      686      664      643
 Federal civil service retirement:                                                                              
   Level implicit in 1996 Budget target.    2,297    2,327    2,365       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............    2,287    2,324    2,349    2,371    2,391    2,412    2,433    2,459
 Military retirement:                                                                                           
   Level implicit in 1996 Budget target.    1,805    1,826    1,847       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............    1,814    1,833    1,854    1,874    1,893    1,908    1,924    1,939
 Unemployment insurance:                                                                                        
   Level implicit in 1996 Budget target.    9,000    9,000    9,000       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............    8,100    8,950    9,300    9,250    9,190    9,160    9,170    9,180
 Food stamps:\2\                                                                                                
   Level implicit in 1996 Budget target.   27,314   27,316   27,307       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............   26,622   26,139   25,947   26,101   26,250   26,383   26,516   26,650
 Child nutrition:                                                                                               
   Level implicit in 1996 Budget target.   37,557   38,544   39,499       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............   36,060   37,279   38,476   39,494   39,319   41,281   42,050   42,826
 Family support: maintenance assistance                                                                         
 (AFDC):\3\                                                                                                     
   Level implicit in 1996 Budget target.    5,250    5,330    5,410       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............    4,866    4,618    4,684    4,750    4,817    4,876    4,935    4,994
[[Page 211]]
 Family support: emergency assistance:                                                                          
   Level implicit in 1996 Budget target.       NA       NA       NA       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............       80       84       87       91       95       98      102      106
 Supplemental security income:                                                                                  
   Level implicit in 1996 Budget target.    6,333    6,822    7,281       NA       NA       NA       NA       NA
   OMB March 1996 estimate:                                                                                     
     Aged...............................    1,327    1,315    1,295    1,280    1,265    1,255    1,240    1,235
     Blind/Disabled.....................    4,743    4,995    5,210    5,405    5,585    5,750    5,910    6,050
                                         -----------------------------------------------------------------------
     Total, OMB March 1996 estimate.....    6,070    6,310    6,505    6,685    6,850    7,005    7,150    7,285
 Earned income tax credit:                                                                                      
   Level implicit in 1996 Budget target.   17,000   17,000   17,005       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............   15,271   15,044   15,219   15,431   15,698   15,885   16,127   16,367
 Social Security (OASDI):                                                                                       
   Old age and survivors insurance:                                                                             
     Level implicit in 1996 Budget                                                                              
     target.............................   37,459   37,821   38,166       NA       NA       NA       NA       NA
     OMB March 1996 estimate............   37,309   37,653   38,005   38,335   38,650   38,975   39,308   39,655
   Disability insurance:                                                                                        
     Level implicit in 1996 Budget                                                                              
     target.............................    5,685    6,050    6,413       NA       NA       NA       NA       NA
     OMB March 1996 estimate............    5,656    5,955    6,277    6,588    6,892    7,178    7,456    7,733
 Veterans' compensation:                                                                                        
   Level implicit in 1996 Budget target.    2,532    2,550    2,557       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............    2,533    2,546    2,551    2,551    2,548    2,543    2,538    2,529
 Veterans' pensions:                                                                                            
   Level implicit in 1996 Budget target.      788      744      706       NA       NA       NA       NA       NA
   OMB March 1996 estimate..............      799      763      731      704      682      665      651      641
----------------------------------------------------------------------------------------------------------------
NA = Not Applicable                                                                                             
                                                                                                                
\1\Midsession estimate as of July 1995. Estimates not available for 2001 and 2002.                              
                                                                                                                
\2\Beneficiary estimates do not include Nutrition Assistance Program recipients.                                
                                                                                                                
\3\Average number of monthly cases.                                                                             

  During the past year, no reconciliation or emergency mandatory 
legislation was enacted into law. Thus, there are no additional 
adjustments to the targets required by the Order.
                      Growth in Mandatory Programs
  Table 13-3 shows outlays for mandatory and related programs for the 
years 1995 through 2002. Under current law, spending on mandatory 
programs including net interest is projected to be $1,102.2 billion in 
1997, $61.5 billion more than the 1996 estimate. By 2002, spending for 
mandatory programs including net interest is projected to reach $1,423.5 
billion.

                                        Table 13-3.  OUTLAYS FOR MANDATORY AND RELATED PROGRAMS UNDER CURRENT LAW                                       
                                                                 (In billions of dollars)                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Estimate                                         
                                                                 1995   ----------------------------------------------------------------------   Total  
                                                                actual     1996      1997      1998      1999      2000      2001      2002    1996-2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Human resources programs:                                                                                                                               
   Education, training, employment, and social services:                                                                                                
     Family education loan...................................       3.5       3.0       2.2       2.0       1.8       1.7       1.8       1.9       14.5
     Direct loan.............................................       0.8       0.6       0.7       0.9       1.3       1.5       1.6       1.7        8.2
     Social services.........................................       8.8       9.6       9.8      10.2      10.7      11.2      11.8      12.4       75.6
     Other...................................................       2.5       1.1       0.8      -0.1      -0.2      -0.3      -0.3      -0.2        0.7
                                                              ------------------------------------------------------------------------------------------
     Subtotal, education, training, employment, and social                                                                                              
     services................................................      15.7      14.3      13.5      12.9      13.5      14.1      14.9      15.8       99.0
   Health:                                                                                                                                              
     Medicaid................................................      89.1      94.9     102.3     112.0     121.8     133.2     145.6     159.4      869.0
     FEHB and other..........................................       4.3       4.2       4.5       4.6       4.5       4.9       5.4       5.7       33.9
                                                              ------------------------------------------------------------------------------------------
     Subtotal, health........................................      93.4      99.1     106.8     116.5     126.3     138.0     151.0     165.1      902.9
   Medicare:                                                                                                                                            
     Hospital insurance......................................     113.6     125.5     137.1     149.3     161.9     175.0     188.8     203.1    1,140.6
     Supplementary medical insurance.........................      63.5      69.1      76.3      84.8      93.0     102.1     112.5     124.1      661.8
     Medicare premiums and collections.......................     -20.2     -19.8     -20.3     -22.0     -23.3     -24.3     -25.3     -26.4     -161.5
                                                              ------------------------------------------------------------------------------------------
     Subtotal, medicare......................................     156.9     174.7     193.1     212.0     231.6     252.8     275.9     300.7    1,640.9
[[Page 212]]
   Income security:                                                                                                                                     
     General retirement and disability:                                                                                                                 
       Railroad retirement...................................       3.7       4.1       4.2       4.2       4.2       4.3       4.3       4.4       29.7
       Other.................................................       1.0       0.5       0.3       0.4       0.4       0.6       0.5       0.6        3.2
                                                              ------------------------------------------------------------------------------------------
       Subtotal, general retirement and disability...........       4.7       4.6       4.4       4.6       4.6       4.9       4.9       5.0       32.9
     Federal employee retirement and disability:                                                                                                        
       Civilian employees retirement.........................      38.8      40.1      42.3      44.3      46.4      48.6      50.9      53.6      326.1
       Military retirement...................................      27.8      28.5      29.7      30.8      31.9      32.9      34.0      35.1      222.9
       Other.................................................      -0.8      -0.7      -0.8      -0.6      -0.6      -0.6      -0.5      -0.5       -4.3
                                                              ------------------------------------------------------------------------------------------
       Subtotal, Federal employees retirement and disability.      65.8      67.8      71.2      74.5      77.7      80.9      84.3      88.2      544.7
     Unemployment compensation...............................      21.3      23.7      24.7      25.3      26.1      27.0      28.1      29.2      184.0
     Food and nutrition assistance:                                                                                                                     
       Food stamps (incl. Puerto Rico).......................      25.6      26.3      27.5      28.6      29.6      30.7      32.0      33.3      208.0
       Child nutrition programs..............................       7.5       8.2       8.6       9.2       9.7      10.3      10.8      11.4       68.1
       Other.................................................       0.5       0.5       0.4       0.4       0.4       0.4       0.4       0.4        3.1
                                                              ------------------------------------------------------------------------------------------
       Subtotal, food and nutrition assistance...............      33.5      35.0      36.5      38.2      39.8      41.4      43.2      45.1      279.2
     Other income security:                                                                                                                             
       Supplemental security incom...........................      24.5      24.5      28.3      30.3      32.1      36.5      33.2      37.7      222.6
       Family support payments...............................      17.1      17.4      18.0      18.4      19.1      19.7      20.4      21.1      133.9
       Earned income tax credit..............................      15.2      18.1      19.9      20.7      21.6      22.6      23.5      24.4      150.9
       Other.................................................      -0.8      -0.9      -1.0      -1.1      -1.3      -1.5      -1.4      -1.5       -8.7
                                                              ------------------------------------------------------------------------------------------
       Subtotal, other income security.......................      56.0      59.1      65.2      68.3      71.4      77.3      75.7      81.6      498.7
                                                              ------------------------------------------------------------------------------------------
     Subtotal, income security...............................     181.3     190.3     202.0     210.9     219.6     231.5     236.2     249.1    1,539.5
   Social Security...........................................     333.3     348.1     364.8     383.3     401.7     421.3     441.9     463.5    2,824.7
   Veterans' benefits and services:                                                                                                                     
    Compensation\1\..........................................      14.8      14.1      15.7      16.2      16.5      18.1      16.2      17.8      114.7
     Pensions\1\.............................................       3.0       2.8       3.0       3.0       3.5       3.9       3.4       3.8       23.3
     Other...................................................       2.0       2.1       2.3       2.3       2.2       2.3       2.3       2.3       15.7
                                                              ------------------------------------------------------------------------------------------
     Subtotal, veterans benefits and services................      19.9      19.0      20.9      21.4      22.3      24.2      21.9      23.9      153.7
                                                              ==========================================================================================
Subtotal, human resources programs                                800.4     845.5     901.1     957.0   1,015.0   1,082.0   1,141.8   1,218.1    7,160.7
Other programs included in the entitlement target:                                                                                                      
   Agriculture:                                                                                                                                         
     Farm price supports (CCC)\2\............................       6.0       3.2       3.6       5.1       5.0       4.4       3.8       3.3       28.5
     Other...................................................      -0.3       0.6       0.1         *         *       0.1       0.2       0.2        1.1
                                                              ------------------------------------------------------------------------------------------
     Subtotal, agriculture...................................       5.8       3.8       3.7       5.1       5.0       4.5       4.0       3.5       29.6
Undistributed offsetting receipts:                                                                                                                      
   Employer share, employee retirement.......................     -34.4     -33.4     -34.4     -35.2     -36.4     -38.2     -40.0     -42.3     -259.9
   Rents and royalties on the Outer Continental Shelf........      -2.4      -2.7      -3.1      -2.6      -2.6      -2.6      -2.6      -2.6      -18.7
   Other offsetting receipts: Spectrum auction, privatize Elk                                                                                           
   Hills, sale of power marketing administration.............      -7.6      -4.2      -1.7      -4.4  ........  ........  ........  ........      -10.3
                                                              ------------------------------------------------------------------------------------------
  Subtotal, undistributed offsetting receipts................     -44.5     -40.3     -39.2     -42.2     -39.0     -40.7     -42.6     -44.9     -288.9
Other functions..............................................      -2.6      -0.4       2.1      -0.1      -0.4       0.8        -*      -0.2        1.8
                                                              ------------------------------------------------------------------------------------------
Subtotal, other programs included in the entitlement target..     -41.2     -37.0     -33.4     -37.2     -34.3     -35.4     -38.6     -41.5     -257.4
                                                              ------------------------------------------------------------------------------------------
Subtotal, mandatory programs included in the entitlement                                                                                                
 target......................................................     759.2     808.6     867.7     919.8     980.7   1,046.6   1,103.2   1,176.6    6,903.3
Deposit insurance............................................     -17.9      -9.0      -4.6      -1.6        -*      -2.0      -1.3      -1.4      -19.9
Net interest:                                                                                                                                           
   Interest on the public debt...............................     332.4     344.6     345.8     347.6     352.1     356.8     360.9     367.6     2475.5
   Interest received on trust funds..........................     -93.2     -97.6    -100.4    -103.3    -105.5    -109.1    -108.8    -111.4     -736.1
   Other interest............................................      -7.1      -5.9      -6.3      -5.7      -6.0      -6.7      -7.4      -7.8      -45.9
                                                              ------------------------------------------------------------------------------------------
Subtotal net interest........................................     232.2     241.1     239.1     238.6     240.6     241.1     244.6     248.4     1693.5
                                                              ------------------------------------------------------------------------------------------
Total, outlays for mandatory and related programs............     973.5   1,040.7   1,102.2   1,156.9   1,221.2   1,285.7   1,346.6   1,423.5    8,576.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
*$50 million or less.                                                                                                                                   
                                                                                                                                                        
\1\13 benefit payments are outlayed in 2000. Only 11 benefit payments are outlayed in 1996 and 2001.                                                    
                                                                                                                                                        
\2\Figures reflect the extension of authority for farm programs that was in place in December 1995. However authority for many farm programs expired    
  after this date. At the time of the 1997 budget preparation, new authority had not been enacted. Therefore under current law, authority for these     
  programs has reverted back to provisions contained in the 1938 and 1949 Farm Bills. See Chapter 15 for estimates of this authority.                   
[[Page 213]]
  Spending on programs covered by the mandatory targets is projected to 
grow from $808.6 billion in 1996 to $1,176.6 billion in 2002, an annual 
average rate of 6.5 percent. In percentage terms, the areas of largest 
growth are the health entitlements. More than half of the growth in 
programs covered by the mandatory targets is in Medicaid and Medicare. 
For additional information on the trends in mandatory spending, see 
Chapter 15 ``Current services estimates'' in this volume.
                           Growth in Receipts
  Baseline receipts are projected to be $1,501.5 billion in 1997, $73.6 
billion more than the 1996 estimate. By 2002, baseline receipts are 
projected to reach $1,915.9.0 billion. For additional information on the 
trends in baseline receipts, see Chapter 15 ``Current Service 
Estimates'' in this volume.
  The Order requires a comparison between the current level of receipts 
and the levels projected as of the date of enactment of OBRA93 
(September 1993 Midsession). As shown in Table 13-4, receipts are higher 
than the September 1993 Midsession estimates in each year, by amounts 
ranging from $25.0 billion to $65.9 billion. These increases are the net 
effect of legislative, administrative and regulatory changes; revisions 
in economic assumptions; and technical estimating revisions. Revised 
economic assumptions, primarily higher wages and salaries, and corporate 
profits, have increased receipts in each year, by amounts ranging from 
$17.2 billion to $56.6 billion. Technical revisions, primarily 
reflecting collection experience, updated tabulations from tax returns, 
and revisions in historical economic data, have increased receipts in 
each year except 1996. Regulatory and legislative changes since 
September 1993 have also increased receipts in each year.

Table 13-4.  COMPARISON OF 1994 MIDSESSION (CBO UPDATED) AND 1996 BUDGET
                            BASELINE RECEIPTS                           
                         (In billions of dollars)                       
------------------------------------------------------------------------
                                    1995      1996      1997      1998  
------------------------------------------------------------------------
1994 Midsession baseline                                                
 estimate.......................   1,329.5   1,402.9   1,457.6   1,512.6
Revised economic assumptions:                                           
   Individual income taxes......      -0.1       7.6      13.0      19.8
   Corporation income taxes.....      13.9      16.5      22.1      28.4
   Social insurance taxes and                                           
   contributions................      -1.4       0.7       5.2       8.4
   Excise taxes.................       0.8       0.9       0.8       0.8
   Estate and gift taxes........       0.2       0.2       0.2       0.3
   Customs duties...............       1.0       0.5       1.1       1.4
   Federal Reserve deposit of                                           
   earnings.....................       2.8       0.2      -1.6      -2.5
   Other miscellaneous receipts.  ........  ........  ........  ........
                                 ---------------------------------------
  Subtotal, economic assumptions      17.2      26.6      40.9      56.6
                                                                        
Technical revisions:                                                    
   Individual income taxes......      -7.7     -10.7      -9.6      -8.2
   Corporation income taxes.....      15.4      17.8      22.5      30.3
   Social insurance taxes and                                           
   contributions................      -5.5     -11.0      -9.4     -12.6
   Excise taxes.................       0.3      -4.1      -6.6      -7.0
   Estate and gift taxes........       0.8       0.9       1.0       1.2
   Customs duties...............      -1.9      -1.3      -0.9      -0.8
   Federal Reserve deposit of                                           
   earnings.....................       3.1       5.2       5.1       5.4
   Other miscellaneous receipts.      -0.1      -0.4      -0.4      -0.4
                                 ---------------------------------------
  Subtotal, technical revisions.       4.4      -3.5       1.8       7.9
                                                                        
Enacted legislation.............       3.9       1.9       1.2       1.4
Administration action\1\........       0.2       0.1       0.1       0.1
                                 ---------------------------------------
   Total changes................      25.7      25.0      43.9      65.9
                                 ---------------------------------------
1997 Budget baseline estimate...   1,355.2   1,427.9   1,501.5   1,578.6
------------------------------------------------------------------------
\1\Reflects the effect of regulations affecting hedging transactions.   

     Comparison of Mandatory Targets and Outlays under Current Laws
  As Table 13-1 shows, estimates of spending for programs covered by the 
targets under current laws are $40.3 billion below the target for 1995, 
$31.4 billion below the target for 1996, and $40.8 billion below the 
target for 1997. Over the three year period from 1995-97, projections of 
current law spending are $112.5 billion below the targets. While the 
targets have increased since the 1995 Budget, current law levels have 
decreased creating more room under the targets. As discussed above, the 
targets have increased as a result of upward revisions in beneficiary 
estimates. Under the Order, decreases in beneficiary estimates, do not 
affect the targets. If the caps were adjusted for the decreases, using 
the same mechanism applied to increases, the targets would have been 
reduced by $38.1 billion over the three years. Current law levels have 
decreased reflecting changes in beneficiaries.
[[Page 214]]
  Since current law spending is projected to be below the targets, a 
special message to reduce direct spending is not required.
       Comparison of Mandatory Targets and Presidential Proposals
  Enactment of the proposals in the President's budget would change the 
levels of the targets and estimated outlays. As shown in Table 13-5, 
enactment of the President's revenue proposals would decrease the 
mandatory targets by $1.6 billion in 1996 and $11.7 in 1997. This 
reduction in revenue is more than offset by the proposed $13.7 billion 
decrease in direct spending. The target enforcement procedure allows for 
this type of tradeoff between decreases in revenue and decreases in 
direct spending. After adjusting the targets to reflect the President's 
policy initiatives, spending under the President's budget is $34.8 
billion below the target for 1996 and $37.9 billion below the target for 
1997. Over the three year period from 1995-97, spending under the 
President's proposal is $113.0 billion below the targets.

    Table 13-5.  MANDATORY TARGETS ASSUMING ENACTMENT OF PRESIDENTIAL   
                                PROPOSALS                               
                        (In billions of dollars)                        
------------------------------------------------------------------------
                                    1995      1996      1997     1995-97
------------------------------------------------------------------------
                                                                        
        Mandatory targets                                               
                                                                        
Current mandatory targets.......     799.5     840.0     908.5  ........
                                                                        
 Adjustment to targets if the                                           
 President's proposals are                                              
 enacted:                                                               
   Tax reduction................  ........      -1.3     -17.6     -18.8
   Other revenue proposals......  ........      -0.3       5.8       5.5
                                 ---------------------------------------
   Total adjustments............  ........      -1.6     -11.7     -13.3
                                                                        
Targets adjusted for                                                    
 Presidential proposals.........     799.5     838.4     896.8  ........
                                                                        
  Proposed outlays for programs                                         
      covered by the target                                             
                                                                        
Outlays under current law.......     759.2     808.6     867.7  ........
  Presidential proposals........  ........      -4.9      -8.8     -13.7
                                 ---------------------------------------
Proposed outlay totals..........     759.2     803.6     858.9  ........
                                                                        
Amount over (+) or under (-) the                                        
 targets........................     -40.3     -34.8     -37.9    -113.0
------------------------------------------------------------------------