[Analytical Perspectives]
[Other Technical Presentations]
[19. Comparison of Actual to Estimated Totals for 1996]
[From the U.S. Government Publishing Office, www.gpo.gov]


 
          19. COMPARISON OF ACTUAL TO ESTIMATED TOTALS FOR 1996

  The following three parts of this chapter compare the actual total 
receipts, outlays, and deficit for 1996 with the current services 
estimates \1\ shown in the FY 1996 Budget published in February 1995. 
The fourth part of this chapter shows additional details for a 
comparison of mandatory and related programs, and the final part 
reconciles actual receipts, outlays, and deficit totals for 1996 
previously published by the Department of the Treasury with those in 
this budget.
---------------------------------------------------------------------------
  \1\ The current services concept is discussed in Chapter 16: ``Current 
Services Estimates.'' For mandatory programs and receipts the February 
1995 current services estimate is based on current law. For 
discretionary programs the February 1995 current service estimate is 
based on the prior year estimates adjusted for inflation.
---------------------------------------------------------------------------
  In this chapter the initial estimates of both receipts and outlays for 
1996 have been adjusted upward by $0.9 billion as a result of the 
reclassification of the Federal Communications universal service fund as 
budgetary. The initial estimates shown here are therefore higher than 
originally published in February 1995.

                                Receipts

  Receipts in 1996 were $1,453.1 billion, which is $33.6 billion greater 
than the current services estimate of $1,419.4 billion in the 1996 
Budget. As shown in Table 19-1, this increase was the net effect of 
legislative, administrative and regulatory changes; economic conditions 
that differed from what had been expected; and different collection 
patterns and effective tax rates than had been assumed.



           Table 19-1.  COMPARISON OF ACTUAL 1996 RECEIPTS WITH THE INITIAL CURRENT SERVICES ESTIMATES          
                                            (In billions of dollars)                                            
----------------------------------------------------------------------------------------------------------------
                                           Current                                                              
                                           services   Legislative,    Different                                 
                                           estimate  regulatory and   economic   Technical     Net       Actual 
                                            (Feb.    administrative  conditions   factors     change            
                                            1995)        changes                                                
----------------------------------------------------------------------------------------------------------------
Individual income taxes.................     626.9          -0.4          17.0       12.9       29.5      656.4 
Corporation income taxes................     157.2           0.2          11.8        2.7       14.7      171.8 
Social insurance taxes and contributions     509.4            -*           4.3       -4.3          *      509.4 
Excise taxes............................      57.3            -*           0.3       -3.6       -3.3       54.0 
Estate and gift taxes...................      16.8   ..............       -0.1        0.5        0.4       17.2 
Customs duties..........................      22.3   ..............       -2.2       -1.4       -3.7       18.7 
Miscellaneous receipts..................      29.6   ..............       -2.3       -1.8       -4.1       25.5 
                                         -----------------------------------------------------------------------
  Total.................................   1,419.4          -0.2          28.8        5.0       33.6    1,453.1 
----------------------------------------------------------------------------------------------------------------
*$50 million or less.                                                                                           

  Policy differences.--Six laws enacted after February 1995 affected 
1996 receipts: Self-Employed Health Insurance Act; Tax Benefits for 
Members of the Armed Forces Performing Peacekeeping Services in Bosnia 
and Hercegovina, Croatia, and Macedonia; Taxpayer Bill of Rights 2; 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996; 
Health Insurance Portability and Accountability Act of 1996; and Small 
Business Job Protection Act. In total, these changes decreased 1996 
receipts by a net $0.2 billion.
  Economic differences.--Differences between the economic assumptions 
upon which the current services estimates were made and actual economic 
performance accounted for a net increase in 1996 receipts of $28.8 
billion. Individual income taxes were higher than expected by $17.0 
billion, in large part attributable to increases in wages and salaries 
and non-wage sources of income relative to the budget forecast. 
Increases in wages and salaries relative to the budget forecast were 
also responsible for the $4.3 billion increase in social insurance taxes 
and contributions. Higher than expected corporate profits increased 
corporation income taxes $11.8 billion above the budget forecast. Lower 
than anticipated interest rates, which affect deposits of earnings by 
the Federal Reserve, reduced miscellaneous receipts by $2.3 billion and 
lower than expected imports reduced customs duties by $2.2 billion.
  Technical reestimates.--Different collection patterns and effective 
tax rates than had been assumed in February 1995 were primarily 
responsible for the decrease in social insurance taxes and contributions 
of $4.3 billion and the increases in individual and corporation income 
taxes of $12.9 billion and $2.7 billion, respectively. Different 
effective tax rates than had been assumed, reflecting different 
distributions of imports and purchases among taxable products, are in 
large part responsible for the decreases in customs duties and excise 
taxes, respectively. Decreased deposits of 

[[Page 316]]

earnings by the Federal 
Reserve, attributable to lower-than-expected asset values on securities 
denominated in foreign currencies, accounted for most of the $1.8 
billion decrease in miscellaneous receipts.

                                 Outlays

  Outlays for 1996 were $1,560.3 billion. This was $59.7 billion less 
than the $1,620.0 billion current services estimate in the initial 1996 
Budget (February 1995).
  Table 19-2 distributes the $59.7 billion net decrease in outlays among 
discretionary and mandatory programs and net interest. The table also 
makes rough estimates according to three reasons for the changes: 
policy; economic conditions; and technical estimating differences, a 
residual.
  Policy changes are the result of actions by the Congress or the 
Administration that change spending levels, primarily through higher or 
lower appropriations or changes in authorizing legislation. For 1996, 
policy changes decreased outlays an estimated $10.5 billion relative to 
the initial current services estimates.
  Policy changes reduced discretionary outlays $13.7 billion because 
final appropriations were below the initial current services estimates. 
Policy changes increased mandatory outlays $3.5 billion above current 
law. Most of this was the result of increases of $2.6 billion for the 
Farm Bill. (Mandatory programs are mostly formula benefit or entitlement 
programs not normally controlled by annual appropriations.)
  Economic conditions that differed from those forecast in February 1995 
resulted in a net outlay decrease of $24.1 billion. Outlays for 
mandatory programs decreased an estimated $9.0 billion. Lower than 
expected unemployment rates decreased outlays an estimated $4.1 billion 
due to the effects on unemployment benefits and income support programs 
such as food stamps. Lower than expected inflation decreased outlays an 
estimated $4.6 billion, largely due to the effect on Social Security 
and, to a lesser extent, Medicare and Medicaid. The remaining major 
decrease was for Federal student loans due to lower than expected 
interest rates. Outlays for net interest decreased an estimated $15.1 
billion due to lower than expected interest rates and lower debt service 
due to economic changes on receipts and outlays.
  Technical estimating differences and other changes result from changes 
in such factors as the number of beneficiaries for entitlement programs, 
crop conditions, bank failures, or other factors not associated with 
policy changes or economic conditions. Technical changes accounted for a 
net decrease of $25.2 billion. The largest decreases were for 
agricultural price support programs, Medicare, Social Security, 
Medicaid, and deposit insur-
ance.






           Table 19-2.  COMPARISON OF ACTUAL 1996 OUTLAYS WITH THE INITIAL CURRENT SERVICES ESTIMATES           
                                            (In billions of dollars)                                            
----------------------------------------------------------------------------------------------------------------
                                                     Current                   Changes                          
                                                     Services -----------------------------------------         
                                                      (Feb.                                     Total    Actual 
                                                    1995) \1\   Policy   Economic  Technical   changes          
----------------------------------------------------------------------------------------------------------------
Discretionary:                                                                                                  
  Defense.........................................      269.7      -6.9  ........        3.1      -3.8     266.0
  Nondefense......................................      282.5      -6.8  ........       -7.3     -14.1     268.4
                                                   -------------------------------------------------------------
    Subtotal, discretionary.......................      552.2     -13.7  ........       -4.1     -17.9     534.4
                                                                                                                
Mandatory:                                                                                                      
  Deposit insurance...............................       -6.2  ........  ........       -2.2      -2.2      -8.4
  Other programs..................................      817.1       3.5      -9.0      -18.4     -23.8     793.3
                                                   -------------------------------------------------------------
    Subtotal, mandatory...........................      810.9       3.5      -9.0      -20.6     -26.0     784.9
                                                                                                                
Net interest......................................      256.9      -0.3     -15.1       -0.5     -15.9     241.1
                                                   -------------------------------------------------------------
     Total outlays................................    1,620.0     -10.5     -24.1      -25.2     -59.7   1,560.3
----------------------------------------------------------------------------------------------------------------
\1\ To be consistent with the conceptual basis of the actual amounts, the total includes $0.9 billion for the   
  universal service fund in mandatory and shifts $2.3 billion from discretionary to mandatory, primarily for    
  transportation programs.                                                                                      


[[Page 317]]


         Table 19-3.  COMPARISON OF THE ACTUAL 1996 DEFICIT WITH THE INITIAL CURRENT SERVICES ESTIMATES         
                                             (In billions of dollars)                                           
----------------------------------------------------------------------------------------------------------------
                                                      Current                  Changes                          
                                                     Services -----------------------------------------         
                                                       (Feb.                                    Total    Actual 
                                                       1995)    Policy   Economic  Technical   changes          
----------------------------------------------------------------------------------------------------------------
Receipts...........................................    1419.4      -0.2      28.8        5.0      33.6    1453.1
Outlays............................................    1620.0     -10.5     -24.1      -25.2     -59.7    1560.3
                                                    ------------------------------------------------------------
   Deficit.........................................    -200.6      10.3      52.9       30.1      93.3    -107.3
----------------------------------------------------------------------------------------------------------------
Note:  Deficit changes are receipts minus outlays. For these changes, a plus indicates a decrease in the        
  deficit.                                                                                                      
                                                                                                                
                                                                                                                

                                 Deficit

  The preceding two sections discussed the differences between the 
initial current services estimates and the actual amounts of Federal 
Government receipts and outlays for 1996. This section combines these 
effects to show the net impact of these differences on the deficit.
  As shown in Table 19-3, the 1996 current services deficit was 
initially estimated to be $200.6 billion. The actual deficit was $107.3 
billion, which was $93.3 billion less than the initial estimate. 
Receipts were $33.6 billion more than the initial estimate, and outlays 
were $59.7 billion less. The table shows the distribution of the changes 
according to the categories in the preceding two sections.
  The net effect of policy decreases for receipts and outlays decreased 
the deficit $10.3 billion.
  Economic conditions that differed from the initial assumptions in 
February 1995 accounted for an estimated $52.9 billion decrease in the 
deficit-- the combined effect of an increase in receipts of $28.8 
billion and a decrease in outlays of $24.1 billion. Technical estimating 
and other differences decreased the deficit by an estimated $30.1 
billion. This was due to a decrease in outlays of $25.2 billion and an 
increase in receipts of $5.0 billion.

Comparison of the Actual and Estimated Outlays for Mandatory and Related 
                            Programs for 1996

  This section compares the original 1996 outlay estimates for mandatory 
and related programs under current law in the 1996 Budget (February 
1995) with the actual outlays. Mandatory and related programs are 
programs with permanent spending authority that is generally controlled 
by authorizing legislation rather than by annual appropriations. Outlays 
for these programs depend primarily on eligibility criteria and benefit 
levels established in law, such as Social Security and Medicare benefits 
for the elderly, agricultural price support payments to farmers, or 
deposit insurance for banks and thrift institutions. This category also 
includes net interest outlays and undistributed offsetting receipts.
  A number of factors may cause differences between the amounts 
estimated in the budget and the actual outlays. For example, legislation 
may change benefit rates or coverage; the actual number of beneficiaries 
may differ from the number estimated; or economic conditions (such as 
inflation or interest rates) may differ from what was assumed in making 
the original estimates.

[[Page 318]]

  Table 19-4.  COMPARISON OF ACTUAL AND ESTIMATED OUTLAYS FOR MANDATORY AND RELATED PROGRAMS UNDER CURRENT LAW  
                                            (In billions of dollars)                                            
----------------------------------------------------------------------------------------------------------------
                                                                                          1996                  
                                                                       -----------------------------------------
                                                                          February                              
                                                                            1995         Actual        Change   
                                                                        estimate \1\                            
----------------------------------------------------------------------------------------------------------------
Mandatory outlays:                                                                                              
  Human resources programs:                                                                                     
    Education, training, employment, and social services..............        15.6          13.9          -1.7  
    Health:                                                                                                     
      Medicaid........................................................        96.0          92.0          -4.0  
      Other...........................................................         4.8           4.8           *    
                                                                       -----------------------------------------
      Total health....................................................       100.8          96.8          -4.0  
    Medicare..........................................................       174.8         171.3          -3.5  
    Income security:                                                                                            
      Retirement and disability.......................................        71.7          72.8           1.2  
      Unemployment compensation.......................................        23.2          22.6          -0.6  
      Food and nutrition assistance...................................        35.8          33.7          -2.1  
      Other...........................................................        62.6          58.9          -3.8  
                                                                       -----------------------------------------
       Total, income security.........................................       193.3         188.0          -5.3  
    Social security...................................................       351.4         347.1          -4.4  
    Veterans benefits and services:                                                                             
      Income security for veterans....................................        17.8          18.2           0.4  
      Other...........................................................         1.3           0.6          -0.6  
                                                                       -----------------------------------------
       Total veterans benefits and services...........................        19.1          18.8          -0.3  
                                                                       -----------------------------------------
     Total mandatory human resources programs.........................       855.0         835.8         -19.1  
  Other functions:                                                                                              
    Agriculture.......................................................         9.5           5.0          -4.5  
    Deposit insurance.................................................        -6.2          -8.4          -2.2  
    Other.............................................................        -5.9         -10.0          -4.0  
                                                                       -----------------------------------------
     Total, other functions...........................................        -2.7         -13.3         -10.7  
                                                                       -----------------------------------------
  Undistributed offsetting receipts:                                                                            
    Employer share, employee retirement...............................       -34.1         -33.5           0.6  
    Rents and royalties on the outer continental shelf................        -3.0          -3.7          -0.7  
    Other undistributed offsetting receipts...........................        -4.3          -0.3           3.9  
                                                                       -----------------------------------------
     Total undistributed offsetting receipts..........................       -41.4         -37.6           3.8  
                                                                       -----------------------------------------
  Total, mandatory....................................................       810.9         784.9         -26.0  
Net interest:                                                                                                   
  Interest on the public debt.........................................       363.8         344.0         -19.9  
  Interest received by trust funds....................................       -98.1         -97.4           0.8  
  Other interest......................................................        -8.7          -5.5           3.2  
                                                                       -----------------------------------------
         Total net interest...........................................       256.9         241.1         -15.9  
                                                                       -----------------------------------------
Total outlays for mandatory and net interest..........................     1,067.8       1,026.0         -41.9  
----------------------------------------------------------------------------------------------------------------
\1\ To be consistent with the conceptual basis of the actual amounts, the total includes $0.9 billion for the   
  universal service fund in mandatory and shifts $2.3 billion from discretionary to mandatory, primarily for    
  transportation programs.                                                                                      

  Table 19-4 shows the differences between the actual outlays for these 
programs in 1996 and the amounts originally estimated in the 1996 
Budget, based on laws in effect at that time. (The list of programs is 
similar to the list in Table 14-3 in Chapter 14, ``Review of Direct 
Spending and Receipts,'' in this volume. This table provides the 
estimates through 2002.) Actual outlays for mandatory spending and net 
interest in 1996 were $1,026.0 billion, which was $41.9 billion less 
than the initial estimate of $1,067.8 billion, based on existing law in 
February 1995.
  Actual outlays for mandatory human resources programs were $835.8 
billion, $19.1 billion less than originally estimated. This decrease was 
the net effect of legislative action, differences between actual and 
assumed economic conditions, differences between the anticipated and 
actual number of beneficiaries, and other technical differences.
  Outlays for other functions were $10.7 billion less than originally 
estimated. The largest decrease was for mandatory agricultural programs 
($4.5 billion), which resulted largely from higher than expected crop 
prices, which reduces Federal subsidies.

[[Page 319]]


  Outlays for net interest were $241.1 billion or $15.9 billion less the 
original estimate. This decrease was largely the effect of lower than 
assumed interest rates and lower borrowing requirements due to a lower 
than originally estimated deficit.

  Reconciliation of Differences with Amounts Published by Treasury for 
                                  1996

  Table 19-5 provides a reconciliation of the receipts, outlays, and the 
deficit totals published by the Department of the Treasury in the U.S. 
Government Annual Report for 1996 and those published in this budget. 
Receipts and outlays are $0.3 billion higher than previously reported by 
the Department of the Treasury. Most of the receipt and outlay 
difference is the result of inclusion of United Mine Workers of America 
benefit funds in the budget totals.

                                   

                              Table 19-5.  RECONCILIATION OF FINAL AMOUNTS FOR 1996                             
                                            (In millions of dollars)                                            
----------------------------------------------------------------------------------------------------------------
                                                                                  Receipts   Outlays    Deficit 
----------------------------------------------------------------------------------------------------------------
Totals published by Treasury (September 30, 1996 Monthly Treasury Statement)...  1,452,763  1,560,094    107,331
Miscellaneous Treasury adjustments.............................................  .........        -54        -54
                                                                                --------------------------------
  Totals published by Treasury in U.S. Government Annual Report................  1,452,763  1,560,040    107,277
Adjustments, net:                                                                                               
  United Mine Workers of America benefit funds.................................        304        304  .........
  Other........................................................................         -5        -14         -9
                                                                                --------------------------------
  Total adjustments, net.......................................................        299        290         -9
                                                                                --------------------------------
Totals in the budget...........................................................  1,453,062  1,560,330    107,268
                                                                                                                
                                  MEMORANDUM:                                                                   
                                                                                                                
Total change since September 30, 1996..........................................        299        236        -63
----------------------------------------------------------------------------------------------------------------