[Analytical Perspectives]
[Other Technical Presentations]
[19. Comparison of Actual to Estimated Totals for 1996]
[From the U.S. Government Publishing Office, www.gpo.gov]
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19. COMPARISON OF ACTUAL TO ESTIMATED TOTALS FOR 1997
The following three parts of this chapter compare the actual total
receipts, outlays, and deficit for 1997 with the current services
estimates \1\ shown in the FY 1997 Budget published in March 1996. 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 1997 previously published by
the Department of the Treasury with those in this budget.
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\1\ The current services concept is discussed in Chapter 16: ``Current
Services Estimates.'' For mandatory programs and receipts the March 1996
current services estimate is based on laws then in place. For
discretionary programs the current services estimate is based on the
prior year estimates adjusted for inflation.
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Receipts
Receipts in 1997 were $1,579.3 billion, which is $77.8 billion greater
than the current services estimate of $1,501.5 billion in the 1997
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 technical factors that
resulted in different collection patterns and effective tax rates than
had been assumed.
Policy differences.--Seven major laws enacted after March 1996
affected 1997 receipts: 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; Small Business Job Protection Act; Airport
and Airway Trust Fund Tax Reinstatement Act of 1997, and Taxpayer Relief
Act of 1997. In total, these changes increased 1997 receipts by a net
$48 million.
Economic differences.--Differences between the economic assumptions
upon which the current services estimates were made and actual economic
performance accounted for a net decrease in 1997 receipts of $0.2
billion. Increases in wages and salaries and non-wages sources of
personal income were in large part responsible for the increase in
individual income taxes of $1.5 billion. Increases in wages and salaries
and proprietor's income relative to the budget forecasts were primarily
responsible for the increase in social insurance and retirement receipts
of $2.5 billion. Excise taxes were also above the budget forecast, in
large part attributable to higher-than-estimated levels of nominal GDP.
Lower-than-expected corporate profits reduced corporation income taxes
$3.4 billion below the budget forecast, and lower-than-expected imports
reduced customs duties by $0.8 billion.
Technical reestimates.--Higher-than-anticipated collections of
individual income taxes accounted for $75.0 billion of the $78.0 billion
increase in 1997 receipts attributable to technical factors. Higher-
than-anticipated capital gains realizations than assumed in March 1996,
and changes in the distribution of income among taxpayers, which caused
effective tax rates to be higher than estimated in March 1996, were in
large part responsible for the increase in individual income tax
receipts. Different collections patterns and effective tax rates than
assumed in March 1996 were primarily responsible for the higher-than-
anticipated collections of corporation income taxes of $5.1 billion.
Most of the $1.0 billion increase in social insurance and retirement
receipts reflected different distributions of income among taxpayers
than had been assumed. Greater-than-anticipated holdings of taxable
assets increased estate and gift taxes above the budget forecast by $2.8
billion. Different distributions of imports and purchases among taxable
products were in large part responsible for the increase in excise taxes
and decrease in customs duties, respectively. Decreased deposits of
earnings by
Table 19-1. COMPARISON OF ACTUAL 1997 RECEIPTS WITH THE INITIAL CURRENT SERVICES ESTIMATES
(In billions of dollars)
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Enacted
March legislation/ Different Technical Net
1996 administrative economic factors change Actual
estimate actions conditions
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Individual income taxes................. 662.3 -1.3 1.5 75.0 75.2 737.5
Corporation income taxes................ 181.6 -1.0 -3.4 5.1 0.7 182.3
Social insurance taxes and contributions 535.9 -* 2.5 1.0 3.5 539.4
Excise taxes............................ 52.0 3.6 0.6 0.7 4.9 56.9
Estate and gift taxes................... 17.1 .............. -* 2.8 2.8 19.8
Customs duties.......................... 21.1 -1.1 -0.8 -1.3 -3.2 17.9
Miscellaneous receipts.................. 31.4 * -0.5 -5.5 -6.0 25.5
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Total................................. 1,501.5 * -0.2 78.0 77.8 1,579.3
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*$50 million or less.
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the Federal Reserve, attributable to lower-than-expected asset values on
securities denominated in foreign currencies, and lower-than-expected
contributions to the Universal Service Fund, accounted for most of the
$5.5 billion decrease in miscellaneous receipts.
Outlays
Outlays for 1997 were $1,601.2 billion. This was $50.0 billion less
than the $1,651.3 billion current services estimate in the 1997 Budget
(March 1996).
Table 19-2 distributes the $50.0 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 1997,
policy changes decreased outlays an estimated $10.6 billion relative to
the initial current services estimates.
Policy changes reduced discretionary outlays $3.9 billion because
final appropriations were below the initial current services estimates.
Policy changes decreased mandatory outlays $6.4 billion below current
law. Most of this was the result of enacted legislation that imposed a
special assessment on thrifts to capitalize the Savings Association
Insurance Fund, expanded collections from auctions of the
electromagnetic spectrum, and reformed food stamps, partially offset by
increases in 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 March 1996
resulted in a net outlay increase of $3.6 billion. Outlays for mandatory
programs decreased an estimated $4.1 billion, largely due to lower than
expected unemployment rates, which in turn resulted in lower outlays for
unemployment compensation and food stamps. Outlays for net interest
increased an estimated $7.7 billion, largely due to higher than expected
interest rates.
Technical estimating differences and other changes result from
changes in such factors as the number of beneficiaries for entitlement
programs, crop conditions, higher asset sales from failed banks and
thrifts, or other factors not associated with policy changes or economic
conditions. Technical changes accounted for a net decrease of $43.1
billion. The largest decreases were for Medicare, Medicaid, deposit
insurance, and higher than expected revenues from the auction of
spectrum licenses.
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 1997. This section combines these
effects to show the net impact of these differences on the deficit.
As shown in Table 19-3, the 1997 current services deficit was
initially estimated to be $149.8 billion. The actual deficit was $21.9
billion, which was $127.8 billion less than the initial estimate.
Receipts were $77.8 billion more than the initial estimate, and outlays
were $50.0 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 $10.6 billion.
Economic conditions that differed from the initial assumptions in
March 1996 accounted for an estimated $3.8 billion increase in the
deficit. This was the combined effect of a decrease in receipts of $0.2
billion and an increase in outlays of $3.6 billion. Technical factors
decreased the deficit by an estimated $121.0 billion. This was due to an
increase in receipts of $78.0 billion and a decrease in outlays of $43.1
billion for technical estimating reasons.
Table 19-2. COMPARISON OF ACTUAL 1997 OUTLAYS WITH THE INITIAL CURRENT SERVICES ESTIMATES
(In billions of dollars)
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Current Changes
Services -----------------------------------------
(March Total Actual
1996) Policy Economic Technical changes
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Discretionary:
Defense.......................................... 270.9 -6.6 ........ 7.4 0.8 271.6
Nondefense....................................... 278.2 2.7 ........ -4.3 -1.6 276.6
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Subtotal, discretionary....................... 549.1 -3.9 ........ 3.1 -0.8 548.3
Mandatory:
Deposit insurance................................ -4.6 -3.2 ........ -6.6 -9.8 -14.4
Other programs................................... 867.7 -3.2 -4.1 -37.0 -44.3 823.4
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Subtotal, mandatory............................ 863.1 -6.4 -4.1 -43.6 -54.1 809.0
Net interest....................................... 239.1 -0.3 7.7 -2.5 4.9 244.0
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Total outlays.................................. 1,651.3 -10.6 3.6 -43.1 -50.0 1,601.2
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Table 19-3. COMPARISON OF THE ACTUAL 1997 DEFICIT WITH THE INITIAL CURRENT SERVICES ESTIMATES
(In billions of dollars)
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Current Changes
Services -----------------------------------------
(March Total Actual
1996) Policy Economic Technical changes
------------------------------------------------------------------------------Receipts........................................... 1,501.5 * -0.2 78.0 77.8 1,579.3
Outlays............................................ 1,651.3 -10.6 3.6 -43.1 -50.0 1,601.2
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Deficit.......................................... -149.8 10.6 -3.8 121.0 127.8 -21.9
------------------------------------------------------------------------------* indicates $50 million or less.
Note: Deficit changes are receipts minus outlays. For these changes, a plus indicates a decrease in the deficit.
Comparison of the Actual and Estimated Outlays for Mandatory and Related
Programs for 1997
This section compares the original 1997 outlay estimates for
mandatory and related programs under current law in the 1997 Budget
(March 1996) 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.
Table 19-4 shows the differences between the actual outlays for these
programs in 1997 and the amounts originally estimated in the 1997
Budget, based on laws in effect at that time. Actual outlays for
mandatory spending and net interest in 1997 were $1,053.0 billion, which
was $49.2 billion less than the initial estimate of $1,102.2 billion,
based on existing law in March 1996.
Actual outlays for mandatory human resources programs were $876.5
billion, $24.6 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 $18.7 billion less than originally
estimated. Much of this decrease was for deposit insurance.
Undistributed offsetting receipts were $10.8 billion higher than
expected, largely due to higher-than-expected receipts from the sale of
spectrum licenses.
Outlays for net interest were $244.0 billion or $4.9 billion more
than the original estimate. This increase was largely the effect of
higher than assumed interest rates, partially offset by lower borrowing
requirements due to lower than originally estimated deficits for 1996
and 1997.
Reconciliation of Differences with Amounts Published by Treasury for
1997
Table 19-5 provides a reconciliation of the receipts, outlays, and
deficit totals published by the Department of the Treasury in the
September 30, 1997, Monthly Treasury Statement and those published in
this budget. The Department of the Treasury made technical adjustements
to the estimates for the U.S. Government Annual Report, which lowered
receipts by $25 million and outlays by $676 million. Most of the
revision was for the Postal Service and for the Federal Housing
Administration in the Department of Housing and Urban Development.
Additional adjustements made for this budget increased receipts by $341
million and outlays by $316 million. Nearly all of this difference is
the result of inclusion of transactions of the United Mine Workers of
America benefit funds.
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Table 19-4. COMPARISON OF ACTUAL AND ESTIMATED OUTLAYS FOR MANDATORY AND RELATED PROGRAMS UNDER CURRENT LAW
(In billions of dollars)
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1997
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March 1996
estimate Actual Change
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Mandatory outlays:
Human resources programs:
Education, training, employment, and social services............. 13.5 13.7 0.2
Health:
Medicaid....................................................... 102.3 95.6 -6.7
Other.......................................................... 4.5 5.3 0.8
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Total health................................................... 106.8 100.9 -5.9
Medicare......................................................... 193.1 187.4 -5.7
Income security:
Retirement and disability...................................... 75.7 75.7 0.1
Unemployment compensation...................................... 24.7 20.6 -4.1
Food and nutrition assistance.................................. 36.5 31.7 -4.8
Other.......................................................... 65.2 63.5 -1.7
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Total, income security....................................... 202.0 191.4 -10.5
Social security.................................................. 364.8 362.3 -2.6
Veterans benefits and services:
Income security for veterans................................... 19.9 20.4 0.5
Other.......................................................... 1.0 0.3 -0.7
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Total veterans benefits and services......................... 20.9 20.7 -0.2
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Total mandatory human resources programs..................... 901.1 876.5 -24.6
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Other functions:
Agriculture...................................................... 3.7 5.0 1.3
Deposit insurance................................................ -4.6 -14.4 -9.8
Other functions.................................................. 2.1 -8.1 -10.2
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Total, other functions....................................... 1.2 -17.5 -18.7
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Undistributed offsetting receipts:
Employer share, employee retirement.............................. -34.5 -34.3 0.2
Rents and royalties on the outer continental shelf............... -3.1 -4.7 -1.6
Other undistributed offsetting receipts.......................... -1.6 -11.0 -9.4
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Total undistributed offsetting receipts........................ -39.2 -50.0 -10.8
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Total, mandatory............................................. 863.1 809.0 -54.1
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Net interest:
Interest on the public debt........................................ 345.8 355.8 10.0
Interest received by trust funds................................... -100.4 -105.0 -4.6
Other interest..................................................... -6.3 -6.8 -0.5
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Total net interest........................................... 239.1 244.0 4.9
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Total outlays for mandatory and net interest................. 1,102.2 1,053.0 -49.2
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Table 19-5. RECONCILIATION OF FINAL AMOUNTS FOR 1997
(In millions of dollars)
------------------------------------------------------------------------------ Receipts Outlays Deficit
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Totals published by Treasury (September 30, 1997, Monthly Treasury Statement).. 1,578,977 1,601,595 -22,618
Postal Service............................................................... ......... -376 376
Federal Housing Administration............................................... ......... -308 308
Other........................................................................ -25 8 -34
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Total adjustments, net....................................................... -25 -676 650
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Totals published by Treasury in U.S. Government Annual Report.................. 1,578,951 1,600,919 -21,968
United Mine Workers of America benefit funds................................. 339 339 .........
Other........................................................................ 2 -23 25
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Total adjustments, net....................................................... 341 316 25
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Totals in the budget........................................................... 1,579,292 1,601,235 -21,943
MEMORANDUM:
Total change since September 30, 1997, Monthly Treasury Statement.............. 315 -360 675
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