[Analytical Perspectives]
[Other Technical Presentations]
[17. Comparison of Actual to Estimated Totals for 1998]
[From the U.S. Government Publishing Office, www.gpo.gov]



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         17.  COMPARISON OF ACTUAL TO ESTIMATED TOTALS FOR 1998

  The following three parts of this chapter compare the actual total 
receipts, outlays, and surplus for 1998 with the current services 
estimates \1\ shown in the FY 1998 Budget published in February 1997. 
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 surplus totals for 1998 
previously published by the Department of the Treasury with those in 
this budget.
---------------------------------------------------------------------------
  \1\ The current services concept is discussed in Chapter 14: ``Current 
Services Estimates.'' For mandatory programs and receipts the February 
1997 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.
---------------------------------------------------------------------------

                                Receipts

  Receipts in 1998 were $1,721.8 billion, which is $148.0 billion 
greater than the current services estimate of $1,573.8 billion in the 
1998 Budget. As shown in Table 17-1, this increase was the net effect of 
legislative and administrative 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.--The Taxpayer Relief Act of 1997 (TRA 97), the 
Balanced Budget Act of 1997, and the Internal Revenue Service 
Restructuring and Reform Act of 1998 were the only major laws enacted 
after February 1997 that affected 1998 receipts. In total, the changes 
provided in these Acts, together with several minor legislative and 
administrative changes, reduced 1998 receipts by a net $10.0 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 1998 receipts of $38.5 
billion. Higher-than-anticipated wages and salaries and non-wage sources 
of personal income were in large part responsible for the increases in 
individual income taxes and social insurance and retirement receipts of 
$20.9 billion and $16.4 billion, respectively. Higher-than-expected 
corporate profits increased corporation income taxes $0.4 billion above 
the budget estimate. Excise taxes and estate and gift taxes were also 
above the budget estimate, in large part attributable to higher-than-
estimated levels of nominal gross domestic product (GDP). Higher-than-
expected imports and higher-than-expected interest rates increased 
customs duties and miscellaneous receipts above the budget estimates by 
$0.1 billion and $0.3 billion, respectively.
  Technical reestimates.--Higher-than-anticipated collections of 
individual income taxes accounted for $108.1 billion of the $119.5 
billion increase in 1998 receipts attributable to technical factors. 
Higher-than-anticipated withheld and estimated payments of 1998 
liability, attributable in large part to higher effective tax rates than 
estimated in February 1997, were in large part responsible for the 
increase in individual income tax receipts. Higher-than-anticipated net 
final settlements of 1997 individual income tax liability also 
contributed to the increase in individual income taxes. Different 
collections patterns and effective tax rates than assumed in February 
1997 were primarily responsible for the higher-than-anticipated 
collections of corporation income taxes of $2.1 billion. Greater-than-
anticipated numbers and values of taxable estates increased estate and 
gift taxes $5.2 billion above the budget estimate. The failure of 
taxpayers to take full advantage of a deposit rule change enacted in TRA 
97, which shifted the due date for the deposit of certain Highway Trust 
Fund taxes (otherwise due after July 31, 1998 and before October 1, 
1998) to October 5, 1998, was in large part responsible for the net 
technical revision in excise tax receipts. Increased deposits of 
earnings by the Federal Reserve, attributable to higher-

           Table 17-1.  COMPARISON OF ACTUAL 1998 RECEIPTS WITH THE INITIAL CURRENT SERVICES ESTIMATES
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                         Enacted
                                          Feb. 1997   legislation/    Different  Technical     Net
                                           estimate  administrative   economic    factors     change     Actual
                                                         actions     conditions
----------------------------------------------------------------------------------------------------------------
Individual income taxes.................     708.4          -8.8          20.9      108.1      120.2      828.6
Corporation income taxes................     187.0          -0.9           0.4        2.1        1.7      188.7
Social insurance and retirement receipts     557.9          -1.1          16.4       -1.4       13.9      571.8
Excise taxes............................      53.3           1.2           0.3        2.9        4.4       57.7
Estate and gift taxes...................      18.8          -0.0           0.1        5.2        5.3       24.1
Customs duties..........................      19.1          -0.6           0.1       -0.4       -0.8       18.3
Miscellaneous receipts..................      29.3           0.1           0.3        2.9        3.3       32.7
                                         -----------------------------------------------------------------------
  Total.................................   1,573.8         -10.0          38.5      119.5      148.0    1,721.8
----------------------------------------------------------------------------------------------------------------


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than-expected asset values on securities denominated in foreign 
currencies, and higher-than-expected contributions to the Universal 
Service Fund, accounted for most of the $2.9 billion increase in 
miscellaneous receipts. Lower-than-estimated unemployment insurance 
receipts accounted for most of the reduction in social insurance and 
retirement receipts relative to the budget estimate. Customs duties were 
reduced $0.4 billion below the budget estimate, in large part because of 
lower-than-estimated taxable activity.

                                 Outlays

  Outlays for 1998 were $1,652.6 billion. This was $40.8 billion less 
than the $1,693.4 billion current services estimate in the 1998 Budget 
(February 1997).
  Table 17-2 distributes the $40.8 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 1998, 
policy changes increased outlays an estimated $0.2 billion relative to 
the initial current services estimates.
  Policy changes increased discretionary outlays $2.1 billion because 
outlays from final appropriations were above the initial current 
services estimates. Policy changes decreased mandatory outlays $2.2 
billion below current law. The largest change decreased Medicare outlays 
by $8.7 billion. This and other decreases were partially offset by 
increases in several programs, including Medicaid, supplemental security 
income, and children's health programs. (Mandatory programs are mostly 
formula benefit or entitlement programs not normally controlled by 
annual appropriations.)
  Economic conditions that differed from those forecast in February 1997 
resulted in a net outlay decrease of $9.4 billion. Outlays for mandatory 
programs decreased an estimated $10.3 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 $0.8 billion due to a combination of changes in interest rates 
and changes in borrowing requirements that resulted from the effect of 
economic factors 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, or other factors not associated with policy changes or 
economic conditions. Technical changes accounted for a net decrease of 
$31.6 billion. Large decreases occurred for Social Security, Medicare, 
and Medicaid. The decreases were partially offset by lower than expected 
revenues from the auction of spectrum licenses.

                             Deficit/Surplus

  The preceding two sections discussed the differences between the 
initial current services estimates and the actual amounts of Federal 
Government receipts and outlays for 1998. This section combines these 
effects to show the net impact of these differences on the deficit or 
surplus.
  As shown in Table 17-3, the 1998 current services deficit was 
initially estimated to be $119.5 billion. The actual surplus was $69.2 
billion, which was a $188.8 billion change from the initial estimate. 
Receipts were $148.0 billion more than the initial estimate, and outlays 
were $40.8 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 increased 
the deficit $10.2 billion.
  Economic conditions that differed from the initial assumptions in 
February 1997 accounted for an estimated $47.9 billion decrease in the 
deficit. This was the combined effect of an increase in receipts of 
$38.5 billion

           Table 17-2.  COMPARISON OF ACTUAL 1998 OUTLAYS WITH THE INITIAL CURRENT SERVICES ESTIMATES
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                      Current                  Changes
                                                     Services -----------------------------------------
                                                       (Feb.                                    Total    Actual
                                                       1997)    Policy   Economic  Technical   changes
----------------------------------------------------------------------------------------------------------------
Discretionary:
  Defense..........................................     265.4      -1.0  ........        5.8       4.8     270.2
  Nondefense.......................................     288.0       3.1  ........       -6.6      -3.5     284.4
                                                    ------------------------------------------------------------
    Subtotal, discretionary........................     553.4       2.1  ........       -0.8       1.3     554.7
 
Mandatory:
  Deposit insurance................................      -3.9  ........  ........       -0.5      -0.5      -4.4
  Other programs...................................     894.0      -2.2     -10.3      -22.6     -35.1     858.9
                                                    ------------------------------------------------------------
    Subtotal, mandatory............................     890.0      -2.2     -10.3      -23.1     -35.5     854.5
 
Net interest.......................................     249.9       0.3       0.8       -7.7      -6.6     243.4
                                                    ------------------------------------------------------------
     Total outlays.................................   1,693.4       0.2      -9.4      -31.6     -40.8   1,652.6
----------------------------------------------------------------------------------------------------------------


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  Table 17-3.  COMPARISON OF THE ACTUAL 1998 SURPLUS WITH THE INITIAL CURRENT SERVICES ESTIMATES OF THE DEFICIT
                                             (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                      Current                  Changes
                                                     Services -----------------------------------------
                                                       (Feb.                                    Total    Actual
                                                       1997)    Policy   Economic  Technical   changes
----------------------------------------------------------------------------------------------------------------
Receipts...........................................   1,573.8     -10.0      38.5      119.5     148.0   1,721.8
 
Outlays............................................   1,693.4       0.2      -9.4      -31.6     -40.8   1,652.6
                                                    ------------------------------------------------------------
 
    Surplus/deficit (-)............................    -119.5     -10.2      47.9      151.1     188.8      69.2
----------------------------------------------------------------------------------------------------------------
Note: Surplus/deficit (-) changes are receipts minus outlays. For these changes, a plus indicates a decrease in
  the deficit or an increase in the surplus.

and a decrease in outlays of $9.4 billion. Technical factors decreased 
the deficit by an estimated $151.1 billion. This was due to an increase 
in receipts of $119.5 billion and a decrease in outlays of $31.6 billion 
for technical estimating reasons.

Comparison of the Actual and Estimated Outlays for Mandatory and Related 
                            Programs for 1998

  This section compares the original 1998 outlay estimates for mandatory 
and related programs under current law in the 1998 Budget (February 
1997) 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 on eligibility criteria, benefit levels, and 
other factors established in law. Major examples of these programs 
include Social Security and Medicare benefits for the elderly, 
agricultural price support payments to farmers, and 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 17-4 shows the differences between the actual outlays for these 
programs in 1998 and the amounts originally estimated in the 1998 
Budget, based on laws in effect at that time. Actual outlays for 
mandatory spending and net interest in 1998 were $1,097.9 billion, which 
was $42.1 billion less than the initial estimate of $1,140.0 billion, 
based on existing law in February 1997.
  Actual outlays for mandatory human resources programs were $900.9 
billion, $36.8 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 $4.9 billion less than originally 
estimated. Undistributed offsetting receipts were $6.1 billion lower 
than expected, largely due to lower-than-expected receipts from the sale 
of spectrum licenses.
  Outlays for net interest were $243.4 billion or $6.6 billion less than 
the original estimate. This decrease was the net effect of changes in 
interest rates from those initially assumed, lower borrowing 
requirements due to a lower-than-estimated deficit for 1997 and an 
actual surplus in 1998, and technical factors.

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  Table 17-4.  COMPARISON OF ACTUAL AND ESTIMATED OUTLAYS FOR MANDATORY AND RELATED PROGRAMS UNDER CURRENT LAW
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                                          1998
                                                                       -----------------------------------------
                                                                          Feb. 1997
                                                                          estimate       Actual        Change
----------------------------------------------------------------------------------------------------------------
Mandatory outlays:
  Human resources programs:
    Education, training, employment, and social security..............        12.7          12.4          -0.3
    Health:
      Medicaid........................................................       104.5         101.2          -3.2
      Other...........................................................         5.1           5.4           0.2
                                                                       -----------------------------------------
      Total health....................................................       109.6         106.6          -3.0
 
    Medicare..........................................................       208.6         190.2         -18.4
 
    Income security:
      Retirement and disability.......................................        78.3          77.6          -0.7
      Unemployment compensation.......................................        24.7          19.6          -5.1
      Food and nutrition assistance...................................        33.9          29.2          -4.7
      Other...........................................................        66.8          65.9          -0.9
                                                                       -----------------------------------------
        Total, income security........................................       203.8         192.3         -11.5
 
    Social security...................................................       380.9         376.1          -4.8
 
    Veterans benefits and services:
      Income security for veterans....................................        21.2          21.3           0.1
      Other...........................................................         0.9           2.0           1.1
                                                                       -----------------------------------------
        Total veterans benefits and services..........................        22.0          23.3           1.2
                                                                       -----------------------------------------
  Total mandatory human resources programs............................       937.7         900.9         -36.8
 
  Other functions:
    Agriculture.......................................................         8.2           7.9          -0.3
    Deposit insurance.................................................        -3.9          -4.4          -0.5
    Other functions...................................................         1.4          -2.8          -4.1
                                                                       -----------------------------------------
      Total, other functions..........................................         5.6           0.8          -4.9
                                                                       -----------------------------------------
  Undistributed offsetting receipts:
    Employer share, employee retirement...............................       -35.3         -34.9           0.4
    Rents and royalties on the outer continentals.....................        -4.4          -4.5          -0.1
    Other undistributed offsetting receipts...........................       -13.7          -7.8           5.9
                                                                       -----------------------------------------
      Total undistributed offsetting receipts.........................       -53.3         -47.2           6.1
                                                                       -----------------------------------------
        Total, mandatory..............................................       890.0         854.5         -35.5
 
Net interest:.........................................................
  Interest on the public debt.........................................       365.2         363.8          -1.4
  Interest received by trust funds....................................      -108.1        -113.8          -5.8
  Other interest......................................................        -7.2          -6.6           0.6
                                                                       -----------------------------------------
        Total net interest............................................       249.9         243.4          -6.6
                                                                       -----------------------------------------
        Total outlays for mandatory and net interest..................     1,140.0       1,097.9         -42.1
----------------------------------------------------------------------------------------------------------------

  Reconciliation of Differences with Amounts Published by Treasury for 
                                  1998

  Table 17-5 provides a reconciliation of the receipts, outlays, and 
surplus totals published by the Department of the Treasury in the 
September 30, 1998, Monthly Treasury Statement and those published in 
this budget. The Department of the Treasury made technical adjustments 
to the estimates for the U.S. Government Annual Report, which lowered 
receipts by $12 million and outlays by $189 million. Additional 
adjustments made for this budget increased receipts by $389 million and 
outlays by $1,358 million. The major changes were for Federal family 
education loans and transactions of the United Mine Workers of America 
benefit funds.

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                              Table 17-5.  RECONCILIATION OF FINAL AMOUNTS FOR 1998
                                            (In millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                     Receipts         Outlays         Surplus
----------------------------------------------------------------------------------------------------------------
Totals published by Treasury (September 30, 1998, Monthly
 Treasury Statement)............................................       1,721,421       1,651,383          70,039
  Miscellaneous Treasury adjustments............................             -12            -189             176
                                                                 -----------------------------------------------
Totals published by Treasury in U.S. Government Annual Report...       1,721,409       1,651,194          70,215
  Federal family education loans................................  ..............             971            -971
  United Mine Workers of America benefit funds..................             340             340  ..............
  Other.........................................................              49              47               2
                                                                 -----------------------------------------------
Total adjustments, net..........................................             389           1,358            -969
                                                                 -----------------------------------------------
Totals in the budget............................................       1,721,798       1,652,552          69,246
 
                           MEMORANDUM:
 
Total change since September 30, 1998, Monthly Treasury
 Statement......................................................             377           1,169            -793
----------------------------------------------------------------------------------------------------------------