[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.
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\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.
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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)
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Enacted
Feb. 1997 legislation/ Different Technical Net
estimate administrative economic factors change Actual
actions conditions
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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
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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)
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Current Changes
Services -----------------------------------------
(Feb. Total Actual
1997) Policy Economic Technical changes
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Discretionary:
Defense.......................................... 265.4 -1.0 ........ 5.8 4.8 270.2
Nondefense....................................... 288.0 3.1 ........ -6.6 -3.5 284.4
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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
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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
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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)
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Current Changes
Services -----------------------------------------
(Feb. Total Actual
1997) Policy Economic Technical changes
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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
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Surplus/deficit (-)............................ -119.5 -10.2 47.9 151.1 188.8 69.2
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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)
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1998
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Feb. 1997
estimate Actual Change
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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
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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
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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
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Total veterans benefits and services.......................... 22.0 23.3 1.2
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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
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Total, other functions.......................................... 5.6 0.8 -4.9
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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
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Total undistributed offsetting receipts......................... -53.3 -47.2 6.1
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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
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Total net interest............................................ 249.9 243.4 -6.6
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Total outlays for mandatory and net interest.................. 1,140.0 1,097.9 -42.1
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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)
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Receipts Outlays Surplus
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Totals published by Treasury (September 30, 1998, Monthly
Treasury Statement)............................................ 1,721,421 1,651,383 70,039
Miscellaneous Treasury adjustments............................ -12 -189 176
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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
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Total adjustments, net.......................................... 389 1,358 -969
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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
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