[Economic Outlook, Highlights from FY 1994 to FY 2001, FY 2002 Baseline Projections]
[III. Major Functions of the Federal Government]
[18.  General Government]
[From the U.S. Government Printing Office, www.gpo.gov]


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                         18.  GENERAL GOVERNMENT

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                         Table 18-1.  Federal Resources in Support of General Government
                                          (Dollar amounts in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                                        Percent
                                Function 800                                     1993        2001       Change:
                                                                                Actual     Estimate    1993-2001
----------------------------------------------------------------------------------------------------------------
Spending:
  Discretionary budget authority............................................     11,642      14,011         20%
  Mandatory outlays.........................................................      1,540       2,283         48%
Credit Activity:
   Direct loan disbursements................................................  ..........         16          NA
Tax expenditures............................................................     37,205      71,300         92%
----------------------------------------------------------------------------------------------------------------
NA = Not applicable.

  ----------------------------------------------------------------------
  The General Government function encompasses the central management 
activities of the executive and legislative branches. Its major 
activities include Federal finances (tax collection, debt financing, 
currency and coinage, Government-wide accounting), personnel management, 
and general administrative and property management.
  Four executive branch agencies are responsible for these activities: 
the Department of the Treasury (2001 enacted level of $14.0 billion), 
the General Services Administration ($590 million), the Office of 
Personnel Management ($207 million), and the Office of Management and 
Budget in the Executive Office of the President ($69 million).

Department of the Treasury

  Treasury is the Federal Government's financial agent--collecting 
revenue, making payments and managing the Government's finances. It 
produces and protects the Nation's currency; helps set domestic and 
international financial, economic, and tax policy; enforces economic 
embargoes and sanctions; regulates financial institutions and the 
alcohol, tobacco, and firearms industries; and protects citizens and 
commerce against those who counterfeit money, engage in financial fraud, 
violate our border, and threaten our leaders. Treasury's law enforcement 
functions are discussed in Chapter 17, ``Administration of Justice.''
  Treasury has enjoyed eight years of success in delivering its 
missions. In 2000 Treasury collected $2 trillion in tax and tariff 
revenues due under law; issued nearly $2 trillion in marketable 
securities and savings bonds to finance the Government's operations and 
promote citizens' savings; and, produced nine billion Federal Reserve 
Notes, 17.5 billion postage stamps, and 27.2 billion coins.

  Internal Revenue Service (IRS): The Clinton-Gore Administration 
inherited an IRS with an outdated organizational structure, work 
processes and technology. Confronted with a steadily increasing workload 
(well over one-billion documents each year), IRS was failing to provide 
the level of service expected by America's taxpayers.
  Since 1993, the IRS has been transformed. As required by the bi-
partisan IRS Restructuring and Reform Act of 1998, IRS reorganized into 
four operating divisions, each focused on serving groups of taxpayers 
with similar needs (i.e., wage and investment earners, small business 
and self-employed, middle and large corporate, and tax exempt and 
government entities). This transformation is the most fundamental 
organizational modernization of the IRS since the early 1950s.

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 IRS also adopted a new mission statement that reflects both its 
customer service and enforcement roles: ``to provide America's taxpayers 
with top quality service by helping them understand and meet their tax 
responsibilities and by applying the tax law with integrity and fairness 
to all.''
  Currently, the IRS is engaged in a massive effort to modernize its 
outdated technological infrastructure to dramatically improve 
compliance, productivity, and customer service. The management capacity 
to succeed in this extraordinarily complicated effort was instituted 
over the last three years. IRS will require another decade to complete 
the full program.
  IRS introduced a new balanced performance measurement system to 
improve its management. Over the last several years, balanced measures 
of business results (including quality and quantity measures), customer 
satisfaction, and employee satisfaction were developed for each major 
work product (e.g., examinations, telephone customer service, etc.). In 
addition, IRS is engaged in a long-term study to improve its 
understanding of taxpayer compliance burden so that this burden can be 
minimized.
  IRS managed its growing workload while implementing its modernization 
program. In 2000, IRS:
   provided 92.2 million refunds to taxpayers on 127.7 million 
          individual returns (83.7 million refunds on 114.2 million 
          returns in 1993); and,
   received 28 percent of individual tax returns electronically 
          (11 percent in 1993).

  Financial Management Service (FMS):  The FMS seeks to improve the 
quality of Federal Government financial management by providing 
financial services and information to Federal program agencies and other 
clients. Over the past eight years, FMS has drastically improved its 
electronic payment and collection systems; and, in doing so, has been 
able to better serve its customers. For example, the percentage of 
payments transmitted electronically has increased from 50 percent in 
1995 to 70 percent in 2000. In addition, FMS received over 75 percent of 
its collections electronically in 2000, compared to 28 percent in 1995. 
FMS also has been successful providing debt collection and debt 
management services to Federal agencies to aid in its implementation of 
the Debt Collection Improvement Act (DCIA). Since the passage of the 
DCIA in 1996, Treasury has collected approximately $9.1 billion in 
delinquent debt.
  Bureau of Public Debt (BPD): BPD handles all Treasury debt financing 
operations and promotes the sale of U.S. savings bonds. During this 
Administration, BPD streamlined and consolidated the issuance and 
redemption process, allowing the Bureau to:
   consistently issue at least 99 percent of over-the-counter 
          bonds within three weeks of their purchase; and,
   announce auction results within one hour 90 percent of the 
          time (100 percent in 1999 and 2000).

  U.S. Mint: The U.S. Mint--a self-financing entity which returns almost 
$3 billion to the Treasury each year--produces the Nation's coinage and 
manufactures numismatic products (commemorative coins, medals, and 
bullion) for the public as well as safeguards the Government's holdings 
in monetary metals. Highlights of the Mint's activities during the last 
eight years follow:
   The implementation of the 50 States Commemorative Quarter 
          Program in 1999. Approximately every 10 weeks, through 2008, 
          the Mint will issue a new State quarter.
   The issuance of the new golden dollar in 2000. To date, the 
          Mint estimates that it will produce close to two billion 
          dollar coins.
   Achieving impressive customer service goals. In 1999, the 
          Mint received a high customer satisfaction rating from buyers 
          of numismatic and commemorative coins. Exceeding the scores of 
          many private sector firms in the American Customer 
          Satisfaction Index (ACSI), the Mint scored among the highest 
          of the 29 ``high impact'' Federal agencies evaluated by ACSI.

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  Bureau of Engraving and Printing (BEP): BEP produces all U.S. 
currency, about half of U.S. postage stamps, and other Government 
securities. During this Administration, the Bureau increased its 
capacity to produce currency. Over the past eight years, BEP efficiency 
and cost-effectiveness have increased, allowing the Bureau to:
   successfully redesign and issue new $100, $50, $20, $10, and 
          $5 bills, which contain many new features intended to make our 
          currency secure and to defeat high-tech printing equipment; 
          and,
   meet all Federal Reserve and United States Postal Service 
          orders as requested.

General Services Administration (GSA)

  GSA provides policy leadership and expertly managed space, products, 
and services to support the administrative needs of Federal agencies. 
Over the past eight years, GSA has expanded the range of choices 
available to its customers for office space, supplies, and 
administrative services. It has also strengthened its role as the 
central management agency for administrative services policies. During 
this same period, GSA reduced its staffing by 30 percent, from 20,248 to 
14,027, and increased its annual operating revenues by nearly 60 
percent, from $8.4 billion to $13.3 billion. Highlights of GSA's 
activities over the past eight years follow.
   In 1995, GSA centralized its policy and regulatory 
          authorities into an Office of Government-wide Policy (OGP) 
          reporting directly to the Administrator. Since then OGP has 
          begun a complete revision of GSA regulations to replace overly 
          complex and outdated policies with simpler, ``plain language'' 
          guidance. OGP has also modernized its Government-wide 
          information systems that capture agency data on the management 
          of various administrative activities such as real property 
          holdings, motor vehicles, aircraft, and travel.
   The Public Buildings Service (PBS) is GSA's largest business 
          activity and provides real estate and related services for 
          more than 100 Federal organizations. Since 1993, PBS has 
          constructed 86 new Federal buildings, of which 37 were 
          courthouses. During this same period, PBS completed major 
          repair and alteration projects on 156 Federal buildings. PBS 
          currently manages almost 186 million square feet of space in 
          Federal buildings and nearly 153 million square feet of space 
          in leased buildings. During the past six years, PBS has 
          improved its responsiveness to its agency customers by 
          reducing the average time for an agency to lease space through 
          GSA from 244 days to 136 days. In 2000, PBS operated 
          Government owned space at a cost 13 percent below the private 
          sector and since 1985 has reduced its energy consumption by 20 
          percent.
   The Federal Supply Service (FSS) has begun a fundamental 
          shift in its business model. In 1993, agencies ordered $926 
          million in supplies from FSS warehouses and purchased $2.9 
          billion in supplies and services directly from vendors on FSS' 
          Multiple Award Schedules contracts. Last year, agencies 
          ordered $781 million from FSS warehouses, but purchased more 
          than $11.4 billion through the Multiple Award Schedules 
          contracts. FSS has also led the Federal Government in 
          simplifying the processes used by agencies to order and pay 
          for supplies and services. GSA Advantage! is an FSS web site 
          through which agencies can order more than 800,000 supply 
          items on-line. GSA's Smart Pay program offers agencies charge 
          cards through which they can purchase goods and services and 
          charge travel expenses. Agency charges through this FSS 
          program have grown from $2.3 billion in 1993 to $10.1 billion 
          in 1999.
   The Federal Technology Service (FTS) is the smallest of the 
          three GSA business units but has made the greatest 
          contribution to GSA's revenue growth. In the last eight years, 
          FTS revenues increased over 2\1/2\ times, from $1.1 billion in 
          1993 to almost $4.2 billion in 1999, most of the increase 
          coming from the sales of information technology services. 
          During this period, FTS also negotiated new long-distance 
          telecommunications contracts that bring the average cost of a 
          long-distance phone call below five cents per minute.

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Office of Personnel Management (OPM)

  OPM provides human resource management leadership and services to 
Federal agencies and the 1.8 million employees in the civil service. OPM 
works closely with agencies to create effective policies and systems to 
recruit, develop, manage and retain the high quality and diverse work 
force needed to deliver results. OPM provides policy guidance, advice, 
and direct personnel services and systems to the agencies. It operates 
USAJOBS, a worldwide job information and application system. It provides 
fast, friendly, accurate, and cost-effective retirement, health benefit, 
and life insurance services to Federal employees, annuitants, and 
agencies. See Chapter 12, ``Health,'' for a discussion of the health 
benefits program and Chapter 14, ``Income Security,'' for a discussion 
of the retirement program.
  OPM provides oversight of the Federal merit system, through on-site 
evaluations that are conducted on a four-year cycle for the 30 major 
departments and agencies, and a five-year cycle for 35 small agencies. 
These oversight reviews ensure that agencies are adhering to the merit 
system principles (5 USC 2301), and other policies and principles such 
as veteran's preference and protection from prohibited personnel 
practices, while allowing agencies enough flexibility to focus on 
results, not process.
  Over the past eight years OPM achieved considerable success in 
refocusing its mission and goals to ensure that the Federal work force 
is effectively poised to meet the challenges of the 21st Century. It 
positioned itself to help agencies better align human resources 
management to support agency goals. OPM privatized its training and 
background investigations programs, the latter resulting in the first 
Government Employee-owned Stock Ownership Plan (ESOP). The ESOP has 
exceeded expectations of success many times over. Extensive use of 
automation and application of state-of-the-art information technology 
has provided agencies with the tools needed to better recruit, train, 
retain and manage their work forces to best serve the American people.
  As the Government's central human resources management agency, OPM 
presided over dramatic work force changes experienced by the Executive 
Branch during the last decade. Between 1993 and 1999, the Federal work 
force declined by 17 percent, or 377,000 full time equivalent (FTE) 
positions, resulting in the smallest Federal work force in 39 years (see 
Chart 18-1). Almost all of the 14 Cabinet Departments and large 
independent agencies have reduced their work force. OPM itself reduced 
its work force by 45 percent during this period. (It should be noted 
that some argue that the work force needed to deliver the mission of the 
Federal Government also includes uniformed military, postal workers, 
contractors, grantees, and State and local government employees, putting 
the work force needed to do the job closer to 16.8 million in 1999.) 
These work force reductions accompanied intensive management reform 
efforts to achieve a Government that works better, costs less, and gets 
results Americans care about.

                                     


  OPM's significant accomplishments in 2000 included: new procedures for 
evaluating senior executives that reinforce excellence and 
accountability; a career intern hiring program to attract top quality, 
diverse applicants; regulations to allow repayment of student loans as a 
recruitment incentive; higher pay rates to attract and retain key 
Federal information technology workers; child care tuition assistance to 
support low-income employees; an Executive Order increasing the 
opportunity for individuals with disabilities to be employed in the 
Federal work force; and USA Staffing--a fully automated system for 
posting vacancies, accepting and rating applications, and notifying 
applicants and agencies of results.

Office of Management and Budget (OMB)

  OMB assists the President by preparing the Federal budget and 
overseeing its execution in the departments and agencies. In helping 
formulate the President's spending plans, OMB coordinates the review and 
examines the effectiveness of agency programs, policies, and procedures; 
assesses competing funding demands among agencies; and, provides policy 
options. OMB works to ensure that proposed legislation, and agency 
testimony, reports, and policies are consistent with Administration 
policies, leveraging use of interagency programs and Councils. On

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behalf of the President, OMB often presents and justifies major policies 
and initiatives related to the budget and Government management before 
the Congress. It performs a critically important function in 
representing the President's position during face-to-face negotiations 
with members of the Congress over budget and policy issues. In addition, 
OMB is often called upon to provide Government-wide policy development 
and coordination on issues of importance to the national interest, such 
as the U.S. policies on responding to the crisis in Kosovo and on the 
protection of our natural resources.
  OMB has a central role in developing, overseeing, coordinating, and 
implementing Federal procurement, financial management, information, and 
regulatory policies. OMB helps to strengthen administrative management, 
develop better performance measures, and improve coordination among 
Executive Branch agencies.
  Over the past eight years, OMB has exercised its leadership and 
oversight role on a number of significant Government-wide efforts. 
Examples include: (1) continued implementation of the Chief Financial 
Officers Act, which resulted in 15 agencies receiving unqualified audit 
opinions on 1999 financial statements; (2) the Government Performance 
and Results Act, which resulted in a closer integration of budget and 
performance data and a Government-wide performance plan; (3) the 
Government Management Reform Act, which led to agencies' issuing 
accountability reports for the first time; (4) the Clinger-Cohen Act, 
which put in place sound information technology resources capital 
planning and investment control, with performance based acquisition 
strategies, all firmly linked to budget requests; (5) provided overall 
coordination of Y2K resource allocations for the agencies; and, (6) the 
Federal Acquisition Streamlining Act, which has resulted in the 
Government buying better goods and services

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for fewer dollars and has propelled acquisition reform throughout the 
Government. A series of Priority Management Objectives was established 
and issued in the annual budget, focusing top management attention on 
the most pressing management improvements needed in Government.
  OMB produced the annual budget for 2001 using a state-of-the art off-
site secure data center to improve efficiency and timeliness, improve 
services to agency customers, and ensure Y2K compliance. In 2001, OMB is 
investing in additional information technology applications to improve 
efficiency and effectiveness of the OMB's staff in completing an ever-
increasing workload under continually shrinking deadlines. In addition, 
OMB staffing is being increased to permit completion of more thorough 
technical and analytical work in key functional areas such as financial 
management, procurement, regulatory analysis, economic forecasting, and 
technology systems investment analyses.

Tax Incentives

  The Federal Government provides significant tax incentives that 
benefit State and local governments and U.S. possessions. The two 
largest are the deductibility of State and local taxes ($46 billion in 
2001) and the exclusion of interest on State and local bonds ($23 
billion in 2001). During this Administration, the effectiveness of tax 
incentives has been improved through reform of the possession credit and 
the expansion of credits to holders of qualified zone academy bonds.
   The Omnibus Budget and Reconciliation Act (OBRA) of 1993 
          reduced the cost of the possession tax credit and greatly 
          improved its effectiveness in creating jobs in the 
          possessions. Before OBRA 1993, U.S. corporations operating in 
          a possession received a credit for the U.S. tax liability on 
          their income in the possession. These profits tended to be 
          very high because valuable intangible assets such as patents 
          and trademarks were routinely transferred to the possessions 
          corporation. Treasury studies indicated that the revenue loss 
          per job created by possession corporations was very high, in 
          excess of 100 percent of the compensation paid. In 1993, the 
          President proposed to convert the income-based possession 
          credit to an activity-based credit. The credit would be 
          limited to 60 percent of the wages paid. The compromise 
          reached in OBRA 1993 permits taxpayers to choose between the 
          wage credit and a substantially reduced income-based credit, 
          phasing down eventually to 40 percent of its pre-OBRA level. 
          The cost of the program has been reduced by about 40 percent 
          or almost $2 billion per year. Employment in possessions 
          corporations has risen.
          In 1994, the Congress further restricted the possession credit 
          by imposing base period constraints on future credits. In the 
          1996 Small Business Job Protection Act, the Congress enacted 
          the complete termination of the possession credit for all 
          taxable years beginning after December 31, 2005.
   The Taxpayer Relief Act of 1997 provided a tax credit to 
          holders of Qualified Zone Academy Bonds (QZABs). The law 
          created $400 million of authority to issue QZABs for 1998 and 
          1999 and allocate it among State education agencies. The 
          proceeds of the bonds may be used for renovation of and 
          equipment in Zone Academies, i.e., elementary or secondary 
          schools in enterprise communities or empowerment zones or 
          having 35 percent or more of their pupils eligible for the 
          free and reduced-price lunch program. Private entities must 
          make a contribution to the school program equal to 10 percent 
          of the face amount of the bonds. Holders of the bonds receive 
          the tax credit in lieu of interest payment; issuers are 
          responsible for repayment of principal. An additional $400 
          million of bond authority was provided for 2000 and 2001 by 
          the Ticket to Work and Work Incentives Improvement Act of 
          1999.
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