[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)
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Percent
Function 800 1993 2001 Change:
Actual Estimate 1993-2001
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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%
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NA = Not applicable.
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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.