    [Analytical Perspectives]
    [Other Technical Presentations]
    [17. National Income and Product Accounts]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    [[Page 367]]

                    17.  NATIONAL INCOME AND PRODUCT ACCOUNTS

      The National Income and Product Accounts (NIPA's) are an integrated
    set of measures of aggregate U.S. economic activity that are prepared by
    the Department of Commerce. Because the NIPA's are widely used in
    economic analysis, it is important to show the NIPA presentation of
    Federal transactions and contrast it with the Budget.
      One of the main purposes of the NIPA's is to measure the Nation's
    total production of goods and services, known as gross domestic product
    (GDP), and the incomes generated in its production. GDP is a measure of
    the Nation's final output, which excludes intermediate product to avoid
    double counting. Government consumption expenditures and gross
    investment--State and local as well as Federal--are included in GDP as
    part of final output, together with personal consumption expenditures,
    gross private domestic investment, and net exports of goods and services
    (exports minus imports).
      Other government expenditures--transfer payments, grants to State and
    local governments, subsidies, and net interest payments--are not
    purchases of final output and as such are not included in GDP; however,
    these transactions are recorded in the NIPA government receipts and
    expenditure account, together with government consumption expenditures
    and gross investment.
       Federal transactions are included in the NIPA's as part of the
    government sector\1\. The Federal sector is designed to measure certain
    important economic effects of Federal transactions in a way that is
    consistent with the conceptual structure of the entire set of integrated
    accounts. The NIPA Federal sector is not itself a budget, because it is
    not a financial plan for proposing, determining, and controlling the
    fiscal activities of the Government. NIPA concepts differ in many ways
    from budget concepts, and therefore the NIPA presentation of Federal
    finances is significantly different from that of the budget.
    ---------------------------------------------------------------------------
      \1\ The other part of the government sector is a set of transactions
    for all U.S. State and local units of government, treated as a single
    consolidated entity.
    ---------------------------------------------------------------------------

                  Differences Between the NIPA's and the Budget

       Federal transactions in the NIPA's are measured according to NIPA
    accounting concepts in order to be compatible with the purposes of the
    NIPA's and other transactions recorded in the NIPA's. As a result they
    differ from the budget in netting, timing, and coverage. These
    differences cause total receipts and expenditures in the NIPA's to
    differ from total receipts and outlays in the budget. Differences in
    timing and coverage also cause the NIPA current surplus or deficit to
    differ from the budget surplus or deficit. Netting differences have
    equal effects on receipts and expenditures and thus have no effect on
    the current surplus/deficit. Besides these differences, the NIPA's
    combine transactions into different categories from those used in the
    budget.
       Netting differences arise when the budget records certain
    transactions as offsets to outlays while they are recorded as receipts
    in the NIPA's (or vice versa). The budget treats all income that comes
    to the Government due to its sovereign powers--mainly, but not
    exclusively, taxes--as governmental receipts. The budget offsets against
    outlays any income that arises from voluntary business-type transactions
    with the public. The NIPA's generally follow this concept as well, and
    all income to government enterprises such as the Postal Service or the
    power administrations is offset against expenditures. However, the
    NIPA's have a narrower definition of ``business-type transactions''.
    Rents, royalties, and regulatory or inspection fees (offsetting receipts
    in the budget) are recorded in the NIPA's as Government receipts
    (business nontaxes). The NIPA's include Medicare premiums as Government
    receipts, while the budget classifies them as business-type transactions
    (offsetting receipts).
       In the budget, any intragovernmental income from one account to
    another is offset against outlays rather than being recorded as a
    receipt. Government contributions for Federal employee social insurance
    (such as social security) is an example: the budget offsets these
    payments against outlays. In contrast, the NIPA's treat the Federal
    Government like any other employer and show contributions for Federal
    employee social insurance as expenditures by the employing agencies and
    as governmental (rather than offsetting) receipts. The NIPA's also
    impute certain transactions that are not explicit in the budget. For
    example, unemployment benefits for Federal employees are financed by
    direct appropriations rather than social insurance contributions. The
    NIPA's impute social insurance contributions by employing agencies to
    finance these benefits--again, treating the Federal Government like any
    other employer.

    [[Page 368]]

                                                        Table 17-1.  FEDERAL TRANSACTIONS IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS, 1992-2003
                                                                                        (In billions of dollars)
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Actual                                                           Estimate
                             Description                         -----------------------------------------------------------------------------------------------------------------------------------
                                                                     1992       1993       1994       1995       1996       1997       1998       1999       2000       2001       2002       2003
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                          CURRENT RECEIPTS
    Personal tax and nontax receipts............................     473.9      500.9      541.2      583.7      654.7      736.3      822.7      878.4      989.7    1,004.7      938.8      987.1
    Corporate profits tax accruals..............................     115.6      131.0      152.5      177.8      187.8      198.6      206.4      211.3      237.2      191.6      168.6      194.7
    Indirect business tax and nontax accruals...................      80.0       84.1       94.2       93.8       90.3       97.9       97.3       98.2      109.8      111.6      107.4      111.5
    Contributions for social insurance..........................     434.9      458.4      487.9      515.8      535.8      566.1      604.2      641.4      695.2      721.1      746.4      786.8
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total current receipts................................   1,104.4    1,174.3    1,275.8    1,371.0    1,468.6    1,599.0    1,730.7    1,829.3    2,031.9    2,029.1    1,961.2    2,080.1
                                                                 ===================================================================================================================================
                        CURRENT EXPENDITURES

    Consumption expenditures....................................     442.0      444.8      441.6      441.5      435.8      453.8      452.0      464.8      490.2      520.2      577.7      625.2
      Defense...................................................     314.9      311.1      304.6      299.6      295.5      304.0      300.3      306.1      321.4      336.5      370.2      407.4
      Nondefense................................................     127.1      133.7      137.1      141.9      140.2      149.8      151.7      158.7      168.7      183.6      207.5      217.9
    Transfer payments...........................................     548.4      590.2      614.8      646.6      680.4      711.0      727.9      741.6      770.2      827.8      926.3      933.7
      To persons................................................     537.1      573.4      599.3      633.8      668.6      699.9      716.9      730.6      756.4      817.2      911.9      921.1
      To the rest of the world..................................      11.3       16.8       15.5       12.8       11.9       11.2       11.0       10.9       13.8       10.6       14.4       12.5
    Grants-in-aid to State and local governments................     145.5      157.7      172.8      184.3      188.4      191.9      207.2      225.2      242.9      268.8      302.1      333.4
    Net interest paid...........................................     229.7      228.4      234.0      261.9      272.6      275.4      278.3      267.2      263.0      250.5      221.7      226.3
    Subsidies less current surplus of Government enterprises....      28.4       38.6       32.9       34.3       34.4       30.8       31.8       34.6       52.4       56.5       45.7       39.6
    Wage disbursements less accruals............................  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total current expenditures............................   1,394.1    1,459.7    1,496.0    1,568.6    1,611.6    1,663.0    1,697.1    1,733.3    1,818.6    1,923.8    2,073.5    2,158.2
                                                                 ===================================================================================================================================
          Current surplus or deficit (-)........................    -289.7     -285.4     -220.2     -197.5     -143.0      -64.0       33.5       96.0      213.3      105.3     -112.4      -78.1

                              ADDENDUM

    Gross investment............................................      87.5       86.2       82.1       83.0       85.5       80.7       85.0       91.2       96.3      100.8      106.0      113.4
      Defense...................................................      60.5       56.8       55.2       53.7       54.9       47.9       49.6       51.5       52.8       56.2       57.6       60.7
      Nondefense................................................      27.0       29.4       26.9       29.3       30.6       32.9       35.4       39.7       43.5       44.6       48.3       52.7
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    * $50 million or less.

       Timing differences for receipts occur because the NIPA's generally
    record personal taxes and social insurance contributions when they are
    paid and business taxes when they accrue, while the budget generally
    records all receipts when they are received. When the NIPA's attribute
    corporations' final settlement payments back to the quarter(s) in which
    the profits that gave rise to the tax liability were generated,
    significant timing differences with the budget arise. When the first of
    a month falls on a weekend, monthly benefit checks normally mailed on
    the first of the month may be mailed out a day or two earlier; the
    budget then reflects two payments in one month and none the next. On
    occasion, the budget totals reflect 13 monthly payments in one year and
    only 11 the next. NIPA expenditure figures always reflect 12 benefit
    payments per year again giving rise to a timing difference compared to
    the budget.
       The budget and the NIPA's also have coverage differences. The NIPA's
    exclude transactions with U.S. territories. The NIPA's also exclude the
    proceeds from the sales of nonproduced assets such as land. Bonuses paid
    on Outer Continental Shelf oil leases and proceeds from broadcast
    spectrum auctions are shown as offsetting receipts in the budget and are
    deducted from budget outlays. In the NIPA's these transactions are
    excluded as an exchange of assets with no production involved.
       A type of coverage difference arises on the expenditure side because
    of the NIPA treatment of government investment. The budget includes
    outlays for Federal investments as they are paid, while the Federal
    sector of the NIPA instead excludes current investments but includes a
    depreciation charge on past investments (``consumption of general
    government fixed capital'') as part of ``current expenditures.'' The
    inclusion of depreciation on fixed capital (structures, equipment and
    software) in current expenditures is a proxy for the services of
    capital; i.e., for its contribution to government output of public
    services.
       The treatment of government pension plan income and outgo creates a
    coverage difference. Where the budget treats employee payments to these
    pension plans as governmental receipts, and employer contributions by
    agencies as offsets to outlays, the NIPA's treat both of these
    components of employee compensation as personal income, in the same way
    as it treats contributions to pension plans in the private (household)
    sector. Likewise, the budget records a government check to a retired
    government employee as a current outlay, but under NIPA concepts, no
    government expenditure occurs at that time; the payment is treated as a
    transfer of income within the household sector.
       Federal investment grants to State and local governments (such as for
    interstate highway construction), investment subsidies to business, and
    forgiveness of

    [[Page 369]]

    debt owed by foreign governments are included as outlays in the budget
    but excluded from the NIPA's as being capital transfers. Likewise,
    estate and gift taxes, included in budget receipts, are excluded from
    the NIPA's as capital transfers.
       Financial transactions such as loan disbursements, loan repayments,
    loan asset sales, and loan guarantees are excluded from the NIPA's on
    the grounds that such transactions simply involve an exchange of assets.
    In contrast, under the Federal Credit Reform Act of 1990, for direct
    loan obligations and loan guarantee commitments made after 1991, the
    budget records the estimated subsidy cost of the direct loan or loan
    guarantee as an outlay when the loan is disbursed. The cash flows with
    the public are recorded in nonbudgetary accounts as a means of financing
    the budget rather than as budgetary transactions themselves. This
    treatment recognizes that part of a Federal direct loan is an exchange
    of assets with equal value but part is a subsidy to the borrower. It
    also recognizes the subsidy normally granted by loan guarantees. In the
    NIPA's, neither the subsidies nor the loan transactions are included.
    However, the NIPA's, like the budget, include all interest transactions
    with the public, including net interest paid to the financing accounts.
       Deposit insurance outlays for resolving failed banks and thrift
    institutions are similarly excluded from the NIPA's on the grounds that
    there are no offsetting current income flows from these transactions. In
    1991, this exclusion was the largest difference between the NIPA's and
    the budget and tended to make the budget deficit larger than the NIPA
    current deficit. In subsequent years, as assets acquired from failed
    financial institutions were sold, these collections tended to make the
    budget deficit smaller than the NIPA current deficit.

                         Federal Sector Current Receipts

       Table 17-1 shows Federal current receipts in the four major
    categories used in the NIPA's, which are similar to the budget
    categories but with significant differences.
       Personal tax and nontax receipts is the largest category of current
    receipts. It is composed primarily of personal income taxes, but also
    includes fees, fines, and other receipts from persons.
       Corporate profits tax accruals differs in classification from the
    corresponding budget category primarily because the NIPA's include the
    deposit of earnings of the Federal Reserve System as corporate profits
    taxes, while the budget treats these collections as miscellaneous
    receipts. The timing difference between the NIPA's and the budget is
    especially large for corporate receipts.
       Indirect business tax and nontax accruals is composed of excise
    taxes, customs duties, royalties, fines, and other receipts from
    business.
       Contributions for social insurance differs from the corresponding
    budget category primarily because: (1) the NIPA's include Federal
    employer contributions for social insurance as a governmental receipt,
    while the budget offsets these contributions against outlays as
    undistributed offsetting receipts; (2) the NIPA's include premiums for
    Part B of Medicare as governmental receipts, while the budget nets them
    against outlays; (3) the NIPA's treat government employee contributions
    to their pension plans as personal income, while the budget includes
    them in governmental receipts; and (4) the NIPA's impute contributions
    for Federal employees' unemployment insurance and workers' compensation.

                       Federal Sector Current Expenditures

       Table 17-1 shows current expenditures in the six major NIPA
    categories, which are very different from the budget categories.
       Government consumption expenditures are the goods and services
    purchased by the Federal Government in the current account, including
    compensation of employees and depreciation. Gross investment (shown as
    addendum items in Table 17-1) is thus excluded from current expenditures
    in computing the government current surplus or current deficit on a NIPA
    basis, whereas depreciation--charges on federally owned fixed capital
    (``consumption of general government fixed capital'')--is included. The
    NIPA's treat State and local investment and capital consumption in the
    same way--regardless of the extent to which it is financed with Federal
    aid (capital transfers) or from State and local own source receipts.
       Although gross investment is not included in government current
    expenditures, both government gross investment and current consumption
    expenditures (including depreciation) are included in total GDP, which
    makes the treatment of the government sectors in the NIPA's similar to
    that of the private sector. Investment includes structures, equipment,
    and computer software.
       Transfer payments are the largest expenditure category. Transfer
    payments to persons are mainly for income security and health programs,
    such as Social Security and Medicare. Payment of pension benefits to
    former government employees is not included, as explained previously .
    Transfer payments to the rest of the world include grants to foreign
    governments and payments under Social Security and other similar
    programs to individuals living abroad.
       Grants-in-aid to State and local governments help finance a range of
    programs, including income security, Medicaid, education, and others
    (but capital transfers for construction of highways, airports, waste-
    water treatment plants, and mass transit are excluded).

    [[Page 370]]

                                              Table 17-2.  RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR, NIPA's
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Actual                                                     Estimate
                                     -----------------------------------------------------------------------------------------------------------------------
                                        1992      1993      1994      1995      1996      1997      1998      1999      2000      2001      2002      2003
    --------------------------------------------------------------------------------------------------------------------------------------------------------

    ------------ RECEIPTS-----------------------------------------------------------------------------------------------------------------------------------

    Budget receipts.................   1,091.3   1,154.4   1,258.6   1,351.8   1,453.1   1,579.3   1,721.8   1,827.5   2,025.2   1,991.0   1,946.1   2,048.1
      Contributions to government         -4.8      -4.8      -4.7      -4.6      -4.5      -4.4      -4.3      -4.5      -4.8      -4.7      -4.6      -4.6
       employee retirement plans....
      Capital transfers received....     -11.0     -12.3     -15.1     -14.5     -17.1     -19.7     -23.9     -27.6     -28.8     -28.2     -27.3     -22.8
      Other coverage differences....      -2.0      -2.0      -2.4      -2.5      -3.6      -3.8      -6.2      -7.1      -8.2      -9.2      -9.7     -10.7
      Netting and grossing..........      32.8      37.5      39.2      37.3      37.0      41.6      40.8      41.3      45.3      53.3      53.4      56.3
      Timing differences............      -1.9       1.6       0.1       3.4       3.6       6.0       2.5      -0.2       3.1      26.9       3.3      13.8

        NIPA current receipts.......   1,104.4   1,174.3   1,275.8   1,371.0   1,468.6   1,599.0   1,730.7   1,829.3   2,031.9   2,029.1   1,961.2   2,080.1
                                     =======================================================================================================================
              EXPENDITURES

    Budget outlays..................   1,381.7   1,409.5   1,461.9   1,515.8   1,560.6   1,601.3   1,652.6   1,701.9   1,788.8   1,863.9   2,052.3   2,128.2
      Government employee retirement      32.7      31.7      30.1      29.0      27.0      31.8      31.6      32.4      31.8      32.0      32.1      41.7
       plan transactions............
      Deposit insurance and other         -9.5      20.2       1.5       7.1      -2.0      -8.0      -6.9     -12.1      -4.3      25.7       0.9      -2.6
       financial transactions.......
      Capital transfers paid........     -21.8     -23.2     -24.6     -27.1     -27.6     -28.8     -28.2     -31.3     -35.0     -39.8     -41.9     -41.7
      Net purchases of nonproduced        -0.2      -0.2      -0.2       7.4       0.1      11.0       5.2       1.5      -0.1       0.8       0.3       0.2
       assets.......................
      Net investment................     -12.7      -8.3      -1.4       0.4      -0.5       5.6       2.8      -0.5      -1.0       1.3      -0.1      -2.5
      Other coverage differences....      -5.6      -8.1      -4.8      -3.0       3.0      11.5       0.7       2.0       3.0     -17.0     -18.3     -19.8
      Netting and grossing                32.8      37.5      39.2      37.3      37.0      41.6      40.8      41.3      45.3      53.3      53.4      56.3
       differences..................
      Timing differences............      -3.2       0.6      -5.7       1.7      14.0      -3.0      -1.3      -2.0     -10.1       3.8      -5.2      -1.6

        NIPA current expenditures...   1,394.1   1,459.7   1,496.0   1,568.6   1,611.6   1,663.0   1,697.1   1,733.3   1,818.6   1,923.8   2,073.5   2,158.2

                ADDENDUM

      Budget surplus or deficit (-).    -290.4    -255.1    -203.3    -164.0    -107.5     -22.0      69.2     125.5     236.4     127.1    -106.2     -80.2
      NIPA current surplus or           -289.7    -285.4    -220.2    -197.5    -143.0     -64.0      33.5      96.0     213.3     105.3    -112.4     -78.1
       deficit (-)..................
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    * $50 million or less.

       Net interest paid is the interest paid by the Government on its debt
    (excluding debt held by trust funds, other than Federal employee pension
    plans; and other Government accounts), less interest received on its
    loans.
       Subsidies less current surplus of Government enterprises consist of
    two elements: (1) subsidy payments for resident businesses (excluding
    subsidies for investment); and (2) the current surplus (or deficit) of
    ``Government enterprises,'' such as the Postal Service, which are
    business-type operations of Government that usually appear in the budget
    as public enterprise revolving funds. Depreciation (consumption of
    enterprise fixed capital) is netted in calculating the current surplus
    of government enterprises.
       NIPA subsidies do not include the imputed credit subsidies estimated
    as budget outlays under credit reform. Rather, loans and guarantees are
    categorized as financial transactions and are excluded from the NIPA's
    except for associated interest and fees.
       Wage disbursements less accruals is an adjustment that is necessary
    to the extent that the wages paid in a period differ from the amount
    earned in the period.

                          Differences in the Estimates

       Since the introduction of the unified budget in January 1968, NIPA
    receipts have been less than budget receipts in most years. This is due
    principally to the fact that estate and gift taxes, which they exclude
    (as capital transfers), have exceeded Medicare premiums, which they
    include as a governmental receipt but the budget treats as an offsetting
    receipt. (In the budget, offsetting receipts are netted against the
    outlay total and not included in the governmental receipts total.) NIPA
    current expenditures have usually been higher than budget outlays (from
    which the Medicare premiums and employer retirement contributions are
    netted out as offsetting receipts), despite the omission from NIPA
    expenditures of grants for capital construction and pension benefit
    payments to former government employees.
       Two components of budget outlays, however, are sometimes sufficiently
    large in combination to match the netting adjustments. These are
    financial transactions and payments to U.S. territories. Large outlays
    associated with resolving the failed savings and loan associations and
    banks in 1990 and 1991 caused those year's budget outlays to exceed NIPA
    current expenditures. With the change in budgetary treatment of direct
    loans in 1992 under credit reform, one type of financial transaction--
    direct loans to the public--has been recorded in the budget in a way
    that is closer to the NIPA treatment. Disbursement and repayment of
    loans made since that time are recorded outside the budget as in the
    Federal sector of the NIPA's, although, unlike the NIPA's, credit
    subsidies are recorded as budget outlays.

    [[Page 371]]

                                                           Table 17-3.  FEDERAL RECEIPTS AND EXPENDITURES IN THE NIPA's, QUARTERLY, 2000-2002
                                                                      (In billions of dollars; seasonally adjusted at annual rates)
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Actual                                                           Estimate
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
                                                                  Oct.-Dec.  Jan.-Mar.  Apr.-June    July-    Oct.-Dec.  Jan.-Mar.  Apr.-June    July-    Oct.-Dec.  Jan.-Mar.  Apr.-June    July-
                             Description                         ---------------------------------   Sept.   ---------------------------------   Sept.   ---------------------------------   Sept.
                                                                                                  -----------                                 -----------                                 ----------
                                                                     2000       2001       2001       2001       2001       2002       2002       2002       2002       2003       2003       2003
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                          CURRENT RECEIPTS
    Personal tax and nontax receipts............................   1,040.5    1,051.4    1,060.0      897.2                 947.9      945.9      950.9      963.2      985.7    1,010.2    1,041.6
    Corporate profits tax accruals..............................     219.4      205.0      197.3      177.4                 115.9      123.2      132.1      156.1      161.9      170.3      177.9
    Indirect business tax and nontax accruals...................     112.7      112.2      112.0      110.2                 109.8      109.8      109.9      112.0      112.8      114.3      116.3
    Contributions for social insurance..........................     704.9      718.8      722.2      722.3                 737.3      743.4      750.3      756.6      778.6      786.9      795.9
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total current receipts................................   2,077.5    2,087.4    2,091.5    1,907.1               1,910.9    1,922.3    1,943.2    1,987.9    2,039.0    2,081.7    2,131.8
                                                                 ===================================================================================================================================
                        CURRENT EXPENDITURES

    Consumption expenditures....................................     494.1      507.5      510.1      513.7                 554.1      566.0      573.3      582.2      600.8      610.3      617.1
      Defense...................................................     325.3      338.3      339.5      343.1                 368.8      376.5      381.2      390.1      405.2      412.5      416.7
      Nondefense................................................     168.8      169.2      170.6      170.6                 185.3      189.5      192.1      192.0      195.6      197.8      200.4
    Transfer payments...........................................     802.9      811.7      823.3      838.6                 899.2      920.1      946.1      939.9      925.9      909.0      894.2
      Domestic (``to persons'').................................     777.4      805.8      816.3      830.9                 887.5      906.8      931.2      914.5      914.9      900.1      885.8
      Foreign...................................................      25.5        5.8        7.1        7.7                  11.7       13.3       14.9       25.4       10.9        8.9        8.4
    Grants-in-aid to State and local governments................     250.1      264.0      281.2      266.4                 296.8      309.2      316.9      325.0      331.2      336.4      340.9
    Net interest paid...........................................     259.9      253.5      242.5      232.5                 214.4      210.8      210.0      212.0      215.9      219.1      222.2
    Subsidies less current surplus of Government enterprises....      48.1       45.4       47.6       69.5                  48.7       45.2       39.0       37.5       38.7       40.6       42.6
    Wage disbursements less accruals............................  .........  .........  .........  .........             .........  .........  .........  .........  .........  .........  .........
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total current expenditures............................   1,855.0    1,882.1    1,904.7    1,920.7               2,013.2    2,051.3    2,085.4    2,096.5    2,112.5    2,115.4    2,117.0
                                                                 ===================================================================================================================================
          Current surplus.......................................     222.5      205.3      186.7      -13.6                -102.3     -129.0     -142.2     -108.6      -73.6      -33.7       14.8

                              ADDENDUM

    Gross investment............................................     100.1       97.8       99.9      102.0                 104.3      106.9      110.2      110.7      113.2      113.6      116.9
      Defense...................................................      57.1       54.6       56.7       56.5                  56.4       57.9       60.0       59.2       60.8       60.2       62.7
      Nondefense................................................      43.0       43.2       43.2       45.5                  47.9       49.0       50.2       51.5       52.5       53.4       54.1
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
     Department of Commerce advance estimates for the Oct.-Dec. quarter, released January 30, 2002, were not available in time for inclusion in this table.
    * $50 million or less.

       During the period 1975-1992, the budget deficit exceeded the Federal
    current deficit as measured in the NIPA's every year. The largest
    difference, $78.7 billion, occurred in 1991 as a result of resolving
    failed financial institutions as discussed above; the budget deficit was
    then $269.4 billion, while the NIPA current deficit was $190.7 billion.
    In 1993-1997, the NIPA current account deficit was slightly larger than
    the budget deficit each year. For 1998-2001, the NIPA current account
    surplus was lower than the budget surplus. For 2002 the NIPA current
    account deficit is projected to be larger than the budget deficit, but
    that for 2003, slightly smaller.
       Table 17-1 displays Federal transactions using NIPA concepts with
    actual data for the years 1992-2001 and estimates for 2002 and 2003
    consistent with the Administration's budget proposals. Table 17-2
    summarizes the reasons for differences between the data using budget
    concepts and NIPA concepts. Table 17-3 displays quarterly data using
    NIPA concepts beginning in October 2000. Annual NIPA data for 1960-2003
    are published in Section 14 of a separate budget volume, Historical
    Tables, Budget of the U.S. Government, Fiscal Year 2003.
       Additional detailed estimates of receipts and current expenditures
    will be published in a forthcoming issue of the Department of Commerce
    publication, Survey of Current Business.