    [Analytical Perspectives]
    [Economic Assumptions and Analyses]
    [13. National Income and Product Accounts]
    [From the U.S. Government Printing Office, www.gpo.gov]

    [[Page 207]]

                    13. NATIONAL INCOME AND PRODUCT ACCOUNTS

      The National Income and Product Accounts (NIPAs) are an integrated set
    of measures of aggregate U.S. economic activity that are prepared by the
    Department of Commerce. Because the NIPAs include Federal transactions
    and are widely used in economic analysis, it is important to show the
    NIPAs' distinctive presentation of Federal transactions and contrast it
    with that of the budget.
      One of the main purposes of the NIPAs 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. Both government consumption expenditures and government
    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--social benefits, grants to State and
    local governments, subsidies, and 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 current receipts and
    current expenditure account, together with Government consumption
    expenditures (which includes depreciation on Government gross
    investment).
      Federal transactions are included in the NIPAs as part of the
    government sector. \1\ The Federal subsector 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 subsector is not itself a budget,
    because it is not a financial plan for proposing, determining, and
    controlling the fiscal activities of the Government. Also, it covers
    current transactions only, whereas the budget includes transactions that
    the NIPA current account omits from its current receipts and current
    expenditure totals as ``capital transfers.'' NIPA concepts also differ
    in many other ways from budget concepts, and therefore the NIPA
    presentation of Federal finances is significantly different from that of
    the budget.
    ---------------------------------------------------------------------------
      \1\ The other subsector of the NIPA government sector is a single set
    of transactions for all U.S. State and local units of government,
    treated as a consolidated entity.
    ---------------------------------------------------------------------------

                  Differences Between the NIPAs and the Budget

      Federal transactions in the NIPAs are measured according to NIPA
    accounting concepts in order to be compatible with the purposes of the
    NIPAs and other transactions recorded in the NIPAs. As a result they
    differ from the budget in netting, timing, and coverage. These
    differences cause current receipts and expenditures in the NIPAs to
    differ from total receipts and outlays in the budget, albeit by
    relatively small amounts. \2\ Differences in timing and coverage also
    cause the NIPA net Federal Government saving to differ from the budget
    surplus or deficit. Netting differences have equal effects on receipts
    and expenditures and thus have no effect on net Government saving.
    Besides these differences, the NIPAs combine transactions into different
    categories from those used in the budget.
    ---------------------------------------------------------------------------
      \2\ Over the period 1994-2003, NIPA current expenditures averaged four
    percent higher than budget outlays, while NIPA current receipts averaged
    two percent higher than budget receipts.
    ---------------------------------------------------------------------------
      December 2003 NIPA Revisions.--Comprehensive revisions to the NIPAs
    introduced in December 2003 significantly changed the way Federal
    transactions are measured in the NIPAs, and the ways in which the NIPAs
    differ from the budget. The three most important changes were: 1)
    reclassification of nontaxes out of current tax receipts into current
    transfer receipts from persons and from business (net); 2) switching
    several items formerly netted against expenditures to current receipts:
    interest and dividends received by Government, the current surplus of
    Government enterprises, and tax receipts from the rest of the world
    (formerly netted against transfer payments to the rest of the world); 3)
    a new receipts category called ``income receipts on assets'' now
    includes such items as Outer Continental Shelf oil and gas royalties.
    The categories into which Government current expenditures and current
    receipts are broken down in the NIPAs are now significantly different
    from those used in the past. Terminology has changed also; most notably,
    government surpluses or deficits are now referred to as net government
    saving. The effects of these changes are reflected in this chapter.
      Netting differences arise when the budget records certain transactions
    as offsets to outlays while they are recorded as current receipts in the
    NIPAs (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 NIPAs often follow this concept as well, and income to
    Government enterprises such as the Postal Service or the power
    administrations is offset against their expenditures--but the NIPAs now
    treat the net surplus of Government enterprises as a component of
    current receipts. However, the NIPAs have a narrower definition of
    ``business-type transactions''. Two classes of receipts, rents and
    royalties, and regulatory or inspection fees, both of which are
    classified as offsets to outlays in the budget, are recorded in the
    NIPAs

    [[Page 208]]

    as Government receipts (income receipts on assets and current transfer
    receipts, respectively). The NIPAs 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 so that total outlays and receipts measure transactions with the
    public. Government contributions for Federal employee social insurance
    (such as social security) is an example: the budget offsets these
    payments against outlays. In contrast, the NIPAs 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 NIPAs 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 NIPAs
    impute social insurance contributions by employing agencies to finance
    these benefits--again, treating the Federal Government like any other
    employer.
      Timing differences for receipts occur because the NIPAs 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. Thus the NIPAs attribute
    corporations' final settlement payments back to the quarter(s) in which
    the profits that gave rise to the tax liability occurred. The delay
    between accrual of liability and Treasury receipt of payment can result
    in significant timing differences between NIPA and budget measures of
    receipts for any given accounting period.
      Timing differences also occur for expenditures. When the first of a
    month falls on a weekend or holiday, 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, giving rise to a timing difference compared to the
    budget.
      Coverage differences also differentiate the budget and the NIPAs. The
    NIPA Federal subsector is a current account and excludes capital
    transfers unrelated to current economic production, which are included
    in the budget. Federal investment grants to State and local governments,
    investment subsidies to business, and forgiveness of debt owed by
    foreign governments are included as outlays in the budget but are
    excluded from NIPA current expenditures as being capital transfers.
    Likewise, estate and gift taxes, included in budget receipts, are
    excluded from NIPA current receipts as being capital transfers. Also
    unlike the budget, the NIPAs exclude transactions with U.S. territories.
    They 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 NIPAs these
    transactions are excluded as an exchange of assets with no current
    production involved.
      A 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 that capital renders;
    i.e., for its contribution to Government output of public services.
      The treatment of Government pension plan income and outgo creates a
    coverage difference. Whereas the budget treats employee payments to
    these pension plans as governmental receipts, and employer contributions
    by agencies as offsets to outlays because they are intragovernmental,
    the NIPAs 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 an outlay, but
    under NIPA concepts, no Government expenditure occurs at that time; the
    payment is treated (like private pension payments) as a transfer of
    income within the household sector.
      Financial transactions such as loan disbursements, loan repayments,
    loan asset sales, and loan guarantees are excluded from the NIPAs on the
    grounds that such transactions simply involve an exchange of assets
    rather than current production, income, or consumption. In contrast,
    under the Federal Credit Reform Act of 1990, 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 NIPAs, neither the subsidies
    nor the loan transactions are included. However, the NIPAs, like the
    budget, include all interest transactions with the public, including
    interest received and paid to the loan financing accounts.

    [[Page 209]]

      Deposit insurance outlays for resolving failed banks and thrift
    institutions are similarly excluded from the NIPAs on the grounds that
    there are no offsetting current income flows from these transactions. In
    1991, this exclusion was the largest difference between the NIPAs and
    the budget and made NIPA net Government saving a significantly smaller
    negative number than the budget deficit that year. In subsequent years,
    as assets acquired from failed financial institutions were sold, these
    collections tended to make the budget deficit a smaller negative figure
    than NIPA net Federal Government saving.

                Table 13-1.  FEDERAL TRANSACTIONS IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS, 2003-2005
                                                (In billions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                                   Estimate
                                  Description                                Actual 2003 ---------------------------
                                                                                              2004          2005
    ----------------------------------------------------------------------------------------------------------------
                               CURRENT RECEIPTS
    Current tax receipts..................................................     1,029.8       1,009.2       1,210.1
      Personal current taxes..............................................       781.7         721.0         850.4
      Taxes on production and imports.....................................        90.3          97.4          97.0
      Taxes on corporate income...........................................       151.0         184.1         256.0
      Taxes from the rest of the world....................................         6.8           6.7           6.7
    Contributions for Government social insurance.........................       749.8         788.0         846.7
    Income receipts on assets.............................................        21.4          23.6          24.0
    Current transfer receipts.............................................        26.3          27.7          30.0
    Current surplus of Government enterprises.............................         2.9          -0.6          -1.4
                                                                           -----------------------------------------
          Total current receipts..........................................     1,830.2       1,847.9       2,109.5
                                                                           =========================================
                             CURRENT EXPENDITURES

    Consumption expenditures..............................................       640.3         706.1         712.3
      Defense.............................................................       424.8         471.2         459.8
      Nondefense..........................................................       215.5         234.9         252.4
    Current transfer payments.............................................     1,310.5       1,398.8       1,447.2
      Government social benefits..........................................       955.7       1,010.1       1,060.1
      Grants-in-aid to State and local governments........................       333.3         360.6         356.5
      To the rest of the world............................................        21.5          28.1          30.6
    Interest payments.....................................................       217.8         218.5         243.8
    Subsidies.............................................................        49.3          44.0          44.2
    Wage disbursements less accruals......................................  ............  ............  ............
                                                                           -----------------------------------------
          Total current expenditures......................................     2,218.0       2,367.4       2,447.4
                                                                           =========================================
          Net Federal Government saving...................................      -387.8        -519.5        -338.0

                                   ADDENDUM

    Capital transfer payments (net).......................................       -23.2         -23.4         -26.7
    Gross Government investment:
      Defense.............................................................        58.6          63.8          67.0
      Nondefense..........................................................        37.0          40.8          43.2
    ----------------------------------------------------------------------------------------------------------------
    * $50 million or less.

                         Federal Sector Current Receipts

      Table 13-1 shows Federal current receipts in the five major categories
    and four of the subcategories now used in the NIPAs, which are similar
    to the budget categories but with significant differences.
      Current tax receipts is the largest major category of current
    receipts, and its personal current taxes subcategory-- composed
    primarily of the individual income tax--is the largest single
    subcategory. The NIPAs' taxes on corporate income subcategory differs in
    classification from the corresponding budget category primarily because
    the NIPAs 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 NIPAs and the
    budget is especially large for corporate receipts.) The taxes on
    production and imports subcategory is composed of excise taxes and
    customs duties.
      Contributions for Government social insurance is the second largest
    major category of current receipts. It differs from the corresponding
    budget category primarily because: (1) the NIPAs 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 NIPAs include premiums for
    Part B of Medicare as governmental receipts, while the budget nets them
    against outlays; (3) the NIPAs treat Government employee contributions
    to their pension plans as personal income, while the budget includes
    them in govern

    [[Page 210]]

    mental receipts; and (4) the NIPAs impute employer contributions for
    Federal employees' unemployment insurance and workers' compensation.
      The income receipts on assets category consists mainly of interest
    payments received on Government direct loans (such as student loans) and
    rents and royalties on Outer Continental Shelf oil leases. The current
    transfer receipts category consists primarily of deposit insurance
    premiums, fees, fines and other receipts from both individuals and
    businesses--virtually all of which are netted against outlays in the
    budget. The current surplus (or deficit) of Government enterprises
    category was formerly netted against subsidies on the expenditure side
    of the accounts. This is the profit or loss 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.

                       Federal Sector Current Expenditures

      Table 13-1 shows current expenditures in five major NIPA categories
    and five subcategories, which are also 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 13-1) is thus excluded from current expenditures
    in computing net Government saving on a NIPA basis, whereas
    depreciation--charges on federally owned fixed capital--(``consumption
    of general government fixed capital'') is included. The NIPAs 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 transfer payments) 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 NIPAs similar to
    that of the private sector. Investment includes structures, equipment,
    and computer software.
      Current transfer payments is the largest expenditure category.
    Transfer payments for Government social benefits consist mainly of
    income security and health programs, such as Social Security and
    Medicare paid to U.S. residents--and to retirees living outside the U.S.
    Payment of pension benefits to former Government employees is not
    included, as explained previously. Grants-in-aid to State and local
    governments help finance a range of programs, including income security,
    Medicaid, and education (but capital transfer payments for construction
    of highways, airports, waste-water treatment plants, and mass transit
    are excluded). ``Current transfer payments to the rest of the world
    (net) consists mainly of grants to foreign governments.
      Interest payments 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). Where the budget nets interest
    received on loans against outlays, the NIPAs now treat it as current
    receipts.
      Subsidies consist of subsidy payments for resident businesses
    (excluding subsidies for investment). 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 NIPAs 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

      From the introduction of the unified budget in January 1968 until the
    early 1990s, NIPA receipts were less than budget receipts in most years.
    This was due principally to the fact that estate and gift taxes, which
    they exclude as capital transfers, 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 capital transfer grants and pension
    benefit payments to former Government employees.
      Two components of budget outlays, however, are sometimes sufficiently
    large in combination to exceed the netting adjustments. These are
    financial transactions and net investment (the difference between gross
    investment and depreciation). 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 NIPAs,
    although, unlike the NIPAs, credit subsidies are recorded as budget
    outlays.

    [[Page 211]]

                          Table 13-2.  RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR, NIPAs
    ----------------------------------------------------------------------------------------------------------------
                                                                                                   Estimate
                                                                             Actual 2003 ---------------------------
                                                                                              2004          2005
    ----------------------------------------------------------------------------------------------------------------

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

    Budget receipts.......................................................     1,782.3       1,798.1       2,036.3
      Contributions to Government employee retirement plans...............        -4.6          -4.7          -4.7
      Capital transfers received..........................................       -21.8         -23.8         -21.3
      Other coverage differences..........................................        -9.8         -10.8         -10.9
      Netting and grossing................................................        86.1          91.6          98.4
      Timing differences..................................................        -2.0          -2.6          11.8
                                                                           -----------------------------------------
        NIPA current receipts.............................................     1,830.2       1,847.9       2,109.5
                                                                           =========================================
                                 EXPENDITURES

    Budget outlays........................................................     2,157.6       2,318.8       2,399.8
      Government employee retirement plan transactions....................        29.3          31.8          31.5
      Deposit insurance and other financial transactions..................        16.8           7.9          15.2
      Capital transfer payments...........................................       -45.0         -47.2         -48.0
      Net purchases of nonproduced assets.................................        -0.1          -0.1          -0.1
      Net investment......................................................        -5.2         -11.7         -14.4
      Other coverage differences..........................................       -20.1         -27.6         -37.1
      Netting and grossing differences....................................        86.1          91.6          98.4
      Timing differences..................................................        -1.6           3.8           2.0
                                                                           -----------------------------------------
        NIPA current expenditures.........................................     2,218.0       2,367.4       2,447.4

                                                                           =========================================
                                   ADDENDUM

      Budget deficit (-)..................................................      -375.3        -520.7        -363.6
      NIPA net Federal Government saving..................................      -387.8        -519.5        -338.0
    ----------------------------------------------------------------------------------------------------------------
    * $50 million or less.

      During the period 1975-1992, the budget deficit was a larger negative
    number than net Federal Government saving as measured in the NIPAs'
    seasonally adjusted data every year except 1987. The largest difference,
    $72.9 billion, occurred in 1991 as a result of resolving failed
    financial institutions as discussed above; the budget deficit was then
    -$269.3 billion, while the NIPA net Government saving was -$196.5
    billion. In 1993-2003, the NIPA net Federal Government saving were
    larger negative numbers than the budget deficit or lower positive
    numbers than the budget surplus each year. For 2004 and 2005, the NIPA
    net Federal Government saving are projected to be smaller negative
    numbers than the budget deficit.
      Table 13-1 displays Federal transactions using NIPA concepts with
    actual data for the 2003 and estimates for 2004 and 2005 consistent with
    the Administration's budget proposals. Table 13-2 summarizes the reasons
    for differences between the data. Table 13-3 displays quarterly data
    using NIPA concepts beginning in October 2002. Annual NIPA data for
    2003-2005 are published in Section 14 of a separate budget volume,
    Historical Tables, Budget of the U.S. Government, Fiscal Year 2005.
      Detailed estimates of NIPA current receipts and expenditures will be
    published in a forthcoming issue of the Department of Commerce
    publication, Survey of Current Business and on the Bureau of Economic
    Analysis website at http://www.bea.doc.gov/bea/pubs.htm.

    [[Page 212]]

                                                           Table 13-3.  FEDERAL RECEIPTS AND EXPENDITURES IN THE NIPA's, QUARTERLY, 2003-2005
                                                                      (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.
                                                                                                  -----------                                 -----------                                 ----------
                                                                     2002       2003       2003       2003       2003       2004       2004       2004       2004       2005       2005       2005
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                          CURRENT RECEIPTS
    Current tax receipts........................................   1,072.7    1,060.3    1,057.1      972.1                 978.1    1,008.6    1,042.4    1,080.4    1,186.3    1,222.7    1,256.6
      Personal current taxes....................................     815.4      794.3      794.6      696.3                 681.5      695.3      712.9      734.2      813.4      836.3      857.8
      Taxes on production and imports...........................      89.0       88.3       87.7       86.3                  93.7       97.5       98.1       94.7       93.9       94.9       95.7
      Taxes on corporate income.................................     161.7      171.0      167.9      182.8                 196.3      209.1      224.7      244.9      272.3      284.8      296.4
      Taxes from the rest of the world..........................       6.7        6.8        6.9        6.7                   6.7        6.7        6.7        6.7        6.7        6.7        6.7
    Contributions for Government social insurance...............     741.9      755.1      758.5      763.1                 791.6      802.4      815.1      824.5      844.0      854.6      864.4
    Income receipts on assets...................................      22.0       22.5       23.6       24.9                  25.6       25.7       25.5       25.5       25.8       26.1       26.5
    Current transfer receipts...................................      25.4       26.0       26.3       26.9                  27.6       28.1       28.7       29.5       30.0       30.5       30.8
    Current surplus of Government enterprises...................      -2.3       -0.4       -1.6       -2.5                  -5.7       -5.7       -5.7       -5.7       -6.1       -6.2       -6.1
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total current receipts................................   1,859.7    1,863.5    1,863.9    1,784.3               1,817.2    1,859.1    1,906.1    1,954.2    2,080.1    2,127.6    2,172.2
                                                                 ===================================================================================================================================
                        CURRENT EXPENDITURES

    Consumption expenditures....................................     620.7      635.9      668.9      672.3                 711.4      723.5      730.2      728.0      724.5      721.2      719.5
      Defense...................................................     404.6      408.6      447.5      443.7                 468.2      475.2      477.6      471.0      462.8      457.3      454.2
      Nondefense................................................     216.1      227.3      221.4      228.5                 243.2      248.3      252.6      257.1      261.7      263.9      265.3
    Current transfer payments...................................   1,270.8    1,287.3    1,339.5    1,348.9               1,392.7    1,404.7    1,424.8    1,433.9    1,457.8    1,452.2    1,452.3
      Government social benefits................................     935.4      951.5      969.7      979.7               1,012.3    1,025.1    1,037.4    1,048.9    1,065.4    1,070.6    1,075.4
      Grants-in-aid to State and local governments..............     316.4      310.8      345.5      346.3                 343.7      352.9      360.4      355.4      353.2      352.4      347.2
      To the rest of the world..................................      19.1       25.1       24.3       22.9                  36.8       26.7       27.1       29.5       39.2       29.3       29.7
    Interest payments...........................................     227.6      217.7      222.5      215.6                 218.5      222.1      227.3      235.5      242.7      250.1      257.6
    Subsidies...................................................      37.0       44.5       56.3       47.0                  41.9       40.0       37.8       38.3       40.3       42.3       43.5
    Wage disbursements less accruals............................  .........      -1.4        1.4   .........             .........  .........  .........  .........  .........  .........  .........
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total current expenditures............................   2,156.1    2,184.0    2,288.5    2,283.7               2,364.4    2,390.2    2,420.3    2,435.7    2,465.3    2,465.9    2,472.9
                                                                 ===================================================================================================================================
          Net Federal Government saving.........................    -296.3     -320.4     -424.7     -499.4                -547.3     -531.1     -514.2     -481.5     -385.3     -338.2     -300.7

                              ADDENDUM

    Capital transfer payments (net).............................     -19.8      -13.8      -28.4      -29.6                 -22.9      -23.9      -23.5      -24.8      -25.7      -26.1      -26.5
    Gross Government investment:
      Defense...................................................      56.6       54.7       59.8       63.5                  65.6       65.5       62.4       66.6       67.2       65.9       68.5
      Nondefense................................................      32.7       32.4       36.0       33.8                  34.3       34.7       35.1       35.4       36.3       37.4       38.7
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Department of Commerce advance estimates for the Oct.-Dec. quarter, released January 30, 2004, were not available in time for inclusion in this table.
    * $50 million or less.

    [[Page 213]]

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                             BUDGET REFORM PROPOSALS

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