[Analytical Perspectives]
[Current Services Estimates]
[25. Current Services Estimates]
[From the U.S. Government Printing Office, www.gpo.gov]


  There has long been a desire to have a neutral benchmark against which 
policy proposals can be measured. Since the early 1970s when the first 
requirements for the calculation of a ``current services'' baseline were 
enacted, a variety of concepts and measures have been employed. In 
recent years, the current services baseline has been defined to be 
identical to the baseline required by the Budget Enforcement Act (BEA). 
However, that baseline has some serious technical flaws, which 
compromise its ability to serve as a neutral measure. This section 
provides detailed estimates of a baseline that corrects these flaws. It 
also discusses alternative formulations for the baseline.
  Ideally, a current services baseline would provide a projection of 
estimated receipts, outlays, deficits or surpluses, and budget authority 
needed to reflect this year's enacted policies and programs for each 
year in the future. Because such a concept would be nearly impossible to 
calculate across all segments of the government, the baseline has become 
largely a mechanical construct. The following section discusses the 
construct as it applies to different types of programs. The baseline is 
not intended to be a prediction of the final outcome of the annual 
budget process, nor is it a proposed budget. By itself, the current 
services baseline commits no one to any particular policy. The 
commitments or constraints reflected in the current services estimates 
are based on the tax and spending policies contained in current law.
  The current services baseline is used in a variety of ways: It can 
warn of future problems, either for Government fiscal policy as a whole 
or for individual tax and spending programs. It is a ``policy-neutral'' 
benchmark against which the President's Budget and other budget 
proposals can be compared to see the magnitude of the proposed changes. 
The following table shows current services estimates of receipts, 
outlays, and surpluses for 2004 through 2010. They are based on the 
economic assumptions described later in this chapter. The estimates are 
shown on a unified budget basis. The off-budget receipts and outlays of 
the Social Security trust funds and the Postal Service Fund are added to 
the on-budget receipts and outlays to calculate the unified budget 
totals. The table also shows the current services estimates by major 
component. The BEA baseline deficits are shown as a memorandum in the 
table.

                                      Table 25-1.  BASELINE CATEGORY TOTALS
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                        2004       2005       2006       2007       2008       2009       2010
----------------------------------------------------------------------------------------------------------------
Receipts...........................    1,880.1    2,053.0    2,177.9    2,347.2    2,518.3    2,668.0    2,841.0
Outlays:
  Discretionary:
    DoD-Military...................      436.3      443.1      416.7      416.1      427.8      439.2      453.0
    Homeland security..............       25.3       30.2       33.1       33.9       34.5       35.2       36.0
    Other discretionary............      433.8      456.8      464.3      472.7      480.2      487.1      497.0
                                    ----------------------------------------------------------------------------
  Subtotal, discretionary..........      895.4      930.0      914.2      922.7      942.5      961.5      986.0
  Mandatory:
    Social Security................      491.5      515.1      540.1      566.7      595.8      629.9      665.5
    Medicare.......................      264.9      290.3      340.2      381.5      406.5      432.8      460.3
    Medicaid and SCHIP.............      180.8      193.6      198.0      210.6      228.8      249.0      270.8
    Other mandatory................      299.3      336.9      337.4      326.5      327.0      332.9      355.3
                                    ----------------------------------------------------------------------------
  Subtotal, mandatory..............    1,236.5    1,335.9    1,415.7    1,485.3    1,558.1    1,644.6    1,751.9
  Net interest.....................      160.2      177.5      209.3      242.1      269.0      290.7      309.8
                                    ----------------------------------------------------------------------------
Total outlays......................    2,292.2    2,443.4    2,539.1    2,650.1    2,769.6    2,896.8    3,047.8
 
  Unified deficit..................     -412.1     -390.4     -361.2     -302.8     -251.3     -228.8     -206.8
    On-budget......................     -567.4     -552.4     -534.3     -500.3     -469.4     -462.2     -462.3
    Off-budget.....................      155.2      162.0      173.1      197.5      218.1      233.3      255.6
 
Memorandum:
  BEA baseline deficit.............     -412.1     -390.7     -368.8     -314.6     -256.2     -213.3     -211.5
    Do not extend emergencies......  .........  .........        5.3        9.0       10.7       12.0       12.7
    Correct growth rates for pay...  .........  .........        2.0        2.4        2.5        2.7        2.8
    Remove special rule for
      administrative expenses of
      selected programs............  .........  .........        0.1        0.2        0.4        0.5        0.6
    Extend certain tax provisions..  .........        0.3       -*         -0.4       -9.6      -31.5      -11.9
    Related debt service...........  .........        *          0.1        0.5        0.9        0.7        0.5
                                    ----------------------------------------------------------------------------
  Current baseline deficit.........     -412.1     -390.4     -361.2     -302.8     -251.3     -228.8     -206.8
----------------------------------------------------------------------------------------------------------------
 *$50 million or less.

                     Conceptual Basis for Estimates

  Receipts and outlays are divided into two categories that are 
important for calculating the current services estimates: those 
controlled by authorizing legislation (direct spending and receipts) and 
those controlled through the annual appropriations process 
(discretionary spending). Different estimating rules apply to each 
category. There are numerous alternative rules that could be used to 
develop current services. The next section discusses some alternatives 
that might be considered.
  Direct spending and receipts.--Direct spending includes the major 
entitlement programs, such as social security, medicare, medicaid, 
Federal employee retirement, unemployment compensation, food stamps and 
other means-tested entitlements. It also includes such programs as 
deposit insurance and farm price and income supports, where the 
Government is legally obligated to make payments under certain 
conditions. Receipts and direct spending are alike in that they involve 
ongoing activities that generally operate under permanent authority 
(they do not require annual authorization), and the underlying statutes 
generally specify the tax rates or benefit levels that must be collected 
or paid, and who must pay or who is eligible to receive benefits. The 
current services baseline assumes that receipts and direct spending 
programs continue in the future as specified by current law. In most 
cases, that is what will occur without enactment of new legislation. The 
budgetary impact of anticipated regulations and administrative actions 
that are permissible under current law are also reflected in the 
estimates.
  If a baseline is intended to reflect current law, then the provisions 
of law providing spending authority and the authority to collect taxes 
or other receipts that expire under current law should be assumed to 
expire. However, the current services baseline assumes extension of 
several types of authority:
    Expiring provisions affecting excise taxes dedicated to a 
          trust fund are assumed to be extended at current rates. During 
          the projection period of 2005 through 2010, taxes deposited in 
          the Highway and Aquatic Resources trust funds, which expire on 
          September 30, 2005, and taxes deposited in the Airport and 
          Airway trust fund, which expire on September 30, 2007, are the 
          only taxes affected by this exception.
    Direct spending programs that will expire under current law 
          are assumed to be extended if their 2005 outlays exceed $50 
          million. For example, Temporary Assistance for Needy Families 
          and child care entitlement to States, which expired at the end 
          of 2002 and have been temporarily extended several times, are 
          now scheduled to expire in March, 2005. The baseline estimates 
          provided here assume continuation of these programs throughout 
          the projection period. However, programs enacted after the 
          enactment of the Balanced Budget Act of 1997 that are 
          explicitly temporary in nature expire in the baseline even if

[[Page 390]]

          their current year outlays exceed the $50 million threshold.
    Certain provisions in the 2001 and 2003 Tax Acts that were 
          clearly not intended to be temporary are assumed to continue 
          past their expiration date. These provisions include 
          reductions in individual income taxes on capital gains and 
          dividends, and increased expensing for small businesses. 
          Unlike the two extensions discussed above, the BEA baseline 
          definitions, developed before the enactment of the 2001 and 
          2003 tax acts, do not provide for extension of these 
          provisions.
  Discretionary spending.--Discretionary programs differ in one 
important aspect from direct spending programs--Congress provides 
spending authority for almost all discretionary programs one year at a 
time. The spending authority is normally provided in the form of annual 
appropriations. Absent appropriations of additional funds in the future, 
discretionary programs would cease to exist after existing balances were 
spent. If the baseline was intended to reflect current law, then a 
baseline would only reflect the expenditure of remaining balances from 
appropriations laws. Instead the current services baseline provides a 
mechanical definition for discretionary programs that is somewhat 
arbitrary. The definition used here attempts to keep discretionary 
spending level in real terms. For 2005, the current services estimates 
for discretionary programs are equal to enacted 2005 appropriations. For 
2006 through 2010, funding for most accounts is equal to this 2005 level 
adjusted for inflation. The inflation rates used here are similar to 
those required by the BEA but adjust to remove the overcompensation for 
federal pay inherent in the BEA definition. Unlike the BEA requirements, 
these current services estimates assume that federal pay raises are 
effective in January, as required under current law. At the time the BEA 
was enacted, it ignored the nearly contemporaneous enactment of the 
Federal Employees Compensation Act of 1991 that shifted the effective 
date of federal employee pay raises from October to January. Also, the 
estimates presented here exclude the special adjustment for 
administrative expenses for certain benefit programs required by the 
BEA. This provision is inconsistent with the baseline rules for other 
accounts that fund administrative costs. In addition, the baseline 
estimates presented here assume that emergency appropriations enacted 
for 2005, largely in response to the Florida hurricanes, are one-time 
only events. The BEA requires that the baseline assume funding for 
emergencies repeatedly through the projection period.

[[Page 391]]

                  Alternative Formulations of Baseline

  Throughout much of U.S. history, budget proposals were often compared 
to either the President's request or the previous year's budget. In the 
early 1970s, development of a baseline was pursued in attempt to provide 
a more neutral benchmark for comparisons. The Congressional Budget Act 
of 1974 included a requirement that OMB and the Congressional Budget 
Office (CBO) provide estimates of a current services baseline. The 
definition of the baseline was very general and specific guidance was 
not provided.
  Since these estimates have been developed, current services for direct 
spending programs and receipts were generally estimated based on laws 
currently in place. Major direct spending programs were assumed to 
continue past their expiration date. The initial budget enforcement 
legislation, enacted in 1990, specifically required that programs sunset 
on schedule in the baseline. This provision was subsequently amended to 
require extension of most major direct spending programs. However, in 
the case of receipts, the BEA requires only the extension of trust fund 
excise taxes.
  For discretionary programs, the proper definition of current services 
was more ambiguous. OMB, for most accounts, applied an inflation 
adjustment to the current year budgetary resource. However, numerous 
exceptions were made to give a better picture of providing the same 
services in the future. Programs that were clearly temporary in nature 
were allowed to expire. Some programs were allowed to grow along a path 
that reflected development of a project: design, followed by 
construction, followed by operating expenses. CBO also made similar 
adjustments to their estimates. In addition, they produced a baseline 
that straightlined budgetary resources rather than apply an inflation 
adjustment. With enactment of budget enforcement legislation in the 
1990s, a precise definition of baseline for discretionary programs was 
instituted and all discretionary programs were estimated based on 
precise rules.
  It is clear, however, that a number of baseline definitions could be 
developed that differ for those presented in this chapter:
    Extend provisions affecting parts of mandatory programs. 
          Currently, mandatory programs that have current year outlays 
          of over $50 million are generally assumed to continue. 
          However, provisions of law that affect parts of mandatory 
          programs, even those that have been consistently extended in 
          the past, are assumed to expire as scheduled.
    Do not extend any authorizing laws that expire. If all 
          mandatory programs were assumed to expire as scheduled, the 
          deficit in 2005 would be $8 billion lower than the current 
          estimates and deficits for 2006 through 2010 would be $280 
          billion lower. (See the section below on major program 
          assumptions for details on mandatory program extensions 
          assumed in the estimates.) If excise taxes were allowed to 
          expire, the deficit would be $224 billion higher over the 
          period 2006 through 2010. If certain provisions of the 2001 
          and 2003 Tax Acts were assumed to expire, the deficit would be 
          $57 billion lower over the period.
    Straightline appropriations. If all discretionary budgetary 
          resources were to be the same in each year in the projection 
          period as provided for the current year, total outlays would 
          be $14 lower in 2006 and $325 billion lower over the period 
          2006 through 2010.
    Do not extend any appropriations. The current treatment of 
          expiring provisions is inconsistent with the treatment of 
          discretionary spending. All discretionary spending continues 
          whether there is authorization for the program or not and 
          whether funds have already been provided or not. In nearly all 
          cases, funds for discretionary programs have not been provided 
          in advance for years beyond the current year. If rules 
          consistent with the treatment of other expiring provisions 
          were applied to discretionary spending, no new budgetary 
          resources would be provided. Thus, under a strict ``current 
          law'' approach, the only discretionary outlays that would be 
          included in the baseline would be the lagged spending from the 
          current year budgetary resource. If this rule were followed, 
          outlays in 2006 would be reduced by $497 billion relative to 
          the current estimates. Clearly this would provide an 
          unrealistic estimate of future spending and the government's 
          future fiscal position.
  Table 25-2 provides estimates for a variety of changes in baseline 
definitions that could be considered.

[[Page 392]]



                                Table 25-2.  ALTERNATIVE BASELINE ASSUMPTIONS \1\
                                            (in billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                        2005       2006       2007       2008       2009       2010    2006-2010
----------------------------------------------------------------------------------------------------------------
Current baseline surplus...........       -390       -361       -303       -251       -229       -207     -1,351
 
Alternative assumptions (surplus
 impact):
  Extend provisions affecting parts         -*         -2         -2         -2         -2         -2        -10
   of mandatory programs...........
 
  Do not extend any authorizing
   laws:
    Mandatory spending.............          8         21         22         72         79         86        280
    Trust fund excise taxes........  .........        -32        -34        -49        -52        -56       -224
    Certain provisions of the 2001          -*          *          *         10         33         14         57
     and 2003 Tax Acts.............
 
  Straightline appropriations......  .........         14         36         62         91        121        325
 
  Do not extend any appropriations.  .........        497        827        961      1,056      1,144      4,485
----------------------------------------------------------------------------------------------------------------
\1\ Estimates provided here are the totals for the illustrative provisions shown in Table 25-5. This is not a
  complete listing of all provisions that expire.
 *500 million or less.

                          Economic Assumptions

  The current services estimates are based on the same economic 
assumptions as the President's Budget, which are based on enactment of 
the President's Budget proposals. The economy and the budget interact. 
Changes in economic conditions significantly alter the estimates of tax 
receipts, unemployment benefits, entitlement payments that are 
automatically adjusted for changes in cost-of-living (COLAs), income 
support programs for low-income individuals, and interest on the Federal 
debt. In turn, Government tax and spending policies influence prices, 
economic growth, consumption, savings, and investment. Because of these 
interactions, it would be reasonable, from an economic perspective, to 
assume different economic paths for the current services baseline and 
the President's Budget. However, this would diminish the value of 
current services estimates as a benchmark for measuring proposed policy 
changes, because it would then be difficult to separate the effects of 
proposed policy changes from the effects of different economic 
assumptions. By using the same economic assumptions for current services 
and the President's Budget, this potential source of confusion is 
eliminated. The economic assumptions underlying both the budget and the 
current service estimates are summarized in Table 25-3. The economic 
outlook underlying these assumptions is discussed in greater detail in 
Chapter 12 of this volume.

                                     

                                  Table 25-3.  SUMMARY OF ECONOMIC ASSUMPTIONS
                                   (Fiscal years; dollar amounts in billions)
----------------------------------------------------------------------------------------------------------------
                                                        2005      2006      2007      2008      2009      2010
----------------------------------------------------------------------------------------------------------------
Gross Domestic Product (GDP):
  Levels, dollar amounts in billions:
    Current dollars.................................    12,227    12,907    13,617    14,349    15,111    15,906
    Real, chained (2000) dollars....................    11,137    11,528    11,916    12,298    12,685    13,078
  Percent change, year over year:
    Current dollars.................................       5.8       5.6       5.5       5.4       5.3       5.3
    Real, chained (2000) dollars....................       3.7       3.5       3.4       3.2       3.1       3.1
  Inflation measures (percent change, year over
   year):
    GDP chained price index.........................       2.0       2.0       2.1       2.1       2.1       2.1
    Consumer price index (all urban)................       2.7       2.2       2.4       2.4       2.4       2.4
Unemployment rate, civilian (percent)...............       5.4       5.2       5.1       5.1       5.1       5.1
Interest rates (percent):
  91-day Treasury bills.............................       2.4       3.4       3.8       4.0       4.1       4.2
  10-year Treasury notes............................       4.5       5.1       5.4       5.5       5.6       5.6
 
MEMORANDUM
  Related program assumptions:
    Automatic benefit increases (percent):
      Social security and veterans pensions.........       2.7       2.3       2.3       2.4       2.4       2.4
      Federal employee retirement...................       2.7       2.3       2.3       2.4       2.4       2.4
      Food stamps...................................       5.8       1.4       2.3       2.4       2.4       2.4
    Insured unemployment rate.......................       2.3       2.2       2.2       2.2       2.2       2.2
----------------------------------------------------------------------------------------------------------------


[[Page 393]]

                     Major Programmatic Assumptions

  A number of programmatic assumptions must be made in order to 
calculate the baseline estimates. These include assumptions about the 
number of beneficiaries who will receive payments from the major benefit 
programs and annual cost-of-living adjustments in the indexed programs. 
Assumptions on baseline caseload projections for the major benefit 
programs are shown in Table 25-4. Assumptions about various automatic 
cost-of-living-adjustments are shown in Table 25-3.

                         Table 25-4.  BENEFICIARY PROJECTIONS FOR MAJOR BENEFIT PROGRAMS
                                         (Annual average, in thousands)
----------------------------------------------------------------------------------------------------------------
                                                                               Estimate
                                              2004   -----------------------------------------------------------
                                             Actual     2005      2006      2007      2008      2009      20010
----------------------------------------------------------------------------------------------------------------
Farmer direct payments....................     1,596     1,856     1,840     1,826     1,822     1,811     1,811
Federal family education loans............     6,612     6,972     6,892     6,584     6,927     7,286     7,658
Federal direct student loans..............     2,152     2,275     2,303     2,312     2,425     2,543     2,667
Medicaid/State Children's Health Insurance    47,600    48,900    50,200    50,300    50,500    50,800    51,200
 Program..................................
Medicare-eligible military retiree health      1,679     1,710     1,734     1,734     1,734     1,734     1,734
 benefits.................................
Medicare:
  Hospital insurance......................    41,078    41,677    42,292    43,014    43,851    44,750    45,701
  Supplementary medical insurance.........    38,706    39,237    39,751    40,339    41,051    41,822    42,615
Railroad retirement.......................       610       597       584       573       563       554       547
Federal civil service retirement..........     2,393     2,421     2,455     2,487     2,519     2,551     2,586
Military retirement.......................     1,787     1,802     1,819     1,838     1,852     1,862     1,869
Unemployment compensation.................     8,770     8,610     8,970     9,070     9,240     9,340     9,420
Food stamps...............................    23,854    26,417    29,059    28,187    27,201    26,113    26,061
Child nutrition...........................    31,693    32,603    33,115    33,642    34,168    34,675    35,162
Foster care and adoption assistance.......       565       584       600       617       636       656       678
Supplemental security income (SSI):
  Aged....................................     1,133     1,118     1,107     1,102     1,100     1,099     1,099
  Blind/disabled..........................     5,533     5,703     5,913     6,071     6,165     6,230     6,291
                                           ---------------------------------------------------------------------
    Subtotal, SSI.........................     6,666     6,821     7,020     7,173     7,265     7,329     7,390
Child care and development fund (CCDF) \1\     2,300     2,200     2,200     2,100     2,100     2,000     2,000
Social security (OASDI):
  Old age and survivor insurance..........    39,488    39,813    40,263    40,770    41,375    42,118    43,011
  Disability insurance....................     7,696     8,005     8,302     8,576     8,835     9,088     9,318
Veterans compensation:
  Veterans................................     2,518     2,594     2,688     2,818     2,911     2,979     3,069
  Survivors (non-veterans)................       316       328       335       343       351       359       368
                                           ---------------------------------------------------------------------
    Subtotal, veterans compensation.......     2,834     2,922     3,023     3,161     3,262     3,338     3,437
Veterans pensions:
  Veterans................................       343       336       330       323       317       311       305
  Survivors (non-veterans)................       219       210       203       195       188       181       174
                                           ---------------------------------------------------------------------
      Subtotal, veterans pensions.........       562       546       533       518       505       492       479
----------------------------------------------------------------------------------------------------------------
\1\ Includes children served through the CCDF (including TANF transfers) and through funds spent directly on
  child care in the Social Services Block Grant and TANF programs.

  It is also necessary to make assumptions about the continuation of 
expiring programs and provisions. In the estimates provided here, 
expiring excise taxes dedicated to a trust fund are extended at current 
rates. Certain income tax provisions from the 2001 and 2003 Tax Acts, 
that were not designed to be temporary in nature, are assumed to be 
permanent for purposes of calculating revenue estimates. In general, 
mandatory programs with current year spending of at least $50 million 
are also assumed to continue. All discretionary programs with enacted 
appropriations in the current year are assumed to continue. However, 
specific provisions of law that affect mandatory programs (but are not 
necessary for program operation) are allowed to expire as scheduled. For 
example, medicaid transition assistance will expire at the end of March 
2005. The baseline does not assume additional spending under this 
authority beyond that point. Table 25-5 provides a listing of mandatory 
programs and taxes assumed to continue in the baseline after their 
expiration.
  Many other important assumptions must be made in order to calculate 
the baseline estimates. These include assumptions about the timing and 
substance of regulations that will be issued over the projection period, 
the use of administrative discretion provided under current law, and 
other assumptions about the way programs operate. Table 25-5 lists many 
of these assumptions and their impact on the baseline estimates. It is 
not intended to be an exhaustive listing; the variety and complexity of 
Government programs are too great to provide a complete list. Instead, 
some of the more important assumptions are shown.

[[Page 394]]



       Table 25-5.  IMPACT OF REGULATIONS, EXPIRING AUTHORIZATIONS, AND OTHER ASSUMPTIONS IN THE BASELINE
                                            (In millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                            Estimate
                   Category                    -----------------------------------------------------------------
                                                   2005       2006       2007       2008       2009       2010
----------------------------------------------------------------------------------------------------------------
                  REGULATIONS
Foster care program:
  Administrative claims for children in         .........       -82        -87        -91        -96       -101
   unlicensed relative homes..................
Old age and survivors insurance (OASI) and
 disabilty insurance (DI):
  Ticket to Work and Self-Sufficiency.........        18         26         27         18          5        -14
  Reduction of Title II benefits under family         16         17         18         19         20         21
   maximum in cases of dual entitlement.......
  Trial work period...........................         4          3          3          2          1          1
Medicare, HI: \1\
  Inpatient Rehabiliation Facilities..........       -50        -70        -70       -180       -230       -260
  Inpatient Hospital Post-Acute Transfers.....  .........      -740       -900       -960     -1,010     -1,080
  Skilled Nursing Facility Case Mix Refinement  .........    -1,520     -1,980     -2,040     -2,230     -2,360
Medicare, HI and SMI: \1\
  Bad debt reimbursement......................  .........       -10        -50        -80        -90       -100
Supplemental security income (SSI):
  Ticket to Work and Self-Sufficiency.........       -12        -12         -6         -3         -7        -19
  Title XVI cross-program recovery............       -30        -15        -15        -15        -15        -20
  Student earned income exclusion.............         4          4          4          4          5          5
EPA Pesticides tolerance fee..................  .........  .........  .........  .........       -21        -22
 
            EXPIRING AUTHORIZATIONS
 
Provisions extended in the baseline (effect of
 extension):
Spending:
  Child care entitlement to States............  .........     2,717      2,717      2,717      2,717      2,717
  Child nutrition:
    Summer food service program...............  .........  .........  .........  .........  .........       369
    State administrative expenses.............  .........  .........  .........  .........  .........       184
  CCC market access, bioenergy and commodity
   programs:
    Counter-cyclical payment program..........  .........  .........  .........  .........     1,072        912
    Dairy price support program...............  .........  .........  .........        50         50         50
    Dairy export incentive program............  .........  .........  .........        45         67         67
    Direct payment program....................  .........  .........  .........     2,621      5,303      5,303
    Marketing assistance loan and loan          .........  .........  .........     1,042        132         88
     deficiency payment program...............
  Conservation reserve program................  .........  .........  .........     2,319      2,505      2,506
  Farm security and rural investment:
    Conservation security program.............  .........  .........  .........       559        648        693
    Environmental quality incentives program..  .........  .........  .........     1,184      1,253      1,276
    Farm and ranch lands protection program...  .........  .........  .........        91         96         97
    Ground and surface water conservation.....  .........  .........  .........        68         63         62
    Wildlife habitat incentives program.......  .........  .........  .........        77         83         85
    Wetlands reserve program..................  .........  .........  .........       287        281        279
  Food stamps:
    Benefit costs.............................  .........  .........  .........    32,728     32,248     33,061
    State administrative expenses.............  .........  .........  .........     2,638      2,730      2,825
    Employment and training...................  .........  .........  .........       308        317        321
    Other program costs.......................  .........  .........  .........        60         61         63
    Nutrition assistance for Puerto Rico......  .........  .........  .........     1,586      1,624      1,663
    Food donations on Indian reservations.....  .........  .........  .........        83         85         87
    The emergency food assistance program       .........  .........  .........       140        140        140
     commodities..............................
  Promoting safe and stable families..........  .........  .........       305        305        305        305
  Secure rural schools--payments to Oregon and  .........  .........  .........       117        118        120
   California counties........................
  Temporary assistance for needy families
   (TANF) resources:
    State family assistance grants (SFAG).....     6,595     16,489     16,489     16,489     16,489     16,489
    SFAG to territories.......................        31         78         78         78         78         78
    Matching grants to territories............         6         15         15         15         15         15
    Bonus to reward high performing States....     1,000   .........  .........  .........  .........     1,000
    Bonus to reward decrease in illegitimacy..       100        100        100        100        100        100
    Tribal work program.......................         8          8          8          8          8          8
    Census survey of program dynamics.........         5         10         10         10         10         10
  Trade adjustment assistance--training and     .........  .........  .........       499        971      1,043
   income support.............................
  Trade adjustment assistance--farmers........  .........  .........  .........        90         90         90
  Veterans compensation--annual cost of living  .........       478      1,008      1,709      2,464      3,269
   adjustment.................................
Revenues:
  Excise taxes dedicated to trust funds:
    Airport and Airway trust fund taxes.......  .........  .........  .........    11,897     12,566     13,271
    Aquatic resources trust fund taxes........  .........       319        328        336        346        355
    Highway trust fund taxes..................  .........    31,468     32,163     32,783     33,366     33,940
  Certain provisions for the 2001 tax cut and        313        -48       -363     -9,647    -31,462    -11,901
   2003 jobs and growth tax cut...............

[[Page 395]]

 
Provisions not extended in the baseline
 (effect of extension):
Spending:
  Biomass research and development............  .........  .........  .........        14         14         14
  EPA pesticides maintenance fee..............  .........  .........  .........  .........       -15        -15
  Loans for broadband services in rural areas.  .........  .........  .........         1          6          9
  Medicare, SMI:
    Medicare low income premium assistance \2\  .........       230        255        280        300        320
  Medicaid:
    Transition benefits \3\...................       221        488        524        554        580        601
  Milk income loss contract program (CCC).....  .........       600        600        600        600        600
  TANF:
    Supplemental grants.......................       128        319        319        319        319        319
    Welfare research..........................         7         15         15         15         15         15
  Veterans programs:
    Income verification match.................  .........  .........  .........  .........        -6        -11
    Contract disability medical exams.........  .........  .........  .........  .........         9        103
    Native American veterans housing loans....  .........  .........  .........  .........  .........        -1
    Hybrid adjustable rate mortgages..........  .........  .........  .........  .........         4          4
    Enhanced loan asset sales.................  .........  .........  .........  .........  .........       -89
    Loan guarantees for multifamily             .........  .........  .........  .........  .........        11
     transitional housing for homeless
     veterans.................................
  Wool research, development, and promotion...  .........  .........         2          2          2          2
 
      OTHER IMPORTANT PROGRAM ASSUMPTIONS
 
Child support enforcement (CSE):
  Alternative penalties for Family Support Act      -208       -208        164          7   .........  .........
   systems and Statewide Disbursement Unit
   requirements...............................
  Effect of enhanced rate of paternity testing         7          7          7          7          8          8
Food stamps:
  Tax offset, recoupment, and general claims        -154       -154       -154       -154       -154       -154
   collection.................................
  Quality control liabilities.................  .........       -18        -18        -16        -12        -12
  Allocation of administrative costs between        -197       -197       -197       -197       -197       -197
   public assistance programs.................
Medicare:
  Medicare Advantage Risk Adjustment..........  .........     2,200      2,100      1,800      1,400        800
  Physicians..................................    56,096     56,345     55,152     54,483     53,745     52,638
  Prescription Drug Benefit \4\...............     1,155     45,846     64,839     70,905     77,417     84,328
  Data Processing Improvement for Overpayments  .........       -90       -100       -110       -120       -100
  Contracting Reform..........................  .........  .........  .........       -70       -280       -550
Medicaid: \5\
  Financial management recoveries.............      -480       -491       -524       -570       -622       -678
  Vaccines for Children, total program costs..     1,635      1,502      1,271      1,259      1,280      1,309
  Allocation of administrative costs between         471        509        549        593        640        692
   public assistance programs.................
  Institutional long term care................    34,290     36,245     38,744     41,391     44,404     47,629
  Home and community based institutional          20,273     23,078     25,766     28,630     31,893     35,381
   alternatives...............................
  Pharmaceuticals (FFS, net of rebates).......    19,643     11,464      9,159      9,933     10,857     11,811
  Managed care (including Medicaid MCOs, PHPs,    30,466     33,914     38,182     42,731     47,915     53,452
   PCCM)......................................
State Children's Health Insurance Program          5,343      5,434      5,438      5,267      5,251      5,423
 (Title XXI)..................................
Approved Demonstrations: \6\
  Medicare, HI:
    Mercy Medical SNF
      Baseline estimate.......................         6          1   .........  .........  .........  .........
      Demonstration estimate..................         6          1   .........  .........  .........  .........
    Premier--Hospital Quality Incentive
      Baseline estimate.......................     3,052      3,265   .........  .........  .........  .........
      Demonstration estimate..................     3,064      3,277         12   .........  .........  .........
    Rural Community Hospital \7\
      Baseline estimate.......................        63         66         69         73         76         80
      Demonstration estimate..................        67         79         83         87         91         90
    New York Graduate Medical Education
      Baseline estimate.......................        53         53         53         53   .........  .........
      Demonstration estimate..................        45         37         26         13   .........  .........
    Utah Graduate Medical Education
      Baseline estimate.......................         5          6          6   .........  .........  .........
      Demonstration estimate..................         5          6          6   .........  .........  .........
  Medicare, SMI:
    Municipal Health
      Baseline estimate.......................        20         22          6   .........  .........  .........
      Demonstration estimate..................        39         43         12   .........  .........  .........

[[Page 396]]

 
    Diabetes (Telemedicine)
      Baseline estimate.......................         8          7          4   .........  .........  .........
      Demonstration estimate..................         8          7          4   .........  .........  .........
    United Mine Workers Program--Prescription
     Drug Benefits \8\
      Baseline estimate.......................  .........  .........  .........  .........  .........  .........
      Demonstration estimate..................       120   .........  .........  .........  .........  .........
    Smoking Cessation
      Baseline estimate.......................         *   .........  .........  .........  .........  .........
      Demonstration estimate..................         *   .........  .........  .........  .........  .........
    BIPA Disease Management
      Baseline estimate.......................     1,134      1,279        640   .........  .........  .........
      Demonstration estimate..................     1,134      1,279        639   .........  .........  .........
    Case Management/Lovelace
      Baseline estimate.......................         2   .........  .........  .........  .........  .........
      Demonstration estimate..................         2   .........  .........  .........  .........  .........
    Coordinated Care
      Baseline estimate.......................       188         95   .........  .........  .........  .........
      Demonstration estimate..................       163         82   .........  .........  .........  .........
    Medicare Replacement Drug
      Baseline estimate.......................  .........  .........  .........  .........  .........  .........
      Demonstration estimate..................       400        100   .........  .........  .........  .........
    Disease Management for Chronically Ill
     Dual Beneficiaries (Lifemasters)
      Baseline estimate.......................       280        603        634        152   .........  .........
      Demonstration estimate..................       251        541        568        136   .........  .........
    Medicare Lifestyle Modification Program
      Baseline estimate.......................         1          1   .........  .........  .........  .........
      Demonstration estimate..................         1          1   .........  .........  .........  .........
    Influenza Medication
      Baseline estimate.......................  .........  .........  .........  .........  .........  .........
      Demonstration estimate..................       200   .........  .........  .........  .........  .........
    United Mine Workers Program--Health
     Benefits
      Baseline estimate.......................       442   .........  .........  .........  .........  .........
      Demonstration estimate..................       411   .........  .........  .........  .........  .........
    Oncology/quality of care
      Baseline estimate.......................  .........  .........  .........  .........  .........  .........
      Demonstration estimate..................       200        100   .........  .........  .........  .........
  Medicare, HI and SMI:
    Evercare
      Baseline estimate.......................        88   .........  .........  .........  .........  .........
      Demonstration estimate..................        88   .........  .........  .........  .........  .........
    Home Health Third Party Liability
      Baseline estimate.......................       110         85         62         59   .........  .........
      Demonstration estimate..................       110         85         62         59   .........  .........
    Homebound
      Baseline estimate.......................  .........  .........  .........  .........  .........  .........
      Demonstration estimate..................         9         10   .........  .........  .........  .........
    Medicare+Choice Phase I
      Baseline estimate.......................       137   .........  .........  .........  .........  .........
      Demonstration estimate..................       141          3   .........  .........  .........  .........
    Medicare+Choice Phase II
      Baseline estimate.......................     1,215        350         28   .........  .........  .........
      Demonstration estimate..................     1,310        395         30   .........  .........  .........
    SHMO-ESRD
      Baseline estimate.......................        18          5   .........  .........  .........  .........
      Demonstration estimate..................        20          6   .........  .........  .........  .........
    S/HMO I--Medicare
      Baseline estimate.......................       925        969      1,010        336   .........  .........
      Demonstration estimate..................     1,160      1,210      1,260        425   .........  .........
    S/HMO II--Medicare
      Baseline estimate.......................       440        461        480        160   .........  .........
      Demonstration estimate..................       550        575        600        195   .........  .........
    Physician Group Practice
      Baseline estimate.......................     1,216      1,680      1,761        445   .........  .........
      Demonstration estimate..................     1,181      1,596      1,634        450         77   .........
  Medicaid: \6\
    Alabama Family Planning...................        92   .........  .........  .........  .........  .........
    Arizona AHCCCS............................     2,929      3,300   .........  .........  .........  .........

[[Page 397]]

 
    Arkansas (ARKids B).......................        59   .........  .........  .........  .........  .........
    Arkansas Family Planning Services.........       207         35   .........  .........  .........  .........
    Arkansas Cash & Counseling................         9          9          2   .........  .........  .........
    Arkansas TEFRA............................        28         30         32          8   .........  .........
    California Family Planning................        53   .........  .........  .........  .........  .........
    California In-Home Supportive Services           242        280        325        378        357   .........
     Plus.....................................
    California--LA County \9\.................        65   .........  .........  .........  .........  .........
    Colorado Consumer Directed Attendant              14         17         19          3   .........  .........
     Support..................................
    Delaware--Diamond State Health Plan.......       456        504        129   .........  .........  .........
    District of Columbia HIV..................         5          8         11         14          4   .........
    District of Columbia Childless Adults 50-          5          5          3   .........  .........  .........
     64.......................................
    Florida Cash & Counseling.................        53         57         61         26   .........  .........
    Hawaii Health QUEST.......................       277   .........  .........  .........  .........  .........
    Illinois Family Planning..................       339        362        387        414   .........  .........
    Kentucky Health Care Partnership Program..       378         33   .........  .........  .........  .........
    Maine HIV.................................         8          9          7   .........  .........  .........
    Maryland (Health Choice)..................       929   .........  .........  .........  .........  .........
    Massachusetts MassHealth..................     1,885   .........  .........  .........  .........  .........
    Minnesota (Prepaid Med. Assist. Project          101   .........  .........  .........  .........  .........
     Plus)....................................
    Mississippi Family Planning...............       122        134        146   .........  .........  .........
    Mississippi--Healthier Mississippi........        59         65         71         78         86   .........
    Missouri Managed Care Plus................       205        204         86   .........  .........  .........
    Montana Basic Medicaid for Able-Bodied            29         32         35         39         13   .........
     Adults...................................
    New Jersey Cash & Counseling..............         4          4          5          3   .........  .........
    New Mexico--Family Planning Expansion.....         9         11   .........  .........  .........  .........
    New York (Partnership Plan)...............     9,753      5,252   .........  .........  .........  .........
    Oklahoma Sooner Care......................       843        906        230   .........  .........  .........
    Oregon Family Planning....................        65         76          6   .........  .........  .........
    Oregon Independent Choices................         2          3          *   .........  .........  .........
    Rhode Island Rite Care (Medicaid).........       111   .........  .........  .........  .........  .........
    South Carolina Family Planning............        10   .........  .........  .........  .........  .........
    TennCare II...............................     3,488      3,865      3,124   .........  .........  .........
    Utah (Primary Care Network)...............        87         97         79   .........  .........  .........
    Vermont Health Access Plan................       204        218         57   .........  .........  .........
    Virginia--Family Planning.................       165        171        176   .........  .........  .........
    Washington (Take Charge/Family Planning)..       200        160   .........  .........  .........  .........
    Wisconsin Badger Care (Medicaid)..........        40         42         18   .........  .........  .........
    Wisconsin Family Planning.................        28         34         40         10   .........  .........
    Pharmacy Plus (demonstration estimate):
     \10\
      Wisconsin Pharmacy Plus.................       183        218        260   .........  .........  .........
      Florida Pharmacy Plus...................        95        105         93   .........  .........  .........
      Illinois Pharmacy Plus..................       298        357        277   .........  .........  .........
      South Carolina Pharmacy Plus............       153        179        208         52   .........  .........
  State Children's Health Insurance Program
   (Title XXI) (demonstration estimates): \10\
    Alaska....................................         9          9         10   .........  .........  .........
    Maryland Health Choice \11\...............       121   .........  .........  .........  .........  .........
    Minnesota Care............................        47   .........  .........  .........  .........  .........
    Missouri MC+c \11\........................        93        108        117   .........  .........  .........
    New Jersey FamilyCare \12\................  .........  .........  .........  .........  .........  .........
    New Mexico SCHIP \11\.....................        24         25         26   .........  .........  .........
    Rhode Island (SCHIP RiteCare).............        10   .........  .........  .........  .........  .........
    Wisconsin (BadgerCare)....................       123        132        142   .........  .........  .........
  Health Insurance Flexibility and
   Accountability (HIFA) (demonstration
   estimate):
    Arizona HIFA (SCHIP funds)................        41         43   .........  .........  .........  .........
    Colorado HIFA (SCHIP funds)...............         4         11   .........  .........  .........  .........
    Idaho HIFA................................        20         23         25         26         24   .........
    Illinois HIFA (KidCare Parent Coverage)
      Baseline estimate (Medicaid funds)......         5          5          6   .........  .........  .........
      Demonstration estimate (SCHIP funds)....       129        180        191   .........  .........  .........
    Maine HIFA (Maine Care for Childless
     Adults--Medicaid funds)
      Baseline estimate.......................       102        102        102   .........  .........  .........
    Michigan HIFA.............................       110        112        117        123         31   .........
    Oregon HIFA (Oregon Health Plan 2)
      Baseline estimate (Medicaid funds)......     1,349      1,467      1,603   .........  .........  .........
      Demonstration estimate (SCHIP funds)....        18         15         16   .........  .........  .........

[[Page 398]]

 
  Joint Medicare and Medicaid:
    Minnesota-Dual Eligibles
      Baseline estimate.......................       154        174        194         54   .........  .........
      Demonstration estimate..................       160        180        200         55   .........  .........
    Wisconsin-Dual Eligibles
      Baseline estimate.......................       130        176         45   .........  .........  .........
      Demonstration estimate..................       130        176         45   .........  .........  .........
    Massachusetts--Dual Eligibles
      Demonstration estimate..................        20         28         34          9   .........  .........
      Baseline estimate.......................        21         29         35          9   .........  .........
OASI, DI, SSI:
  Performance of continuing disability reviews      -105       -525     -1,030     -1,630     -2,230     -2,845
   (baseline levels) (OASI, DI, SSI)..........
  OASDI:
    Payments to states for vocational                 80        104        112        121        130        138
     rehabilitation...........................
  DI:
    Research and demonstration projects.......        17         42         55         27   .........  .........
  SSI:
    Payments from states for state                -4,318     -4,520     -4,755     -4,895     -5,060     -5,224
     supplemental benefits....................
    Payments for state supplemental benefits..     4,650      4,520      4,355      4,885      5,045      5,210
    Fees for administration of State
     supplement:
      Treasury share..........................      -142       -142       -145       -146       -148       -149
      SSA share...............................      -124       -131       -128       -128       -129       -129
    Research and demonstration projects.......        44         46         27         26         27         27
  Payments to states for vocational                   52         67         71         76         81         84
   rehabilitation.............................
  Performance of non-disability                     -310       -990     -1,340     -1,440     -1,510     -1,590
   redeterminations...........................
State grants and demonstrations--health care:
  Ticket to work grant programs:
    Infrastructure grant program..............        15         17         17         20         20         32
    Demonstration to maintain independence and        28         21         21         22         22         10
     employment...............................
  High risk pools:
    Initial seed grants.......................         1   .........  .........  .........  .........  .........
    Operation of pools........................        22         40   .........  .........  .........  .........
  Emergency health services for undocumented          63        250        250        250        187   .........
   aliens.....................................
  Pilot program for national and state                 9          8          8   .........  .........  .........
   background checks..........................
  State pharmaceutical assistance programs....        62         63   .........  .........  .........  .........
----------------------------------------------------------------------------------------------------------------
* = $500,000 or less.
NA = Not available.
\1\ Medicare regulations reflect gross outlays.
\2\ Current law extends program through September 30, 2005.
\3\ Current law extends program through March 31, 2005.
\4\ Net mandatory outlays.
\5\ Not shown on table are anticipated collections from various state liabilities under current law.
\6\ Baseline estimates reflect costs absent the demonstration; demonstration estimate reflects costs of the
  demonstration. The differences represent the net impact of the demonstration.
\7\ Costs of this demonstration are offset annually by a reduction to inpatient hospital prospective payment
  rates.
\8\ Estimate for 2006 is currently unavailable.
\9\ Budget modified from original agreement for phase-out of waiver funding.
\10\ Beginning in 2006, Pharmacy Plus estimates may be affected by Part D.
\11\ Estimates reflect costs for SCHIP children under the State's Medicaid 1115.
\12\ For 2005 and 2006, the state will revert to Medicaid funds for this demonstration.


[[Page 399]]

        Current Services Receipts, Outlays, and Budget Authority

  Receipts.--Table 25-6 shows baseline receipts by major source. Total 
receipts are projected to increase by $125 billion from 2005 to 2006 and 
by $663 billion from 2006 to 2010, largely due to assumed increases in 
incomes resulting from both real economic growth and inflation.
  Individual income taxes are estimated to increase by $71 billion from 
2005 to 2006 under current law. This growth of 7.9 percent is primarily 
the effect of increased collections resulting from rising personal 
incomes. Individual income taxes are projected to grow at an annual rate 
of 9.0 percent between 2006 and 2010.
  Corporation income taxes under current law are estimated to decline by 
$4 billion or 1.6 percent between 2005 and 2006, in large part due to 
the timing and magnitude of tax changes provided in the 2003 jobs and 
growth tax cut. Corporation income taxes are projected to increase at an 
annual rate of 4.8 percent from 2006 to 2010, reflecting higher 
corporate profits.
  Social insurance and retirement receipts are estimated to increase by 
$45 billion between 2005 and 2006, and by an additional $198 billion 
between 2006 and 2010. The estimates reflect assumed increases in total 
wages and salaries paid, and scheduled increases in the social security 
taxable earnings base from $90,000 in 2005 to $111,300 in 2010.
  Excise taxes are estimated to increase by $9 billion from 2005 to 
2010, in large part due to increased economic activity. Other baseline 
receipts (estate and gift taxes, customs duties, and miscellaneous 
receipts) are projected to increase by $26 billion from 2005 to 2010.

                                     

                                    Table 25-6.  BASELINE RECEIPTS BY SOURCE
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                            Estimate
                                        2004   -----------------------------------------------------------------
                                       Actual      2005       2006       2007       2008       2009       2010
----------------------------------------------------------------------------------------------------------------
Individual income taxes............      809.0      893.9      964.8    1,070.0    1,170.5    1,252.1    1,361.5
Corporation income taxes...........      189.4      226.6      222.9      234.2      251.5      263.3      268.9
Social insurance and retirement          733.4      773.7      818.8      866.2      911.7      959.2    1,016.9
 receipts..........................
  On-budget........................      198.7      212.4      225.6      237.0      247.2      258.6      273.7
  Off-budget.......................      534.7      561.4      593.2      629.2      664.6      700.7      743.2
Excise taxes.......................       69.9       73.9       75.5       77.2       79.1       81.1       83.0
Other..............................       78.5       84.9       95.8       99.5      105.5      112.3      110.7
 
Total..............................    1,880.1    2,053.0    2,177.9    2,347.2    2,518.3    2,668.0    2,841.0
  On-budget........................    1,345.3    1,491.6    1,584.7    1,718.0    1,853.8    1,967.3    2,097.8
  Off-budget.......................      534.7      561.4      593.2      629.2      664.6      700.7      743.2
----------------------------------------------------------------------------------------------------------------


[[Page 400]]

  Outlays.--Current services outlays are estimated to grow from $2,443 
billion in 2005 to $2,539 billion in 2006, a 3.8 percent increase. 
Between 2005 and 2010, they are projected to increase at an average 
annual rate of 4.5 percent. Because the baseline assumes no spending for 
the war beyond what is already enacted, outlays for discretionary 
programs decline from $930 billion in 2005 to $914 billion in 2006. The 
assumed decline in spending for the war more than offsets increases to 
keep pace with inflation. Discretionary outlays increase each year from 
2006 through 2010, reflecting increases in resources to keep pace with 
inflation, reaching $986 billion in 2010. Entitlement and other 
mandatory programs are estimated to grow from $1,336 billion in 2005 to 
$1,416 billion in 2006, and to $1,752 billion in 2010, due in large part 
to changes in the number of beneficiaries and to automatic cost-of-
living adjustments and other adjustments for inflation. Social security 
outlays grow from $515 billion in 2005 to $666 billion in 2010, an 
average annual rate of 5.3 percent. Medicare and medicaid are projected 
to grow at annual average rates of 7.1 and 9.7 percent, respectively, 
outpacing inflation. Other areas of growth are federal employee 
retirement (average rate of 4.5 percent) and unemployment compensation 
(5.3 percent). Offsetting growth in other areas, after surging in 2005 
spending for farm programs is nearly halved between 2005 and 2010, 
reflecting anticipated changes in market supply and demand.
  Net interest payments to the public total $177 billion in 2005 and 
$209 billion in 2006. They rise each year reaching $310 billion in 2010. 
This pattern reflects increased borrowing requirements as well as 
changes in the mix of debt issuance and interest rates over the period.
  Tables 25-8 and 25-9 show current services outlays by function and by 
agency, respectively. A more detailed presentation of outlays (by 
function, subfunction, category, and program) appears on the CD-ROM that 
accompanies this volume.
  Budget authority.--Tables 25-10 and 25-11 show current services 
estimates of budget authority by function and by agency, respectively. A 
more detailed presentation of budget authority with program level 
estimates appears on the CD-ROM that accompanies this volume.

                                     

                                              Table 25-7.  CHANGE IN BASELINE OUTLAY ESTIMATES BY CATEGORY
                                                              (Dollar amounts In billions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Change 2005 to 2006   Change 2005 to 2010
                                                                                                            --------------------------------------------
                                                                               2005       2006       2010                                       Average
                                                                                                               Amount    Percent     Amount     Annual
                                                                                                                                                 Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays:
  Discretionary:
    DoD-Military..........................................................      443.1      416.7      453.0      -26.3      -5.9%        9.9        0.4%
    Homeland security.....................................................       30.2       33.1       36.0        3.0       9.9%        5.9        3.6%
    Other discretionary...................................................      456.8      464.3      497.0        7.5       1.6%       40.2        1.7%
                                                                           -----------------------------------------------------------------------------
  Subtotal, discretionary.................................................      930.0      914.2      986.0      -15.9      -1.7%       56.0        1.2%
  Mandatory:
    Farm programs.........................................................       25.2       21.0       12.5       -4.1     -16.5%      -12.6      -13.0%
    Medicaid..............................................................      188.3      192.6      265.4        4.3       2.3%       77.1        7.1%
    Medicare..............................................................      290.3      340.2      460.3       49.9      17.2%      170.0        9.7%
    Federal employee retirement
      and disability......................................................       94.1       98.9      117.4        4.8       5.1%       23.3        4.5%
    Unemployment compensation.............................................       35.4       37.0       45.8        1.6       4.4%       10.4        5.3%
    Other income security programs........................................      167.8      171.0      181.8        3.3       1.9%       14.1        1.6%
    Social Security.......................................................      515.1      540.1      665.5       25.0       4.9%      150.5        5.3%
    Other mandatory programs..............................................       78.0       81.7       84.0        3.7       4.8%        6.0        1.5%
    Credit subsidy reestimates............................................        6.7  .........  .........       -6.7         NA       -6.7          NA
    Undistributed offsetting receipts.....................................      -65.0      -66.8      -81.0       -1.8       2.8%      -16.0        4.5%
                                                                           -----------------------------------------------------------------------------
  Subtotal, mandatory.....................................................    1,335.9    1,415.7    1,751.9       79.8       6.0%      416.1        5.6%
  Net interest............................................................      177.5      209.3      309.8       31.8      17.9%      132.3       11.8%
                                                                           -----------------------------------------------------------------------------
Total outlays.............................................................    2,443.4    2,539.1    3,047.8       95.7       3.9%      604.4        4.5%
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 401]]

                                     

                                                    Table 25-8. CURRENT SERVICES OUTLAYS BY FUNCTION
                                                                (in billions of dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Estimate
                           Function                                2004    -----------------------------------------------------------------------------
                                                                 Actual         2005         2006         2007         2008         2009         2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
National defense:
  Department of Defense--Military............................       436.5        443.9        418.6        417.9        429.8        441.2        455.1
  Other......................................................        19.4         22.0         21.9         22.2         22.2         22.6         23.1
                                                              ------------------------------------------------------------------------------------------
  Total, National defense....................................       455.9        465.9        440.6        440.1        451.9        463.9        478.2
International affairs........................................        26.9         32.0         37.3         33.9         33.1         30.9         31.3
General science, space, and technology.......................        23.1         24.0         24.3         25.1         25.7         26.3         26.8
Energy.......................................................        -0.2          1.4          2.5          2.2          2.7          2.8          3.1
Natural resources and environment............................        30.7         31.0         32.8         34.0         34.6         35.7         36.7
Agriculture..................................................        15.4         30.5         26.8         24.3         21.6         19.7         19.3
Commerce and housing credit..................................         5.3         10.7          8.2          2.4          1.7          0.4         -0.2
  On-Budget..................................................        (9.4)       (11.7)        (7.3)        (6.0)        (6.0)        (4.7)        (4.5)
  Off-Budget.................................................       (-4.1)       (-1.0)        (1.0)       (-3.5)       (-4.3)       (-4.3)       (-4.8)
Transportation...............................................        64.6         68.6         72.3         73.1         74.2         75.8         77.6
Community and regional development...........................        15.8         20.1         19.4         18.1         16.9         15.5         15.3
Education, training, employment, and social services.........        87.9         95.7         86.8         91.7         92.9         94.6         96.7
Health.......................................................       240.1        257.3        266.0        280.6        301.2        323.3        346.9
Medicare.....................................................       269.4        295.4        344.8        385.6        410.8        437.2        464.9
Income security..............................................       332.8        350.9        360.5        365.9        379.2        388.7        400.9
Social security..............................................       495.5        519.7        544.7        571.4        600.7        635.0        670.8
  On-Budget..................................................       (14.3)       (16.4)       (16.1)       (17.7)       (20.5)       (21.4)       (23.2)
  Off-Budget.................................................      (481.2)      (503.3)      (528.6)      (553.7)      (580.2)      (613.6)      (647.7)
Veterans benefits and services...............................        59.8         68.2         69.0         69.6         75.6         78.8         82.3
Administration of justice....................................        45.5         40.7         42.7         42.9         43.8         46.1         47.6
General government...........................................        21.8         18.8         17.9         18.3         18.9         19.4         20.0
Net interest.................................................       160.2        177.5        209.3        242.1        269.0        290.7        309.8
  On-Budget..................................................      (246.5)      (269.5)      (307.4)      (348.8)      (386.0)      (419.4)      (451.2)
  Off-Budget.................................................      (-86.2)      (-92.0)      (-98.1)     (-106.7)     (-117.0)     (-128.7)     (-141.4)
Allowances...................................................  ...........  ...........  ...........         0.2          0.4          0.5          0.6
Undistributed offsetting receipts:
  Employer share, employee retirement (on-budget)............       -42.1        -48.1        -48.2        -50.3        -52.9        -55.5        -58.2
  Employer share, employee retirement (off-budget)...........       -11.3        -10.9        -11.4        -11.8        -12.5        -13.2        -13.9
  Rents and royalties on the Outer Continental Shelf.........        -5.1         -5.9         -7.1         -6.7         -6.8         -7.1         -7.3
  Sale of major assets.......................................  ...........  ...........  ...........        -0.3   ...........  ...........  ...........
  Other undistributed offsetting receipts....................  ...........        -0.1         -0.1         -2.3        -13.3        -12.4         -1.5
                                                              ------------------------------------------------------------------------------------------
  Total, Undistributed offsetting receipts...................       -58.5        -65.0        -66.8        -71.5        -85.4        -88.2        -81.0
    On-Budget................................................      (-47.2)      (-54.1)      (-55.5)      (-59.7)      (-72.9)      (-75.0)      (-67.1)
    Off-Budget...............................................      (-11.3)      (-10.9)      (-11.4)      (-11.8)      (-12.5)      (-13.2)      (-13.9)
                                                              ==========================================================================================
Total........................................................     2,292.2      2,443.4      2,539.1      2,650.1      2,769.6      2,896.8      3,047.8
                                                              ------------------------------------------------------------------------------------------
  On-Budget..................................................    (1,912.7)    (2,044.0)    (2,119.0)    (2,218.4)    (2,323.2)    (2,429.5)    (2,560.1)
  Off-Budget.................................................      (379.5)      (399.4)      (420.1)      (431.7)      (446.5)      (467.3)      (487.6)
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 402]]


                                                     Table 25-9. CURRENT SERVICES OUTLAYS BY AGENCY
                                                                (in billions of dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Estimate
                            Agency                                 2004    -----------------------------------------------------------------------------
                                                                 Actual         2005         2006         2007         2008         2009         2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Legislative Branch...........................................         3.9          4.1          4.1          4.1          4.2          4.4          4.5
Judicial Branch..............................................         5.4          5.7          5.8          6.0          6.2          6.4          6.6
Agriculture..................................................        71.8         94.9         96.4         94.0         92.8         91.9         93.7
Commerce.....................................................         5.8          6.3          6.6          6.9          7.0          7.2          7.4
Defense--Military............................................       437.1        444.1        418.7        417.9        429.8        441.2        455.1
Education....................................................        62.8         70.4         61.2         65.7         66.3         67.2         68.8
Energy.......................................................        20.0         22.2         22.6         23.1         23.7         24.2         24.7
Health and Human Services....................................       543.4        585.5        642.5        697.1        742.2        790.4        841.4
Homeland Security............................................        26.5         33.3         34.1         32.8         33.4         32.8         32.9
Housing and Urban Development................................        45.0         42.6         39.3         38.8         38.1         37.8         37.7
Interior.....................................................         8.9          9.4         10.2         10.9         10.8         11.2         11.6
Justice......................................................        29.0         21.2         23.5         23.7         24.0         25.6         26.4
Labor........................................................        56.7         50.0         51.7         53.8         56.4         59.4         62.2
State........................................................        10.9         11.9         13.3         14.1         14.0         13.6         13.6
Transportation...............................................        54.5         58.4         61.5         62.2         62.8         64.0         65.4
Treasury.....................................................       374.8        402.5        444.3        490.6        533.0        571.5        609.2
Veterans Affairs.............................................        59.6         68.0         68.9         69.5         75.5         78.7         82.2
Corps of Engineers--Civil Works..............................         4.8          4.9          4.9          4.9          4.9          5.1          5.3
Other Defense Civil Programs.................................        41.7         43.5         44.5         45.5         46.6         47.3         47.7
Environmental Protection Agency..............................         8.3          7.9          8.3          8.6          8.8          8.8          9.0
Executive Office of the President............................         3.3          5.8          7.2          1.9         -2.3         -3.9          0.4
General Services Administration..............................        -0.4          0.5          0.3          0.3          0.2          0.3          0.2
International Assistance Programs............................        13.7         14.8         16.6         16.6         16.5         16.9         17.3
National Aeronautics and Space Administration................        15.2         15.7         16.0         16.6         17.2         17.5         17.9
National Science Foundation..................................         5.1          5.6          5.6          5.7          5.8          6.0          6.0
Office of Personnel Management...............................        56.5         61.0         64.5         67.4         70.7         73.9         77.4
Small Business Administration................................         4.1          3.0          0.8          0.6          0.6          0.7          0.7
Social Security Administration...............................       530.2        559.0        583.5        608.6        642.6        677.5        715.8
  On-Budget..................................................       (49.0)       (55.8)       (54.9)       (54.9)       (62.4)       (63.9)       (68.2)
  Off-Budget.................................................      (481.2)      (503.3)      (528.6)      (553.7)      (580.2)      (613.6)      (647.7)
Other Independent Agencies...................................         5.9         19.7         20.6         15.0         14.8         14.8         14.8
  On-Budget..................................................       (10.0)       (20.7)       (19.6)       (18.5)       (19.0)       (19.1)       (19.6)
  Off-Budget.................................................       (-4.1)       (-1.0)        (1.0)       (-3.5)       (-4.3)       (-4.3)       (-4.8)
Allowances...................................................  ...........  ...........  ...........         0.2          0.4          0.5          0.6
Undistributed Offsetting Receipts............................      -212.5       -228.4       -238.3       -253.1       -277.2       -296.1       -309.1
  On-Budget..................................................     (-115.0)     (-125.5)     (-128.8)     (-134.6)     (-147.7)     (-154.1)     (-153.8)
  Off-Budget.................................................      (-97.6)     (-102.9)     (-109.5)     (-118.5)     (-129.5)     (-141.9)     (-155.3)
                                                              ==========================================================================================
Total........................................................     2,292.2      2,443.4      2,539.1      2,650.1      2,769.6      2,896.8      3,047.8
  On-Budget..................................................    (1,912.7)    (2,044.0)    (2,119.0)    (2,218.4)    (2,323.2)    (2,429.5)    (2,560.1)
  Off-Budget.................................................      (379.5)      (399.4)      (420.1)      (431.7)      (446.5)      (467.3)      (487.6)
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 403]]


                                               Table 25-10. CURRENT SERVICES BUDGET AUTHORITY BY FUNCTION
                                                                (in billions of dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Estimate
                           Function                                2004    -----------------------------------------------------------------------------
                                                                 Actual         2005         2006         2007         2008         2009         2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
National defense:
  Department of Defense--Military............................       471.0        402.0        412.9        424.5        436.7        449.1        462.0
  Other......................................................        19.6         21.6         21.8         22.0         22.4         22.8         23.3
                                                              ------------------------------------------------------------------------------------------
  Total, National defense....................................       490.6        423.6        434.6        446.5        459.0        471.9        485.2
International affairs........................................        45.2         25.8         28.2         30.4         31.3         32.2         33.0
General science, space, and technology.......................        23.4         24.4         24.8         25.4         26.1         26.6         27.2
Energy.......................................................         3.2          1.3          2.5          2.5          3.0          3.2          3.5
Natural resources and environment............................        32.7         32.2         32.5         34.0         34.7         36.1         37.3
Agriculture..................................................        32.7         29.1         26.6         24.1         21.3         19.4         19.0
Commerce and housing credit..................................        14.2         14.4         15.6         13.6         14.0         13.1         12.8
  On-Budget..................................................       (12.1)       (13.6)       (11.8)       (13.0)       (13.4)       (12.5)       (12.8)
  Off-Budget.................................................        (2.1)        (0.9)        (3.8)        (0.6)        (0.6)        (0.5)        (0.1)
Transportation...............................................        71.1         72.4         66.0         66.4         67.0         67.9         68.7
Community and regional development...........................        18.1         23.0         15.1         15.5         15.8         16.2         16.6
Education, training, employment, and social services.........        92.0         96.3         92.8         92.8         94.7         96.7         98.9
Health.......................................................       252.3        255.8        288.7        283.6        304.4        329.4        351.8
Medicare.....................................................       271.7        294.3        344.7        385.4        410.8        437.7        464.6
Income security..............................................       334.2        345.5        356.7        365.0        378.3        388.3        404.5
Social security..............................................       496.0        520.2        546.7        573.5        603.0        637.7        673.6
  On-Budget..................................................       (14.3)       (16.4)       (16.1)       (17.7)       (20.5)       (21.4)       (23.2)
  Off-Budget.................................................      (481.7)      (503.8)      (530.6)      (555.8)      (582.5)      (616.3)      (650.5)
Veterans benefits and services...............................        60.5         67.6         68.9         72.9         76.3         79.6         83.2
Administration of justice....................................        45.7         39.9         42.6         42.7         44.1         46.6         48.2
General government...........................................        23.2         18.1         18.6         18.9         19.6         20.3         21.0
Net interest.................................................       160.2        177.5        209.3        242.1        269.0        290.7        309.8
  On-Budget..................................................      (246.4)      (269.5)      (307.4)      (348.8)      (386.0)      (419.4)      (451.2)
  Off-Budget.................................................      (-86.2)      (-92.0)      (-98.1)     (-106.7)     (-117.0)     (-128.7)     (-141.4)
Allowances...................................................  ...........  ...........  ...........         1.2          1.2   ...........  ...........
Undistributed offsetting receipts:
  Employer share, employee retirement (on-budget)............       -42.1        -48.1        -48.2        -50.3        -52.9        -55.5        -58.2
  Employer share, employee retirement (off-budget)...........       -11.3        -10.9        -11.4        -11.8        -12.5        -13.2        -13.9
  Rents and royalties on the Outer Continental Shelf.........        -5.1         -5.9         -7.1         -6.7         -6.8         -7.1         -7.3
  Sale of major assets.......................................  ...........  ...........  ...........        -0.3   ...........  ...........  ...........
  Other undistributed offsetting receipts....................  ...........        -0.1         -0.1         -2.3        -13.3        -12.4         -1.5
                                                              ------------------------------------------------------------------------------------------
  Total, Undistributed offsetting receipts...................       -58.5        -65.0        -66.8        -71.5        -85.4        -88.2        -81.0
    On-Budget................................................      (-47.2)      (-54.1)      (-55.5)      (-59.7)      (-72.9)      (-75.0)      (-67.1)
    Off-Budget...............................................      (-11.3)      (-10.9)      (-11.4)      (-11.8)      (-12.5)      (-13.2)      (-13.9)
                                                              ==========================================================================================
Total........................................................     2,408.3      2,396.5      2,548.0      2,665.1      2,788.5      2,925.2      3,078.0
                                                              ------------------------------------------------------------------------------------------
  On-Budget..................................................    (2,022.1)    (1,994.7)    (2,123.1)    (2,227.2)    (2,335.0)    (2,450.3)    (2,582.8)
  Off-Budget.................................................      (386.2)      (401.8)      (424.9)      (437.9)      (453.6)      (474.9)      (495.2)
                                                              ------------------------------------------------------------------------------------------
                          MEMORANDUM
 
Discretionary budget authority:
  National defense...........................................       485.7        421.3        431.7        443.7        456.2        469.1        482.4
  International..............................................        49.3         29.6         30.2         30.9         31.6         32.4         33.2
  Domestic...................................................       372.6        384.5        384.7        396.4        407.6        419.2        430.5
                                                              ------------------------------------------------------------------------------------------
Total, discretionary.........................................       907.6        835.4        846.5        871.0        895.5        920.7        946.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 404]]


                                                Table 25-11. CURRENT SERVICES BUDGET AUTHORITY BY AGENCY
                                                                (in billions of dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Estimate
                            Agency                                 2004    -----------------------------------------------------------------------------
                                                                 Actual         2005         2006         2007         2008         2009         2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Legislative Branch...........................................         3.9          3.9          4.0          4.2          4.3          4.5          4.7
Judicial Branch..............................................         5.4          5.7          5.9          6.1          6.3          6.6          6.8
Agriculture..................................................        93.1         94.7         98.9         97.8         95.9         95.2         97.1
Commerce.....................................................         5.9          6.5          6.7          6.9          7.1          7.4          7.6
Defense--Military............................................       471.9        402.0        412.9        424.5        436.7        449.1        462.0
Education....................................................        67.2         70.9         66.9         66.4         67.7         69.1         70.6
Energy.......................................................        22.1         21.5         22.5         23.0         24.0         24.6         25.2
Health and Human Services....................................       556.7        581.6        662.3        698.7        744.4        793.3        847.2
Homeland Security............................................        32.5         38.3         30.1         30.8         31.8         35.0         33.8
Housing and Urban Development................................        35.1         35.5         35.4         35.9         36.6         37.5         38.4
Interior.....................................................        10.5          9.9         10.1         10.6         10.9         11.2         11.7
Justice......................................................        27.4         21.6         23.6         23.4         24.1         25.9         26.7
Labor........................................................        56.9         50.7         52.2         54.0         56.6         59.2         61.9
State........................................................        12.0         11.9         12.2         12.6         12.9         13.2         13.6
Transportation...............................................        60.5         61.7         55.4         55.2         55.5         55.9         56.3
Treasury.....................................................       375.9        403.7        445.7        491.8        534.1        572.9        610.6
Veterans Affairs.............................................        60.3         67.5         68.7         72.7         76.2         79.5         83.1
Corps of Engineers--Civil Works..............................         4.7          5.1          4.6          4.8          5.0          5.1          5.3
Other Defense Civil Programs.................................        41.8         43.6         44.6         45.7         46.7         47.5         47.9
Environmental Protection Agency..............................         8.4          8.0          8.2          8.4          8.6          8.9          9.1
Executive Office of the President............................        18.8          0.4          0.3         -1.1         -4.6         -3.9          0.4
General Services Administration..............................         0.1          0.3          0.3          0.3          0.3          0.3          0.4
International Assistance Programs............................        15.7         14.1         15.4         17.1         17.6         18.1         18.5
National Aeronautics and Space Administration................        15.4         16.2         16.4         16.9         17.4         17.7         18.1
National Science Foundation..................................         5.6          5.6          5.7          5.8          6.0          6.1          6.2
Office of Personnel Management...............................        59.9         63.9         67.4         70.4         73.9         77.5         81.2
Small Business Administration................................         4.2          3.3          0.7          0.6          0.7          0.7          0.7
Social Security Administration...............................       531.6        558.9        584.7        611.1        644.9        680.2        718.7
  On-Budget..................................................       (49.9)       (55.0)       (54.1)       (55.3)       (62.4)       (64.0)       (68.2)
  Off-Budget.................................................      (481.7)      (503.8)      (530.6)      (555.8)      (582.5)      (616.3)      (650.5)
Other Independent Agencies...................................        17.2         17.8         24.1         22.3         22.9         23.0         23.1
  On-Budget..................................................       (15.2)       (17.0)       (20.4)       (21.8)       (22.3)       (22.4)       (23.1)
  Off-Budget.................................................        (2.1)        (0.9)        (3.8)        (0.6)        (0.6)        (0.5)        (0.1)
Allowances...................................................  ...........  ...........  ...........         1.2          1.2   ...........  ...........
Undistributed Offsetting Receipts............................      -212.5       -228.4       -238.3       -253.1       -277.2       -296.1       -309.1
  On-Budget..................................................     (-115.0)     (-125.5)     (-128.8)     (-134.6)     (-147.7)     (-154.1)     (-153.8)
  Off-Budget.................................................      (-97.6)     (-102.9)     (-109.5)     (-118.5)     (-129.5)     (-141.9)     (-155.3)
                                                              ==========================================================================================
Total........................................................     2,408.3      2,396.5      2,548.0      2,665.1      2,788.5      2,925.2      3,078.0
  On-Budget..................................................    (2,022.1)    (1,994.7)    (2,123.1)    (2,227.2)    (2,335.0)    (2,450.3)    (2,582.8)
  Off-Budget.................................................      (386.2)      (401.8)      (424.9)      (437.9)      (453.6)      (474.9)      (495.2)
--------------------------------------------------------------------------------------------------------------------------------------------------------