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

    [[Page 203]]

                   14.   NATIONAL INCOME AND PRODUCT ACCOUNTS

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

                  Differences Between the NIPAs and the Budget

      Federal transactions in the NIPAs are measured according to NIPA
    accounting concepts in order to be compatible with the purposes of the
    NIPAs and other transactions recorded in the NIPAs. As a result they
    differ from the budget in netting and grossing, timing, and coverage.
    These differences cause current receipts and expenditures in the NIPAs
    to differ from total receipts and outlays in the budget, albeit by
    relatively small amounts.\2\ Differences in timing and coverage also
    cause the NIPA net Federal Government saving to differ from the budget
    surplus or deficit. Netting and grossing differences have equal effects
    on receipts and expenditures and thus have no effect on net Government
    saving. Besides these differences, the NIPAs combine transactions into
    different categories from those used in the budget.
    ---------------------------------------------------------------------------
      \2\ Over the period 1994-2006, NIPA current expenditures averaged 3.8
    percent higher than budget outlays, while NIPA current receipts averaged
    2.4 percent higher than budget receipts.
    ---------------------------------------------------------------------------
      Netting and grossing differences arise when the budget records certain
    transactions as offsets to outlays, while they are recorded as current
    receipts in the NIPAs (or vice versa). The budget treats all income that
    comes to the Government due to its sovereign powers--mainly, but not
    exclusively, taxes--as governmental receipts. The budget offsets against
    outlays any income that arises from voluntary business-type transactions
    with the public. The NIPAs often follow this concept as well, and income
    to Government revolving accounts (such as the Government Printing
    Office) is offset against their expenditures. However, the NIPAs have a
    narrower definition of ``business-type transactions'' than does the
    budget. Two classes of receipts, rents and royalties, and some
    regulatory or inspection fees, both of which are classified as offsets
    to outlays in the budget, are recorded in the NIPAs as Government
    receipts (income receipts on assets and current transfer receipts,
    respectively). The NIPAs include Medicare premiums as Government
    receipts, while the budget classifies them as business-type transactions
    (offsetting receipts). In addition, the NIPAs treat the net surplus of
    Government enterprises as a component of current receipts.
      In the budget, any intragovernmental income paid from one account to
    another is offset against outlays rather than being recorded as a
    receipt so that total outlays and receipts measure transactions with the
    public. Government contributions for Federal employee social insurance
    (such as Social Security) is an example: the budget offsets these
    payments against outlays. In contrast, the NIPAs treat the Federal
    Government like any other employer and show contributions for Federal
    employee social insurance as expenditures by the employing agencies and
    as governmental (rather than offsetting) receipts. The NIPAs also impute
    certain transactions that are not explicit in the budget. For example,
    unemployment benefits for Federal employees are financed by direct
    appropriations rather than social insurance contributions. The NIPAs
    impute social insurance contributions by employing agencies to finance

    [[Page 204]]

    these benefits--again, treating the Federal Government like any other
    employer.
       Timing differences for receipts occur because the NIPAs generally
    record personal taxes and social insurance contributions when they are
    paid and business taxes when they accrue, while the budget generally
    records all receipts when they are received. Thus the NIPAs attribute
    corporations' final settlement payments back to the quarter(s) in which
    the profits that gave rise to the tax liability occurred. The delay
    between accrual of liability and Treasury receipt of payment can result
    in significant timing differences between NIPA and budget measures of
    receipts for any given accounting period.
      Timing differences also occur for expenditures. When the first day of
    a month falls on a weekend or holiday, monthly benefit checks normally
    mailed on the first day of the month may be mailed out a day or two
    earlier; the budget then reflects two payments in one month and none the
    next. As a result, the budget totals occasionally reflect 13 monthly
    payments in one year and only 11 the next. NIPA expenditure figures
    always reflect 12 benefit payments per year, giving rise to a timing
    difference compared to the budget.
      Coverage differences also differentiate the budget and the NIPAs. A
    coverage difference arises on the expenditure side because of the NIPA
    treatment of Government investment. The budget includes outlays for
    Federal investments as they are paid, while the NIPA Federal current
    account instead excludes current investments but includes a depreciation
    charge on past investments (``consumption of general government fixed
    capital'') as part of ``current expenditures.'' The inclusion of
    depreciation on fixed capital (structures, equipment and software) in
    current expenditures is a proxy for the services that capital renders;
    i.e., for its contribution to Government output of public services.
      Certain items in the budget are excluded from the NIPA Federal current
    account because they are capital transfers that are related to the
    acquisition or sale of assets, and not related to current consumption or
    income. Examples include Federal investment grants to State and local
    governments, investment subsidies to business, lump sum payments to
    amortize the unfunded liability of the Uniformed Services Retiree Health
    Care Fund, and forgiveness of debt owed by foreign governments.
    Likewise, estate and gift taxes, included in budget receipts, are
    excluded from NIPA current receipts as being capital transfers. They
    also exclude the proceeds from the sales of nonproduced assets such as
    land. Bonuses paid on Outer Continental Shelf oil leases and proceeds
    from broadcast spectrum auctions are shown as offsetting receipts in the
    budget and are deducted from budget outlays. In the NIPAs these
    transactions are excluded from the Federal current account as an
    exchange of assets with no current production involved. Also unlike the
    budget, the NIPAs exclude transactions with U.S. territories.
      The treatment of Government pension plan income and outgo creates a
    coverage difference. Whereas the budget treats employee payments to
    these pension plans as governmental receipts, and employer contributions
    by agencies as offsets to outlays because they are intragovernmental,
    the NIPAs treat both of these components of employee compensation as
    personal income, in the same way as it treats contributions to pension
    plans in the private (household) sector. Likewise, the budget records a
    Government check to a retired Government employee as an outlay, but
    under NIPA concepts, no Government expenditure occurs at that time; the
    payment is treated (like private pension payments) as a transfer of
    income within the household sector.
      Financial transactions such as loan disbursements, loan repayments,
    loan asset sales, and loan guarantees are excluded from the NIPAs on the
    grounds that such transactions simply involve an exchange of assets
    rather than current production, income, or consumption. In contrast,
    under the Federal Credit Reform Act of 1990, the budget records the
    estimated subsidy cost of the direct loan or loan guarantee as an outlay
    when the loan is disbursed. The cash flows with the public are recorded
    in nonbudgetary accounts as a means of financing the budget rather than
    as budgetary transactions themselves. This treatment recognizes that
    part of a Federal direct loan is an exchange of assets with equal value
    but part is a subsidy to the borrower. It also recognizes the subsidy
    normally granted by loan guarantees. In the NIPAs, neither the subsidies
    nor the loan transactions are included. However, the NIPAs, like the
    budget, include all interest transactions with the public, including
    interest received by and paid to the loan financing accounts; and both
    the NIPAs and the budget include administrative costs of credit program
    operations.
      Deposit insurance outlays for resolving failed banks and thrift
    institutions are similarly excluded from the NIPAs on the grounds that
    there are no offsetting current income flows from these transactions. In
    1991, this exclusion was the largest difference between the NIPAs and
    the budget and made NIPA net Government saving a significantly smaller
    negative number than the budget deficit that year. In subsequent years,
    as assets acquired from failed financial institutions were sold, these
    collections tended to make the budget deficit a smaller negative figure
    than NIPA net Federal Government saving.

    [[Page 205]]

                                                        Table 14-1.  FEDERAL TRANSACTIONS IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS, 1997-2008
                                                                                        (In billions of dollars)
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Actual                                                           Estimate
                          Description                            -----------------------------------------------------------------------------------------------------------------------------------
                                                                     1997       1998       1999       2000       2001       2002       2003       2004       2005       2006       2007       2008
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                          CURRENT RECEIPTS

    Current tax receipts........................................    1010.2     1105.9     1165.2     1305.6     1266.9     1089.7     1065.9     1118.9     1323.9     1527.2     1639.9     1708.9
      Personal current taxes....................................     729.0      814.1      868.5      987.4      993.8      851.1      781.7      787.2      909.0     1028.6     1151.6     1231.6
      Taxes on production and imports...........................      77.2       80.7       82.5       87.8       86.4       86.4       89.1       93.1       99.7      106.0      102.5      108.1
      Taxes on corporate income.................................     198.9      205.9      207.9      223.5      179.5      144.7      186.8      229.4      304.3      381.6      374.5      357.8
      Taxes from the rest of the world..........................       5.1        5.2        6.2        6.8        7.1        7.4        8.3        9.2       11.0       11.0       11.3       11.3
    Contributions for government social insurance...............     565.5      604.4      642.2      687.8      713.8      729.6      749.9      788.0      849.9      890.1      944.6      995.6
    Income receipts on assets...................................      26.7       22.3       20.9       24.3       26.4       21.3       21.4       22.4       23.7       24.8       25.0       26.2
    Current transfer receipts...................................      23.8       21.0       21.8       24.9       26.5       25.5       24.7       26.9        6.4       35.1       33.3       38.2
    Current surplus of government enterprises...................       0.2        0.0        0.3       -1.3       -6.5       -1.1        2.5        0.2       -5.3       -3.6       -2.0       -1.6
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total current receipts................................    1626.4     1753.5     1850.3     2041.2     2027.1     1865.0     1864.4     1956.4     2198.6     2473.6     2640.9     2767.4
                                                                 ===================================================================================================================================
                        CURRENT EXPENDITURES

    Consumption expenditures....................................     454.6      452.9      469.5      496.0      519.7      575.5      648.0      707.2      758.0      803.3      865.7      906.9
      Defense...................................................     304.4      301.3      307.2      321.2      335.7      368.4      424.5      470.9      508.8      532.8      579.1      617.2
      Nondefense................................................     150.2      151.6      162.3      174.8      184.0      207.1      223.5      236.3      249.2      270.5      286.6      289.7
    Current transfer payments...................................     908.2      940.3      976.4     1023.2     1108.0     1216.6     1308.9     1379.6     1462.5     1543.1     1655.1     1721.1
      Government social benefits................................     700.0      716.4      733.0      762.7      823.6      900.9      956.3     1007.4     1072.0     1151.4     1244.9     1306.1
      Grants-in-aid to State and local governments..............     194.1      209.9      227.7      244.1      268.2      296.7      329.3      347.6      359.5      361.4      373.9      377.2
      Other transfers to the rest of the world..................      14.2       14.0       15.7       16.4       16.3       19.0       23.2       24.5       31.0       30.4       36.4       37.8
    Interest payments...........................................     299.4      299.7      285.9      283.3      267.9      234.9      214.6      216.6      242.3      286.7      306.2      331.9
    Subsidies...................................................      31.3       33.6       36.1       49.6       53.7       37.9       46.1       43.5       53.6       54.4       47.3       46.3
    Wage disbursements less accruals............................  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........  .........
                                                                 -----------------------------------------------------------------------------------------------------------------------------------

          Total current expenditures............................    1693.5     1726.5     1767.9     1852.0     1949.3     2064.9     2217.6     2346.9     2516.3     2687.5     2874.3     3006.2
                                                                 ===================================================================================================================================
          Net Federal Government saving.........................     -67.1       27.0       82.4      189.2       77.8     -199.9     -353.2     -390.5     -317.7     -213.9     -233.4     -238.9

              ADDENDUM: TOTAL RECEIPTS AND EXPENDITURES

    Current receipts............................................    1626.4     1753.5     1850.3     2041.2     2027.1     1865.0     1864.4     1956.4     2198.6     2473.6     2640.9     2767.4
    Capital transfer receipts...................................      19.7       23.9       27.6       28.8       28.2       26.4       21.7       24.7       24.5       27.7       25.0       25.5
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total receipts........................................    1646.1     1777.4     1877.9     2070.1     2055.3     1891.3     1886.1     1981.1     2223.1     2501.3     2666.0     2792.8

    Current expenditures........................................    1693.5     1726.5     1767.9     1852.0     1949.3     2064.9     2217.6     2346.9     2516.3     2687.5     2874.3     3006.2
    Net investment:
      Gross government investment:
        Defense.................................................      44.5       45.4       46.5       48.5       49.9       54.5       59.0       65.0       71.7       76.9       86.7       79.1
        Nondefense..............................................      28.5       29.7       31.9       32.2       30.3       32.6       33.3       33.4       36.0       37.0       38.0       40.0
      Less: Consumption of fixed capital:
        Defense.................................................      60.6       59.8       59.7       60.2       60.3       60.4       61.4       63.4       67.2       70.8       74.2       77.2
        Nondefense..............................................      21.8       22.9       24.5       26.5       27.7       28.2       28.7       29.3       30.7       32.5       32.4       33.5
    Capital transfer payments...................................      29.0       28.2       31.3       39.3       39.8       44.3       62.0       62.9       66.0       69.4       77.8       77.4
    Net purchases of nonproduced assets.........................     -11.0       -5.3       -1.7       -0.3       -0.9        0.3        0.1        0.1       -0.9        0.0      -13.7      -13.3
                                                                 -----------------------------------------------------------------------------------------------------------------------------------
          Total expenditures....................................    1702.3     1741.8     1791.8     1885.1     1980.3     2108.0     2281.9     2415.6     2591.2     2767.6     2956.5     3079.0
                                                                 ===================================================================================================================================
          Net lending or net borrowing (-)......................     -56.2       35.7       86.1      185.0       75.0     -216.7     -395.8     -434.5     -368.1     -266.2     -290.6    -286.1
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    $50 million or less.

                         Federal Sector Current Receipts

      Table 14-1 shows Federal current receipts in the five major categories
    and four of the subcategories used in the NIPAs, which are similar to
    the budget categories but with significant differences.
      Current tax receipts is the largest category of current receipts, and
    its personal current taxes subcategory--composed primarily of the
    individual income tax--is the largest single subcategory. The NIPAs'
    taxes on corporate income subcategory differs in classification from the
    corresponding budget category primarily because the NIPAs include the
    deposit of earnings of the Federal Reserve System as corporate income
    taxes, while the budget treats these collections as miscellaneous
    receipts. (The timing difference between the NIPAs and the budget is
    especially large for corporate receipts.) The taxes on production and
    imports subcategory is composed of excise taxes and customs duties.

    [[Page 206]]

      Contributions for Government social insurance is the second largest
    category of current receipts. It differs from the corresponding budget
    category primarily because: (1) the NIPAs include Federal employer
    contributions for social insurance as a governmental receipt, while the
    budget offsets these contributions against outlays as undistributed
    offsetting receipts; (2) the NIPAs include premiums for Parts B and D of
    Medicare as governmental receipts, while the budget nets them against
    outlays; (3) the NIPAs treat Government employee contributions to their
    pension plans as a transfer of personal income within the household
    sector (as if the pension system were private), while the budget
    includes them in governmental receipts; and (4) the NIPAs impute
    employer contributions for Federal employees' unemployment insurance and
    workers' compensation.
      The income receipts on assets category consists mainly of interest
    payments received on Government direct loans (such as student loans) and
    rents and royalties on Outer Continental Shelf oil leases. The current
    transfer receipts category consists primarily of deposit insurance
    premiums, fees, fines and other receipts from both individuals and
    businesses, less insurance settlements from the National Flood Insurance
    Program--virtually all of which are netted against outlays in the
    budget. The current surplus (or deficit) of Government enterprises
    category is the profit or loss of ``Government enterprises,'' such as
    the Postal Service, which are business-type operations of Government
    that usually appear in the budget as public enterprise revolving funds.
    Depreciation (consumption of enterprise fixed capital) is netted in
    calculating the current surplus of Government enterprises.

                       Federal Sector Current Expenditures

      Table 14-1 shows current expenditures in five major NIPA categories
    and five subcategories, which are also very different from the budget
    categories.
      Government consumption expenditures are the goods and services
    purchased by the Federal Government in the current account, including
    compensation of employees and depreciation. Gross investment (shown
    among the addendum items in Table 14-1) is thus excluded from current
    expenditures in computing net Government saving on a NIPA basis, whereas
    depreciation--charges on federally-owned fixed capital--(``consumption
    of general government fixed capital'') is included. The NIPAs treat
    State and local investment and capital consumption in the same way--
    regardless of the extent to which it is financed with Federal aid
    (capital transfer payments) or from State and local own-source receipts.
      Although gross investment is not included in Government current
    expenditures, both Government gross investment and current consumption
    expenditures (including depreciation) are included in total GDP, which
    makes the treatment of the government sector in the NIPAs similar to
    that of the private sector. Investment includes structures, equipment,
    and computer software.
      Current transfer payments is the largest expenditure category.
    Transfer payments for Government social benefits consist mainly of
    income security and health programs, such as Social Security and
    Medicare paid to U.S. residents--and to retirees living outside the
    United States. Payment of pension benefits to former Government
    employees is not included, as explained previously. Grants-in-aid to
    State and local governments help finance a range of programs, including
    income security, Medicaid, and education (but capital transfer payments
    for construction of highways, airports, waste-water treatment plants,
    and mass transit are excluded). ``Current transfer payments to the rest
    of the world (net)'' consists mainly of grants to foreign governments.
      Interest payments is the interest paid by the Government on its debt
    (excluding debt held by trust funds, other than Federal employee pension
    plans; and other Government accounts). Where the budget nets interest
    received on loans against outlays, the NIPAs treat it as current
    receipts.
      Subsidies consist of subsidy payments for resident businesses
    (excluding subsidies for investment). NIPA subsidies do not include the
    imputed credit subsidies estimated as budget outlays under credit
    reform. Rather, as explained previously loans and guarantees are
    categorized as financial transactions and are excluded from the NIPAs
    except for associated interest and fees.
      Wage disbursements less accruals is an adjustment that is necessary to
    the extent that the wages paid in a period differ from the amount earned
    in the period.

                                                                  Table 14-2.  RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR, NIPA's
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Actual                                                           Estimate
                          Description                            -----------------------------------------------------------------------------------------------------------------------------------
                                                                     1997       1998       1999       2000       2001       2002       2003       2004       2005       2006       2007       2008
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                              RECEIPTS

    Budget receipts.............................................    1579.4     1722.0     1827.6     2025.5     1991.4     1853.4     1782.5     1880.3     2153.9     2407.3     2540.1     2662.5
      Contributions to government employee retirement plans.....      -4.4       -4.3       -4.5       -4.8       -4.7       -4.6       -4.6       -4.6       -4.5       -4.4       -4.7       -4.7
      Capital transfers received................................     -19.7      -23.9      -27.6      -28.8      -28.2      -26.3      -21.7      -24.7      -24.5      -27.7      -25.0      -25.5
      Other coverage differences................................      -3.9       -5.8       -7.0       -8.0       -7.9       -8.9       -9.0      -10.1      -11.0      -12.2      -12.4      -13.1
      Netting and grossing......................................      69.5       64.5       65.7       70.6       69.9       77.0       85.1       88.4       70.7      112.7      121.7      133.7
      Timing differences........................................       5.5        1.1       -3.9      -13.2        6.7      -25.6       32.1       27.1       14.0       -2.0       21.2       14.4

        NIPA current receipts...................................    1626.4     1753.5     1850.3     2041.2     2027.1     1865.0     1864.4     1956.4     2198.6     2473.6     2640.9     2767.4
                                                                 ===================================================================================================================================
                            EXPENDITURES

    Budget outlays..............................................    1601.3     1652.7     1702.0     1789.2     1863.2     2011.2     2160.1     2293.0     2472.2     2655.4     2784.3     2901.9
      Government employee retirement plan transactions..........      31.6       31.3       32.1       31.7       31.5       33.7       33.1       33.5       39.4       42.4       44.4       47.4
      Deposit insurance and other financial transactions........      -6.4       -7.1       -6.1       -9.0       -6.2       -6.7        2.1       -0.8       -0.8       -9.1      -19.2      -25.2
      Capital transfer payments.................................     -28.9      -28.2      -31.3      -35.1      -39.8      -44.1      -45.4      -46.4      -47.7      -51.2      -53.9      -55.8
      Net purchases of nonproduced assets.......................      11.0        5.3        1.7        0.3        0.9       -0.3       -0.1       -0.1        0.7        0.0       13.7       13.3
      Net investment............................................       9.3        7.6        5.7        6.0        7.9        1.4       -2.3       -5.7       -9.8      -10.6      -18.1       -8.5
      Other coverage differences................................      11.4        1.0        2.7        4.0        7.9       -0.6      -13.5      -20.2      -25.1      -38.1       -7.5       -1.1
      Netting and grossing differences..........................      69.5       64.5       65.7       70.6       69.9       77.0       85.1       88.4       70.7      112.7      121.7      133.7
      Timing differences........................................      -5.4       -0.7       -4.7       -5.6       14.3       -6.7       -1.6        5.1       16.6      -14.0        8.9        0.7

        NIPA current expenditures...............................    1693.5     1726.5     1767.8     1852.0     1949.3     2064.9     2217.6     2346.9     2516.3     2687.5     2874.3     3006.2

                              ADDENDUM

      Budget surplus or deficit (-).............................     -21.9       69.3      125.6      236.2      128.2     -157.8     -377.6     -412.7     -318.3     -248.2     -244.2     -239.4
      NIPA net Federal Government saving........................     -67.1       27.0       82.4      189.2       77.8     -199.9     -353.2     -390.5     -317.7     -213.9     -233.4     -238.9
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    * $50 million or less.

                          Differences in the Estimates

      Since the introduction of the unified budget in January 1968, NIPA
    current receipts have been greater than budget receipts in most years.
    This is due principally to grossing differences and the fact that estate
    and gift taxes, which the NIPAs exclude as capital transfers, roughly
    matched Medicare premiums, which the NIPAs include as a governmental
    receipt but the budget treats as an offsetting receipt. (In the budget,
    offsetting receipts are netted against the outlay total and not included
    in the governmental receipts total.) Since 1986, NIPA current
    expenditures have usually been higher than budget outlays (from which
    the Medicare premiums and employer retirement contributions are netted
    out as offsetting receipts), despite the omission from NIPA expenditures
    of capital transfer grants and pension benefit payments to former
    Government employees.
      Two components of budget outlays, however, are sometimes sufficiently
    large in combination to exceed the netting and grossing adjustments.
    These are financial transactions and net investment (the difference
    between gross investment and depreciation). Large outlays associated
    with resolving the failed savings and loan associations and banks in
    1990 and 1991 caused those year's budget outlays to exceed NIPA current
    expenditures. With the change in budgetary treatment of direct loans in
    1992 under credit reform, one type

    [[Page 207]]

    of financial transaction--direct loans to the public--has been recorded
    in the budget in a way that is closer to the NIPA treatment.
    Disbursement and repayment of loans made since that time are recorded
    outside the budget as in the Federal sector of the NIPAs, although,
    unlike the NIPAs, credit subsidies are recorded as budget outlays.
      During the period 1975-1992, the budget deficit was a larger negative
    number than net Federal Government saving as measured in the NIPAs every
    year. The largest difference, $78.8 billion, occurred in 1991 as a
    result of resolving failed financial institutions as discussed above;
    the budget deficit was then -$269.2 billion, while the NIPA net
    Government saving was -$190.5 billion. In 1993-2002, the NIPA net
    Federal Government saving was a larger negative number than the budget
    deficit or lower positive number than the budget surplus each year. For
    2003-2008, however, the NIPA net Federal Government saving was, or is
    estimated to be, a smaller negative number than the budget deficit.
      Table 14-1 displays Federal transactions using NIPA concepts with
    actual data for 1997-2006 and estimates for 2007 and 2008 consistent
    with the Administration's budget proposals. Table 14-2 summarizes the
    reasons for differences between the data. Annual NIPA data for 1948-2008
    are published in Section 14 of a separate budget volume, Historical
    Tables, Budget of the U.S. Government, Fiscal Year 2008.
      Detailed estimates of NIPA current receipts and expenditures
    consistent with the budget and including quarterly estimates will be
    published in a forthcoming issue of the Department of Commerce
    publication, Survey of Current Business and on the Bureau of Economic
    Analysis website at www.bea.doc.gov/bea/pubs.htm.