Budget Trends: Federal Investment Outlays, Fiscal Years 1981-2003 (Letter
Report, 06/15/98, GAO/AIMD-98-184).
Pursuant to a congressional request, GAO updated its 1997 report on
federal investment trends.
GAO noted that: (1) the annual levels of investment spending for the
period 1998 through 2002 in the President's 1999 budget is estimated to
range from slightly more than $2 billion to almost $11 billion higher
each year than the levels estimated in the President's 1998 budget for
the same period; (2) only one budget function--energy--has lower
estimates for 1998 through 2002 than in the 1998 budget; (3) the share
of total federal budget outlays and of gross domestic product (GDP)
devoted to investment declined slightly from the early 1980s through
1997; (4) according to the administration's policy estimates contained
in the President's 1999 budget, investment's share of both outlays and
GDP will increase slightly from 1998 through 2000 and then fall slightly
through 2003; (5) these new estimates represent a change from the 1998
budget estimates which showed a continuing gradual decline from 1998
through 2002; (6) when investment outlays are converted to constant 1992
dollars, roughly the same picture emerges over this time period; (7)
investment spending in estimated constant dollar outlays generally
increased from the mid-1980s through 1995 before dropping in 1996 and
1997; (8) in the 1999 budget, investment spending is projected to
increase from 1998 through 2000 and then gradually decrease through
2003; (9) after dropping from 1981 to 1983, physical capital remained
relatively stable through 1995, with slight declines in 1996 and 1997;
(10) the 1999 budget estimates for fiscal years 1998 through 2003 show a
relatively stable level--around $33 billion to $34 billion each year;
(11) this is a higher level than the 1998 budget estimates, which showed
a steady decline from 1998 through 2002; (12) the research and
development category had relatively steady increases from the mid-1980s
through 1997 and estimates for 1998 through 2003 continue to increase;
(13) this is a change from the estimates for 1998 through 2002 made in
the 1998 budget which had shown modest decreases after 1998; (14) the
pattern of investment from 1981 through 2003 in constant dollars varies
across budget functions; (15) seven functions contain about 95 percent
of investment outlays; (16) four of those functions, Education and
Training, Transportation, Health, and General Science, Space, and
Technology show general increases over this period; (17) the National
Defense function shows several fluctuations but remains relatively flat
overall; and (18) the Natural Resources and Environment and Energy
functions shows a continued downward trend from the 1980s through 2003.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-98-184
TITLE: Budget Trends: Federal Investment Outlays, Fiscal Years
1981-2003
DATE: 06/15/98
SUBJECT: Future budget projections
Economic growth
Fiscal policies
Macroeconomic analysis
Investments
Budget deficit
Presidential budgets
Budget functions
Budget outlays
Deficit reduction
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Report to Congressional Requesters
June 1998
BUDGET TRENDS - FEDERAL INVESTMENT
OUTLAYS, FISCAL YEARS 1981-2003
GAO/AIMD-98-184
Federal Investment Trends
(935265)
Abbreviations
=============================================================== ABBREV
GDP - gross domestic product
NASA - National Aeronautics and Space Administration
OMB - Office of Management and Budget
R&D - research and development
Letter
=============================================================== LETTER
B-279819
June 15, 1998
The Honorable Frank R. Lautenberg
Ranking Democratic Member
Committee on the Budget
United States Senate
The Honorable George E. Brown, Jr.
Ranking Democratic Member
Committee on Science
House of Representatives
This report is in response to your request that we update our 1997
report\1 on investment trends. It includes new estimates for 1998
through 2003 contained in the President's 1999 budget and per
conversation with your staff recalculates the investment component
for Department of Defense research and development (R&D).
Concerns still abound about levels of federal and
domestically-financed investment and national saving. Reductions in
the federal government's deficit or increases in the surplus help
increase national saving and expand domestic capital available for
private investment. At the same time, however, reducing the deficit
places constraints on the government's discretionary spending which
finances most federal investment. The constraints on discretionary
spending have again tightened with the enactment of the Balanced
Budget Act of 1997. Recent congressional initiatives have sought to
promote long-term private sector economic growth by increasing
federal investment. The National Research Investment Act of 1998 (S.
1305), a bipartisan bill, would almost double total R&D funding
between 1999 and 2008 at 12 selected agencies. In addition, the
President's budget for fiscal year 1999 proposed three new investment
funds: (1) the Research Fund for America, which includes a broad
range of investment in knowledge, (2) the Environmental Resources
Fund, which includes several environmental programs identified by the
President as investment programs, and (3) the Transportation Fund for
America, which includes highway and airport programs. You have both
expressed interest in the future of spending for investment and
indicated that better information on recent investment trends would
help decision-making.
--------------------
\1 Budget Trends: Federal Investment Outlays, Fiscal Years 1981-2002
(GAO/AIMD-97-88, May 21, 1997).
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The annual levels of investment spending for the period 1998 through
2002 in the President's 1999 budget (in constant dollars)\2 is
estimated to range from slightly more than $2 billion to almost $11
billion higher each year than the levels estimated in the President's
1998 budget for the same period. Only one budget function\3
--energy--has lower estimates for 1998 through 2002 than in the 1998
budget.\4
The share of total federal budget outlays and of gross domestic
product (GDP) devoted to investment\5 declined slightly from the
early 1980s through 1997. According to the administration's policy
estimates contained in the President's 1999 budget, investment's
share of both outlays and GDP will increase slightly from 1998
through 2000 and then fall slightly through 2003. These new
estimates represent a change from the 1998 budget estimates which
showed a continuing gradual decline from 1998 through 2002. When
investment outlays are converted to constant 1992 dollars, roughly
the same picture emerges over this time period. Investment spending
in estimated constant dollar outlays generally increased from the
mid-1980s through 1995 before dropping in 1996 and 1997. In the 1999
budget, investment spending is projected to increase from 1998
through 2000 and then gradually decrease through 2003. The 1998
budget estimates for 1998 through 2002 had shown a similar trend but
at a slightly lower level.
Investment by category (character class\6 ) in constant dollars shows
varying patterns. After dropping from 1981 to 1983, physical capital
remained relatively stable through 1995, with slight declines in 1996
and 1997. The 1999 budget estimates for fiscal years 1998 through
2003 show a relatively stable level--around $33 billion to $34
billion each year. This is a higher level than the 1998 budget
estimates, which showed a steady decline from 1998 through 2002. The
R&D category had relatively steady increases from the mid-1980s
through 1997 and estimates for 1998 through 2003 continue to
increase. This is a change from the estimates for 1998 through 2002
made in the 1998 budget which had shown modest decreases after 1998.
Likewise, after dropping from 1981 through 1984, education and
training has shown a relatively steady increase that is projected in
the 1999 budget to continue through 2000 before dropping off slightly
thereafter. The 1998 budget estimates showed a similar pattern for
1998 through 2002 at a slightly lower level of outlays.
The pattern of investment from 1981 through 2003 in constant dollars
varies across budget functions. Seven functions contain about 95
percent of investment outlays. Four of those functions, Education
and Training (500), Transportation (400), Health (550), and General
Science, Space, and Technology (250) show general increases over this
period. The National Defense (050) function shows several
fluctuations but remains relatively flat overall. Investment
spending in the Natural Resources and Environment (300) and Energy
(270) functions shows a continued downward trend from the 1980s
through 2003.
--------------------
\2 Constant dollars are dollar values adjusted for changes in the
average price level. They represent the values that would exist if
prices had remained at the same average level as the base period.
\3 The functional classification is a system of classifying budget
resources to the national needs being addressed, such as defense and
health. Each budget account is generally placed in the budget
function that best reflects its major purpose. Functions may be
divided into subfunctions depending on the complexity of national
need being addressed.
\4 The total level of investment reported in this report is lower
than that reported in our 1997 report. This is because of a revision
in the composition of investment, principally the substitution of
Defense applied R&D for developmental R&D. This substitution did not
significantly alter the trend data presented.
\5 We define investment as federal spending, either direct or through
grants, specifically intended to enhance the private sector's
long-term productivity.
\6 Character classification is used to report investment activities
separately from noninvestment in the President's budget submission.
Data are classified as investment by agencies when they finance
activities yielding benefits largely in the future, such as physical
assets, research and development, and education and training.
Character classification also distinguishes between grants to state
and local governments and direct federal programs.
BACKGROUND
------------------------------------------------------------ Letter :2
We previously reported\7 that the current budget structure does not
highlight, for decision-making purposes, the differences between
spending for long-term investment and current consumption because it
treats all expenditures the same. Nor does the current budget
process encourage the Congress to make explicit decisions about how
much spending overall should be devoted to programs having a direct
bearing on long-term growth and productivity.
In our 1993 report, we suggested that establishing investment targets
within a framework similar to that contained in the Budget
Enforcement Act is the most promising way to incorporate an
investment component into budget decision-making. In that report we
concluded that the most appropriate definition of investment would
include only that federal spending, either direct or through grants,
which is specifically intended to enhance the private sector's
long-term productivity. This definition includes spending on (1)
some intangible activities, such as R&D, (2) human capital designed
to increase worker productivity, particularly education and training,
and (3) physical assets to improve infrastructure, such as highways,
bridges, and air traffic control systems.
This definition would not include spending for physical capital
designed to achieve federal agency programmatic goals or improve the
government's operating efficiency--such as spending for federal land,
office buildings, and defense weapons systems--because such spending
does not directly enhance productivity in the private sector. Some
budget functions and subfunctions--such as international affairs,
recreational resources, and law enforcement and justice--have been
excluded from this analysis because we believe the bulk of spending
in these subfunctions does not directly enhance productivity. This
definition of investment was also used in our November 1993 report on
incorporating an investment component in the federal budget and in
our 1997 report on trends in federal investment outlays.\8
--------------------
\7 GAO/AIMD-97-88, May 21, 1997, and Budget Issues: Incorporating an
Investment Component in the Federal Budget (GAO/AIMD-94-40, November
9, 1993).
\8 GAO/AIMD-94-40, November 9, 1993, and GAO/AIMD-97-88, May 21,
1997.
OBJECTIVE, SCOPE, AND
METHODOLOGY
------------------------------------------------------------ Letter :3
The objective of this assignment was to update the data we provided
last year on the trend in the federal budget's actual and future
estimated investment outlays. This report includes actual investment
outlays for fiscal years 1981 through 1997 and estimates contained in
the President's 1999 budget for fiscal years 1998 through 2003. As
agreed with your offices, the analysis was done on a macro basis,
using aggregate data by investment category and budget function and
subfunction. We did not analyze data at either the agency or account
level.
Also, as agreed with your offices, we reexamined the items to be
included in the definition of investment, specifically related to
Defense R&D. We discussed different categories of Defense R&D with
Office of Management and Budget (OMB) and Congressional Research
Service staff. As a result, we changed the categories of Defense R&D
included as investment spending from what was included in last year's
report to more accurately reflect what we believe to promote private
sector economic growth. We now include the categories of basic and
applied research rather than basic and developmental research as in
last year's analysis. This adjustment lowers the amount attributed
to total investment, Defense investment, and R&D, but does not
significantly alter the overall trend data. In order to make
comparisons between the 1998 and 1999 budget estimates, we recast the
1998 data using our revised categories for Defense R&D.
Outlay data used for this analysis were extracted from the automated
information system that OMB used to prepare the President's annual
budget request. We traced totals to published budget documents but
did not independently verify this information. Reported actual
outlay data (including offsetting collections but excluding
offsetting receipts) for fiscal years 1981 through 1997 were used for
both investment and total federal outlays; the President's estimates
for his policy as shown in the 1999 budget were used for fiscal years
1998 through 2003. Annual GDP numbers and GDP implicit price
deflators used in calculating constant dollar values for investment
for fiscal years 1981 through 2003 were obtained from the Historical
Tables accompanying the President's 1999 budget.
Our work was done from March 1998 through May 1998 in accordance with
generally accepted government auditing standards.
OVERALL INVESTMENT TRENDS
------------------------------------------------------------ Letter :4
The President's policy estimates of what we have categorized as
investment spending for fiscal year 1999 amount to $126.7 billion,
which is 6.1 percent of total outlays and 1.5 percent of GDP. Actual
total federal outlays for investment as a share of total outlays
decreased from a high of 8.8 percent in 1981 to 6 percent in 1997.
While investment rose in some years, the overall trend after 1982 was
relatively flat, as shown in figure 1. Investment outlays for fiscal
years 1998 to 2003 are projected to rise from 6 percent to 6.2
percent in 2000 and then decline to 5.9 percent in 2003. The
estimates for 1998 through 2002 using the 1999 budget estimates are
higher than those for the corresponding period contained in the 1998
budget both in dollars and as a percent of total outlays.
Figure 1: Investment as a
Percent of Total Outlays,
Fiscal Years 1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
The share of total outlays categorized as investment may be
influenced as much by increases in noninvestment outlays as by
investment outlays themselves. Accordingly, to offer assurance that
the investment trend line was not a function of the level of overall
federal outlays, we analyzed the outlays' share of GDP. As shown in
figure 2, we found that actual investment outlays as a percent of GDP
followed the same pattern as investment outlays as a percent of total
federal outlays. From a high of 2.3 percent of GDP in 1981,
investment outlays fell to 1.5 percent of GDP in 1997. While the
decline was not steady from year to year, the overall trend was
downward. Estimates in the President's 1999 budget rise from 1.4
percent of GDP in 1998 to 1.5 percent in 2000 and then decline to 1.4
percent by 2003. As figure 2 shows, these estimates for the 1998
through 2002 period are higher in all years than the corresponding
estimates from the 1998 budget.
Figure 2: Investment as a
Percent of Gross Domestic
Product, Fiscal Years 1981
Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
Figure 3 shows nondefense outlays\9 for investment as a share of
total outlays. Nondefense outlays dropped from 8.5 percent of total
outlays in 1981 to a low of 5.3 percent in 1990, then rose to 6.3
percent in 1995 and fell to 5.8 percent in 1997. Estimates in the
1999 budget rise slightly to 5.9 percent in 2000 and decline to 5.6
percent in 2003.
Figure 3: Nondefense
Investment as a Percent of
Total Outlays, Fiscal Years
1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
As shown in figure 4, nondefense outlays as a percent of GDP show a
similar pattern. As in the case of total outlays, the 1999 budget
plans to dedicate a higher percentage of total outlays to nondefense
investment from 1998 through 2002 than did the 1998 budget.
Figure 4: Nondefense
Investment as a Percent of
Gross Domestic Product, Fiscal
Years 1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
The spending pattern is different when analyzed in terms of constant
dollars. As shown in figure 5, in constant dollars, investment
spending dropped from $105 billion in 1981 to $83 billion in 1984.
However, it increased somewhat steadily to $110 billion in 1995
before dropping to $103 billion in 1997. Estimates in the 1999
budget increase from $105 billion in 1998 to $111 billion in 2000
before dropping to $109 billion in 2003. As shown in figure 5, the
1999 budget estimates for investment from 1998 through 2002 range
from slightly more than $2 billion to almost $11 billion higher than
the 1998 budget estimates.
Figure 5: Investment for
Fiscal Years 1981 Through 2003
in Constant 1992 Dollars
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
--------------------
\9 Total federal investment outlays minus investment outlays in the
Defense function.
INVESTMENT BY CATEGORY
------------------------------------------------------------ Letter :5
Investment by category is a way of describing the three major types
of investment financed by the federal government--outlays for
physical assets, research and development, and education and
training. These basic categories are determined by character class
designations federal agencies report in the budget. They are
subdivided into more detailed categories, such as construction and
rehabilitation or equipment (physical assets); basic, applied, and
development (research and development); or direct federal programs or
grants to others (physical assets, research and development, and
education and training).
PHYSICAL ASSETS
---------------------------------------------------------- Letter :5.1
This category includes federal spending on physical assets intended
to promote long-term private sector economic growth. It includes
such major items as federal-aid highways, airport facilities and
equipment, and Department of Energy and National Aeronautics and
Space Administration (NASA) research facilities. It excludes
spending for physical assets whose principal use is in agency
missions, such as federal office buildings and weapons systems. In
constant dollars, actual investment in physical assets has remained
relatively stable over the term of our analyses--ranging from highs
of about $36 billion in 1981 and 1995 to a low of $30 billion for
1983. (See figure 6.) Estimates in the 1999 budget for 1998 through
2003 are in the $33 billion to $34 billion range and are higher than
those contained in the 1998 budget.
Figure 6: Investment in
Physical Assets for Fiscal
Years 1981 Through 2003 in
Constant 1992 Dollars
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
RESEARCH AND DEVELOPMENT
---------------------------------------------------------- Letter :5.2
This category includes the R&D activities of the Department of
Defense (basic and applied research only), NASA, National Institutes
of Health, Department of Energy, and others. As shown in figure 7,
outlays for R&D in constant dollars decreased from $30 billion in
1981 to $23 billion in 1984, then gradually increased to $32 billion
in 1995 before declining to $29 billion in 1996. R&D estimates in
the 1999 budget for 1998 through 2003 increase from $31 billion to
almost $35 billion. In contrast, the 1998 budget projected a slight
decline from $31 billion in 1998 to $30 billion in 2002.
Figure 7: Investment in
Research and Development for
Fiscal Years 1981 Through 2003
in Constant 1992 Dollars
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
EDUCATION AND TRAINING
---------------------------------------------------------- Letter :5.3
This category includes items such as the Department of Labor's
training and employment services, the Department of Veterans Affairs'
readjustment benefits, and the Department of Education's student
financial assistance. As shown in figure 8, education and training
constant dollar outlays declined sharply from 1981, and remained
relatively flat at $29 billion to $31 billion through 1990 before
beginning a rising trend, estimated in the 1999 budget to reach a
peak at $44 billion in 2000, dropping to $42 billion by 2003.
Compared to the 1998 budget estimates for 1998 through 2002, the 1999
budget estimates are lower for 1998 by less than $1 billion and
higher for 1999 through 2002 by amounts ranging from less than $1
billion to $2 billion.
Figure 8: Investment in
Education and Training for
Fiscal Years 1981 Through 2003
in Constant 1992 Dollars
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
INVESTMENT BY BUDGET FUNCTION
------------------------------------------------------------ Letter :6
Budget functions are groupings of budgetary resources according to
the national needs being addressed without regard to agency or
organizational distinctions or the category (character class) of
resources used.
Based on the average annual outlays from 1981 through 2003,
investment outlays in seven budget functions comprise about 95
percent of all investment outlays, with the top four comprising 79
percent of total investment. In descending order of constant dollar
investment outlays, the functions are (1) Education, Training,
Employment, and Social Services, (2) Transportation, (3) Health
(principally R&D at the National Institutes of Health), (4) General
Science, Space, and Technology, (5) Natural Resources and
Environment, (6) National Defense, and (7) Energy. While there may
be year-to-year variations in investment outlays, these seven
functions can be placed into three groups based on their general
investment spending trends--increased, steady, and declining.
INCREASED SPENDING
---------------------------------------------------------- Letter :6.1
The Education, Training, Employment, and Social Services function
contains such investment items as the Department of Labor's training
and employment services; the Department of Health and Human Services'
children and families services programs; and the Department of
Education's student financial assistance, special education, family
education loans, and education for the disadvantaged programs. The
overall constant dollar outlay trend for this function\10 (500) is
upward, as shown in figure 9. A sharp decline from $34 billion to
$26 billion between 1981 and 1982 was followed by generally
increasing outlays up to $40 billion in 1995. Outlays declined in
1997 before climbing back to $40 billion to $41 billion level for
1999 through 2003. Estimates for 2000 through 2002 are higher in the
1999 budget than they were in the 1998 budget.
Figure 9: Investment Outlays
for the Education, Training,
Employment, and Social Services
Function in Constant 1992
Dollars, Fiscal Years 1981
Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
Outlays for Transportation (400) include federal-aid highways
spending from the transportation trust fund, federal transit formula
grants, and facilities and equipment outlays from the airport and
airway trust fund. In constant dollars, the trend for outlays has
been generally upward. Outlays reached a high of about $28 billion
in 1997. However, as illustrated in figure 10, 1999 budget estimates
for 1998 through 2003 remain in the $27 billion to $28 billion range
as compared to 1998 budget estimates which had projected a steady
decrease after 1997 to $23 billion in 2002.
Figure 10: Investment Outlays
for the Transportation Function
in Constant 1992 Dollars,
Fiscal Years 1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
Constant dollar investment outlays in the Health function (550),
which are largely R&D carried out by the National Institutes of
Health fell from about $8 billion in 1981 to $6 billion in 1984.
They rose fairly consistently to $11 billion in 1995, dropping to $10
billion in 1996 and then rising again. Estimates in the 1999 budget
increase from $12 billion in 1998 to $15 billion in 2003, in contrast
to last year's estimates which showed a gradual decline to $11
billion in 2002. (See figure 11.)
Figure 11: Investment Outlays
for the Health Function in
Constant 1992 Dollars, Fiscal
Years 1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
As shown in figure 12, the General Science, Space, and Technology
function (250), which includes National Science Foundation and NASA
research, dropped sharply in constant dollar outlays from $10 billion
in 1981 to $5 billion in 1983. Outlays then continued a fairly
steady increase to $11 billion in 1995. In 1996 outlays dropped to
$10 billion before beginning a steady increase to $12 billion in
estimated annual outlays from 2000 through 2003. In contrast,
estimated future outlays in the 1998 budget were $10 billion annually
from 1998 through 2002.
Figure 12: Investment Outlays
for the General Science, Space,
and Technology Function in
Constant 1992 Dollars, Fiscal
Years 1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
--------------------
\10 The functional totals for education and training are lower than
the category (character class) of investment called education and
training. This is because some education and training in federal
agencies is classified in functional reporting as part of the agency
mission (for example, the Defense function) rather than the education
and training function.
STABLE TRENDS
---------------------------------------------------------- Letter :6.2
Investment outlays for the National Defense function (050), which
includes basic and applied military R&D,\11 have hovered around the
$4 billion mark in constant dollar investment outlays from 1981
through 1997. Estimates in the 1999 budget are at the $4 billion to
$5 billion level annually from 1998 through 2003. Estimates from the
1998 budget were slightly higher than the current estimates for 1998
and 1999, but slightly lower than the current estimates for 2000
through 2002. (See figure 13.)
Under our definition of investment, this function does not include
military construction, weapons procurement, defense developmental
research, and atomic energy defense activities. Basic and applied
research are included because of possible adaptation to civilian use,
particularly in the aviation industry. Others may have a different
opinion on what defense items to include as investment. For example,
OMB includes only defense basic research in its national capital\12
presentation.
Figure 13: Investment Outlays
for the National Defense
Function in Constant 1992
Dollars, Fiscal Years 1981
Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
--------------------
\11 In our 1997 report, GAO/AIMD-97-88, May 21, 1997, we included
basic and developmental R&D for Defense. Those numbers were
considerably higher than the results for this analysis. References
to 1998 budget estimates in this report are based on a revision of
the numbers to be consistent with contents in the current analysis.
\12 OMB's national capital presentation is contained in table 6-10 of
the Analytical Perspectives of the President's 1999 budget and is
based upon the GAO definition of investment. That presentation
contains slightly different numbers because of differences in some
items considered to be investment.
DOWNWARD TRENDS
---------------------------------------------------------- Letter :6.3
Investment outlays in the Natural Resources and Environment function
(300), which includes items such as Environmental Protection Agency
activities, show a continuous downward trend from 1981 through 2003.
As seen in figure 14, constant dollar outlays of $11 billion in 1981
decreased to slightly over $5 billion in 1997 with a few intervening
small upswings. Estimates in the 1999 budget for 1998 through 2003
show a continuing decline to less than $5 billion. Although the 1999
budget estimates were slightly higher than those in the 1998 budget,
the downward trend continues.
Figure 14: Investment Outlays
for the Natural Resources and
Environment Function in
Constant 1992 Dollars, Fiscal
Years 1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
Investment outlays in the Energy function (270), which includes
Tennessee Valley Authority and Department of Energy activities, show
a downward trend similar to the natural resources function. As seen
in figure 15, constant dollar outlays were almost $10 billion in 1981
but dropped to under $4 billion in 1997. Despite upward spikes in
outlays in 1985, 1992, and 1995, the overall trend was still
downward. Estimated outlays for 1998 to 2003 show a continued
decline to about $2 billion. This year's estimates for 1998 through
2002 are lower than those in last year's budget for each of the
outyears, but the same downward trend is present.
Figure 15: Investment Outlays
for the Energy Function in
Constant 1992 Dollars, Fiscal
Years 1981 Through 2003
(See figure in printed
edition.)
Note: 1998 through 2003 are estimates.
---------------------------------------------------------- Letter :6.4
We are sending copies of this report to the Chairman of the Senate
Budget Committee, the Chairman of the House Science Committee, and
the Chairman and Ranking Minority Member of the House Budget
Committee. Copies will also be sent to others on request.
Please contact me at (202) 512-9142 if you or your staffs have any
questions concerning this letter. Christine Bonham, Assistant
Director, and Robert Sexton and John Mingus, Senior Evaluators, were
the major contributors to this report.
Susan J. Irving
Associate Director, Budget Issues
*** End of document. ***