The Federal Budget,1978 and Beyond :

Prospects for Budget Balance

TAX FOUNDATION, INC.

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NOTESI _ Unless otherwise noted, all years referred to in this analysis are fiscal years _

2 O%vrall budget receipt and outlay totals in this anah-sis refkct a recent chang ein the treatment of earned income coedit pa}-ments in excess of tax liabilities o flow-income famines with children. provided under the Tax Reduction Act of1975 and the Tax Reform Act of 1976_ Such payments, formerly carried as out-

vs, arc now classified as income tax refunds. with the result that both receiptand outlay totals arc reduced by SO.8 billion in 1976 and SO.9 billion in 1977 and1978_ Thus. totals shown differ b . these amounts from those reported in th eJanuary budget and the February and April revisions -

3- Details in tabulations may not add to totals due to rounding-

PREFACE

As required by law. President Ford submitted to Congress on January 17 . th-ce days beforeka%ing office. the Federal budget for the fiscal year ending September 30 . 1978- On February 22 PresidentCarter presented his initial m-isions of the Ford budget- O= April 22 the new Administration submittedfurther recisions, including significant changes in the February estimates . due primarily to the withdrawal ofthe proposed $50 rebates and other changes in the economic stimulus program, and reflecting re-estimates o fbudget outlay trends.

The mid-session review of the 1978 budget released July 1 . 1977. hawevcr. presents by far the mostdetailed and definitive forecasts for 1977 and 1978 submitted to date by the new Administration . The Julyestimates for 1977 are based upon actual data for two-thirds of the year. and reflect ead;er ch-:--iges in theeconomic stimulus program as well as technical rc-estimates- The 1978 estimates reflect the energy proposal spresented by President Carter in late April, his proposals for financing the social security program . thebudgetary impact of Congressional actions through June 30 . further re-estimates based upon revisedeconomic assumptions and other factors . and an accounting change under which earned income credits i n

,excess of tax li.-hilitics paid to low-income familim formerly treated as budget outla)s . are now reported asincome = refunds.

Table I summarizes the budget receipt, outlay, and deficit totals for 1977 and 1978. as set forth in theJanuary budget and subsequent re%isions -

TABLE 1COMPARISON OF JANUARY AND REVISED BUDGET TOTAL S

(Billions of Dollars)Year Rcce~pts Outlays 001" H

197* Adctwug 2992 365.7 -66.51977 Edimmile:

January budget =2 410.4 -57.2February revisions 348.5 416 .6 -68.0April recisions 358.6 407.3 -48. 7

July budget review 358.3 406.4 -48. 11978 Eillimale:

January budget 392.2 439.2 -47.0February revisions 400.7 458.5 -57 . 7April revisions 403.8 461 .7 -57 .9July budget review 401 .4 462.9 -W

Wtour Weral Wdyget to( 1971: submitted January Q and hilid-Session Review of 1978 &Wgd . released July 1 .

This analysis briefly reviews the data presented in the revised budget estimates for 1977 and 1978 set fort hin the July I mid-session review. and provides some comparisons with the Ford Administration estimates o flast January. Part 11 examines the five-year budget projections (1978-1982) included in the July budget review .Finally, Part III provides a Tax Foundation analysis of gross budget transactions with the public . suggestingthat the impact of budgetary transactions may be significantly greater than indicated by the unified budge ttotals .

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PART IBUDGET RECEIPTS

The January budget contain: proposals for permanent individual and corporation income ►a xreductions, retroactive to January !_ 1977_ These proposals included : an increase in the personal exemptio n

from S750 to 51,000: reduced tax rata in lower-and middle-income brackets : an increase iii ; the lour-income

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allowance from 52.100 to S2.500 for joint returns and from 51 .700 to SI .800 for single persons: elimination of

the S35 per capita credit . the optimal taxable income credit . and the earned income credit (retroactive t o

January 1, 1977): permanent extension of the temporary rate reductions-from 22 percent to 20 percent o n

the first S25.000 of corporation income and from 48 percent to 22 percent or► the second S25AX). now

scheduled :o expire December 31 . 1977: a reduction from 48 percent to 46 percet . . on corporation income i n

excess of 550.000: integration of corporation on personal income tares: and certain other relatively minor tax

changes_cc

In his February budget revisions President Carter withdrew almost all these proposal- and substitute d

his economic stimulus tax proposals. including the ill-fated S50 tax rebate per person . a permanentsimplification of the standard deduction through substitution of a fiat deduction of S2_200 for single person s

= and 53,000 for joint returns for the present set of standard deductions: and a permanent business ta xreduction prodding a choice between either a 2 percentage point increase in the present investment ta xcredit or a refundable credit equal to 4 percent of social security payroll taxes and 2 percent of railroa dretirement and self-employment taxes (with no change once the choicc is made) . In addition. . the bud gct =revisions proposed an extension of certain temporary provisions of the Tax Reform Act of 1976 .

Subsequently the President v. :thdscw the S50 rebate proposal . and the Tax Reduction and Simplificatio nAct of 1977 (Public Law 95-30) enacted in May . further modified the economic stimulus proposals b yincreasing the standard deduction for joint returns from the proposed 53 .000 to S3.200- The revenu eestimates contained in the mid-session review of July 1 reflect thc ;c changes . assume enactment o fPraidential proposals submitted prior to that date . including his energy program- and also take account o frevised economic assumptions .

The President has also submitted proposals for tong-range financing of social security- However. theproposed social security tax changes would not take effect until 1979 or later, the proposals do contemplat etransfers of general revenue funds to the social security trust funds, over the period of 1978-1980 . but thesepayments, if approved. would be treated as interfund transactions and would not affect budget receipt o routlay totals .

Table 2 sets forth budget receipt totals by major source . and provides a comparison between the Januarybudget and current estimates for 1977 and 1478_

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TABLE 2BUDGET RECEIPTS BY MAJOR SOURCE, 1976-197 8

(Billions of Dollars)1976

1977 Estimate _ 1978 Estimate----Source Actual

January Curre-.t January Curren t

Individual income tax 130.8

152.2 158 .3 170.4 178.2

Corporation income tax 41 .4

56.6 54 .6 58.9 59.7

Social insurance taxes and contributions 92.7

108 .9 108.8 126.1 1. 23. 1

Excise taxes 17.0

17 .9 17 .8 1115 22. 0

Estate and gift taxes 5.2

5.9 7.3 5 .8 5 . 5

Customs duties 4 .1

4.7 5.0 53 5 . 6

Miscellaneous receipts 8.0

6.9 6 .6 7 .2 7 . 2

TOTAL BUDGET RECEIPTS 299.2

353 .1 358 .3 392 .2 401 . 4

Source: Mid-Session Review or the 1978 Budget.

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Budget Outlays

The budget revisions first announced by President Carter in February resulted in estimated outla yincreases over the January budget of S6 .2 billion in the current year and 519.3 billion in 1975, bringing thetotals for those years to 5416.6 btl!ion and 5458.5 billion. respectively. In April. the new Administrationrevised its 1977 outlay estimate downward by S9.3 billion. to S407.3 billion. reflecting changes in its

-economic stimulus program and other factors . At the same time the catlay estimate for 1978 was increasedby S3.2 billion, to 5461-7 billion.

In the July budget review the outlay estimate for the current year was further reduced . to SWA billion.while the 1978 estimate was increased to 5462.9 billion. The Director of the Office of !Management andBudget has subsequently released re-estimates for 1977- Iowering the spending total to S404 .0 billion. Thisadjustment further reflects an unexplained "spending shortfair which has been occurring over the past sca ror more.

Thus . in the current year total outlays, which were originally projected to be S6.2 billion higher than theestimate submitted by President Ford in January, now are estimated at S6 .4 billion under the Januaryforecast .

The latest 1978 outlay estimates reflect .• t_ the energy program proposed by the President in April ;

• 2_ ether Administration recommendations :

• 3. the impact of Congressional actions through June 30 :

• 4- rc-estimates based on revised economic assumptions and cxperienLc with earlier outlay forecasts .

Based upon these estimates. budget outlays in 1975 will total 523.7 billion higher than the origina l-January estimate . and are expected to rise by 5589 billion-or about 14.5 percent-over 1977- Thispercentage increase compares to an average year-to-year increasr of 10 .6 percent in the 10-year period o f1967-1976. and the projected increase of about 10 .5 percent in 1977 over 1976 . The 1978 increase is of some =

- _significance, particularly in view of the rather abrupt hold-down on the annual rate of outlay increas econtemplated in the administration's long-range budget outlook, included in the July review (see Part 11) _

TABLE 3CHANGES IN BUDGET OUTLAYS, BY FUNCTIONAL GROUPINGS, 1976-197 8

(Billions of Dollars)

_

Functional Grouping

National defense International affairsDomestic-civilian functions°Rew:nue sharing-fiscal assistanceInterestAll other sUndistributed offsetting receipts`

1976Actual

1977 EstimateJanuary

Jul yBudget

Review

90.0 100.1 96. 95 .1 7.1 6.5

232.9 259.8 258.57.1 8.9 9.5

34.6 28.0 38.010.6 11 .8 12. 1

-14.7 -15 .4 -15.2

1978 Estimat eJanuary JulyBudget Revues

112 .3 113.07 .3 7 . 1

273.2 292.48.1 9 .6

39.7 41 . 715.1 15 . 2

-16.5 -15.9

TOTAL OUTLAYS 365.7

410 .3

406 .4

439.2

462 . 9

a includes functional budget categories covering natural resources. environment . and energy. agriculture. commerce and transportation . communit yand reg :onat development : education . training. employment . and social services. health . income security . and veterans benefits and services

a lncludes functional categories of general science. space and technology: taw enforcement and justice . and general government . and allowances forcivilian pay raises and contingencie s

c includes government share . employee retirement . interest paid to trust funds. and rents and royalties on the Outer Continental Shelf.Source : Mid-Session Review of the 1978 budget .

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Table 3 shows the trend of budget outlays . by functional groupings. over the 1976-1978 period . andprovides comparisons between the Ford and Carter Administration projections for the current and ensuin gfiscal years.

As already noted . the present Administrations latest spending estimates for the fiscal year ending

September 30. 1977, are substantially below their initial revisions of last February . as well as the Januaryforecast of the previous Administration. due primarily to changes in the Carter economic stimulus program ,

the so-called "spending shortfall ." and other re-estimates . As Table 2 indicates, this reduction is accounte dfor almost entirely by lower spending for national defense and those activities classified under the domestic -civilian functional categories. Estimated outlays for these functional groupings are below the originalJanuary forecast .

in 1978 the spending pattern is sharply reversed. National defense spending is projected at 5113.0 billion.up S16.1 billion over the estimate for the current year . Outlays for the domestic-civilian programs also ar escheduled to rise sharply—by almost S34 billion—to total S292.4 billion. Interest outlays also are expected t oincrease S3.7 billion in 1978.

Budget DeficitsThe foregoing estimates of receipts and outlays (including the further reduction of S2_4 billion in th e

1977 outlay estimate, to 5404.0 billion. announced by the Office of Management and Budget on August 4)result in budget deficits totaling 545 .7 billion for the current year and S61 .5 billion for 1978-

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This represents a rather startling shift from the original budget plan presented by the ne wAdministration last February . At t':at time, despite the substantial increase in total outlays in 1978, muc hemphasis was placed upon the fact that the projected budget deficit would be smaller in 1978 than in 1977 .This was often cited as evidence of the Administrations determination to achieve budget balance by 1981 .

PART 11THE FISCAL OUTLOOK, 1978-198 2

The July mid-session budget review presents . for the first time. the Carter administrations long-rangeeconomic assumptions and budget projections . Like all such assumptions and projections, these wer eaccompanied by the usual caveats as to the difficulties of making long-range economic forecasts and th esensitivity of budget projections to relatively small changes in the underlying economic assumptions.

Director Bert Lance of the Office of Management and Budget . in testimony before Congressionalcommittees, has dnc _r ibcd the long-range economic assumptions as -merely projections that assume progres sin moving toward a more fully-employed economy and greater price stability," and emphasized that theywere not forecasts of economic events .

The OMB Director also characterized the budget receipt and outlay projections for 1979 through 198 2as representing "an estimate of the degree to which resources would be committed by the continuation o fexisting programs modified only by those changes already proposed by the Administration," based upon th elong-range economic assumptions .

However, because of the Administratio n 's repeated pledge to balance the budget by 1981, the receipt an doutlay projections for the years 1979 through 1982 have received considerable attention in the media an delsewhere . One reason for this doubtless is the fact that the figures indicate a possibility of budget balance by1980 . It is therefore of interest to make a more detailed analysis of the projections and some of the question swhich they raise .

Table 4, taken from the July budget review . sets forth the outlay and receipt totals for 1978 throug h1982, indicating the estimated budget deficit of S61 .5 billion in 1978 would be almost halved in 1979 an dthere would be budget "margins," or surpluses, beginning in 1980, with very sizable ones in 1981 and 1982 .

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These projected totals do not attempt to anticipate future decisions by either the Administration o rCongress. Specifically, the receipt totals do not reflect the impact of the tax reform proposals the President i sexpected to send to Congress later this year. The outlay totals. however, do include provision for the recentlyannounced welfare reform programs, by including present welfare costs and including additional amounts i nan "allowance for contingenaes7r ;lem (SIA billion in 1979, rising to $5 .5 _billion in 1982)-

TABLE 4THE FISCAL OUTLOOK, 1978-1982 =

(Billions of Dollars)1978

curter:Estimate

1979

1900

1901

1942

=

Projected outlays 4629

498-6

532..7

564.8

- 601.0Projected receipts 401 .4

466.8

536.6

606.9

676.5

Budget margin or deficit (-) -61 .5

-31 .8

3.9

421

75. 5

Source: W-Sess*n Hewerr of V* 1978 Budget-

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Receipts, 1978-1982

The budget receipt totals shown for the years 1979 through 1982- of course, reflect the generall yfavorable economic assumptions behind these projections . The inflationary rate, as measured by theConsumer Price Index, is assumed to decline from 6 .5 percent in calendar year 1977 to 6.0 percent in 1978,and decline steadily to 4 .3 percent by 1982- The average annual unemployment rate, forecast to be 7-0percent in 1977, is also assumed to decline from year to year, to 4 .5 percent by 1982.

Budget receipts. by this measurement, would increase over the 1979-1982 period at a rate exceeding tha tof recent years, as indicated in Table 5 . Over the 1970-1977 period, including the very sizable increase i nrevenues estimated for the current year, budget receipts increased at an average annual rate of 9 .3 percent . In1978 they are estimated to total S401 .4 billion, a 12 .0 percent increase. However, in 1979 the projectionsreflect a 16.2 percent rise. with further increases of 14.9 percent, 13.1 percent, and 11 .4 percent, respectively,in the following three ?ears.

Outlays, 1978-1982For budget outlays the long-range projections follow a pattern directly the opposite of that shown fo r

receipts. indicating an unusual application of expenditure restraint.

The outlay projections assume :• 1 . program levels remain constant except where current law or "explicit Administration policies ".

would result in increases or reductions ;

2. the phasing out after 1978 of the employment and training programs begun or expanded as par tof the economic stimulus program;

• 3. changes in beneficiary populations for social security and similar programs ;

• 4. future cost-of-living adjustments in benefit levels where such increases arc automatic under present law ;

• 5. Federal pay increases and price increases for nondefense purchases of goods and services .

In general, outlays for domestic assistance programs (including payments to individuals), which accoun tfor 56.3 percent of total outlays in 1976 and 1977, would drop to 54.8 percent in 1978, and to 54 .0 percent o r

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below in the 1979-1982 period . Outlays for national defense. interest, and oth.r direct Federal operations . "currently 43.7 percent of total spending, would rise to 45.2 percent :n 19. 78 an - m e upward to the 40.0range or above in each of the next four years_

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During the 1970-1977 period. the average annual percentage rate of increase in outlay totais was 10 .9

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_ percent : and the current estimate of 5462-9 billion in 1978 spending represents an increase of 14 .6 percent

-over 1977. But in 1979 the increase in outlays is reduced to 7.7 percent. and is further reduced to 6.8 percentin -1980, 6.0 percent in 1981, and 6-4 percent in 1982 (see Table 6).

TABLE 5

TABLE EBUDGET RECEIPTS,19?0-1982

_ BUDGET OUTLAYS, 1970-198 2(Amounts in Billions of Dollars)

(Amounts in Billions of Dollars )Fount

gauntYear

Amount

Change

Year

Amount

tr.MM -

1970

=1~ 7

__1970 _

196.6

—1971

188-4

- 28

1971

211A

7.51972

208.6

+10 .7

=

1972

= ''2320

9.7

_=

(-.1973

232-2

+11 .2

_

-1973

24:.1

6 . 41974

264 .9

+14.0

1974

269.6

9.1

-1975

=

=

281.0

+6_0

- 1975

-

326.1

20.9

_1976

--300-0

+ 6.7 L

1976

_

366.5

12319777 Est .

358.3 _ +19.1

1917 Est .

404.0 _

10.2_r=:

Average 1970-1977 increase

±23.5

+9.3

i Average 1970-1977 increase =

29.6

10.9 -

July Budget Projections :

Judy Budget Projections:-

1978 =

_401 .4

+120

1978

462.9

'.461970

466.8

+16.2

1979

498.6

7. 71980

536.6

-14.9

1980

532.7

6.81981

606.9 - +13.1

1981

-564.S

6.0-1982

=

=>676-5

`+11 .4

1982

601 .0

6.4 -Average 1977-1982 increase

+63.6

+13.5

Average 1977-1982 increase v

39.4

8.3

source_ mid-sessian Review o! the 1978 Budget and Tax Foundation

Source_ Mid-Session Review of the Budget and -ax Foundation con-computauoru .

_ potations.

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It is, of course, conceivable that the rate of expenditure growth can be nearly halved from 1978 to 1979 :however, an examination of outlay totals and trends since 1950 reveals no period in which the rate of growth

_was consistently restrained over a period of years, such as is indicated by these outlay projections . in som eyears there has been severe constraint on outlay growth . - but this usually has been followed by significan tincreases in the next two or three years .

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Questions are raised, in particular, by the restraint in growth of outlays for programs in v olv ingpayments to individuals indicated in these projections . These have been among the most '., olatilc and rapidlygrowing expenditures over recent years, and arc among those classified as "relatively uncontrollable" byeither Congress or the Executive on a year-to-year basis under existing laws . In the period from 197 0through 1976. outlays for payments to individuals increased at an average annual rate of 18 .8 percent, th elong-range projections contemplate an average increase over the 1978-1982 period of 9 .0 pc►ccnt .

It becomes obvious that, even if the long-range economic assumptions prove to he reasonably accurate ,and the increases in budget receipts occur, spending restraint will be the kcy to achievement of bu .lgc tbalance by 1981 . For example, if outlays over the 1979-1982 period were to increase at the average annual

-rate which occured in the 1970-1977 period--10 .9 percent—the budget "margins" reflected in the Julyprojections for 1980 through 1982 would be replaced by sizable deficits. Instead of the budget margins show nin Table 4, there would be d6vits of 546.6 billion in 1979, $32 .8 billion in 1980, 524 .6 billion in 1981, and$23.8 billion in 1982.

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- GROSS BUDGET TRANSACTIONS OF THE GOVERNMEN T

The budget totals for 1977 and 1978. and the long-range projections through l98? do not include thetransactions of certain Federal agencies and activities which are excluded from the budget—the so-called"off-budget" entities .

Both President Ford and Carter . in their budget submissions this rear, were sharply critical of thi spractice—a phenomenon of the 197Ws . The entities currcntly in off-budget status include : the Federa lFinancing Bank : rural electrification and telephone revolving fund : Pension Benefit Guarantee Corporation :exchange stabilization fund : Postal Service fund : and U.S. Railway Association. The net outlays of theseactivities totaled S7.2 billion in 1976 and arc estimated to amount to S8 .5 billion in 1978.

These expenditures arc not reflected in budget outlay totals. or in the deficit : requested appropriation sfor their activities are not included in budget authority totals, and the outlays are rot subject to the ceiling sset by Congressional budget resolutions . However, the net outlays of these entities is added to the budge tdeficit to determine the total Federal deficit to be financed through government borrowing .

Both the previous and present Administrations have complained that the exclusion of these entities ha seroded the comprehensive budget coverage recommended in 1967 by the President's Commission on Budge tConcepts, which led to the establishment of the unified budget in use since 1969. In his initial budget r• visionmessage President Carter declared : `Comprehensive coverage is necessary in order to inform the President .the Congress, and the public accurately about the size, scope . and composition of the Federal Government' soperations. ' and to "provide the proper context within which to establish priorities among alternativ egovernmental programs, and between-public and private activitie s

The Administration is now "intensively reviewing" the treatment of each off-budgct entity . and has

_promised to submit recommendations to Congress soon . Congress also has indicated concern over the growt hof off-budget entities. The Congressional Budget Act of 1974 requires the House and Senate BudgetCommittees to make a continuing study of those provisions of law which exempt Federai agencies o ractivities from inclusion in the annual budget .

These concerns over the practice of excluding certain Federal agencies and activities from the budget areunquestionably valid . The emphasis upon the importance of comprehensive budget coverage. particularly asit pertains to the establishment of priorities among governmental programs and between public and privat eactivities, raises other questions.

Prior to the adoption of the unified budget concept in 1969, a special analysis usually accompanied th ebudget in which the transactions of trust funds (then excluded from budget totals) and other types of fund swere grouped to show the gross expenditures of goyernme, t-administered funds . After the unified budge tconcept, which combined the transactions of the general funds and trust funds and made certain othe rchanges in the budget presentation was adopted, the gross expenditure analysis was discontinued .

There remain, however, certain budgetary practices . in addition to the off-budgct entities, which tend tocamouflage budget receipt and outlay totals and would appear to bear upon the compreh : nsive coverageissue. Some of these practices arc dictated by present law, some arc based on the 1967 recommendations ofthe President's Commission on Budget Concepts which led to adoption of the unified budget, and som esimply conform to past decisions by budget officials .

Because of the emphasis upon the issue of comprehensive budget coverage . and more particularly theeconoraic implications of budgetary policy, the following examination of the impact of these practices u nbudget totals is of interest .

For example . there is the sub-group of Federal funds identified as public enterprise funds, which carr yon a cycle of business-type operations, primarily with the public . The transactions of these funds havetraditionally been included in budget totals only on a net basis, i .e. the excess of disbursements overrepayments or receipts . For 1978, -the January budget estimated that "applicable collections" (or receipts) o f

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TABLE 7_

FEDERAL BUDGET TRANSACTIONS WITH THE PUBLIC(Billions of Dollars)

1976 Actual

1976 F:V=ated =Receipts

outlays

necepts

Outlay s

Unified budget totals : 300.0 366.5 401 .4 4629Deduct: Net outlays, public enterprise funds - -7.9 - -8.7Deduct: Net receipts, trust revolving funds -1 .0 - - .9 -

' A djusted unified bu;:gm : ;,iaa 299.0 358.6 400.5 454. 2Off-budget outlays (net) - 7.2 - 8. 5Public enterprise funds - 28.8 36.7 28.1 36. 8Trust revolving funds -r ;_

4.6 3.6 5.5 4. 6Offsetting proprietary receipts 13 .9 13.9 17.1 17. 1

Gross transactions 346-3 420.0 451 .2 521 .2r ;

Budget deficit. adjusted basis 73.7 70.0

Balled budget U90s. net ouVays of off-budget enbtioes, and offsetting proprietary recapttotatstef►ect Carter Administration budget recision; otnetanoints are from ttv, January budget . since revised data have not been released . -

these funds will total S28.1 billion, with their gross outlays forecast to total S36-8 billion- The unified budge treports only the net outlays. S8.7 billion-

Another sub-group of funds, designated as trust revolving funds (the largest being the Federa lemployces life insurance and health benefit funds. and the Federal Deposit Insurance Corporation) arc als o"netted out" in the unified budget totals. Currently, the collections of these funds, in total . exceed their grossoutlays . In 1978 they are expected to have collections of S5 .5 billion and outlays of S4.6 billion. Thus. onlythe S0.9 billion excess of receipts is inclufird in the unified budget_

r .Still another practice involves the treatment of what . in budgetary parlance, are called "offsetting

proprietary receipts from the public .- These include certain receipts from interest payments to th egovernment, rents, royalties, sales of products . fees. etc. These collections . currently estimated to total S17. 1billion in 1978, are treated in the unifi.a budget not as receipts, but as offsets against outlays-or negativ eexpenditures.

If the receipts and outlays of these various fund operations were included in the budget on a gross basis .the totals obviously would be significantly larger than those currently reported. Because some of thesetransactions are now included on a net basis and the offsetting receipts would be recorded in both receip tand outlay columns, the change in the budget deficit figure is not as large as in the receipt and outlay totals.

Table 7 has been constructed to indicate what the impact on the budget receipt and outlay totals for1976 and 1978 would be if the off-budget entities were returned to on-budget status, and if the othe rtransactions just described were included in the budget in terms of their gross outlays and receipts . In thi stable the unified budget totals are first adjusted to eliminate the net receipts of the trust revolving funds an dthe net outlays of the public enterprise funds . The gross receipts and disbursements of the off-budget entities ,public enterprise funds, and trust revolving funds are then added in . and the offsetting proprietary receipt stotal, which "wash-out" under the current budgetary practice, is added to both the receipt and outlay totals .

This analysis suggests that the impact of Federal budgetary transactions with the public is significantl ygreater than is indicated by the unified budget totals . It is not claimed to be all-inclusive . It is not intendedas a criticism of the unified budget concept, the recommendations of the Commission on Budget Concepts .or current budgetary practices . However, in view of the current emphasis upon comprehensive coverage an dinforming the public about the size, scope, and composition of Federal operations, as well as the economi cimpact of the Federal budget, this exercise may be of timely interest .

1 0

The Tax Foundation is a publicly supported . non-profit organization, founded in`1937 to :ngage in non-partisan research and public education on the fiscal and man-agement aspects of government . Its purpose, characterized by the motto "TowardBetter Government Through Citizen Understanding :' is to aid in the development o fmore efficient and economical government . It serves as a national information agenc yfor individuals and organizations concerned with problems of government expendi-tures, taxation and debt .

September 197 7

s s s