[Historical Tables, Budget of the United States Government,   Fiscal Year 1998]
[Page 1-18]

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  Historical Tables provides budget users with a wide range of data on 
Federal Government finances. Many of the data series begin in 1940 and 
include estimates of the President's budget for 1997-2002. Additionally, 
Table 1.1 provides data on receipts, outlays, and surpluses or deficits 
for 1901-1939 and for earlier multi-year periods.

                  Note on GDP and Constant-Dollar Data

  Many of the tables in this document show receipts or outlays as 
percentages of Gross Domestic Product (GDP) or show budget data in 
constant-dollar (i.e., inflation-adjusted) terms. These data are shown 
on what is called a post-benchmark basis. The Bureau of Economic 
Analysis of the Department of Commerce has recently completed a 
benchmark revision to the National Income and Product Accounts, which 
include GDP and the components used to calculate various deflators to 
construct constant-dollar time series data. Unfortunately, their 
revision has only been completed back to fiscal year 1960. To preserve 
the consistency of the time series data contained in the Historical 
Tables, many of which go back to 1940 or earlier, the GPD figures and 
the deflators for constant-dollar data prior to FY 1960 are 
approximations of the anticipated post-benchmark revision values. The 
pre-benchmark GDP data for years prior to FY 1960 have been increased by 
2\1/2\ percent to approximate the post-benchmark levels. The deflators 
for FY 1960 and beyond were calculated using the new chain-weighted 
constant dollar NIPA data. The deflators for years prior to FY 1960 were 
calculated by applying the year-to-year percentage change in the pre-
benchmark revision (fixed-weight) deflators to the various 1960 deflator 


  This document is composed of 17 sections, each of which has one or 
more tables. Each section covers a common theme. Section 1, for example, 
provides an overview of the budget and off-budget totals; Section 2 
provides tables on receipts by source; and Section 3 shows outlays by 
function. When a section contains several tables, the general rule is to 
start with tables showing the broadest overview data and then work down 
to more detailed tables. The purpose of these tables is to present a 
broad range of historical budgetary data in one convenient reference 
source and to provide relevant comparisons most likely to be of 
assistance. The most common comparisons are in terms of proportions 
(e.g., each major receipt category as a percentage of total receipts and 
of the gross domestic product).
  Section notes explain the nature of the activities covered by the 
tables in each section. Additional descriptive information is also 
included where appropriate. Explanations are generally not repeated, but 
there are occasional cross-references to related materials.
  Because of the numerous changes in the way budget data have been 
presented over time, there are inevitable difficulties in trying to 
produce comparable data to cover many years. The general rule is to 
provide data in as meaningful and comparable a fashion as possible. To 
the extent feasible, the data are presented on a basis consistent with 
current budget concepts. When a structural change is made, insofar as 
possible the data are adjusted for all years.
  One significant change in recent years concerns the budgetary 
treatment of Federal credit programs, which was changed by the Federal 
Credit Reform Act of 1990. Previously the budget recorded the cost of 
direct and guaranteed loans on a cash basis. Under credit reform, the 
budget only records budget authority and outlays for the subsidy cost of 
direct and guaranteed loans made in 1992 and subsequent years. The 
subsidy is defined as the net estimated cash flows 

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to and from the 
Government over the life of the loan, discounted to the present. The 
cash transactions are recorded as means of financing the deficit. 
Because it was impossible to convert the pre-1992 loans to a credit 
reform basis, the data are on a cash basis for pre-1992 loans and on a 
credit reform basis for loans made in 1992 and subsequent years.


  The Federal Government has used the unified or consolidated budget 
concept as the foundation for its budgetary analysis and presentation 
since the 1969 budget. The basic guidelines for the unified budget were 
presented in the Report of the President's Commission on Budget Concepts 
(October 1967). The Commission recommended the budget include all 
Federal fiscal activities unless there were exceptionally persuasive 
reasons for exclusion. Nevertheless, from the very beginning some 
programs were perceived as warranting special treatment. Indeed, the 
Commission itself recommended a bifurcated presentation: a ``unified 
budget'' composed of an ``expenditure account'' and a ``loan account.'' 
The distinction between the expenditure account and the loan account 
proved to be confusing and caused considerable complication in the 
budget for little benefit. As a result, this distinction was eliminated 
starting with the 1974 budget. However, even prior to the 1974 budget, 
the Export-Import Bank had been excluded by law from the budget totals, 
and other exclusions followed. The structure of the budget was gradually 
revised to show the off-budget transactions in many locations along with 
the on-budget transactions, and the off-budget amounts were added to the 
on-budget amounts in order to show total Federal spending.
  The Balanced Budget and Emergency Deficit Control Act of 1985 (Public 
Law 99-177) repealed the off-budget status of all then existing off-
budget entities, but it also included a provision moving the Federal 
old-age, survivors, and disability insurance funds (collectively known 
as social security) off-budget. To provide a consistent time series, the 
budget historical data show social security off-budget for all years 
since its inception, and show all formerly off-budget entities on-budget 
for all years. The Omnibus Budget Reconciliation Act of 1989 (OBRA 1989) 
moved the Postal Service fund off-budget, starting in fiscal year 1989. 
Prior to that year, the Postal Service fund is shown on-budget.
  Though social security and the Postal Service are now off-budget, they 
continue to be Federal programs. Indeed, social security currently 
accounts for about one-fourth of all Federal receipts and one-fifth of 
all Federal spending. Hence, the budget documents include these funds 
and focus on the Federal totals that combine the on-budget and off-
budget amounts. Various budget tables and charts show total Federal 
receipts, outlays, and surpluses and deficits, and divide these totals 
between the portions that are on-budget and off-budget.

 Changes in Historical Budget Authority, Outlays, Receipts and Deficits

  Totals for 1984 through 1995 have changed from those published in the 
1997 Budget. Budget authority, outlays and receipts for the FCC 
Universal Service fund have been added to the budget for the 1984-1994 
period. While the deficits are unchanged as a result of this addition, 
budget authority, outlays and receipts all increase by amounts ranging 
from $42 million in 1984 up to $890 million in 1994.
  Correction of Maritime Administration outlays reported to the Treasury 
for 1992 reduces outlays and the deficit by $1 million, and corrections 
to the Farm Credit System Financial Assistance Corporation reduce 1993 
outlays and the deficit by $127 million.
  Various other adjustments by the Treasury Department to 1995 actual 
receipts and outlays decrease outlays by $3,404 million, receipts by 
$3,383 million, and the deficit by $21 million. Most of this change in 
receipts and outlays results from a conceptual change in the scoring of 
the FCC's Universal Service Fund. A substantially smaller portion of the 
fund is now reflected in the budget totals ($0.9 billion versus $3.4 
billion in 1995).
  For 1990 and beyond, budget authority equal to the obligation 
limitation for adminis-

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trative expenses for certain special and trust 
funds has been reclassified as discretionary rather than mandatory to 
conform to the current treatment required for most other such funds as a 
result of the Budget Enforcement Act of 1990 (see Notes on Section 5, 

                         Note on the Fiscal Year

  The Federal fiscal year begins on October 1 and ends on the subsequent 
September 30. It is designated by the year in which it ends; for 
example, fiscal year 1995 began on October 1, 1994, and ended on 
September 30, 1995. Prior to fiscal year 1977 the Federal fiscal years 
began on July 1 and ended on June 30. In calendar year 1976 the July-
September period was a separate accounting period (known as the 
transition quarter or TQ) to bridge the period required to shift to the 
new fiscal year.

               Concepts Relevant to the Historical Tables

  Budget (or ``on-budget'') receipts constitute the income side of the 
budget; they are composed almost entirely of taxes or other compulsory 
payments to the Government. Any income from business-type activities 
(e.g., interest income or sale of electric power), and any income by 
Government accounts arising from payments by other Government accounts 
is offset against outlays, so that total budget outlays are reported net 
of offsetting collections. This method of accounting permits users to 
easily identify the size and trends in Federal taxes and other 
compulsory income, and in Federal spending financed from taxes, other 
compulsory income, or borrowing. Budget surplus refers to any excess of 
budget receipts over budget outlays, while budget deficit refers to any 
excess of budget outlays over budget receipts.
  The terms off-budget receipts, off-budget outlays, off-budget 
surpluses, and off-budget deficits refer to similar categories for off-
budget activities. The sum of the on-budget and off-budget transactions 
constitute the consolidated or total Federal Government transactions.
  The budget is divided between two fund groups, Federal funds and trust 
funds. The Federal funds grouping includes all receipts and outlays not 
specified by law as being trust funds. All Federal funds are on-budget 
except for the Postal Service fund starting with fiscal year 1989. All 
trust funds are on-budget, except the two social security retirement 
trust funds, which are shown off-budget for all years.
  The term trust fund as used in Federal budget accounting is frequently 
misunderstood. In the private sector, ``trust'' refers to funds of one 
party held by a second party (the trustee) in a fiduciary capacity. In 
the Federal budget, the term ``trust fund'' means only that the law 
requires the funds be accounted for separately and used only for 
specified purposes and that the account in which the funds are deposited 
is designated as a ``trust fund.'' A change in law may change the future 
receipts and the terms under which the fund's resources are spent. The 
determining factor as to whether a particular fund is designated as a 
``Federal'' fund or ``trust'' fund is the law governing the fund.
  The largest trust funds are for retirement and social insurance (e.g., 
civil service and military retirement, social security, medicare, and 
unemployment benefits). They are financed largely by social insurance 
taxes and contributions and payments from the general fund (the main 
component of Federal funds). However, there are also major trust funds 
for transportation (highway and airport and airways) and for other 
programs financed in whole or in part by user charges. 
  The budget documents do not separately show user charges. Frequently 
there is confusion between the concept of user charges and the concept 
of offsetting collections. User charges are charges for services 
rendered. Such charges may take the form of taxes (budget receipts), 
such as highway excise taxes used to finance the highway trust fund. 
They may also take the form of business-type charges, in which case they 
are offsetting collections--offset against budget outlays rather than 
being recorded as budget receipts. Examples of such charges are the 
proceeds from the sale of electric power by the Tennessee Valley 
Authority and medical insurance 

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premiums paid to medicare's 
supplementary medical insurance trust fund. User charges may go to the 
general fund of the Treasury or they may be ``earmarked''. If the funds 
are earmarked, it means the collections are separately identified and 
used for a specified purpose--they are not commingled (in an accounting 
sense) with any other money. This does not mean the money is actually 
kept in a separate bank account. All money in the Treasury is merged for 
efficient cash management. However, any earmarked funds are accounted 
for in such a way that the balances are always identifiable and 
available for the stipulated purposes.

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                          SECTION NOTES

       Notes on Section 1 (Overview of Federal Government Finances)

  This section provides an overall perspective on total receipts, 
outlays (spending), and surpluses or deficits, the on-budget and off-
budget amounts are also separately shown. Tables 1.1 and 1.2 have 
similar structures; 1.1 shows the data in millions of dollars, while 1.2 
shows the same data as percentages of the gross domestic product (GDP). 
For all the historical tables, fiscal year GDP is used to calculate 
percentages of GDP. The fiscal year GDP data are shown in Table 1.2. 
Additionally, Table 1.1 shows budget totals annually back to 1901 and 
for multi-year periods back to 1789.
  Table 1.3 shows total Federal receipts, outlays, and surpluses or 
deficits in current and constant dollars, and as percentages of GDP. 
Section 6 provides a disaggregation of the constant dollar outlays.
  Table 1.4 shows receipts, outlays and surpluses or deficits for the 
consolidated budget by fund group. The budget is composed of two 
principal fund groups--Federal funds and trust funds. Normally, whenever 
data are shown by fund group, any payments from programs in one fund 
group to accounts of the other are shown as outlays of the paying fund 
and receipts of the collecting fund. When the two fund groups are 
aggregated to arrive at budget totals these interfund transactions are 
deducted from both receipts and outlays in order to arrive at 
transactions with the public. Table 1.4 displays receipts and outlays on 
a gross basis. That is, in contrast to normal budget practice, 
collections of interfund payments are included in the receipts totals 
rather than as offsets to outlays. These interfund collections are 
grossed-up to more closely approximate cash income and outgo of the fund 

     Notes on Section 2 (Composition of Federal Government Receipts)

  Section 2 provides historical information on on-budget and off-budget 
receipts. Table 2.1 shows total receipts divided into five major 
categories; it also shows the split between on-budget and off-budget 
receipts. Table 2.2 shows the receipts by major category as percentages 
of total receipts, while Table 2.3 shows the same categories of receipts 
as percentages of GDP. Table 2.4 disaggregates two of the major receipts 
categories, social insurance taxes and contributions and excise taxes, 
and Table 2.5 disaggregates the ``other receipts'' category. While the 
focus of the section is on total Federal receipts, auxiliary data show 
the amounts of trust fund receipts in each category, so it is possible 
to readily distinguish the Federal fund and trust fund portions.

       Notes on Section 3 (Federal Government Outlays by Function)

  Section 3 displays Federal Government outlays (on-budget and off-
budget) according to their functional classification. The functional 
structure is divided into 18 broad areas (functions) that provide a 
coherent and comprehensive basis for analyzing the budget. Each 
function, in turn, is divided into basic groupings of programs entitled 
subfunctions. The structure has two categories--allowances and 
undistributed offsetting receipts--that are not truly functions but are 
required in order to cover the entire budget. At times a more summary 
presentation of functional data is needed; the data by ``superfunction'' 
is produced to satisfy this need. Table 3.1 provides outlays by 
superfunction and function while Table 3.2 shows outlays by function and 
  In arraying data on a functional basis, budget authority and outlays 
are classified according to the primary purpose of the activity. To the 
extent feasible, this classification is made without regard to agency or 
organizational distinctions. Classifying each activity solely in the 
function defining its most important purpose--even though many 
activities serve more than one purpose--permits adding the budget 
authority and outlays of each function to obtain the budget 

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totals. For 
example, Federal spending for medicaid constitutes a health care 
program, but it also constitutes a form of income security benefits. 
However, the spending cannot be counted in both functions; since the 
main purpose of medicaid is to finance the health care of the 
beneficiaries, this program is classified in the ``health'' function. 
Section 3 provides data on budget outlays by function, while Section 5 
provides comparable data on budget authority.

        Notes on Section 4 (Federal Government Outlays by Agency)

  Section 4 displays Federal Government outlays (on- and off-budget) by 
agency. Table 4.1 shows the dollar amounts of such outlays, and Table 
4.2 shows the percentage distribution. The outlays by agency are based 
on the agency structure currently in effect. For example, the Department 
of Education was established by legislation enacted in 1979. However, 
these data show spending by the Department of Education in previous 
years that consists of education spending attributable to other agencies 
in earlier years, but now attributable to the Department of Education.

        Notes on Section 5 (Budget Authority--On- and Off-Budget)

  Section 5 provides data on budget authority (BA). BA is the authority 
provided by law for agencies to obligate the Government to spend. Table 
5.1 shows BA by function and subfunction, starting with 1976. Table 5.2 
provides the same information by agency, and Table 5.3 provides a 
percentage distribution of BA by agency.
  The data in these tables were compiled using the same methods used for 
the budget historical tables for receipts and outlays (e.g., to the 
extent feasible, changes in classification are reflected retroactively 
so the data show the same stream of transactions in the same location 
for all years). However, BA is heterogeneous in nature, varying 
significantly from one program to another. As a result, it is not 
additive--either across programs or agencies for a year or, in many 
cases, for an agency or program across a series of years--in the same 
sense that budget receipts and budget outlays are additive. The 
following are examples of different kinds of BA and the manner in which 
there are large divergences between the creation and use of BA.
<bullet>  BA and outlays for each year may be exactly the same (e.g., 
          interest on the public debt).
<bullet>  For each year the Congress may appropriate a large quantity of 
          BA that will be spent over a subsequent period of years (e.g., 
          many defense procurement contracts and major construction 
<bullet>  Some BA (e.g., the salaries and expenses of an operating 
          agency) is made available only for a year and any portion not 
          obligated during that year lapses (i.e., it ceases to be 
          available to be obligated).
<bullet>  Revolving funds may operate spending programs indefinitely 
          with no new infusion of BA, other than the authority to spend 
          offsetting collections.
<bullet>  BA may be enacted with the expectation it is unlikely ever to 
          be used (e.g., standby borrowing authority).
<bullet>  All income to a fund (e.g., certain revolving, special, and 
          trust funds) may be permanently appropriated as BA; as long as 
          the fund has adequate resources, there is no further 
          relationship between the BA and outlays.
<bullet>  As a result of the Budget Enforcement Act of 1990, the 
          measurement of BA changed in most special and trust funds with 
          legislatively imposed limitations or benefit formulas that 
          constrain the use of BA. Where previously budget authority was 
          the total income to the fund, BA in these funds for 1990 and 
          subsequent years is now an estimate of the obligations to be 
          incurred during the fiscal year for benefit payments, 
          administration and other expenses of the fund. In some, but 
          not all, cases it was possible to adjust BA figures for these 
          funds for years prior to 1990 to conform to the current 
<bullet>  Although major changes in the way BA is measured for credit 
          programs (beginning in 1992) result from the Budget 

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forcement Act, these tables could not be reconstructed to 
          show revised BA figures for 1991 and prior years on the new 
<bullet>  In its earliest years, the Federal Financing Bank (FFB) was 
          conducted as a revolving fund, making direct loans to the 
          public or purchasing loan assets from other funds or accounts. 
          Each new loan by the FFB required new BA. In many cases, if 
          the same loan were made by the account being serviced by the 
          FFB, the loan could be financed from offsetting collections 
          and no new BA would be recorded. Under terms of the 1985 
          legislation moving the FFB on-budget, the FFB ceased to make 
          direct loans to the public. Instead, it makes loans to the 
          accounts it services, and these accounts, in turn, make the 
          loans to the public. Such loans could be made from new BA or 
          other obligational authority available to the parent account. 
          These tables have not been reconstructed to shift BA 
          previously scored in the FFB to the parent accounts, because 
          there is no technical way to reconfigure the data.
  Despite these qualifications there is a desire for historical data on 
BA, and this section has been developed to meet that desire. Budget 
authority data are also provided in Table 8.9 for various discretionary 
program groupings.

     Notes on Section 6 (Composition of Federal Government Outlays)

  The ``composition'' categories in this section divide total outlays 
(including social security) into national defense and nondefense 
components, and then disaggregate the nondefense spending into several 
<bullet>  Payments for individuals: These are Federal Government 
          spending programs designed to transfer income (in cash or in 
          kind) to individuals or families. To the extent feasible, this 
          category does not include reimbursements for current services 
          rendered to the Government (e.g., salaries and interest). The 
          payments may be in the form of cash paid directly to 
          individuals or they may take the form of the provision of 
          services or the payment of bills for activities largely 
          financed from personal income. They include outlays for the 
          provision of medical care (in veterans hospitals, for example) 
          and for the payment of medical bills (e.g., medicare). They 
          also include subsidies to reduce the cost of housing below 
          market rates, and food and nutrition assistance (such as food 
          stamps). The data base, while not precise, provides a 
          reasonable perspective of the size and composition of income 
          support transfers within any particular year and trends over 
          time. Section 11 disaggregates the components of this 
          category. The data in Section 6 show a significant amount of 
          payments for individuals takes the form of grants to State and 
          local governments to finance benefits for the ultimate 
          recipients. These grants include medicaid, some food and 
          nutrition assistance, and a significant portion of the housing 
          assistance payments. Sections 11 and 12 provide a more 
          detailed disaggregation of this spending.
<bullet>  All other grants to State and local governments: This category 
          consists of the Federal nondefense grants to State and local 
          governments other than grants defined as payments for 
          individuals. Section 12 disaggregates this spending.
<bullet>  Net interest: This category consists all spending (including 
          offsetting receipts) included in the functional category ``net 
          interest.'' Most spending for net interest is paid to the 
          public as interest on the Federal debt. As shown in Table 3.2, 
          net interest includes, as an offset, significant amounts of 
          interest income.
<bullet>  All other: This category consists of all remaining Federal 
          spending and offsetting receipts except for those included in 
          the category ``undistributed offsetting receipts.'' It 
          includes most Federal loan activities and most Federal 
          spending for foreign assistance, farm price supports, medical 
          and other scientific research, and, in general, Federal direct 
          program operations.
<bullet>  Undistributed offsetting receipts: These are offsetting 
          receipts that are not offset against any specific agency or 
          programmatic function. They are classified as function 950 in 
          the functional tables. Addi-

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tional details on their composition 
          can be found at the end of Table 3.2.

 Table 6.1 shows these outlays in current and constant dollars, the 
percentage distribution of current dollar outlays, and the current 
dollar outlays as percentages of GDP. The term ``constant dollars'' 
means the amounts of money that would have had to be spent in each year 
if, on average, the unit cost of everything purchased within that 
category each year (including purchases financed by income transfers, 
interest, etc.) were the same as in the base year (1992). The 
adjustments to constant dollars are made by applying a series of chain-
weighted price deflators to the current dollar data base. The composite 
deflator is used to produce estimates of constant dollar receipts 
published in Table 1.3. The separate deflators used for these 
calculations are shown in Table 10.1.

                    Notes on Section 7 (Federal Debt)

  This section provides information about Federal debt. Table 7.1 
contains data on gross Federal debt and its major components in terms of 
both the amount of debt outstanding at the end of each year and that 
amount as a percentage of fiscal year GDP.
  Gross Federal debt is composed both of Federal debt held (owned) by 
the public and Federal debt held by Federal Government accounts, which 
is mostly held by trust funds. Federal debt held by the public consists 
of all Federal debt held outside the Federal Government accounts. For 
example, it includes debt held by individuals, private banks and 
insurance companies, the Federal Reserve Banks, and foreign central 
banks. The sale of Federal debt to the public is the principal means of 
financing the Federal deficit.
  The Federal Government accounts holding the largest amount of Federal 
debt securities are the civil service and military retirement, social 
security, and medicare trust funds. However, significant amounts are 
also held by some other Government accounts, such as the unemployment 
and highway trust funds.
  Table 7.1 divides debt held by the public between the amount held by 
the Federal Reserve Banks and the remainder. The Federal Reserve System 
is the central bank for the Nation. Their holdings of Federal debt are 
shown separately because they do not have the same impact on private 
credit markets as does other debt held by the public. They accumulate 
Federal debt as a result of their role as the country's central bank, 
and the size of these holdings has a major impact on the Nation's money 
supply. Since the Federal budget does not forecast Federal Reserve 
monetary policy, it does not project future changes in the amounts of 
Federal debt that will be held by the Federal Reserve Banks. Hence, the 
split of debt held by the public into that portion held by the Federal 
Reserve Banks and the remainder is provided only for past years. Table 
2.5 shows deposits of earnings by the Federal Reserve System. Most 
interest paid by Treasury on debt held by the Federal Reserve Banks is 
returned to the Treasury as deposits of earnings, which are recorded as 
budget receipts.
  As a result of a conceptual revision in the quantification of Federal 
debt, the data on debt held by the public and gross Federal debt--but 
only a small part of debt held by Government accounts--were revised back 
to 1956 in the 1990 budget. The total revision was relatively small--a 
change of under one percent of the recorded value of the debt--but the 
revised basis is more consistent with the quantification of interest 
outlays, and provides a more meaningful measure of Federal debt. The 
change converted most debt held by the public from the par value to the 
sales price plus amortized discount.
  Most debt held by Government accounts is issued at par, and securities 
issued at a premium or discount have traditionally been recorded at par. 
However, zero-coupon bonds are recorded at estimated market price. 
Starting in 1989, total debt held by Government accounts is adjusted for 
any initial discount on other securities.
  Table 7.2 shows the end-of-year amounts of Federal debt subject to the 
general statutory limitation. It is recorded at par value (except for 
savings bonds) through 1988, but by law the basis was changed, in part, 
to accrual value for later years. Before World War I, each debt issue by 
the Government 

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required specific authorization by the Congress. Starting 
in 1917, the nature of this limitation was modified in several steps 
until it developed into a limit on the total amount of Federal debt 
outstanding. The Treasury is free to borrow whatever amounts are needed 
up to the debt limit, which is changed from time to time to meet new 
requirements. Table 7.3 shows the ceiling at each point in time since 
1940. It provides the specific legal citation, a short description of 
the change, and the amount of the limit specified by each Act. Most of 
gross Federal debt is subject to the statutory limit. However, there are 
some differences.

     Notes on Section 8 (Outlays by Budget Enforcement Act Category)

  Section 8 is composed of nine tables that present budget authority and 
outlays by the major categories used under the Budget Enforcement Act 
(BEA) and under previous budget agreements between Congress and the 
current and previous Administrations. Table 8.1 shows Federal outlays 
within each of the categories and subcategories. The principal 
categories are outlays for mandatory and related programs and outlays 
for discretionary programs. Mandatory and related programs include 
direct spending and offsetting receipts whose budget authority is 
provided by law other than appropriations acts. These include 
appropriated entitlements and the food stamp program, which receive pro 
forma appropriations. Discretionary programs are those whose budgetary 
resources (other than entitlement authority) are provided in 
appropriations acts. The table shows three categories of discretionary 
programs: Defense (Function 050), International (Function 150), and 
Domestic (all other discretionary programs). Table 8.2 has the same 
structure, but shows the data in constant (FY 1992) dollars. Table 8.3 
shows the percentage distribution of outlays by BEA category and Table 
8.4 shows outlays by BEA category as a percentage of GDP.
  Table 8.5 provides additional detail by function and/or subfunction 
for mandatory and related programs. Table 8.6 shows the same data in 
constant dollars.
  Table 8.7 provides additional detail by function and/or subfunction on 
outlays for discretionary programs. Table 8.8 provides the same data in 
constant dollars. Table 8.9 provides function and/or subfunction detail 
on budget authority for discretionary programs.

   Notes on Section 9 (Federal Government Outlays for Major Physical 
     Capital, Research and Development, and Education and Training)

  Tables in this section provide a broad perspective on Federal 
Government outlays for public physical capital, the conduct of research 
and development (R&D), and education and training. These data measure 
new Federal spending for major public physical assets, but they exclude 
major commodity inventories. In some cases it was necessary to use 
supplementary data sources to estimate missing data in order to develop 
a consistent historical data series. The data for the conduct of 
research and development continue to exclude outlays for construction 
and major equipment because such spending is included in outlays for 
physical capital.
  Table 9.1 shows total investment outlays for major public physical 
capital, R&D, and education and training in current and constant (FY 
1992) dollars, and shows the percentage distribution of outlays and 
outlays as a percentage of GDP. Table 9.2 focuses on direct Federal 
outlays and grants for major public physical capital investment in 
current and constant (FY 1992) dollars, disaggregating direct Federal 
outlays into national defense and nondefense capital investment. Table 
9.3 retains the same structure as 9.2, but shows direct Federal outlay 
totals for physical capital investment as percentages of total outlays 
and as percentages of GDP. Table 9.4 disaggregates national defense 
direct outlays, while Table 9.5 disaggregates nondefense outlays for 
major public physical capital investment. Table 9.6 shows the 
composition of grant outlays for major public physical capital 
  Table 9.7 provides an overall perspective on Federal Government 
outlays for the conduct of R&D. It shows total R&D spending and the 
split between national defense and non-

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defense spending in four forms: in 
current dollars, in constant dollars, as percentages of total outlays, 
and as percentages of GDP. Table 9.8 shows outlays in current dollars by 
major function and program.
  Table 9.9 shows outlays for the conduct of education and training in 
current dollars for direct Federal programs and for grants to State and 
local governments. Total outlays for the conduct of education and 
training as a percentage of Federal outlays and in constant (FY 1992) 
dollars are also shown. As with the series on physical capital, several 
budget data sources have been used to develop a consistent data series 
extending back to 1962. A discontinuity occurs between 1991 and 1992 and 
affects primarily direct Federal higher education outlays. For 1991 and 
earlier, these data include net loan outlays. Beginning in 1992, 
pursuant to changes in the treatment of loans as specified in the Credit 
Reform Act of 1990, this series includes outlays for loan repayments and 
defaults for loans originated in 1991 and earlier and credit subsidy 
outlays for loans originated in 1992 and later years.
  Table 9.9 also excludes education and training outlays for physical 
capital (which are included in Table 9.7) and education and training 
outlays for the conduct of research and development (which are in Table 
9.8). Also excluded are education and training programs for Federal 
civilian and military personnel.

             Notes on Section 10 (Implicit Outlay Deflators)

  Section 10 consists of Table 10.1, Gross Domestic Product and 
Deflators Used in the Historical Tables, which shows the various 
implicit deflators used to convert current dollar outlays to constant 
dollars. The constant dollar deflators are based on chain-weighted (FY 
1992 chained-dollars) deflators derived from the National Income and 
Product Accounts data.

    Notes on Section 11 (Federal Government Payments for Individuals)

  This section provides detail on outlays for Federal Government 
payments for individuals, which are also described in the notes on 
Section 6. The basic purpose of the payments for individuals aggregation 
is to provide a broad perspective on Federal cash or in-kind payments 
for which no current service is rendered yet which constitutes income 
transfers to individuals and families. Table 11.1 provides an overview 
display of these data in four different forms. All four of these 
displays show the total payments for individuals, and the split of this 
total between grants to State and local governments for payments for 
individuals (such as medicaid and grants for housing assistance) and all 
other (``direct'') payments for individuals.
  Table 11.2 shows the functional composition of payments for 
individuals (see notes on Section 3 for a description of the functional 
classification), and includes the same grants versus nongrants 
(``direct'') split provided in Table 11.1. The off-budget social 
security program finances a significant portion of the Federal payments 
for individuals. These tables do not distinguish between the on-budget 
and off-budget payments for individuals. However, all payments for 
individuals shown in Table 11.2 in function 650 (social security) are 
off-budget outlays, and all other payments for individuals are on-
budget. Table 11.3 displays the payments for individuals by major 
program category.

   Notes on Section 12 (Federal Grants To State and Local Governments)

  For several decades the Federal budget documents have provided data on 
Federal grants to State and local governments. The purpose of these data 
is to identify Federal Government outlays that constitute income to 
State and local governments to help finance their services and their 
income transfers (payments for individuals) to the public. Grants 
generally exclude Federal Government payments for services rendered 
directly to the Federal Government; for example, they exclude most 
Federal Government payments for research and development, and they 
exclude payments to State social service agencies for screening 
disability insurance beneficiaries for the Federal disability insurance 
trust fund.

[[Page 11]]

  Table 12.1 provides an overall perspective on grants; its structure is 
similar to the structure of Table 11.1.
  Table 12.2 displays Federal grants by function (see notes on Section 3 
for a description of the functional classification). The bulk of Federal 
grants are included in the Federal funds group; however, since the 
creation of the highway trust fund in 1957, significant amounts of 
grants have been financed from trust funds (see notes to Section 1 for a 
description of the difference between ``Federal funds'' and ``trust 
funds''). All Federal grants are on-budget. Wherever trust fund outlays 
are included in those data, Table 12.2 not only identifies the total 
grants by function but also shows the split between Federal funds and 
trust funds.
  Table 12.3 provides data on grants at the account or program level, 
with an identification of the function, agency, and fund group of the 

           Notes on Section 13 (Social Security and Medicare)

  Over the past several decades the social security programs (the 
Federal old-age and survivors insurance (OASI) and the Federal 
disability insurance (DI) trust funds) and the medicare programs (the 
Federal hospital insurance (HI) and the Federal supplementary medical 
insurance (SMI) trust funds) have grown to be among the largest parts of 
the Federal budget. Because of the size, the rates of growth, and the 
specialized financing of these programs, policy analysts frequently wish 
to identify these activities separately from all other Federal taxes and 
spending. As discussed in the introductory notes, the two social 
security funds are off-budget, while the medicare funds are on-budget. 
As Table 13.1 shows, the first of these funds (OASI) began in 1937. The 
table shows the annual transactions of that fund and of the other funds 
beginning with their points of origin.
  The table provides detailed information about social security and 
medicare by fund. It shows total cash income (including offsetting 
receipts) by fund, separately identifying social insurance taxes and 
contributions, intragovernmental income, and proprietary receipts from 
the public. Virtually all of the proprietary receipts from the public, 
especially those for the supplementary medical insurance trust fund, are 
medicare insurance premiums. The table shows the income, outgo, and 
surplus or deficit of each fund for each year, and also shows the 
balances of the funds available for future requirements. Most of these 
fund balances are invested in public debt securities and constitute a 
significant portion of the debt held by Government accounts (see Table 
  The SMI fund, which was established in 1967, is financed primarily by 
payments from Federal funds and secondarily by medical insurance 
premiums (proprietary receipts from the public). The other three trust 
funds are financed primarily by social insurance taxes. The law 
establishing the rate and base of these taxes allocates the tax receipts 
among the three funds.
  The table shows significant transfers by OASI and DI to the railroad 
retirement social security equivalent account. These transfers are equal 
to the additional amounts of money social security would have had to 
pay, less additional receipts it would have collected, if the rail labor 
force had been included directly under social security since the 
inception of the social security program.
  In 1983, when the OASI fund ran short of money, Congress passed 
legislation that (a) provided for a one-time acceleration of military 
service credit payments to these trust funds, (b) provided for a Federal 
fund payment to OASDI for the estimated value of checks issued in prior 
years and charged to the trust funds but never cashed, (c) required that 
the Treasury make payments to OASDHI on the first day of the month for 
the estimated amounts of their social insurance taxes to be collected 
over the course of each month (thereby increasing each affected trust 
fund's balances at the beginning of the month), and (d) subjected some 
social security benefits to Federal income or other taxes and provided 
for payments by Federal funds to social security of amounts equal to 
these additional taxes. Additionally, in 1983 the OASI fund borrowed 
from the 

[[Page 12]]

DI and HI funds (the tables show the amounts of such borrowing 
and repayments of borrowing). The large intragovernmental collections by 
OASDHI in 1983 are a result of the transactions described under (a) and 
(b) above. Also starting in 1983, OASI began paying interest to DI and 
HI to reimburse them for the balances OASI borrowed from them; OASDHI 
paid interest to Treasury to compensate it for the balances transferred 
to these funds on the first day of each month. The legal requirement for 
Treasury to make payments on the first day of the month, and the 
associated interest payment, ended in 1985 for HI and in 1991 for OASI 
and DI.

Notes on Section 14 (Federal Sector Transactions in the National Income 
                          and Product Accounts)

  The principal system used in the United States for measuring total 
economic activity is the system of national income and product accounts 
(NIPA), which provide calculations of the GDP and related data series. 
These data are produced by the Bureau of Economic Analysis (BEA) of the 
Department of Commerce. As part of this work the BEA staff analyze the 
budget data base and estimate transactions consistent with this 
measurement system. The NIPA data are normally produced for calendar 
years and quarters. Section 14 provides Federal Sector NIPA data on a 
fiscal year basis.
  The BEA recently completed a benchmark revision to the NIPA data; 
however, the data required to update years prior to FY 1960 for this 
section to the revised basis are not yet available. Thus, the data are 
presented on a post-benchmark basis from FY 1960 through FY 1998.

  Notes on Section 15 (Total (Federal and State and Local) Government 

  Section 15 provides a perspective on the size and composition of total 
Government (Federal, State, and local) receipts and spending. Both the 
Bureau of the Census and the Bureau of Economic Analysis in the Commerce 
Department provide information (in the national income and product 
accounts (NIPA) data) on income and spending for all levels of 
government in the United States. These tables include the NIPA State and 
local transactions with the Federal Government (deducting the amount of 
overlap due to Federal grants to State and local governments) to measure 
total Government receipts and spending on a fiscal year basis from 1960 
through 1996.

              Notes on Section 16 (Federal Health Spending)

  Section 16 consists of Table 16.1, Total Outlays for Health Programs. 
This table shows a broad definition of total Federal health spending by 
type of health program, including defense and veterans health programs, 
medicare, medicaid, Federal employees' health benefits and other health 
spending. It also shows Federal health spending as percentages of total 
outlays and of GDP.

                Notes on Section 17 (Federal Employment)

  Section 17 provides an overview of the size and scope of the Federal 
work force. The measures of Federal employment currently in use are end-
strength and full-time equivalents (FTEs). End-strength is the measure 
of total positions filled at the end of the fiscal year, representing a 
``head count'' of all paid employees.
  Federal employment in the Executive Branch, however, is controlled on 
the basis of FTEs. Full-time equivalent (FTE) employment is the measure 
of the total number of regular (non-overtime) hours worked by an 
employee divided by the number of compensable hours applicable to each 
fiscal year. A typical FTE workyear is equal to 2,080 hours. Put simply, 
one full-time employee counts as one FTE, and two employees who work 
half-time count as one FTE. FTE data have been collected for Executive 
Branch agencies since 1981.
  The tables included in this section illustrate the size of the 
governmental work forces utilizing these measures. Table 17.1 shows the 
end-strength of the Executive Branch and selected agencies starting in 
1940. Table 17.2 shows the end-strength of the Executive 

[[Page 13]]

Branch and 
selected agencies as a percentage of total Executive Branch employment 
starting in 1940. Table 17.3 shows FTEs for the Executive Branch and 
selected agencies for 1981 and subsequent years; Table 17.4 shows these 
FTEs as a percentage of total Executive Branch FTEs. In Table 17.3, the 
figure shown for 1999 is the limitation for the Executive Branch 
established by the Federal Workforce Restructuring Act of 1994. Table 
17.5 shows a comparison of the end-strengths of Federal employment and 
State and local government employment, and the total of the two as a 
percentage of the U.S. population in each year.

[[Page 15]]

                      HISTORICAL TRENDS

  Because the Historical Tables publication provides a large volume and 
wide array of data on Federal Government finances, it is sometimes 
difficult to perceive the longer term patterns in various budget 
aggregates and components. To assist the reader in understanding some of 
these longer term patterns, this section provides a short summary of the 
trends in Federal deficits and surpluses, debt, receipts, outlays and 
  Deficits and Debt.--As shown in Table 1.1, except for periods of war 
(when spending for defense increased sharply), depressions or other 
economic downturns (when receipts fell precipitously), the Federal 
budget was generally in surplus throughout most of the Nation's first 
200 years. For our first 60 years as a Nation (through 1849), cumulative 
budget surpluses and deficits yielded a net surplus of $70 million. The 
Civil War, along with the Spanish-American War and the depression of the 
1890s, resulted in a cumulative deficit totaling just under $1 billion 
during the 1850-1900 period. Between 1901 and 1916, the budget hovered 
very close to balance every year. World War I brought large deficits 
that totaled $23 billion over the 1917-1919 period. The budget was then 
in surplus throughout the 1920s. However, the combination of the Great 
Depression followed by World War II resulted in a long, unbroken string 
of deficits that were historically unprecedented in magnitude. As a 
result, Federal debt held by the public mushroomed from less than $3 
billion in 1917 to $16 billion in 1930 and then to $242 billion by 1946. 
In relation to the size of the economy, debt held by the public grew 
from 16% of GDP in 1930 to 111% in 1946.
  During much of the postwar period, this same pattern persisted--large 
deficits were incurred only in time of war (e.g., Korea and Vietnam) or 
as a result of recessions. As shown in Table 1.2, prior to the 1980s, 
postwar deficits as a percent of GDP reached their highest during the 
1975-76 recession at 4.3% in 1976. Debt held by the public had grown to 
$477 billion by 1976, but, because the economy had grown faster, debt as 
a percent of GDP had declined throughout the postwar period to a low of 
23.9% in 1974, climbing back to 27.6% in 1976. Following five years of 
deficits averaging 2.5% of GDP between 1977-1981, debt held by the 
public rose to 25.8% of GDP by 1981, only two percentage points higher 
than its postwar low.
  The traditional pattern of running large deficits only in times of war 
or economic downturns was broken during the rest of the 1980s. In 1982, 
large tax cuts were enacted as were substantial increases in defense 
spending. Reductions in nondefense spending were not sufficient to 
offset the impact on the deficit. As a result, deficits averaging $207 
billion were incurred between 1983 and 1992. As a result of these 
unprecedented peacetime deficits, debt held by the public grew from $785 
billion in 1981 to $3.0 trillion in 1992.
  Since peaking at $290 billion in 1992, deficits have declined each 
year, dropping to a level of $107 billion in 1996. As a percent of GDP, 
deficits were reduced by more than two-thirds during those 4 years, from 
4.7% in 1992 to 1.4% in 1996.
  Receipts.-- From the beginning of the Republic until the start of the 
Civil War, our Nation relied on customs duties to finance the activities 
of the Federal Government. During the 19th Century, sales of public 
lands supplemented customs duties. While large amounts were occasionally 
obtained from the sale of lands, customs duties accounted for over 90% 
of Federal receipts in most years prior to the Civil War. Excise taxes 
became an important and growing source of Federal receipts starting in 
the 1860s. Estate and gift taxes were levied and collected sporadically 
from the 1860s through World War I, although never amounting to a 
significant source of receipts during that time. Prior to 1913, income 
taxes did not exist or were inconsequential, other than for a 

[[Page 16]]

brief time 
during the Civil War period, when special tax legislation raised the 
income tax share of Federal receipts to as much as 13% in 1866. 
Subsequent to the enactment of income tax legislation in 1913, these 
taxes grew in importance as a Federal receipts source during following 
decade. By 1930, the Federal Government was relying on income taxes for 
60% of its receipts, while customs duties and excise taxes each 
accounted for 15% of the receipts total.
  During the 1930s, total Federal receipts averaged about 5% of GDP. 
World War II brought a dramatic increase in receipts, with the Federal 
receipts share of GDP peaking at 21.2% in 1944. The share declined 
somewhat after the war and has remained fairly steady since the early 
1950s, fluctuating between 16-20% of GDP. Federal receipts ranged from 
17 to 19 percent of GDP in the 1960s and 1970s and are currently at 
19.4% of GDP. This relative stability in the postwar receipts share of 
GDP masks some significant shifts over time in the underlying sources or 
composition of receipts.
  The increase in taxes needed to support the war effort in the 1940s 
saw the income tax rise to prominence as a source of Federal receipts, 
reaching nearly 80% of total receipts in 1944. After the war, the income 
tax share of total receipts fell from a postwar high of 74% in 1952 to 
63% in the late 1960s. The growth in social insurance taxes (such as 
social security and medicare) more than offset a postwar secular decline 
in excise and other non-income tax shares. The combination of 
substantial reductions in income taxes enacted in the early 1980s and 
the continued growth in social insurance taxes has resulted in a 
continued decline in the income tax share of total receipts. By 1983 
income taxes had dropped to 54% of total receipts and have remained 
between 53% and 57% since then.
  Corporation income taxes accounted for a large part of this postwar 
decline, falling from 30% of total Federal receipts in the early 1950s 
to 20% in 1969. During the same period, pretax corporate profits fell 
from about 12% of GDP in the early 1950s to 10% in 1969. By 1980 the 
corporation income tax share of total receipts had dropped to 12.5%. 
During the 1980s, pretax corporate profits declined as a percent of GDP 
and, thus, the corporation income tax share dropped to as low as 6.2%, 
but eventually climbed back to 11.8% by 1996--still below the 1980 
share. This sharp drop in corporation income tax share of total receipts 
was more than offset by the growth in social insurance taxes, as both 
tax rates and percentage of the workforce covered by these taxes 
increased. Social insurance taxes increased from only 8% of total 
receipts during the mid-1940s to 38% by 1992, declining to 35% by 1996. 
Excise taxes have also declined in relative importance during the 
postwar period, falling from a 19% share in 1947 to slightly under 4% 
  Outlays and Federal employment.--Throughout most of the Nation's 
history prior to the 1930s, the bulk of Federal spending went towards 
national defense, veterans benefits and interest on the public debt. In 
1929, for example, 71% of Federal outlays were in these three 
categories. The 1930s began with Federal outlays comprising just 3.3% of 
GDP. The efforts to fight the Great Depression with public works and 
other nondefense Federal spending, when combined with the depressed GDP 
levels, caused outlays and their share of GDP to increase steadily 
during most of that decade, with outlays rising to 10.1% of GDP by 1939 
and to 11.8% by 1941 on the eve of U.S. involvement in World War II (as 
shown in Table 1.2). Defense spending during World War II resulted in 
outlays as a percent of GDP rising sharply, to a peak of 44.2% in 1944. 
The end of the war brought total spending down to 14.4% of GDP in 1949. 
The Korean war increased spending to an average 19.5% of GDP for a few 
years in the early 1950s, but outlays as a percent of GDP then 
stabilized at around 17-19% until U.S. involvement in the Vietnam war 
escalated sharply in the middle 1960s and early 1970s. From 1967 through 
1972, Federal outlays averaged 19.7% of GDP. The decline in defense 
spending as a percent of GDP that began in 1971, as the Vietnam War came 
to a close, was more than offset by increased spending on human 
resources programs during the 1970s--due to the maturation of the social 
security program and other longstanding income sup-

[[Page 17]]

port programs, as well 
as a takeoff in spending on the recently enacted Great Society programs, 
such as medicare and medicaid--so that total spending increased as a 
percent of GDP to average more than 21% during the last half of that 
decade. Also contributing to the increase in Federal spending was a 
substantial increase throughout the 1970s in grants to State and local 
governments. Since receipts stabilized at 17-18% of GDP during most of 
the decade, chronic deficits of nearly 2% of GDP were incurred (except 
for the recession of 1975-76, which saw deficits increase to an average 
of 4%).
  The 1980s began with substantial momentum in the growth of Federal 
nondefense spending in the areas of human resources, grants to State and 
local governments, and, as a result of the deficits incurred throughout 
the 1970s, interest on the public debt. In the early 1980s, a 
combination of substantially increased defense spending, continued 
growth in human resource spending, a tax cut and recession caused the 
deficits to soar, which, in turn, sharply increased spending for 
interest on the public debt. Federal spending climbed to an average of 
nearly 23% of GDP in the first half of the decade. Partial reversals of 
the tax cut and rapid defense buildup, along with a strong economy 
during the second half of the decade, brought Federal spending back down 
to 21.4% of GDP by 1989. In the early 1990s, another recession in the 
face of continued rapid growth in Federal health care spending and 
additional spending necessitated by the Savings and Loan crisis caused 
outlays to average over 22.5% of GDP in 1991 and 1992. During the past 
four years, this outlay growth trend was reversed. Outlays have begun to 
fall as a percent of GDP, dropping to 20.8% in 1996.
  Despite the growth in total Federal spending as a percent of GDP in 
the postwar period, Federal employment, as shown in Table 17.1, has 
remained roughly constant, ranging from 1.8 to 2.3 million civilian 
employees (excluding the Postal Service) throughout this period. The 
composition of employment has shifted dramatically between defense and 
civilian agencies over the last 35 years. In 1951, for example, of the 
2.0 million employees, 1.2 million worked for the Department of Defense 
and 0.7 million worked for civilian agencies. By 1974, Federal 
employment was split equally between defense and civilian agencies, with 
each accounting for 1.07 million employees. The shift away from defense 
to civilian agency employment continued throughout the next two decades 
so that by 1996 civilian agency employment was 1.2 million and 
Department of Defense employment was 0.8 million, nearly the reverse of 
the proportions in 1951. During the past several years total Federal 
employment has begun to decline. Since 1992, when there were 2.2 million 
civilians employed by the Federal Government, reductions of nearly 300 
thousand employees have been achieved, bringing Federal employment down 
to 1.9 million in 1996.
  Although total spending has increased substantially as a percent of 
GDP since the 1950s, the growth in the various components of spending 
has not been even and, thus, the composition of spending has changed 
significantly during the same period.
  Discretionary spending totaled 12.7% of GDP in 1962, with three-
fourths going to defense. Defense spending increased during the Vietnam 
War buildup in the late 1960s causing total discretionary outlays to 
rise to 13.6% of GDP by 1968, after which a secular decline began. By 
the middle 1970s, this category had dropped to 10% of GDP. It fluctuated 
between 9\1/2\-10\1/2\% of GDP until the late 1980's, when the defense 
buildup that started early in that decade ended. Total discretionary 
spending has fallen more sharply over the past ten years, from 9.6% in 
1987 to 7.1% in 1996. Although total discretionary spending has followed 
a path of secular decline over the past 25 years, its major components--
defense and nondefense--have experienced contrasting histories.
  Defense discretionary spending began the 1960s at 9.3% of GDP in 1962. 
As shown in Table 8.4, spending in this category had declined to 7.4% of 
GDP by 1965, then increased as a result of the Vietnam War. After 
peaking at 9.5% of GDP in 1968, it returned to the 1965 level by 1971. 
The decline continued throughout the 1970s, hitting a low point of 4.7% 
of GDP in 1979. 

[[Page 18]]

The defense buildup starting in the early 1980s boosted 
its percentage of GDP back to 6.3% by 1986, after which it again began a 
gradual decline throughout the rest of that decade. By 1996, defense 
discretionary spending stood at 3.6% of GDP, reflecting the impact of 
the end of the Cold War on our Nation's defense requirements.
  Nondefense discretionary spending as a percent of GDP has followed a 
much different path. In 1962, it stood at 3.4% of GDP. During the next 
few years it quickly increased, reaching 4.2% of GDP by 1967. It dropped 
slightly after that year, but still averaged about 4.0% of GDP until 
1975, when it surged to 4.5% of GDP due to the recession and, in part, 
to growth in spending on energy and the environment, housing and other 
income support programs. Much of this growth was in the form of Federal 
grants to State and local governments. Additional grant spending arose 
from the creation of General Revenue Sharing in 1972 and various anti-
recession grants at the end of the decade. Nondefense discretionary 
outlays peaked as a percent of GDP during the recession in 1980 at 5.2%. 
They declined sharply starting in 1982, falling to 3.9% by 1985 and to 
3.5% during the 1987-1990 period. Spending for these programs has 
increased slightly since 1990, climbing to 3.8% by 1992 before falling 
back to 3.5% in 1996.
  Programmatic mandatory spending (which excludes net interest and 
undistributed offsetting receipts) accounts for a large part of the 
growth in total Federal spending as a percent of GDP since the 1950s. 
Major programs in this category include social security, medicare, 
deposit insurance and means-tested entitlements (medicaid, aid to 
dependent children, food stamps and other programs subject to an income 
test). Prior to the start of medicare and medicaid in 1966, this 
category averaged 5.7% of GDP between 1962 and 1965 (less than half the 
size of total discretionary spending), with social security accounting 
for nearly half. Within a decade, this category was comparable in size 
to total discretionary spending, nearly doubling as a percent of GDP to 
10.6% by 1976 (1.1% of which was for unemployment compensation that 
  Although part of this growth represented the impact of the 1975-76 
recession on GDP levels and outlays for unemployment compensation, the 
largest part was due to growth in social security, medicare and 
medicaid. These three programs totaled 3.4% of GDP in 1968 and had 
nearly doubled to 5.8% of GDP by 1976. While social security stabilized 
as a percent of GDP during 1985-1995, ranging from 4.3% to 4.7%, the 
growth in other programmatic mandatory spending has continued to outpace 
the growth in GDP since the mid-1970s (apart from the recessionary 
periods) due largely to medicare and medicaid. These two programs, which 
were 1.4% of GDP in 1976, have more than doubled as a percent of GDP 
since then, reaching 3.5% in 1996. Excluding medicaid, spending for 
means-tested entitlements in 1996 was at 1.3% percent of GDP, the same 
as it was twenty years ago in 1976. By way of contrast, programmatic 
mandatory spending--other than medicare, unemployment compensation, 
social security, deposit insurance and means-tested entitlements--has 
been halved as a percent of GDP, falling from 2.8% in 1976 to 1.4% of 
GDP in 1996. (Major programs in this grouping include Federal employee 
and railroad retirement, veterans' benefits other than veterans' 
pensions, and farm price supports.) Nevertheless, total programmatic 
mandatory spending in 1996 had reached 11.0% of GDP compared to 7.1% for 
total discretionary spending.
  Additional perspectives on spending trends available in this document 
include spending by agency, by function and subfunction and by 
composition of outlays categories, which include payments for 
individuals and grants to State and local governments.