example, those that encourage the enforcement of the 55-mile-perhour speed limit. Related to these safety efforts is administration of mandatory and voluntary fuel economy programs which will reduce the amount of petroleum used by motor vehicles.

Mass transit.—Outlays for mass transit are estimated to increase by more than 15% between 1977 and 1979—from $2.0 billion to $2.3 billion. Outlays are growing substantially in two areas: payments to help defray local transit operating deficits, and construction of rail transit projects made possible by the cancellation of unneeded Interstate highway projects in urban areas, particularly in Boston and Washington, D.C. The new highway and mass transit legislation proposes to change Federal cost sharing formulas to provide a uniform 90% Federal share for all highway and mass transit projects substituted for Interstate projects, and a uniform 80% Federal share for all other projects. Most mass transit programs are currently funded at 80% by the Federal Government. This includes transit projects funded from Interstate transfers, even though the Federal share for highway construction would have been 90%. In addition, when transit projects are funded from the urban system highway program, the Federal share is now only 70%. These funding differences have discouraged localities from using urban highway funds and Interstate transfers for transit projects because a greater share of local funds is necessary to complete transit projects. The new bill should correct these inequities. An additional step to improve Federal transit assistance is the proposal to double the proportion of funding allocated by formula to urbanized areas by shifting away from the discretionary allocation of Federal funds. Previously, local governments had to apply for most mass transit funds on a case-by-case basis, and there was little predictability on the level of Federal funds that would be available to each metropolitan area. Under the administration's proposal, local governments should know how much they can expect during the next 4 years. In addition, the legislation will propose consolidation of Federal highway and transit planning assistance programs into one program. Both of these actions should facilitate transportation planning and reduce paperwork and administrative costs for local jurisdictions. In 1979, a new generation of mass transit buses—the Transbus— will be put into production. These buses, developed by private enterprise to meet Federal standards, contain new features and improvements intended to make buses easier to use by elderly and handicapped individuals. They also have the potential to reduce operating and maintenance costs. Funds from mass transit programs will be available to jurisdictions for purchase of these buses. An aggressive program of cost and design control is planned to assure that the impact of these improvements on the purchase price of buses will be only moderate.

Railroads.-Outlays for railroad programs are estimated to increase from $1.7 billion in 1977 to $1.8 billion by 1979, including loans to the Consolidated Rail Corporation (Con Rail). By the end of 1979, Con Rail will have received an estimated $2.1 billion to help establish a self-supporting freight rail system in the Northeast and Midwest. The impact of this assistance is now under review by the Department of Transportation (DOT) and the United States Railway Association, an off-budget Federal entity that provides assistance to Con Rail. Reports to Congress on ConFail's financial condition will be completed during 1978. In addition, about $1.1 billion in direct and guaranteed loans will be available through 1979 for the rest of the rail freight industry. This assistance was designed to be temporary. The longterm need for such assistance is currently being studied by DOT. These studies should help identify the problems of the industry and the appropriate Federal role, if any, in addressing these problems.

Assistance to rail passenger service takes the form of a subsidy to the National Railroad Passenger Corporation (Amtrak). The 1979 request for Amtrak continues the standard for Federal assistance to the Corporation established in 1978. Except for additions to reflect increases in taxes and interest, the proposed operating subsidy for 1979 and subsequent years is being held to the same level as in 1978 rather than being increased to meet Amtrak's operating deficit. It is expected that Amtrak will be able to conduct its operations at the proposed level by taking management actions such as route reductions. The Department of Transportation, in cooperation with Amtrak, is conducting a review of Amtrak's route system and will submit a report to the Congress by March 1, 1978. The results of this study are expected to influence the final subsidy level in 1979. Aid to rail passenger service is also provided by the Northeast corridor improvement project. The budget proposes that $1.1 billion in outlays be provided through 1979 to rehabilitate track and improve rail service in the region. This investment aids the development of a rail system that seeks to increase the number of riders, and that encourages efforts to operate without financial loss.

Regulation.—Outlays for ground transportation regulation are estimated at $69 million for 1979. The operation of railroads will be allowed more flexibility as the carriers take advantage of the liberalized ratesetting provisions of recent legislation. In calendar year 1978, the Interstate Commerce Commission is considering administrative actions to reform the regulation of motor carriers. The administration will continue to seek reduction of outmoded motor carrier rules and regulations.

Air transportation.—To provide a safe and reliable air transportation system, the Federal Government will spend an estimated $3.4 billion in 1979.

Airways and airports.-The budget requests additional air traffic controllers to provide safe, effective handling of projected air traffic activity. Management efficiencies by the Federal Aviation Administration, in areas other than air traffic control, will allow continuation of present service levels with some minor staffing reductions, particularly in administrative overhead.

The budget includes full funding of the program to modernize and streamline flight service stations which will provide improved aviation weather information and navigation services to general aviation aircraft. The budget also requests full funding of the 1979 authorization for airport grants to insure the continued development of the Nation's airport system.

Aeronautical research and technology.—The Federal Government supports basic aeronautics research and technology advancement to meet national needs for more efficient, higher performance and environmentally acceptable aircraft. The National Aeronautics and Space Administration conducts research in those areas that cannot be supported adequately by private industry because of long leadtimes or high technical risk. The 1979 budget includes $466 million in outlays for aeronautical research and technology. Priority will be given to seeking advances in aircraft technologies to reduce fuel consumption by civilian and military air transports. In addition, increased emphasis will be given to long-term basic research to maintain a sound technology base for future aircraft improvements.

Regulation.—The Civil Aeronautics Board regulates the aviation industry by making awards of operating authority for specific routes and reviewing the fares and rates to be charged. The President's commitment to increased competition and lower fares and rates has contributed to reform of aircargo regulation and has led to substantial reductions in prices for cargo and passengers on international routes. The administration is committed to the goal of domestic aviation regulatory reform, and expects passage of a reform bill in calendar year 1978. In the interim, the Board is continuing to reform its existing regulations to increase competition among air carriers. Extensive management efforts are also underway at the Board to improve and quicken the regulatory process.

Water transportation.—To meet the need for a viable U.S. merchant marine and to operate and maintain a safe, reliable, and efficient marine transportation system, the budget proposes $1.9 billion in outlays in 1979 for water transportation programs. This does not include amounts for Corps of Engineers construction, operation, and maintenance programs for navigation purposes since a number of the projects do not have navigation components separately identified in the budget.

Marine safety and transportation.—Outlays of $1.4 billion in 1979 reflect a continuing emphasis on renovation and replacement of Coast Guard operating equipment to meet the needs of marine transportation and safety. Full funding for the removal or replacement of three bridges that represent hazards to navigation is provided for, as well as a shift in staff to expand foreign tanker inspections. In addition, the budget proposes phasing out the Coast Guard's boating safety grant program.

The administration will press for enactment of waterway user charges legislation to recover a substantial portion of the Federal cost of constructing, operating, and maintaining the inland waterway system. These proposals are further discussed in the receipts section (Part 4) of the Budget.

Ocean shipping.—Outlays in support of the U.S. merchant marine and the U.S. shipbuilding industry are estimated to total $532 million in 1979. Federal operating subsidies are provided to offset the higher labor and other operating costs of U.S.-flag ships. In addition, Federal construction differential subsidies are provided to offset higher labor and material costs of manufacturing ships in U.S. shipyards. Without these subsidies, foreign-flag ships would have a competitive advantage in our foreign trade because of their lower costs. Outlays for operating differential subsidies of $337 million are expected in 1979. This reflects approximately the same level of operations for liner ships as in 1978, and a reduction in subsidies for bulk carriers hauling grain to the Soviet Union as a result of strong demand for these ships in other markets. Commitments to subsidize the construction of a number of merchant vessels are planned.

Under the terms of the Panama Canal Treaty of 1977, the Panama Canal Company would be replaced by a new Federal Government agency, the Panama Canal Commission, when the treaty is effective. The Commission would be responsible for operating the waterway, but most supporting activities—now performed by the Panama Canal Company—would not be continued by the new Commission.

Other transportation.—Various programs that are not readily addressed to ground, air, or water transportation also contribute to the achievement of the national need for an effective transportation system. These include the National Transportation Safety Board and the unallocated overhead of the Department of Transportation. The budget requests $0.1 billion in outlays for these programs that serve all transportation areas.

Tax expenditures.—The deductibility of State and local gasoline excise taxes results in a tax expenditure estimated to be $0.8 billion in 1979 under current law. The President's tax reform proposals include repeal of this provision. Repeal would both simplify the tax system and help meet the objectives of the national energy plan.