Page images


[In millions of dollars)

1977 1978 1979 1980 actual estimate estimate estimate

Outlays for the interest function-------------------- 38,092 43,841 48,991 53,686

Interest received by trust funds-------------------- –8, 131 –8,595 –9,064 –10,300

Net interest outlays------------------------- 29,961 35,246 39,927 43,386 Deduct: Deposit of earnings by the Federal Reserve

System --------------------------------------- 5,908 6, 200 6,300 6,400

Net impact”------------------------------- 24,053 29,046 33,627 36,986

[ocr errors]

e * Net amount .# interest to be paid from receipts or other means of financing.

In addition, Federal Reserve banks hold government securities as part of their monetary functions. The Federal Reserve banks return a portion of the interest they receive on those securities back to the Treasury as miscellaneous budget receipts. This deposit of earnings is projected to be $6.3 billion in 1979. Deducting these receipts from net interest totals results in a net impact on the budget of $33.6 billion in 1979. The net impact of interest is the amount of interest that must be paid from receipts or additional borrowing to meet Federal financing requirements.

A tax expenditure arises from the optional deferral of interest income on U.S. savings bonds. Normally, the interest on these bonds would be taxed each year as it is credited, but the holder may defer paying the tax until the bond is redeemed. The revenue loss is projected to be $0.6 billion in 1979.


Allowances are included in the 1979 budget to cover statutory pay increases for Federal civilian agency employees, future initiatives and unforeseen requirements that may arise. Pay allowances for the Department of Defense are included in the National Defense function.

ALLOWANCES [Functional code 920; in millions of dollars) Recom- Outlays mended Program budget 1977 1978 1979 1980 authorit actual estimate estimate estimate for 197 Civilian agency pay raises------------------- 1, 197 ------- ------- 1, 145 2,435 Proposed legislation---------------------- -47 ------- ------- –45 – 1/7 Contingencies for: Relatively uncontrollable programs-------- ------- --------- ------- ------- ------Other requirements---------------------- 3,000 ------- ------- 1,700 3,500 Total------------------------------ 4, 150 ------- ------- 2,800 5,818

The Federal Pay Comparability Act of 1970 provides a system for annually adjusting Federal white-collar pay on the basis of comparability with the private sector. In 1977, the number of private establishments covered by the comparability survey was increased by 24%. This increase provides an improved base upon which to make future comparability adjustments. The President has asked business and labor to cooperate in a voluntary program to decelerate wage and price increases. Every effort is to be made to hold wage and price increases in 1978 significantly below those in the prior year. The President intends to keep this criterion in mind when he reviews the October 1978 pay raise recommendations of the President's pay agent, the Federal Employees Pay Council, and the Advisory Committee on Federal Pay, and after a review of the economic situation at the time. The President's final decision will be made in late summer. As part of the overall effort to hold down inflationary trends, Federal agencies will be required to limit additional funds requested to cover the pay increase to no more than 6%. Recently, the Federal personnel management project recommended legislative changes in the Federal pay system. These proposals include splitting the present general schedule into two schedules and setting salaries in the new clerical and technical schedule on a local basis. Enactment of this proposal will improve the process of setting pay on the basis of comparability. The administration continues to support legislation that is also pending before the Congress to reform certain aspects of wage-board pay rates that result in blue-collar workers earning more than their private sector counterparts. This proposal would save $45 million in the 1979 budgets of civilian agencies. In addition, the Civil Service Commission is considering extending the comparability base to include fringe benefits in its considerations to establish total comparability with the private sector.

The allowance for relatively uncontrollable programs is assumed to be zero since the probability of estimates higher or lower than the budget estimates is assumed to be the same. An allowance for other requirements is included. This does not represent a compilation of a specific list of future needs, but is a rough estimate taking into account past experience of unanticipated requirements and possible requirements for future initiatives.


Offsetting receipts (which are shown in detail in table 11 in Part 9 of the budget) are generally deducted from budget totals at the function or agency levels. There are three instances, however, when such payments are deducted from the budget as undistributed offsetting receipts. In two cases, interest received by trust funds and rents and royalties on the Outer Continental Shelf, the payments are extremely large and to include them at the function or agency level would present a distorted view of Federal program costs. In the case of the third, the payment that each agency makes as its share of employee retirement, it is not practical to collect the information, since to do so would require a very large number of detailed reports.

[blocks in formation]

Employer share, employee retirement.—This category is composed of payments by Federal agencies to various employee retirement funds. These contributions are outlays of the agency and receipts of the respective retirement fund. They are deducted before striking budget totals in order to eliminate double counting and thereby properly reflect transactions with the public. About two-thirds of these payments are to the Civil Service retirement fund, with the remainder paid mostly to the social security trust funds.

Interest received by trust funds.-By law, most trust fund balances are invested in Federal securities. The interest received by trust nonrevolving funds is deducted from the budget totals under the unified budget concept to reflect transactions with the public.

Rents and royalties from the Outer Continental Shelf (OCS).—These estimates include cash bonuses received from the

260-000 0 - 78 - 16

leasing of new OCS lands that have the promise of containing oil and gas. Annual rentals on existing leases and royalties based on a percentage of the value of production are also included. The current estimates assume that five scheduled OCS sales will be conducted in 1979 and four sales in 1980. No final decision will be made on any of these sales until environmental studies and other requirements under the National Environmental Policy Act have been completed.

« PreviousContinue »