in the Federal Government fail in this responsibility, our other objectives are meaningless. Accordingly, I am recommending a significant increase in defense spending for 1977. If in good conscience I could propose less, I would. Great good could be accomplished with other uses of these dollars. My request is based on a careful assessment of the international situation and the contingencies we must be prepared to meet. The amounts I seek will provide the national defense it now appears we need. We dare not do less. And if our efforts to secure international arms limitations falter, we will need to do more. Assuring our Nation's needs for energy must also be among our highest priorities. My budget gives that priority. While providing fully for our defense and energy needs, I have imposed upon these budgets the same discipline that I have applied in reviewing other programs. Savings have been achieved in a number of areas. We cannot tolerate waste in any program. In our domestic programs, my objective has been to achieve a balance between all the things we would like to do and those things we can realistically afford to do. The hundreds of pages that spell out the details of my program proposals tell the story, but some examples illustrate the point. I am proposing that we take steps to address the haunting fear of our elderly that a prolonged, serious illness could cost them and their children everything they have. My medicare reform proposal would provide protection against such catastrophic health costs. No elderly person would have to pay over $500 per year for covered hospital or nursing home care, and no more than $250 per year for covered physician services. To offset the costs of this additional protection and to slow down the runaway increases in federally funded medical expenses, I am recommending adjustments to the medicare program so that within the new maximums beneficiaries contribute more to the costs of their care than they do now. My budget provides a full cost-of-living increase for those receiving social security or other Federal retirement benefits. We must recognize, however, that the social security trust fund is becoming depleted. To restore its integrity, I am asking the Congress to raise social security taxes, effective January 1, 1977, and to adopt certain other reforms of the system. Higher social security taxes and the other reforms I am proposing may be controversial, but they are the right thing to do. The American people understand that we must pay for the things we want. I know that those who are working now want to be sure that the money will be there to pay their benefits when their working days are over. My budget also proposes that we replace 59 grant programs with broad block grants in four important areas: -A health block grant that will consolidate medicaid and 15 other health programs. States will be able to make their own priority choices for use of these Federal funds to help lowincome people with their health needs. -An education block grant that will consolidate 27 grant programs for education into a single flexible Federal grant to States, primarily for use in helping disadvantaged and handicapped children. -A block grant for feeding needy children that will consolidate 15 complex and overlapping programs. Under existing programs, 700,000 needy children receive no benefits. Under my program, all needy children can be fed, but subsidies for the nonpoor will be eliminated. -A block grant that will support a community's social service programs for the needy. This would be accomplished by removing current requirements unnecessarily restricting the flexibility of States in providing such services. These initiatives will result in more equitable distribution of Federal dollars, and provide greater State discretion and responsibility. All requirements that States match Federal funds will be eliminated. Such reforms are urgently needed, but my proposals recognize that they will, in some cases, require a period of transition. These are only examples. My budget sets forth many other recommendations. Some involve new initiatives. Others seek restraint. The American people know that promises that the Federal Government will do more for them every year have not been kept. I make no such promises. I offer no such illusion: This budget does not shrink from hard choices where necessary. Notwithstanding those hard choices, I believe this budget reflects a forward-looking spirit that is in keeping with our heritage as we begin our Nation's third GERALD R. FORD. century. JANUARY 21, 1976. This part presents the budget totals and explains briefly several topics that help to place the budget in perspective. One of the sections that follows compares the original estimates of certain 1975 outlays with the actual results for that year. This comparison demonstrates several key points: -Budget outlays and receipts for the current and future years are estimates. -The President's budget is his principal statement of priorities for the Federal Government and is predicated on acceptance of his proposals for appropriations, for legislative change, and for deferrals and rescissions -For a variety of reasons, the estimates now presented will undergo change as we move closer to 1977 and then into that year. Notwithstanding every effort to refine and apply the best estimating techniques available, the estimates set forth in the budget will turn out to be different from the actual figures recorded at the end of 1977— a year and 8 months away. There will be many reasons for the differences. Economic assumptions, covered in Part 3, rarely are precisely accurate. Differences between actual economic conditions and those assumed can materially affect both outlays and receipts. Furthermore, in many programs benefits are paid automatically to those who meet specified criteria. Thus, the rate at which individuals or States and localities apply for benefits can have a major effect on the level of Federal spending. Particularly in the case of new programs, or programs that have recently undergone substantial change, the number of eligible applicants is difficult to predict accurately. Finally, congressional action on or affecting the budget, subsequent Presidential decisions, and other factors can also cause substantial changes to the budget estimates. This part also discusses certain concepts not directly reflected in total budget outlays but very closely related, such as the off-budget Federal agencies and the privately owned Government-sponsored 2 enterprises. Finally, it covers the concepts of Federal funds and trust funds, and Federal debt. These discussions demonstrate strongly that budget outlays and budget authority give only a part, albeit a fundamental part, of the picture with respect to the financial position and plans of the Federal Government. Differing perspectives on both the totals and the details are also presented in this part and throughout the budget documents by use of different classifications. While the details of the budget are shown by agency and by budget account, the major classification of the budget. totals is in terms of functions or purposes being served. As is noted in the introduction to Part 5 of this document, the functional classification has taken on a major new role now that the Congress is using it as a basis for budget review. One additional perspective is crucial. Where we are headed in the next few years-particularly as to the growth in Federal spending— is determined in large measure by substantive laws and appropriations already enacted and programmatic actions already taken. For example, many billions of outlays represent payment of obligations that must be met. These include interest on the public debt and payments coming due on a wide variety of contracts already signed. The Federal Government is committed to future payments for bridges, dams, water reclamation projects, waterways, military equipment, sewage treatment plants, research and development, subsidies for lower income housing, community development projects, and much more. About one-quarter of 1977 outlays are so committed. Moreover, major Federal responsibilities often cannot be altered rapidly. It is possible to increase or decrease outlays for our national parks, the Forest Service, or the Department of the Treasury, but sharply curtailing or eliminating such activities in a short period of time is not practical. It is for this reason that the budget document has increasingly emphasized projections for the years beyond the budget year. Part 3 of this document contains estimates through 1981, as now required by the Congressional Budget Act. Even greater emphasis has been placed on future budget trends by including in the discussion of the budget by function, in Part 5, specific references to 1978 outlays where the outyear impact is particularly important. The sections in this part of the volume are also complemented by Part 6, which summarizes the budget process and defines the most significant terms used in the budget documents. BUDGET AUTHORITY The Congress must provide budget authority, generally in the form of appropriations, before Federal agencies can obligate the Government to make outlays. For 1977, a total of $433.4 billion of new budget. authority is recommended. |