described in the budget message. The following table shows the estimated effect of this proposed legislation on net budget receipts.

Miscellaneous receipts- increased fees and charges for services and special benefits.

Total proposed legislation..

3, 520

4,670

The estimated effects of proposed legislation on the transfer to the highway trust fund are shown in the following table.

The budget expenditures of $76.5 billion in the fiscal year 1960, a decrease of $3.8 billion from the expenditures of 1959, reflect the effort made during the year to reduce budget expenditures and achieve a balanced budget. The distribution of the changes that took place in budget expenditures as related to budgetary functions is shown in the comparative summary which follows. Details of expenditures by

major functions for the fiscal years 1952 through 1960 are shown in table 10.

Changes in major national security expenditures included reductions of $0.7 billion for military assistance and $0.1 billion for stockpiling, coupled with an increase of approximately $0.1 billion for development and control of atomic energy. Spending for the military defense portion of major national security remained virtually unchanged in total but changes within this sector included an $0.9 billion increase for research and development, test, and evaluation, offset by declines of $0.3 billion in military construction; $0.2 billion in operations and maintenance; and smaller declines in both military personnel and procurement.

Expenditures for international affairs and finance during fiscal 1960 were $2.0 billion less than in 1959 but total outlays for fiscal 1959 included the subscription payment of $1.4 billion by the United States to the International Monetary Fund. The increase of $1.6 billion in interest was a result of both the interest incurred on the $1.7 billion rise in the public debt and the higher market rates paid by the Treasury on issues offered in exchange for maturing securities.

The nearly unchanged totals for labor and welfare resulted from a decrease of $0.4 billion in expenditures for labor and manpower, together with increases of $0.3 billion for promotion of public health, education, and science and research, with relatively minor changes. in other categories.

The major items accounting for the net $1.7 billion decline in expenditures for agriculture and agricultural resources were a $1.8 billion decrease in the program for the stabilization of farm prices and farm income, and an $0.1 billion increase in the conservation of agricultural land and water resources.

The major changes in the category of commerce, housing, and space technology were an $0.8 billion reduction in the housing program from the high amount of the previous year, an $0.2 billion decrease in postal service expenditures, an $0.3 billion increase in space exploration and flight technology, and an $0.1 billion increase in the promotion of aviation. General government expenditures increased by approximately $0.1 billion during fiscal 1960, and those for veterans' services were reduced by the same amount.

The amount deducted to adjust for interfund transactions was increased by $0.3 billion, resulting in a further decline in budget expenditures.

Estimates of expenditures in 1961 and 1962

Actual expenditures for the fiscal year 1960 and estimates for the fiscal years 1961 and 1962 are summarized in the following table. Further details will be found in table 12. The estimates are based on those submitted to the Congress in the Budget of the United States Government for the Fiscal Year Ending June 30, 1962.

Actual budget expenditures for the fiscal year 1960 and estimated expenditures for 1961 and 1962

[In millions of dollars. On basis of 1962 Budget document]

Trust Account and Other Transactions

Several categories of financial transactions of the Government (other than those in the public debt) augment or diminish the cash balance of the Treasurer of the United States or the cash held outside the account of the Treasurer but do not affect the Federal budget surplus or deficit. These classes consist of trust and deposit accounts; net investments of Government agencies in public debt securities; and net sales or redemptions of obligations of Government agencies in the market.

The Government maintains trust funds for use in carrying out specified purposes and programs in accordance with trust agreements or statutes. Within this group, trust revolving funds are those established to carry on a cycle of business-type operations. Deposit funds account for receipts held by the Government in suspense temporarily and later refunded or paid into some other Government fund, or are funds held by the Government as banker or agent for others. Although trust and deposit funds transactions constitute an important part of Federal financial operations, they are excluded from the budget because they are not fully owned by the Government. Transactions of most trust accounts are reported on a gross basis, but some, and also those of deposit funds, are reported net.

The investments by Government agencies in public debt securities (net) represent an exchange of assets and have no effect on the operating programs of the agencies. The investments provide interest income until the funds invested are required to meet the cash needs. of the programs.

Sales and redemptions of securities of certain Government agencies. in the market (net) represent financing operations between the agencies and the public. The transactions are reported at the par value of the securities. In the fiscal year 1960 these operations were in nonguaranteed securities except those in debentures issued by the Federal Housing Administration in exchange for defaulted mortgages, the stadium bonds issued by the District of Columbia Armory Board, and also, redemptions of matured guaranteed obligations outstanding in lesser amounts.

Detail of trust account and other transactions for 1959 and 1960 appears in tables 7, 8, and 9. Annual fiscal year data for 1952 through 1960 are shown in table 11. The data for 1960 with estimates for 1961 and 1962 are published in table 13.

Individual statements of receipts and expenditures (excluding investment transactions) and of the assets of selected trust accounts. are contained in tables 62 through 84. Investments in Federal securities of the trust accounts handled by the Treasury (and also

of those handled by Government agencies) are shown in table 61 as of June 30, 1952 through 1960. The investments in Federal securities include both public and special issues of the public debt and also guaranteed obligations of the Federal Government.

Interest rates on special issues

The Treasury endeavored during the fiscal year through recommendations to the Congress and administrative action to obtain some uniformity in the bases for fixing interest rates on special obligations issued to the major trust funds administered by the Treasury, such as the Federal old-age and survivors insurance trust fund, the Federal disability insurance trust fund, the civil service retirement and disability fund, the railroad retirement account, and the veterans' life insurance funds.

On February 3, 1960, the Treasury Department adopted an interest rate formula for the national service life insurance fund and the U.S. Government life insurance fund whereby the special obligations issued to these funds would bear interest at a rate one-half of one percent lower than a rate equal to the average market yield on outstanding obligations not due or callable until after the expiration of three years from the date of the special obligations, provided that the rate for the U.S. Government life insurance fund would not be less than 321⁄2 percent and for the national service life insurance fund not less than 3 percent. The provision for an interest rate one-half of one percent lower than the average of market yields was adopted in consideration of the guarantee of the minimum rates established for the respective funds. In anticipation of the change in the formula, the special obligations held by the two funds had been replaced in February 1960 with special issues having equal maturities spread over a period from one to 15 years. The Treasury was in position to make these arrangements because the existing provisions of law placed full responsibility in the Secretary of the Treasury for the investment of the veterans' life insurance funds.

By statutory requirement the formula for fixing interest rates on special obligations issued to the Federal old-age and survivors insurance trust fund and to the Federal disability insurance trust fund was based upon the average interest rate on all outstanding marketable public debt obligations that are not due or callable until after the expiration of five years from date of original issue. During the summer of 1959 the Board of Trustees of the two funds (the Secretary of the Treasury as Managing Trustee, the Secretary of Labor, and the Secretary of Health, Education, and Welfare) recommended that the statutory formula be changed to a formula based upon current