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Unless otherwise noted, all years referred to in this report are fiscal years. Details in the text, tables, and figures of this report may not add to totals because of rounding. In tables, BA refers to budget authority, O signifies outlays. |
The Congressional Budget Office is required by section 202(f) of the Congressional Budget Act of 1974 to submit an annual report on budgetary options to the House and Senate Committees on the Budget. This year, the report is in three parts: The Prospects for Economic Recovery, Baseline Budget Projections for Fiscal Years 1983-1987, and Reducing the Federal Deficit: Strategies and Options.
Part II, Baseline Budget Projections for Fiscal Years 1983-1987, presents projections of federal revenues and spending that could occur if current laws and policies were to continue unchanged for the next five years. The projections do not represent a forecast of future federal budgets, since those budgets will doubtless include numerous policy changes. They do provide, however, a useful baseline or benchmark against which proposed changes in taxes or spending programs may be measured and assessed.
The Congressional Budget Office is required under section 308(c) of the Congressional Budget Act to issue a report each year that projects new budget authority, outlays, and revenues for the next five years. This report fulfills that statutory requirement for fiscal years 1983 to 1987. The Congressional Budget Act also requires CBO to project tax expenditures for each of the next five fiscal years. A separate report on tax expenditure projections will be issued at a later date.
The baseline budget projections were prepared by staff of the Budget
Analysis and Tax Analysis Divisions, under the supervision of James L.
Blum and James M. Verdier. The principal authors were Paul N. Van de Water
and Rosemary D. Marcuss. Robert L. Faherty and Francis S. Pierce edited
the manuscript, and Paula Spitzig prepared the report for publication.
Alice M. Rivlin
Director
February 1982
SUMMARY
CHAPTER I. INTRODUCTION
CHAPTER II. OVERVIEW OF THE PROJECTIONS
CHAPTER III. BASELINE REVENUE PROJECTIONS
CHAPTER IV. BASELINE SPENDING PROJECTIONS
APPENDIX A. BASELINE SPENDING PROJECTIONS BY MAJOR FUNCTIONAL CATEGORY
APPENDIX B. BASELINE SPENDING PROJECTIONS BY COMMITTEE JURISDICTION
APPENDIX C. FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME ACCOUNTS
APPENDIX D. BASELINE SPENDING CONCEPTS AND ASSUMPTIONS
| TABLES | |
| 1. | BASELINE ECONOMIC ASSUMPTIONS |
| 2. | BASELINE BUDGET PROJECTIONS |
| 3. | EFFECT ON BASELINE OUTLAYS AND DEFICITS OF ALTERNATIVE DEFENSE APPROPRIATION ASSUMPTIONS |
| 4. | EFFECT ON BASELINE OUTLAYS AND DEFICITS OF NO DISCRETIONARY INFLATION ADJUSTMENTS |
| 5. | ALTERNATIVE ECONOMIC ASSUMPTIONS |
| 6. | BASELINE BUDGET PROJECTIONS UNDER ALTERNATIVE ECONOMIC ASSUMPTIONS |
| 7. | PROJECTIONS OF SOCIAL SECURITY TRUST FUND OUTLAYS, INCOMES, AND BALANCES UNDER ALTERNATIVE ECONOMIC ASSUMPTIONS |
| 8. | COMPARISON OF BASELINE BUDGET PROJECTIONS AND FISCAL YEAR 1982 BUDGET RESOLUTION TARGETS |
| 9. | COMPARISON OF ECONOMIC ASSUMPTIONS UNDERLYING BASELINE BUDGET PROJECTIONS AND FISCAL YEAR 1982 BUDGET RESOLUTIONS |
| 10. | BASELINE REVENUE PROJECTIONS BY SOURCE |
| 11. | REVENUE EFFECTS OF ECONOMIC RECOVERY TAX ACT |
| 12. | REVENUE REDUCTIONS UNDER THE 1981 TAX ACT COMPARED WITH INFLATION OFFSETS |
| 13. | BASELINE REVENUE PROJECTIONS UNDER ALTERNATIVE ECONOMIC ASSUMPTIONS |
| 14. | BASELINE REVENUE PROJECTIONS AS SHARES OF GNP UNDER ALTERNATIVE ECONOMIC ASSUMPTIONS |
| 15. | COMPARISON OF BASELINE REVENUES AND FISCAL YEAR 1982 BUDGET RESOLUTION TARGETS |
| 16. | BASELINE OUTLAY PROJECTIONS FOR MAJOR PROGRAM CATEGORIES |
| 17. | DEFENSE SPENDING PROJECTIONS UNDER ALTERNATIVE PROGRAM ASSUMPTIONS |
| 18. | BASELINE OUTLAY PROJECTIONS FOR BENEFIT PAYMENTS FOR INDIVIDUALS |
| 19. | BASELINE OUTLAY PROJECTIONS FOR GRANTS TO STATE AND LOCAL GOVERNMENTS |
| 20. | NET INTEREST OUTLAY PROJECTIONS UNDER ALTERNATIVE DEFICIT ASSUMPTIONS |
| 21. | BASELINE OUTLAY PROJECTIONS FOR OTHER FEDERAL OPERATIONS |
| 22. | BASELINE OUTLAY PROJECTIONS FOR OFF-BUDGET FEDERAL ENTITIES |
| 23. | EFFECT ON BASELINE OUTLAY PROJECTIONS OF ALTERNATIVE ECONOMIC ASSUMPTIONS |
| 24. | COMPARISON OF BASELINE OUTLAY PROJECTIONS AND FISCAL YEAR 1982 BUDGET RESOLUTION TARGETS |
| A-1. | BASELINE BUDGET AUTHORITY PROJECTIONS BY FUNCTION |
| A-2. | BASELINE OUTLAY PROJECTIONS BY FUNCTION |
| A-3. | BASELINE BUDGET AUTHORITY PROJECTIONS, WITHOUT DISCRETIONARY INFLATION, BY FUNCTION |
| A-4. | BASELINE OUTLAY PROJECTIONS, WITHOUT DISCRETIONARY INFLATION, BY FUNCTION |
| B-1. | BASELINE BUDGET PROJECTIONS BY HOUSE COMMITTEES WITH SPENDING JURISDICTION |
| B-2. | BASELINE BUDGET PROJECTIONS BY SENATE COMMITTEES WITH SPENDING JURISDICTION |
| B-3. | BASELINE BUDGET PROJECTIONS BY HOUSE COMMITTEES WITH AUTHORIZING JURISDICTION |
| B-4. | BASELINE BUDGET PROJECTIONS BY SENATE COMMITTEES WITH AUTHORIZING JURISDICTION |
| C-1. | PROJECTIONS OF BASELINE REVENUES AND OUTLAYS ON A NATIONAL INCOME ACCOUNTS BASIS |
| D-1. | BASELINE PROJECTIONS FOR NATIONAL DEFENSE |
| D-2. | CURRENT-DOLLAR DEFENSE BASELINE BY DEFENSE PLANNING AND PROGRAMMING CATEGORY |
| D-3. | CONSTANT-DOLLAR DEFENSE BASELINE BY DEFENSE PLANNING AND PROGRAMMING CATEGORY |
| D-4. | ACTIVE MILITARY AND CIVILIAN PERSONNEL IN THE DEFENSE BASELINE |
| D-5. | MAJOR ACTIVE FORCE LEVELS USED IN THE DEFENSE BASELINE |
| D-6. | MAJOR INVESTMENT PROGRAMS CONTAINED IN THE NATIONAL DEFENSE BASELINE PROJECTIONS |
| D-7. | ASSUMPTIONS USED FOR CCC PRICE SUPPORT OUTLAY ESTIMATES |
| FIGURES | |
| 1. | MAJOR ECONOMIC ASSUMPTIONS |
| 2. | FEDERAL REVENUES AND OUTLAYS AS A PERCENTAGE OF GNP |
| 3. | FEDERAL DEFICIT UNDER ALTERNATIVE DEFENSE APPROPRIATION ASSUMPTIONS |
| 4. | REVENUE SOURCES AS PERCENTAGES OF GNP |
| 5. | INDIVIDUAL INCOME TAXES AS A PERCENTAGE OF TAXABLE PERSONAL INCOME |
| 6. | THE COMPOSITION OF FEDERAL SPENDING |
Each year, the Congress makes numerous decisions about how laws and policies affecting the budget should be changed to meet fiscal policy goals and national needs. In making these decisions, it is useful to have a baseline or benchmark that represents what might happen to the budget if no changes in current laws or policies were made. This report provides such a baseline for assessing the possible budgetary effects of changes in taxes or spending.
Baseline budget projections are not a forecast of future budget outcomes. Those outcomes will be influenced to a great extent by new policy decisions that will be made during the next year. They will also be affected by how well the economy performs, by international events, and by many other factors that influence the levels of federal revenues and spending.
In previous reports, baseline projections always showed revenues growing more rapidly than budget outlays. As a consequence, baseline budgets began to show a surplus within two or three years. The baseline projections presented in this report for fiscal years 1983 to 1987 have an entirely different set of characteristics. As a result of the Economic Recovery Tax Act of 1981, the growth in federal revenues will be sharply reduced from rates experienced over the past decade. Under the economic and spending assumptions used for this report, baseline outlays grow at a faster rate than revenues (by about two percentage points a year on average). Consequently, the baseline projections show large and growing budget deficits for the next five years.
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