FROM THE OFFICE OF PUBLIC AFFAIRS

The Administration is today releasing the September Monthly Treasury Statement of Receipts and Outlays of the United States Government. The statement shows the actual financial totals for the fiscal year that ended September 30, 1998, as follows:

-- a surplus of $70.0 billion;

-- total receipts of $1,721.4 billion; and

-- total outlays of $1,651.4 billion.

NOTE: Detail may not add to totals or changes due to rounding.

The actual FY 1998 surplus is $70.0 billion, or 0.8 percent of GDP. This is the first surplus since 1969, and the largest as a percentage of GDP since 1956. In dollar terms, it is the largest ever. The surplus marks the sixth consecutive year of improvement in the Federal budget balance since the deficit peaked at $290.4 billion, or 4.7 percent of GDP, in FY 1992. Since FY 1992, thanks to strong and continuing economic growth and Federal Government downsizing and spending control, outlays have grown at an average rate of only 3.0 percent per year, less than half the average of 7.3 percent per year over the preceding 12 years, while receipts have advanced at a rate of 7.9 percent per year, faster than the 6.4 percent average of 1980 through 1992, resulting in steady reductions in the deficit and the realization of a surplus. Because of this progress in eliminating the budget deficit, the debt held by the public has been reduced for the first time in 29 years. As a share of the economy, the debt held by the public has declined for five consecutive fiscal years, and is now below its 1991 level.

The change from the MSR surplus estimate reflects:

-- a $13.3 billion decrease in outlays; and

-- a $17.6 billion increase in receipts.

Total outlays were $1,651.4 billion, $13.3 billion lower than the MSR estimate, continuing the spending restraint and slower outlay growth that have occurred since the beginning of this Administration. The major outlay changes since the MSR are described below. Table 2 displays actual outlays and estimates from the February Budget and the MSR by agency and major program.

Department of Agriculture. Actual outlays for the Department of Agriculture were $54.0 billion, $0.9 billion below the MSR estimate. The major differences were in the following areas:

Food Stamp outlays were $1.2 billion lower than the MSR estimate due primarily to larger-than-projected declines in the Food Stamp caseload resulting in part from the strong economy.

Commodity Credit Corporation (CCC) outlays were $0.8 billion higher than the MSR estimate, reflecting the difficulties in parts of the agriculture sector this year. Almost $0.5 billion was paid to farmers in loan deficiency payments due to market prices being below the CCC marketing loan rate, which was not assumed in the MSR. In addition, many farmers delayed repaying their previous year's loans, and over $0.2 billion more in marketing loans were disbursed to farmers for their 1998 crops than forecasted.

The increase in CCC outlays was partially offset by lower-than-forecasted expenditures for the Conservation Reserve and Export Enhancement Programs, the working capital fund, and other programs.

Department of Defense - Military. Actual outlays for the Department of Defense - Military were $256.1 billion, $2.8 billion above the MSR estimate. The difference was due to higher-than-expected outlays for procurement, particularly by the Air Force.

Department of Education. Actual outlays for the Department of Education were only $0.3 billion below the MSR estimate. However, a $1.3 billion increase in outlays for the Office of Elementary and Secondary Education was more than offset by a $1.3 billion decrease in the Office of Post Secondary Education outlays and a $0.2 billion decrease in outlays for other education programs. The Office of Elementary and Secondary Education experienced a higher rate of grant disbursements than estimated in the MSR. The decrease in the Office of Post Secondary Education was due to receiving fewer Pell Grant applications and receiving greater FFEL offsetting collections than anticipated.

Department of Health and Human Services. Actual outlays for the Department of Health and Human Services were $350.6 billion, $7.0 billion below the MSR estimate. The major differences were in the following areas:

Outlays for the Medicare program were $213.6 billion, $4.7 billion below the MSR estimate. The MSR overestimated hospital outlays, specifically payments for inpatient services. In addition, a portion of the difference was due to a temporary slowdown in home health expenditures due to billing and computer systems changes required by the Balanced Budget Act of 1997.

Outlays for the Temporary Assistance for Needy Families (TANF) and related programs were $15.5 billion, $1.7 billion below MSR estimates. The difference was due primarily to slower-than-anticipated outlays during implementation of the new TANF law and larger-than-projected declines in state welfare caseloads due to the strong economy.

Department of the Interior. Actual outlays for the Department of the Interior were $7.2 billion, $0.7 billion below the MSR estimate. Outlays for the Bureau of Reclamation and land acquisition through the Land and Water Conservation Fund were less than projected, in part because the Congress did not release all of the funds appropriated for FY 1998.

Department of Justice. Actual outlays for the Department of Justice were $16.1 billion, $0.7 billion above the MSR estimate. As a result of a Departmental initiative to obligate grant dollars more quickly, outlays for the Crime Reduction Trust Fund were higher than previously experienced.

Department of Labor. Actual outlays for the Department of Labor were $30.0 billion, $0.6 billion below the MSR estimate. Nearly half of the net shortfall was due to lower-than-anticipated claims activity in the unemployment insurance program. About another 30 percent was due to slower spending under grants to States and local areas for helping dislocated workers and disadvantaged youth and adults train for or find jobs.

Department of State. Actual outlays for the Department of State were $4.6 billion, $0.7 billion below the MSR estimate. Outlays for payments to international organizations were $0.2 billion lower than expected due to the failure to enact authorizing legislation for United Nations arrearage payments and to an end-of-year reprogramming notification. Outlays for diplomatic and consular programs were $0.2 billion lower than expected primarily due to improved collection and settlement of prior year receivables from other government agencies. Other outlay shortfalls were primarily due to an accounting adjustment for foreign buildings programs.

Department of Transportation. Actual outlays for the Department of Transportation were $39.5 billion, $1.0 billion below the MSR estimate. Outlays for the Federal Highway Administration were $20.4 billion, $1.1 billion below the MSR estimate, largely because projects were delayed during the lapse in authorization for the highway program.

Department of the Treasury. Actual outlays for the Department of the Treasury were $390.1 billion, $1.3 billion above the MSR estimate. Interest on the public debt, which includes interest paid to the other government accounts as well as interest paid to the public, was $363.8 billion, $1.4 billion above the MSR estimate. This difference was due primarily to interest paid to trust funds, which was $1.2 billion higher than the MSR estimates because of higher trust fund balances and slightly higher interest rates than were assumed in the MSR. Higher interest paid to trust funds is offset by higher interest received by trust funds, so this difference does not affect total outlays. Interest paid to the public was $0.2 billion above the MSR estimate due to slightly higher interest rates, partly offset by the impact of the higher surplus.

Department of Veterans Affairs. Actual outlays for the Department of Veterans Affairs were $41.8 billion, $1.3 billion below the MSR estimate. Veterans Health Administration outlays were $0.6 billion less than anticipated, because higher-than-expected medical insurance collections were retained for future obligations. Outlays for all other Veterans programs were $0.7 billion below the MSR estimate due to a lower-than-anticipated number of claims for veterans disability compensation and lower-than-expected mortality in the National Service Life Insurance programs.

Federal Emergency Management Agency. Actual outlays for the Federal Emergency Management Agency were $2.1 billion, $1.1 billion below the MSR estimate. This difference reflected lower-than-estimated flood insurance claims, slower disbursements for the repair and restoration of public facilities damaged in disasters, and higher-than-projected cancellations and reductions in previously approved disaster assistance.

Federal Communications Commission. Actual outlays for the Federal Communications Commission were $0.1 billion below the MSR estimate. However, this difference represented a $1.6 billion decrease in outlays for the Universal Service Fund (USF) and a $1.5 billion increase in subsidies for spectrum auction sales. The decrease in USF outlays resulted from a delay in the disbursement of the fund for schools and libraries and a reduction in available funds, because contributions to the USF were $0.5 billion lower than anticipated. The increase in spectrum auction subsidy outlays reflected higher-than-projected subsidy rates and modifications of loan terms.

United States Postal Service. Actual net outlays for the United States Postal Service were $0.3 billion, $1.3 billion below the MSR estimate. Outlays forecast for several major programs did not occur as planned, contributing to a $1.7 billion reduction in operating disbursements. In addition, estimated capital outlays of $0.5 billion did not occur in FY 1998. These outlay shortfalls were partly offset by a $0.9 billion shortfall in receipts due to a delay in implementing new postage rates.

Undistributed offsetting receipts. Offsetting receipts are deducted from gross outlays in calculating net outlays; therefore, increases in these figures reduce the surplus and vice-versa. The major differences were in the following areas:

Interest received by on-budget trust funds was $67.2 billion, $1.2 billion higher than the MSR estimate. As indicated in the paragraph above on the Department of the Treasury, this difference is offset by higher interest paid on the public debt by Treasury and does not affect total outlays.

Spectrum auction receipts were $2.6 billion, $0.5 billion lower than the MSR estimate. Auctions expected to generate $0.3 billion in receipts were rescheduled from FY 1998 to FY 1999. The remaining $0.2 billion difference was due to the fact that proceeds from numerous auctions were different than anticipated.

Actual FY 1998 receipts were $1,721.4 billion, $17.6 billion higher than the MSR estimate. This larger-than-expected improvement in receipts follows on similar results over the preceding four years, in which the economy outperformed the Administration's forecasts. Table 3 displays actual receipts as well as estimates from the budget and MSR by source.

Changes in Receipts by Source

Individual income taxes were $828.6 billion, $18.1 billion higher than the MSR estimate of $810.5 billion. Most of the difference is attributable to higher-than-estimated withholding of $6.6 billion, higher-than-estimated non-withheld payments of $5.3 billion and lower-than-estimated refunds of $2.7 billion. Higher-than-anticipated net adjustments into individual income taxes from the social security trust funds account for the remaining increase relative to the MSR estimate.

Corporation income taxes were $188.7 billion, $1.0 billion higher than the MSR estimate. Higher-than-anticipated payments from corporations, offset in part by higher-than-anticipated refunds paid to corporations, account for the increase in this source of receipts.

Social insurance and retirement receipts were $3.5 billion lower than the MSR estimate of $575.4 billion. Higher-than-anticipated net adjustments into individual income taxes from the social security trust funds, higher-than-anticipated refunds of social security taxes and lower-than-estimated unemployment insurance receipts account for most of the net decrease in this source of receipts relative to the MSR estimate.

Excise taxes were $2.0 billion higher than the MSR estimate. Most of this amount appears to be associated with taxpayers not taking full advantage of a Taxpayer Relief Act of 1997 deposit rule change, which shifted the due date for the deposit of certain Highway Trust Fund taxes, otherwise due after July 31, 1998 and before October 1, 1998, to October 5, 1998.

Miscellaneous receipts were $32.3 billion, $1.3 billion lower than the MSR estimate of $33.6 billion. Lower-than-anticipated deposits of earnings by the Federal Reserve System, reflecting lower-than-expected asset values on securities denominated in foreign currencies, reduced miscellaneous receipts $0.5 billion relative to the MSR. Lower-than-anticipated contributions to the Universal Service Fund of $0.5 billion account for most of the remaining net decrease in this source of receipts.

Other receipts, which include estate and gift taxes and customs duties, were $42.4 billion, $1.4 billion higher than the MSR estimate. Estate and gift taxes were $1.0 billion higher than the MSR estimate, reflecting higher-than-anticipated numbers and values of taxable estates. Customs duties were $0.4 billion above the MSR estimate, in large part because of higher-than-anticipated taxable activity.