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Unless otherwise indicated, all years referred to in this report are fiscal years. Details in the text and tables of this report may not add to totals because of rounding. The source of data concerning the President's budget is the Office of Management and Budget. The source of other data, unless otherwise noted, is the Congressional Budget Office. The Balanced Budget and Emergency Deficit Control Act of 1985 is also referred to in this volume more briefly as the Balanced Budget Act. |
This analysis of the President's budget for fiscal year 1988 was prepared at the request of the Senate Committee on Appropriations. The report discusses the President's policy proposals in terms of changes from the Congressional Budget Office (CBO) baseline budget projections for 1988-1992. It provides estimates of the budgetary impact of the Administration's proposals using CBO's economic assumptions and technical estimating methods.
This report was prepared by the staff of the Budget Analysis, Fiscal Analysis, and Tax Analysis Divisions under the supervision of James L. Blum, William J. Beeman, and Rosemary D. Marcuss, respectively. Paul Van de Water was responsible for Chapter I; Martin A. Regalia and James M. Keifer for Chapter II; Rosemary D. Marcuss for Chapter III; Michael A. Miller for Chapter IV; Charles E. Seagrave and Robert A. Sunshine for Chapter V; Marvin Phaup for Chapter VI; and Kathy A. Ruffing for Appendix A. Principal contributors are listed in Appendix B.
Paul L. Houts supervised the editing and production of the report, assisted
by Nancy H. Brooks. Major portions were edited by Patricia H. Johnston,
Francis S. Pierce, and Sherry Snyder. Thelma L. Jones coordinated the preparation
of the report. The final manuscript was prepared for publication by Linda
Brockman, Cindy Cleveland, Janice M. Johnson, Brenda Lockhart, Simone McKay,
Earnestine Miles, Rae Roy, Lois Simon, and M. Vanessa Woods. Additional
assistance was provided by Shelbah Adams.
Rudolph G. Penner
Director
February 1987
CHAPTER I - Summary and Introduction
CHAPTER II - A Comparison of Economic Assumptions
CHAPTER III - The Administration's Revenue Proposals
CHAPTER IV - The Administration's Defense Budget
CHAPTER V - The Administration's Nondefense Budget
CHAPTER VI - The Administration's Credit Proposals
APPENDIXES
A - Baseline Budget Projections
B - Major Contributors
| TABLES | |
| I-1 | The Budget Outlook Under the Administration Policies |
| I-2 | CBO Reestimate of the Administration's Budget |
| I-3 | Effects of CBO Economic Assumptions on Estimates of the Adminstration's Deficit |
| I-4 | CBO Reestimates Resulting from Different Technical Assumption |
| I-5 | The Administration's Budget Programs Estimated by CBO |
| II-1 | Comparison of Administration and CBO Short-Run Economic Forecast |
| II-2 | Comparison of Administration and CBO Economic Assumptions, 1987-1992 |
| III-1 | Administration and CBO Estimates of Administration's Revenues by Major Source |
| III-2 | CBO's Reestimates of Administration Budget Revenues |
| III-3 | Sources of Reestimates |
| III-4 | Differences Between CBO and Administration Economic Assumptions |
| III-5 | Major Revenue Proposals in the Administration's 1988 Budget |
| III-6 | CBO Estimates of the Revenue of the Administration's Proposed IRS Initiatives |
| III-7 | CBO Estimates of the Administration's Social Insurance Proposals |
| III-8 | CBO Estimates of the Administration's Black Lung Tax Proposals |
| III-9 | CBO Estimates of the Administration's Excise Tax and Fee Proposals |
| IV-1 | Major Spending Proposed in Administration's 1988 Budget for Function 050: National Defense |
| IV-2 | Major Spending Changes Proposed in Administration's 1988 Budget for Function 050: National Defense |
| IV-3 | Summary of Active Forces |
| IV-4 | Real Percent Changes in Defense Budget Authority, By Appropriation Categories |
| IV-5 | Requested Strength Levels for Military Personnel |
| IV-6 | Real Changes in Operation and Maintenance |
| IV-7 | Real Changes in Procurement Budget Authority |
| IV-8 | Selected Program Changes in the 1988 Request for Aircraft Procurement |
| IV-9 | Selected Program Changes in the 1988 Request for Other Missiles, Torpedoes, and Weapons Procurement |
| IV-10 | Real Changes in Research, Development, Test and Evaluation |
| V-l | CBO Estimates of the Administration's Proposals in Nondefense Spending (In billions of dollars) |
| V-2 | CBO Estimates of the Administration's Proposals in Nondefense Spending (In percent differences from the CBO baseline) |
| VI-1 | The Administration's Credit Budget as Estimated by CBO |
| VI-2 | Major Proposed Credit Program Changes, 1988-1992 |
| VI-3 | The Reallocation of Credit Costs Across Agency and New Revolving Fund Accounts Under the President's Credit Reform Proposal, Fiscal Year 1986 |
| VI-4 | Cash Outflow and Estimated Subsidy Cost |
| VI-5 | Effect on the Budget of Reclassifying Credit Cash Flows as a Means of Financing |
| VI-6 | Loan Assets Proposed for Sale, Administration Pilot Program, Face Value and Projected Receipts, Net of Lost Repayments, 1987-1992 |
| A-l | Baseline Budget Projections |
| A-2 | Major Differences Between Administration's and CBO's Budget Projections Under Current Policy |
| FIGURES | |
| I-1 | Federal Deficit Projections and Targets |
| I-2 | The Composition of Federal Spending |
| IV-1 | Sources of Growth in Defense Outlays, Fiscal Years 1987-1992 |
| BOXES | |
| I-1 | Social Security in the Budget |
| IV-1 | Inflation and Real Growth in the Defense Budget |
| IV-2 | The Administration's Request for Supplemental 1987 Appropriations for Defense |
CBO estimates that the federal deficit under Administration policies would be $134.4 billion in 1988, $117.1 billion in 1989, and $1.2 billion in 1992. These figures are noticeably higher than the Administration's own deficit estimates--$107.8 billion in 1988, $92.8 billion in 1989, and a surplus of $12.3 billion in 1992. CBO's estimate for 1988 represents a reduction of $36.1 billion below its baseline but is still $26.4 billion above the $108 billion target established in the Balanced Budget Act (see Figure I-1 and Table I-1).
CBO analyzes the Administration's budget in terms of changes from its baseline, which projects the course of the budget on the assumption that current taxing and spending policies continue unchanged. CBO reestimates, or reprices, the Administration's budget using CBO's economic and technical estimating assumptions and methods. The differences between the baseline projections and the CBO estimate of the budget measure the effects of the Administration's proposed policy changes. Appendix A further describes the baseline projections, which update those published last month in CBO's annual report, The Economic and Budget Outlook: Fiscal Years 1988-1992.
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