fy 2014 mid-session review budget of the u.s. government

7/29/2019 FY 2014 MID-SESSION REVIEW BUDGET OF THE U.S. GOVERNMENT

1/72


2/72


3/72

MID-SESSION REVIEW

BUDGET OF THE U.S. GOVERNMENT

FISCAL YEAR 2014

OFFICE OF MANAGEMENT AND BUDGET

Scan here to goto our website.


4/72


5/72

THE DIRECTOR

XV PR

FFE F MEME BUE

WASHINGTON, D.C. 20503

July 8, 2013

The Honorable John A. BoehnerSpeaker of the House of RepresentativesWashington, DC 20510

Dear Mr. Speaker:

Section 1106 of Title 31 United States Code, requests that the President send to

the Congress a supplemental udate of the Budget that was transmitted to the Congressearlier in the year This enclosed supplemental update of the Budget, commonly knownas the Mid-Session Review, contains revised estimates of receipts, outlays, budgetauthority, and the budget decit for scal years 2013 tough 2023

Sincerely,

M:Director

Enclosure

Identical Letter Sent to the President of the Senate


6/72


7/72

i

TABLE OF CONTENTS

List o Tables ............................................................................................................................................. iii

Summary .....................................................................................................................................................1

Economic Assumptions ...............................................................................................................................5

Receipts .....................................................................................................................................................11

Expenditures .............................................................................................................................................13

Summary Tables .......................................................................................................................................17

Page


8/72


9/72

iii

LIST OF TABLES

Table 1. Changes in Decits rom the 2014 Budget ........................................................................4

Table 2. Economic Assumptions ........................................................................................................6

Table 3. Comparison o Economic Assumptions ..............................................................................9

Table 4. Change in Receipts ............................................................................................................12

Table 5. Change in Outlays .............................................................................................................16

Table S1. Budget Totals .....................................................................................................................18

Table S2. Eect o Budget Proposals on Projected Decits .............................................................19

Table S3. Cumulative Decit Reduction ...........................................................................................21

Table S4. Adjusted Baseline by Category .........................................................................................22

Table S5. Proposed Budget by Category ...........................................................................................24

Table S6. Proposed Budget by Category as a Percent o GDP ........................................................26

Table S7. Bridge From Balanced Budget and Emergency Control Act(BBEDCA) Baseline to Adjusted Baseline ....................................................................28

Table S8. Mandatory and Receipt Proposals ....................................................................................29

Table S9. Funding Levels or Appropriated (Discretionary) Programs by Category ..................54

Table S10. Funding Levels or Appropriated (Discretionary) Programs by Agency ......................56

Table S11. Federal Government Financing and Debt ........................................................................59

Page


10/72


11/72

1

This Mid-Session Review (MSR) updatesthe Administrations estimates or outlays, re-ceipts, and the decit or economic, legislative,and other changes that have occurred sincethe release o the Presidents 2014 Budget.The 2013 decit is now projected to be $759billion, $214 billion lower than the $973 bil-lion decit projected in the Budget. As apercentage o gross domestic product (GDP),the 2013 decit is now projected to equal 4.7percent, down rom the 6.0 percent projectedin the Budget. Going orward, the MSR esti-mates that the decit will all to below 3 per-cent o GDP by 2017 and to about 2 percent

o GDP by 2023. The MSR also shows thatthe Budget achieves the core goal o scal sus-tainability by putting Federal debt on a de-clining path as a share o the economy.

STRENGTHENING THEECONOMIC RECOVERY

The President believes our top priority mustbe strengthening the true engine o economicgrowtha rising and thriving middle class.He will continue to pursue policies to accel-erate the recovery, speed job creation, andexpand the middle class. The 2014 Budget

demonstrates that we do not need to choose be-tween making critical investments necessaryto help grow our economy and support middleclass amilies and continuing to cut the decitin a balanced way. The Budget shows how wecan do both. It oers concrete strategies toaddress three undamental questions: Howdo we attract more jobs to our shores? Howdo we equip our people with the skills neededto do the jobs o the 21st Century? How do wemake sure hard work leads to a decent living?

To once again make America a magnet orjobs, the Budget invests in high-tech manu-acturing and innovation, clean energy, andinrastructure, while cutting red tape to helpbusinesses grow. To give workers the skillsthey need to compete in the global economy,it invests in education and job training, andsets orth a visionary proposal to ensure ev-ery our-year-old has access to high qualitypre-school. To ensure hard work is rewarded,it builds ladders o opportunity to help every

American and every community. By identi-

ying osets or each o these initiatives, theBudget invests in the potential o the middleclass and our economy while keeping us on ascally disciplined long-term path.

While more work remains to be done, theU.S. economy has made signicant progressin recovering rom the worst downturn sincethe Great Depression. When the Presidenttook oce in 2009, the private sector waslosing over 800,000 jobs a month, creditmarkets that provide capital or investmenthad seized up, and businessessmall andlargewere struggling. The housing market

was in ree all and our auto industry wasnear collapse.

Through the determination and resiliencyo the American people and the decisive ac-tions o the President working with Congressto bolster job growth and jumpstart economicactivity, we successully broke the back o therecession and pulled the Nation back romthe brink. The economy has been recoveringever since. We have seen positive economicgrowth or 15 consecutive quarters. ThroughJune, the private sector has added jobs everymonth or 40 straight months, with a total

o 7.2 million jobs added over that period.This year alone, more than 1.2 million pri-vate sector jobs have been added so ar. Theunemployment rate has allen rom a higho 10 percent in 2009 to 7.6 percent as oJune. Manuacturers have added more than500,000 jobs over the past three years. Andthe housing market and the auto industrycontinue to show signs o recovery.

But while the economy is adding jobs, toomany Americans are still unemployed andhave been looking or work or too long.Businesses are hiring again, but too manyare still struggling to compete and nd work-ers with the right skills to meet their needs.Home prices are rising at the astest pace inseven years and construction is expanding,but too many amilies with solid credit arestill nding it dicult to buy a home or re-nance. And although corporate prots haveclimbed to all-time highs, wages and incomesor Americas middle class have continued tostagnate.

SUMMARY


12/72

2 MID-SESSION REVIEW

By making investments in our people andinrastructure, we can strengthen the middleclass, make America a magnet or jobs andinnovation, and grow our economy. But eco-

nomic growth alone will not solve our Nationslong-term scal challenges. That is why thePresident is committed to continuing to re-duce the decit in a balanced way.

THE ROLE OF DEFICITREDUCTION IN PROMOTINGSUSTAINED ECONOMIC GROWTH

AND JOB CREATION

Over the past ew years, we have experi-enced the astest period o decit reductionsince the years immediately ollowing WorldWar II. The President and the Congress haveachieved over $2.5 trillion in decit reduction

by cutting spending by more than $1.4 tril-lion, achieving more than $600 billion in newrevenue rom raising tax rates on the wealthi-est Americans, and realizing interest savings.

As a Nation we are more than halway towardthe goal o $4 trillion in decit reduction thatbipartisan, independent experts have iden-tied as necessary to bring decits below 3percent o GDP, put our debt on a downwardtrajectory, and put us on a scally sustainablepath.

The Presidents Budget includes a compro-mise plan to achieve that goal while dem-

onstrating that we do not need to choosebetween economic growth and scal disci-pline. The Presidents compromise proposalcombines additional spending cuts, entitle-ment reorms, and revenue rom tax reormto achieve nearly $1.8 trillion in additionaldecit reduction over the next 10 years, bring-ing total decit reduction to more than $4.3trillion.

We are already making progress down thispath to urther decit reduction. Under therevised estimates in the MSR, the currentyear decit has allen by $214 billion com-pared to the projections in the Budget, anddecits will continue to all to below 3 percento GDP in 2017. In addition, the MSR showsthat the Federal debt will begin to declineas a share o the economy in 2016. Over thenext 10 years, decits all to about 2 percento GDP, and debt continues to decline everyyear ater 2015. Putting our budget on a sus-tainable scal path is a critical step toward

ensuring that we have a solid oundation onwhich to build a strong economy and a thriv-ing middle class or years to come.

In addition to the policies explicitly refectedin the MSR, the President has outlined a planor commonsense immigration reorm andcalled on Congress to enact legislation thatwould strengthen our borders; crack down onemployers who exploit American and immi-grant workers; streamline the legal immigra-tion system to attract highly-skilled entrepre-neurs and engineers to help create jobs, driveeconomic growth, and reunite Americans withtheir amilies; and establish a responsiblepathway to earned citizenship. In June, theSenate passed, with a strongly bipartisan vote,a bill that would achieve these goals and alsomake a substantial contribution to reducing

the decit. The Congressional Budget Oceestimated the eect o the Senate immigrationbill, using its own economic and technical as-sumptions, and ound that the bill would re-duce Federal decits by $158 billion over therst decade and by about $700 billion in thesecond decade. In addition, according to theindependent Social Security Oce o the Chie

Actuary, the bipartisan Senate-passed immi-gration reorm bill would strengthen SocialSecurity over the long-term, ensuring ullSocial Security solvency until 2035two yearslonger than i we ail to act on immigrationand reducing Social Security ununded liabili-

ties by hal a trillion dollars through 2087.

REPLACING SEQUESTRATION WITHBALANCED DEFICIT REDUCTION,WHILE INVESTING IN THE MIDDLECLASS AND AMERICAS FUTURE

The 2014 Budget presents a strategy togrow the economy in both the short and longterm. To ensure America remains competitivein the 21st Century, it invests in American in-novation, reviving our manuacturing baseand keeping our Nation at the oreront otechnological advancement. For example,it invests in 15 manuacturing innovationinstitutes across the country, transormingregions into global epicenters o advancedmanuacturing. To ensure our energy secu-rity and combat global climate change, it ad-

vances the Presidents all-o-the-above energystrategy, ocusing on energy production, thedevelopment o clean energy alternatives, andthe promotion o energy eciency eorts in


13/72

3SUMMARY

both the public and private sectors. To builda oundation or growth and competitivenessand create jobs now, it invests in repairing ourexisting inrastructure and building the inra-

structure o tomorrow, including high-speedrail, high-tech schools, and power grids thatare resilient to uture extreme conditions.

And to ensure hard work leads to a decent liv-ing, it creates new ladders o opportunity byexpanding childhood education, supportingcommunities as they rebuild rom the GreatRecession, creating pathways to work or thelong-term unemployed and youth, and raisingthe minimum wage to $9 an hour so a harddays work pays more.

Importantly, the 2014 Budget also supportseconomic growth by including more thanenough decit reduction to replace sequestra-

tion and the deep discretionary unding cutstriggered by the ailure o the Joint SelectCommittee on Decit Reduction (the JointCommittee) to reach an agreement. With therecovery gaining traction, we need to ocuson ways to protect and accelerate economicgrowth, not hold it back. The Budget demon-strates that we can replace these economical-ly-damaging cuts with smart, targeted eortsto cut wasteul spending, strengthen entitle-ments, and eliminate loopholes through taxreorm, while at the same time making criti-cal investments to grow the economy, create

jobs, and strengthen the middle class.

In the Budget Control Act (BCA), theCongress agreed on tight caps or discretion-ary spending that will allow or the criticalinvestments we need to grow the economywhile saving more than a trillion dollars overthe next 10 years and bringing domestic dis-cretionary spending to its lowest level as ashare o the economy since the Eisenhower

Administration. The BCA also establishedthe Joint Committee to provide Congresswith an opportunity to reach bipartisanagreement on achieving an additional $1.2trillion in balanced decit reduction over 10years. The law included the threat o seques-tration as a mechanism to orce Congress toact. The specter o harmul across-the-boardcuts to deense and non-deense programswas intended to drive both sides to compro-

mise; sequestration itsel was never intendedto be implemented. However, Congresss ail-ure to act on an alternative decit reductionplan led the scheduled cuts to begin taking

eect in March.

Sequestration is already having negativeimpacts on the country and the Americanpeople. Although the economy has continuedto grow and job creation has held steady, wecould be experiencing even stronger growthand job creation were it not or sequestration.The CBO estimated that sequestration willreduce the Nations economic growth by morethan hal a percentage point and cost 750,000

jobs in 2013. Other independent economicorecasters have reached similar conclusions.The negative eects o sequestration are al-ready being elt in areas ranging rom reduced

Army and Air Force training programs to cutsin National Institute o Health research tocuts at Head Start centers. Moreover, theseimpacts will build over time.

I allowed to continue, sequestration willurther harm the economy and undermine themiddle class. Congress can and should takeaction to replace it by passing a comprehen-sive and balanced decit reduction package.Unortunately, Congressional Republicans,primarily in the House o Representatives,have been unwilling to accept any plan toreplace sequestration that includes new rev-

enue. Instead, the Republican House has pro-posed to shit unding to deense accounts byimposing even deeper cuts in areas such aseducation, innovation and inrastructure.

Bipartisan and independent groups thathave examined the Nations scal outlookhave concluded that the best way orward isa balanced plan that phases in decit reduc-tion to avoid harming the economic recovery,raises new revenue rom tax reorm that willalso improve U.S. competitiveness, includesentitlement reorm that takes urther stepsto address rising health care costs while pro-

viding protections or the most vulnerable,and maintains investments in education, in-novation, and inrastructure. That is theright path orward, and it is the approach thePresident has proposed in his 2014 Budget.


14/72

4 MID-SESSION REVIEW4

Table 1. CHANGES IN DEFICITS FROM THE 2014 BUDGET(In billions o dollars)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018

2014-2023

2014 Budget decit .......................................................... 973 744 576 528 487 475 498 503 501 519 439

Percent o GDP ............................................................. 6.0% 4.4% 3.2% 2.8% 2.4% 2.3% 2.3% 2.2% 2.1% 2.1% 1.7%

Enacted legislation:

Consolidated and Further ContinuingAppropriations Act o 2013 .................................. 5 8 * * * * * * * * * 8 7

Debt service .............................................................. * * * * * * * * * * * * 1

Subtotal, enacted legislation ....................................... 5 8 * * * * * * * * * 8 8

Economic and technical reestimates:

Receipts .................................................................... 65 11 47 46 27 15 30 58 40 42 69 146 384

Outlays:

Discretionary programs ....................................... 43 1 3 6 3 3 2 2 2 1 1 14 21

Mandatory:

Medicaid ........................................................... 8 8 11 11 11 12 13 13 14 14 15 54 123

Social Security .................................................. 3 9 12 12 11 10 8 7 6 5 4 54 85Supplemental Nutrition Assistance Program 2 6 7 6 7 6 6 6 6 7 8 32 65

Premium assistance tax credits ...................... ......... 1 5 7 3 2 3 4 5 7 8 16 43

Proceeds rom GSE Preerred Stock ............... 71 3 5 6 4 3 3 3 3 3 3 20 34

Earned Income Tax Credit ............................... 2 3 3 2 2 2 4 4 4 4 4 12 32

Medicare ........................................................... 2 * 1 1 2 * 2 4 5 8 10 1 31

Unemployment compensation ......................... 6 5 3 3 2 2 1 1 1 1 1 15 19

Supplemental Security Income program ........ * 1 1 1 1 1 2 2 2 2 2 6 15

Federal retirement ........................................... * * 1 2 2 2 2 2 2 2 1 7 14

Child Tax Credit ............................................... 1 3 3 3 3 3 1 1 1 1 1 16 11

Troubled Asset Relie Program ....................... 7 1 1 1 1 1 1 1 ......... ......... ......... 5 7

Deposit Insurance Fund .................................. 6 * 1 * * * 1 2 * 1 1 1 5

Other ................................................................. 18 1 4 4 2 2 1 * * 1 1 13 16

Total mandatory ........................................... 104 3 * 3 2 2 14 17 17 21 25 * 93

Net interest 1 ......................................................... 7 * * 2 1 1 1 4 7 11 15 3 41

Subtotal, outlays 2 ................................................. 154 3 2 4 2 6 17 23 26 33 41 17 156

Subtotal, economic and technical reestimates ............ 219 14 49 50 29 21 47 81 65 74 109 163 540

Total, changes ................................................................... 214 6 49 50 29 21 47 81 65 74 109 155 532

Mid-Session Review decit .............................................. 759 750 626 578 516 496 545 584 566 593 549

Percent o GDP ............................................................. 4.7% 4.5% 3.5% 3.1% 2.6% 2.4% 2.5% 2.6% 2.4% 2.4% 2.1%

Note: positive gures represent higher outlays or lower receipts.

*$500 million or less.1 Includes debt service on all reestimates.2 Includes change in allowance or uture disaster costs.


15/72

5

This Mid-Session Review (MSR) updatesthe economic orecast rom the 2014 Budget.The 2014 Budget orecast projected that theeconomic recovery, which began in 2009,would continue. Unemployment was ex-pected to decline as the economy recovered,and infation was expected to remain moder-ate. Interest rates were expected to remainquite low in the near term, but to rise gradu-ally in the medium term. The MSR orecast,completed in late May, maintains these as-sumptions with minor modications to takeaccount o evolving conditions since the lastorecast.

Since 2009, and through the rst quarter o2013, real GDP has risen or 15 straight quar-ters. Following the resumption o real GDPgrowth, the private sector began adding jobs.Private-sector employment has increased ineach o the past 40 months, although it willtake a urther period o healthy job growth toully recover rom the losses due to the reces-sion. The unemployment rate has declinedrom its peak o 10.0 percent in October 2009to 7.6 percent in June 2013. Likewise, thehousing market has begun to contribute tothe recovery. The steep decline in the hous-

ing market ended in 2009, and housingstarts and home prices have rebounded overthe past two years.

Administration policies contributed to theeconomic revival, as have automatic scalstabilizers such as the unemployment com-pensation system. The American Recoveryand Reinvestment Act was passed soon a-ter the President took oce, at a time whenwe were losing more than 800,000 jobs permonth and ater real GDP ell at an annualrate o 8.9 percent in the ourth quarter o2008. The Administrations prompt actionhelped to reverse these precipitous declinesand opened the way to a sustained eco-nomic recovery. Additional actions by the

Administration and Congress, culminat-ing in the passage o the temporary pay-roll tax holiday as part o the Tax Relie,Unemployment Insurance Reauthorizationand Job Creation Act in December 2010,urther sustained demand and ostered con-tinued growth.

Although Administration actions helpedspark the ongoing recovery, the economy hasaced serious headwinds that have held downthe growth rate and limited gains in employ-ment. Several European countries are expe-riencing slowing or negative growth as theyhave engaged in scal austerity measuresto address their decit and debt problems.China and other emerging countries have alsoexperienced some slowing in their very rapidgrowth rates o the past decade. The globalslowdown has reduced the growth o U.S. ex-ports, which subtracted rom overall U.S. GDPgrowth during the ourth quarter o 2012 and

rst quarter o 2013. In addition, the econom-ic downturn, which reduced State and localtax revenue signicantly, orced scal consoli-dation at the State and local government lev-el because State governments generally acebalanced-budget requirements.

Notably, sequestration has imposed a dragon growth in recent months. Congress hasnot yet acted on the comprehensive plan thatthe President proposed to replace sequestra-tion with long-term decit reduction. As aconsequence, the economy was under addi-tional scal pressure during the rst hal o

2013, leading to a reduction in the orecast orgrowth during 2013, although the MSR con-tinues to assume that the sequestration willbe reversed going orward.

Assuming adoption o the Presidents pro-posed scal plan, the Administration projectseconomic growth to continue in the secondhal o 2013 and to pick up in 2014. As variousheadwinds die down, and the proposed Budgetreplaces sequestration, the Administrationexpects more rapid growth in 2014. The de-cline in the unemployment rate over the pastseveral months has been more rapid than ex-pected when the 2014 Budget orecast was -nalized, and unemployment is now projectedto decline somewhat more rapidly than in theBudget projections.

Beyond 2018, the Administrations orecastis based on the long-run trends expected orreal GDP growth, price infation, and interestrates. Projected real GDP growth in the longrun is below the historical average growth or

ECONOMIC ASSUMPTIONS


16/72


the United States because o an expected de-cline in the growth o the labor orce as thepopulation ages.

ECONOMIC PROJECTIONS

The MSR economic projections are based oninormation available through late May 2013and assume adoption o the policies in thePresidents Budget. They are summarized inTable 2.

Real Gross Domestic Product (GDP): RealGDP is expected to rise by 2.4 percent dur-ing the our quarters o 2013 and to increase3.4 percent during 2014. The growth rate isprojected to average 3.5 percent or the threeyears rom 2015 to 2017. The average growth

rom 2013-2018 is slightly below what waspublished in the Budget. Beyond 2018, realGDP growth is projected to moderate. Thegrowth rate is steady at 2.3 percent per year

in 2021-2023, which is the same rate as in theBudget.

Unemployment: The unemployment rate isprojected to reach 7.3 percent by the ourthquarter o 2013, three-tenths o a percentagepoint below its level in June. Unemploymentis projected to decline at a moderate pace re-fecting the expected pace o real GDP growthand because, as labor market conditions im-prove, discouraged workers are expected torejoin the labor orce. With continued growth,the unemployment rate is projected to all,eventually stabilizing at 5.4 percent.

Table 2. ECONOMIC ASSUMPTIONS1

(Calendar years; dollar amounts in billions)

Actual Projections

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Gross Domestic Product (GDP):

Levels, dollar amounts in billions:

Current dollars ............................. 15,076 15,685 16,240 17,057 17,982 18,969 20,007 20,984 21,919 22,873 23,853 24,873 25,935

Real, chained (2005) dollars ........ 13,299 13,593 13,861 14,289 14,784 15,305 15,843 16,308 16,718 17,121 17,524 17,932 18,350

Chained price index (2005 = 100),annual average ......................... 113.4 115.4 117.2 119.3 121.6 123.9 126.3 128.7 131.1 133.6 136.1 138.7 141.3

Percent change, ourth quarter overourth quarter:

Current dollars ............................. 4.0 3.5 4.0 5.4 5.5 5.5 5.5 4.5 4.4 4.3 4.3 4.3 4.3

Real, chained (2005) dollars ........ 2.0 1.7 2.4 3.4 3.5 3.5 3.5 2.6 2.4 2.4 2.3 2.3 2.3

Chained price index (2005 = 100) ... 2.0 1.8 1.6 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9

Percent change, year over year:

Current dollars ............................. 4.0 4.0 3.5 5.0 5.4 5.5 5.5 4.9 4.5 4.4 4.3 4.3 4.3

Real, chained (2005) dollars ........ 1.8 2.2 2.0 3.1 3.5 3.5 3.5 2.9 2.5 2.4 2.4 2.3 2.3

Chained price index (2005 = 100) ... 2.1 1.8 1.5 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9

Incomes, billions o currentdollars:

Domestic corporate prots ........... 1,388 1,521 1,522 1,676 1,832 1,921 1,947 1,833 1,680 1,562 1,467 1,372 1,297

Employee compensation .............. 8,295 8,566 8,841 9,262 9,725 10,319 10,907 11,498 12,060 12,646 13,255 13,868 14,506

Wages and salaries .. .. .. .. ... .. .. .. .. .. .. 6,661 6,881 7,124 7,477 7,842 8,330 8,820 9,308 9,768 10,249 10,734 11,227 11,739

Other taxable income2 .................. 3,252 3,415 3,518 3,609 3,804 3,998 4,301 4,619 4,914 5,166 5,389 5,594 5,793

Consumer Price Index (allurban): 3

Level (198284 = 100), annualaverage ..................................... 224.9 229.6 232.8 237.3 242.4 247.7 253.0 258.5 264.0 269.7 275.5 281.5 287.5

Percent change, ourth quarterover ourth quarter .................. 3.3 1.9 1.3 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2

Percent change, year over year ....... 3.1 2.1 1.4 1.9 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2


17/72

7ECONOMIC ASSUMPTIONS

Infation: Overall infation, as measured bythe consumer price index (CPI), rose in early2013, but it has moderated since then. Coreinfation, excluding ood and energy prices,has declined over the last 12 months to 1.7percent, rom 2.3 percent during the preceding12-month period. Infation is presently below

the Federal Open Market Committees (FOMC)target, but is expected to pick up again as theeconomy recovers and unemployment declinesin the medium term. In the long run, the CPIinfation rate is projected to be 2.2 percent peryear. Another key measure o infation is thechained price index or gross domestic product,which is projected to increase by 1.6 percent in2013, and 1.9 percent or 2014 onward.

Interest Rates: The projections or interestrates are based on nancial market data andmarket expectations at the time the orecastwas developed in late May. The three-monthTreasury bill rate is expected to average only0.1 percent in 2013 and 2014. It is expected tobegin to rise in 2015 and to reach 3.7 percentby 2020. The yield on the 10-year Treasurynote is expected to rise to 3.2 percent in 2015,and to reach 5.0 percent by 2021. In the lateryears o the orecast, interest rates are close totheir historical averages in real terms; that is,adjusted or the projected rate o infation.

Incomes and Income Shares: Corporate pro-its have rebounded more quickly than laborcompensation (which consists o wages andsalaries and employee ringe benets). As aresult, corporate prots have risen as a shareo total income, while the share or labor com-pensation is below its long-run average. As

the economy recovers, some o this shit inshares is expected to reverse. Labor compen-sation is projected to rise somewhat relative tototal income, while the share o corporate pro-its is projected to all. The wage share (whichexcludes ringe benets) is also expected to re-cover rom its recent low level in step with theincrease in compensation.

FORECAST COMPARISONS

A comparison o the MSR orecast with themost recent Blue Chip consensus (an aver-age o about 50 private-sector orecasts), theCongressional Budget Oce (CBO), and theFOMC orecasts is shown below in Table 3.For 2013, the Administrations 2.4 percentprojected rate o real GDP growth during theour quarters o the year is somewhat abovethat o the other orecasts, largely because othe assumption that the sequester will be re-placed by the Presidents package o alterna-tive decit reduction proposals beore the end

Table 2. ECONOMIC ASSUMPTIONS1Continued(Calendar years; dollar amounts in billions)

Actual Projections

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Unemployment rate, civilian,percent:

Fourth quarter level ..................... 8.7 7.8 7.3 6.8 6.3 5.9 5.4 5.4 5.4 5.4 5.4 5.4 5.4

Annual average ............................ 8.9 8.1 7.5 7.0 6.5 6.0 5.6 5.4 5.4 5.4 5.4 5.4 5.4

Federal pay raises, January,percent:

Military4 ........................................ 1.4 1.6 1.7 1.0 NA NA NA NA NA NA NA NA NA

Civilian5 ......................................... 0.0 0.0 0.5 1.0 NA NA NA NA NA NA NA NA NA

Interest rates, percent:

91-day Treasury bills6 ................... 0.1 0.1 0.1 0.1 0.3 1.2 2.3 3.2 3.6 3.7 3.7 3.7 3.7

10-year Treasury notes ................ 2.8 1.8 2.1 2.6 3.2 3.7 4.1 4.4 4.6 4.8 5.0 5.0 5.0

NA = Not Available1

Based on inormation available as o mid-May 2013.2 Rent, interest, dividend, and proprietors income components o personal income.3 Seasonally adjusted CPI or all urban consumers.4 Percentages apply to basic pay only; percentages to be proposed or years ater 2014 have not yet been determined.5 Overall average increase, including locality pay adjustments. Percentages or years ater 2014 have not yet been determined.6Average rate, secondary market (bank discount basis).


18/72


o the scal year, which would reduce the scaldrag during the second hal o 2013. During2014, real GDP growth (Q4/Q4) is expected tobe 3.4 percent, which is above the Blue Chip

consensus o 2.8 percent, but it is within theFOMC central tendency o 3.0 to 3.5 percent,and again refects the assumption that thePresidents Budget policies are adopted. In2015 and 2016, the Administrations projectedrate o GDP growth is more conservative thanCBOs orecast, while average growth rom2013 through 2023 is 0.1 percentage pointhigher than CBO.

The Administration projects that unem-ployment will average 7.5 percent in 2013,7.0 percent in 2014, and 6.5 percent in 2015.The Blue Chip consensus is quite similar:

7.5 percent in 2013, 7.1 percent in 2014,and 6.7 percent in 2015. (The CBO projec-tionslast updated in Januaryassumed asomewhat higher trajectory or the unem-

ployment rate.) The FOMC also projectsthat unemployment will all. By the ourthquarter o 2015, the central tendency o theFOMC orecast ranges rom 5.8 percent to6.2 percent.

The orecasts are airly similar or infationand interest rates. Private orecasters expectinfation to rise to between 2 percent to 2-1/2percent per year or both main measures o in-fation. The Administration orecast projectsslightly less infation and slightly higher inter-est rates than the Blue Chip consensus in thelong run.


19/72

9ECONOMIC ASSUMPTIONS

Table 3. COMPARISON OF ECONOMIC ASSUMPTIONS(Calendar years; dollar amounts in billions)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Nominal GDP:MSR ................................................................. 15,685 16,240 17,057 17,982 18,969 20,007 20,984 21,919 22,873 23,853 24,873 25,935

Budget .............................................................. 15,705 16,384 17,235 18,181 19,192 20,247 21,275 22,247 23,219 24,216 25,253 26,331CBO .................................................................. 15,692 16,149 16,863 17,913 19,087 20,224 21,178 22,129 23,099 24,093 25,117 26,180

Blue Chip1 ........................................................ 15,685 16,224 16,952 17,839 18,741 19,671 20,626 21,607 22,612 23,664 24,765 25,917

Real GDP: percent change, ourth quarter over ourth quarter

MSR ................................................................. 1.7 2.4 3.4 3.5 3.5 3.5 2.6 2.4 2.4 2.3 2.3 2.3Budget .............................................................. 2.0 2.6 3.4 3.6 3.6 3.5 2.9 2.4 2.4 2.3 2.3 2.3

CBO .................................................................. 1.9 1.4 3.4 4.4 4.3 3.2 2.5 2.4 2.2 2.2 2.2 2.2Blue Chip1 ........................................................ 1.7 2.3 2.8 3.2 2.8 2.8 2.6 2.6 2.5 2.5 2.5 2.5

FOMC .............................................................. ......... 2.32.6 3.03.5 2.93.6 ......... ......... ......... ......... ......... ......... ......... .........

Real GDP: percent change, year over year

MSR ................................................................. 2.2 2.0 3.1 3.5 3.5 3.5 2.9 2.5 2.4 2.4 2.3 2.3Budget .............................................................. 2.3 2.3 3.2 3.5 3.6 3.5 3.1 2.6 2.4 2.4 2.3 2.3

CBO .................................................................. 2.3 1.4 2.6 4.1 4.4 3.8 2.6 2.4 2.3 2.2 2.2 2.2Blue Chip1 ........................................................ 2.2 1.9 2.6 3.1 2.9 2.8 2.7 2.6 2.5 2.5 2.5 2.5

GDP Price Index:

MSR ................................................................. 1.8 1.5 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9

Budget .............................................................. 1.9 2.0 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9CBO .................................................................. 1.8 1.5 1.8 2.0 2.1 2.1 2.1 2.0 2.1 2.0 2.0 2.0

Blue Chip1 ........................................................ 1.8 1.5 1.8 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1

Consumer Price Index (CPI-U):

MSR ................................................................. 2.1 1.4 1.9 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2

Budget .............................................................. 2.1 2.1 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2CBO .................................................................. 2.1 1.6 1.9 2.1 2.1 2.2 2.3 2.3 2.3 2.3 2.3 2.3

Blue Chip1 ........................................................ 2.1 1.6 2.0 2.3 2.4 2.4 2.4 2.4 2.3 2.3 2.3 2.3

Unemployment Rate: annual average in percent

MSR ................................................................. 8.1 7.5 7.0 6.5 6.0 5.6 5.4 5.4 5.4 5.4 5.4 5.4Budget .............................................................. 8.1 7.7 7.2 6.7 6.2 5.7 5.5 5.4 5.4 5.4 5.4 5.4CBO .................................................................. 8.1 7.9 7.8 7.1 6.3 5.6 5.5 5.5 5.4 5.4 5.3 5.3Blue Chip1 ........................................................ 8.1 7.5 7.1 6.7 6.3 6.0 5.7 5.6 5.6 5.6 5.6 5.6

FOMC2 ............................................................. ......... 7.27.3 6.56.8 5.86.2 ......... ......... ......... ......... ......... ......... ......... .........

Interest Rates:

91-Day Treasury Bills (discount basis):

MSR ............................................................. 0.1 0.1 0.1 0.3 1.2 2.3 3.2 3.6 3.7 3.7 3.7 3.7Budget .......................................................... 0.1 0.1 0.2 0.4 1.3 2.3 3.2 3.6 3.7 3.7 3.7 3.7

CBO .............................................................. 0.1 0.1 0.2 0.2 1.5 3.4 4.0 4.0 4.0 4.0 4.0 4.0Blue Chip1 .................................................... 0.1 0.1 0.2 0.9 2.1 3.0 3.3 3.5 3.6 3.6 3.6 3.6

10-Year Treasury Notes:

MSR ............................................................. 1.8 2.1 2.6 3.2 3.7 4.1 4.4 4.6 4.8 5.0 5.0 5.0Budget .......................................................... 1.8 2.0 2.6 3.1 3.7 4.1 4.4 4.6 4.8 5.0 5.0 5.0

CBO .............................................................. 1.8 2.1 2.7 3.5 4.3 5.0 5.2 5.2 5.2 5.2 5.2 5.2

Blue Chip1 .................................................... 1.8 2.0 2.6 3.4 4.1 4.5 4.7 4.7 4.7 4.7 4.7 4.7

MSR = 2014 Mid-Session Review (orecast date: May 2013).

Budget = 2014 Budget (orecast date: November 2012).

CBO = Congressional Budget Oce February 2013 baseline economic orecast.

FOMC = Federal Reserve Open Market Committee (orecast central tendency date: June 19, 2013).

Blue Chip = June 2013 Blue Chip Consensus Forecast extended with March 2013 Blue Chip long-run survey.

Sources: Administration; Federal Open Market Committee projections materials, June 19, 2013; Blue Chip Economic Indicators, Marchand June 2013, Aspen Publishers; CBO, The Budget and Economic Outlook: February 2013.

1Values or 20152023 interpolated by OMB rom annual growth rates.2 Fourth quarter levels o unemployment.


20/72


21/72

11

RECEIPTS

The Mid-Session Review (MSR) estimateso receipts are above the Budget estimates by$65 billion in 2013 and below the Budget es-timates by $11 billion in 2014. In each subse-quent year, the MSR estimates o receipts arebelow the Budget estimates by amounts rang-ing rom $15 billion to $69 billion, resultingin a $384 billion decrease in receipts over the10-year budget horizon (2014 through 2023).The net increase in 2013 receipts is in largepart attributable to the eect o technical re-

visions based on new tax reporting data, col-lections to date and other inormation, whichincrease receipts by $110 billion. Revised

economic assumptions partially oset this in-crease, reducing 2013 receipts by $46 billion.

The $11 billion net reduction in 2014 re-ceipts refects a $40 billion decrease in re-ceipts attributable to revised economic as-sumptions, which is partially oset by a $27billion increase in receipts attributable totechnical actors. Changes in the estimatedeect o the Administrations proposals on re-ceipts oset the reduction attributable to re-

vised economic assumptions by an additional$2 billion.

The $384 billion reduction in receipts overthe 10-year budget horizon is primarily dueto receipt losses o $424 billion attributable torevisions in the economic orecast. These re-ductions are partially oset by net increaseso $40 billion attributable to technical revi-sions and to changes in the estimates o the

Administrations proposals and the provisionsextended in the adjusted baseline.

ECONOMIC CHANGES

Revisions in the economic orecast reducereceipts by $46 billion in 2013, $40 billion in2014, and $23 billion to $71 billion in eachsubsequent year, or a total reduction o $424billion over the 10 years rom 2014 through2023. In 2013, revisions to the economic ore-cast have the greatest eect on individualand corporation income taxes, reducing thosesources o receipts by $25 billion and $14 bil-lion, respectively. Revisions in the economicorecast also reduce collections o social in-surance and retirement receipts by $7 billion

in 2013. The reduction in individual incometax receipts is primarily attributable to re-ductions in the orecasts o wages and sala-ries and nonwage sources o personal income.Changes in the orecasts o GDP and othereconomic measures that aect the protabil-ity o corporations are primarily responsibleor the reduction in 2013 in corporation in-come taxes. Reductions in the orecasts owages and salaries and proprietors income,which are the tax base or Social Securityand Medicare payroll taxes, the largest com-ponents o social insurance and retirementreceipts, account or most o the reduction in

this source o receipts.

Over the 10-year budget horizon, revisionsin the economic orecast reduce collectionso individual income taxes and social insur-ance and retirement receipts by $444 billionand $200 billion, respectively. Reductions inthe economic orecast or wages and salaries,nonwage sources o personal income, and pro-prietors income account or most o the down-ward revision in these two sources o receipts.The reductions in individual income taxesand social insurance and retirement receiptsare partially oset by increases in corporation

income taxes o $241 billion. Revisions in theorecasts o GDP, interest rates, other sourceso income, and imports reduce all remainingsources o receipts by a net $21 billion.

TECHNICAL CHANGES

Technical revisions in the estimates in-crease receipts by $110 billion in 2013 and$27 billion in 2014. In later years, techni-cal revisions increase receipts in some yearsand decrease them in others, resulting in anet increase in receipts o $21 billion over the10-year budget horizon. The increase in re-ceipts in 2013 is mostly due to a $101 billionincrease in individual income taxes, attribut-able in large part to more recent collectionsdata. The net increase in receipts over the10-year budget horizon is primarily due tonet downward re-estimates o corporation in-come taxes and miscellaneous receipts, whichare more than oset by upward re-estimateso individual income taxes, social insuranceand retirement receipts, and the remaining


22/72


sources o receipts. The technical revisions inindividual and corporation income taxes andin social insurance and retirement receiptsare in large part attributable to more recent

collections data and revisions in the tax mod-els based primarily on updated tax data orprior years. The technical revisions in mis-cellaneous receipts primarily refect changesin the estimates o various penalties based onmore recent inormation.

REVISIONS IN EXPIRINGPROVISIONS EXTENDED INTHE ADJUSTED BASELINE

The Budgets adjusted baseline permanentlycontinued the tax relie provided to individu-als and amilies under the American Recoveryand Reinvestment Act o 2009 that was ex-

tended only through tax year 2017 under theAmerican Taxpayer Relie Act o 2012. Thistax relie includes increased reundability othe child tax credit, expansions in the earnedincome tax credit or larger amilies and mar-ried taxpayers ling a joint return, and in-creased assistance or qualied tuition andrelated expenses provided by the AmericanOpportunity Tax Credit. Because these provi-

sions are reundable (taxpayers may receivepayments in excess o their tax liability), theproposed extension o these provisions aectsboth outlays and receipts. Revisions in the

estimated cost o extending these provisionsincrease receipts in each year, beginning in2018, and by $8 billion over the 10 years, 2014through 2023. This reduction in the cost oextending these provisions is in large partattributable to a reallocation o a portion othe cost rom receipts to outlays, rather thana reduction in the total relie provided to in-dividuals and amilies. This reallocation re-fects the revised economic orecast, currentcollection experience and updated tax dataor prior years.

REVISIONS IN PROPOSALS

Revisions in the estimates o theAdministrations proposals increase receiptsby a net $11 billion over the 10 years, 2014through 2023. These revisions, which refectthe revised economic orecast and technicalre-estimates based on more recent collectionsdata and other inormation, are the net eecto relatively small revisions in the estimateso a number o provisions.

Table 4. CHANGE IN RECEIPTS(In billions o dollars)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018

2014-2023

2014 Budget estimate ................................ 2,712 3,034 3,332 3,561 3,761 3,974 4,226 4,464 4,709 4,951 5,220

Changes in current law receipts due torevised economic assumptions:

Individual income taxes ............................ 25 37 44 31 28 31 41 49 55 59 69 171 444

Corporation income taxes ......................... 14 9 27 22 24 23 24 25 27 29 31 105 241

Social insurance and retirement .............. 7 10 16 16 17 17 20 26 22 26 31 75 200

Other .......................................................... * 1 2 2 2 2 2 3 3 3 3 8 21

Total, changes due to revised economicassumptions ....................................... 46 40 34 26 23 27 39 52 52 59 71 149 424

Changes in current law receipts due totechnical re-estimates:

Individual income taxes ............................ 101 49 31 12 3 7 7 7 6 4 16 102 110

Corporation income taxes ......................... 5 9 19 17 16 15 15 15 16 16 17 75 155

Social insurance and retirement .............. 7 10 9 10 11 12 14 15 13 19 21 52 135

Miscellaneous receipts .............................. 6 24 34 29 5 3 4 23 1 4 7 88 103Other .......................................................... 4 1 3 4 5 5 4 4 4 3 2 18 34

Total, changes due to technical re-estimates ........................................... 110 27 9 18 2 11 5 12 9 14 4 9 21

Changes in provisions extended in theadjusted baseline due to economic andtechnical revisions ..................................... ......... ......... ......... ......... ......... * 1 2 2 2 2 * 8

Changes in proposals due to economic andtechnical revisions ..................................... * 2 4 1 2 * 3 5 2 2 5 6 11

Total change in receipts .................. 65 11 47 46 27 15 30 58 40 42 69 146 384

2014 Mid-Session estimate ....................... 2,777 3,023 3,285 3,516 3,733 3,959 4,196 4,406 4,669 4,909 5,152

*$500 million or less.


23/72


24/72


the projected COLA decreases rom 2.2 to 1.1percent or 2014 and rom 2.2 to 2.1 percentor 2015. Technical changes partially osetthe lower spending due to economic actors,

driven by upward revisions in the OASI pro-gram to account or improved mortality as-sumptions among the elderly.

Supplemental Nutrition AssistanceProgram (SNAP). Outlays or SNAP in-crease by $2 billion in 2013 and $65 billionover the next 10 years, primarily due to tech-nical actors. The technical changes ariserom higher actual participation in the pro-gram than was assumed in the Budget, re-

vised modeling o current and uture bene-ciaries who are underemployed or out o theactive labor orce, and adjustments to betteraccount or uture disaster benets.

Premium assistance tax credits.Changes in technical assumptions decreaseestimated outlays or the reundable portiono the premium assistance tax credit by $43billion rom 2014 through 2023. The esti-mated decrease in expenditures is the neteect o several osetting technical changes,including adjustments to premium estimatesin the exchanges, revised assumptions or the

Aordable Care Act Medicaid expansion, andother technical corrections to the model.

Proceeds rom Government Sponsored

Enterprises. Collections rom dividendpayments under Treasurys Preerred StockPurchase Agreements with Fannie Mae andFreddie Mac have been revised upward in2013, lowering net outlays by $71 billion,based on the companies nancial resultsthrough the end o March, including a $50.6billion increase in the valuation o FannieMaes deerred tax asset. Collections or 2014to 2023 have been revised downward to refectthe change in Fannie Maes taxable status, in-creasing net outlays over 10 years by $34 bil-lion.

Earned Income Tax Credit (EITC).Estimating changes increase outlays or theEITC by $2 billion in 2013 and an additional$32 billion rom 2014 through 2023. Mosto the upward revision can be attributed tochanges to economic assumptions or GDP,personal income, wages, and infation thatcause more beneciaries to stay within the

income eligibility requirements or longerperiods o time. Technical changes also con-tribute modestly to the increase, as a resulto revisions to refect actual participation in

the current year and improved participationprojections in the uture.

Medicare. Economic and technical chang-es reduce outlays or Medicare by $2 billionin 2013, but increase spending by $31 billionover the next 10 years. Outlays or MedicareParts A and D increase substantially overthe next 10 years, while Part B decreases.The spending increase in Part A is primar-ily a result o upward revisions to Medicare

Advantage enrollment, as well as other tech-nical changes. The decrease in Medicare PartB spending is primarily due to increases inpremium receipts and receipts rom provider

payment adjustments related to health inor-mation technology programs. The increase tospending or Medicare Part D is due mostly tohigher drug spending and revised enrollmentassumptions compared to the Budget.

Unemployment compensation. Changesin economic and technical assumptions de-crease outlays or unemployment benets by$6 billion in 2013. Over 2014 through 2023,outlays are down by an additional $19 billionrelative to the Budget estimate. The reduc-tion is driven in large part by lower-than-ex-pected rates o insured unemployment rela-

tive to actual civilian unemployment rates aswell as lower-than-expected actual spendingthan had been assumed in the Budget. In ad-dition, the revised MSR economic orecast orlower near-term civilian unemployment ratesand the smaller labor orce than was assumedin the Presidents Budget contributes some-what to the downward revision in spendingthroughout the Budget horizon.

Supplemental Security Income (SSI).Estimating changes decrease outlays or theSSI program by $15 billion over the next 10years. Most o the downward revision canbe attributed to lower COLA assumptions in2014 and 2015 as well as lower unemploy-ment rate assumptions relative to the Budget,leading to ewer projected applications andawards. Technical revisions to the projectedrecipient population and average projectedpayments also contributed to the decrease inSSI spending.


25/72

15EXPENDITURES

Civilian and military retirement.Economic changes comprise nearly the entire$14 billion decrease in spending relative tothe Budget or civilian and military retire-

ment over the next 10 years. The lower COLAassumptions in 2014 and 2015 explain most othe decreases or both programs.

Child Tax Credit (CTC). Estimatingchanges decrease outlays or the CTC by $1 bil-lion in 2013 and an additional $11 billion rom2014 through 2023. Most o the downward revi-sion can be attributed to lower actual outlays,due to ewer CTC claims during the recent taxling season. Changes in the economic orecastor the MSR increased outlays relative to theBudget in 2015 and beyond by increasing thenumber o taxpayers assumed to all within theeligible income range or the credit.

Troubled Asset Relie Program (TARP)housing programs. Technical changeslower outlays in 2013 or TARP housing pro-grams by $7 billion relative to the Budget asa result o adjusting projections to account orlower spending to date. On May 30, 2013, theTreasury Department announced a two-yearextension o the Home Aordable ModicationProgram that was not assumed in the Budget.

As a result, outlays previously projected or2013 are now projected to be spent in 2014through 2020, with total spending over thebudget window virtually unchanged.

Deposit Insurance Fund (DIF).Technical and economic changes lower de-posit insurance spending in 2013 by $6 bil-lion, but raise spending over 2014 through

2023 by $5 billion. The short-term reductionin spending is attributable to ewer bank ail-ures experienced to date than were projectedin the Budget. The outyear spending increasecan be attributed to lower uture premiums.Because o the reduction in current year de-posit insurance spending, arising rom thelower projection o uture bank ailures rela-tive to the Budget, it is expected that therewill be a reduced need to replenish the DIFand that premiums will be lower in the out-years, Revised orecasts o GDP, infation,and interest rates also result in some minoroutyear spending increases.

Net interest. Excluding the debt serviceassociated with enacted legislation, outlaysor net interest are projected to decrease by$7 billion in 2013, but increase by $41 billionover the next 10 years. The reduction in 2013is largely due to the eects o recent lower-than-expected infation in the ConsumerPrice Index on interest outlays or infation-indexed securities. The increases in 2016 andsubsequent years are virtually all due to tech-nical revisions to interest accounts, as well ashigher debt service due to estimating changesin receipts and outlays.


26/72

16 MID-SESSION REVIEW16

Table 5. CHANGE IN OUTLAYS(In billions o dollars)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018

2014-2023

2014 Budget estimate .............................................. 3,685 3,778 3,908 4,090 4,247 4,449 4,724 4,967 5,209 5,470 5,660

Changes due to enacted legislation:

Consolidated and Further ContinuingAppropriations Act o 2013 ............................. 5 8 * * * * * * * * * 8 7

Debt service ......................................................... * * * * * * * * * * * * 1

Subtotal, enacted legislation .................................. 5 8 * * * * * * * * * 8 8

Changes due to reestimates:

Discretionary appropriations:

Deense ............................................................ 22 2 1 2 * 1 * * * * * 1 1

Non-deense ..................................................... 21 3 4 4 2 2 2 2 2 1 * 15 22

Medicaid .............................................................. 8 8 11 11 11 12 13 13 14 14 15 54 123

Social Security ..................................................... 3 9 12 12 11 10 8 7 6 5 4 54 85

Supplemental Nutrition Assistance Program ..... 2 6 7 6 7 6 6 6 6 7 8 32 65

Premium assistance tax credits ......................... ......... 1 5 7 3 2 3 4 5 7 8 16 43Proceeds rom GSE Preerred Stock .................. 71 3 5 6 4 3 3 3 3 3 3 20 34

Earned Income Tax Credit .................................. 2 3 3 2 2 2 4 4 4 4 4 12 32

Medicare .............................................................. 2 * 1 1 2 * 2 4 5 8 10 1 31

Unemployment compensation ............................ 6 5 3 3 2 2 1 1 1 1 1 15 19

Supplemental Security Income program ........... * 1 1 1 1 1 2 2 2 2 2 6 15

Civilian and military retirement ........................ * * 1 2 2 2 2 2 2 2 1 7 14

Child Tax Credit .................................................. 1 3 3 3 3 3 1 1 1 1 1 16 11

Troubled Asset Relie Program .......................... 7 1 1 1 1 1 1 1 ......... ......... ......... 5 7

Deposit Insurance Fund ..................................... 6 * 1 * * * 1 2 * 1 1 1 5

Other programs 1 .................................................. 18 1 4 4 2 2 1 * * 1 1 13 16

Net interest 2 ........................................................ 7 * * 2 1 1 1 4 7 11 15 3 41

Subtotal, reestimates .............................................. 154 3 2 4 2 6 17 23 26 33 41 17 156

Total change in outlays ............................................... 149 4 3 4 2 6 17 23 26 33 41 9 148

Mid-Session estimate .............................................. 3,536 3,773 3,911 4,094 4,249 4,455 4,741 4,990 5,235 5,502 5,700

*$500 million or less.1 Includes change in allowance or uture disaster costs.2 Includes debt service on all reestimates.


27/72

17

SUMMARY TABLES


28/72

Table S1. BUDGET TOTALS(In billions o dollars and as a percent o GDP)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Budget Totals in Billions o Dollars:

Receipts .................................................... 2,450 2,777 3,023 3,285 3,516 3,733 3,959 4,196 4,406 4,669Outlays ..................................................... 3,537 3,536 3,773 3,911 4,094 4,249 4,455 4,741 4,990 5,235

Decit .................................................... 1,087 759 750 626 578 516 496 545 584 566

Debt held by the public ............................ 11,281 12,213 13,087 13,874 14,610 15,271 15,905 16,582 17,294 17,984

Debt net o nancial assets ...................... 10,282 11,041 11,791 12,417 12,995 13,510 14,007 14,551 15,135 15,701

Gross domestic product (GDP) .................... 15,549 16,081 16,836 17,745 18,717 19,743 20,753 21,685 22,632 23,604

Budget Totals as a Percent o GDP:

Receipts .................................................... 15.8% 17.3% 18.0% 18.5% 18.8% 18.9% 19.1% 19.3% 19.5% 19.8%

Outlays ..................................................... 22.7% 22.0% 22.4% 22.0% 21.9% 21.5% 21.5% 21.9% 22.0% 22.2%

Decit .................................................... 7.0% 4.7% 4.5% 3.5% 3.1% 2.6% 2.4% 2.5% 2.6% 2.4%

Debt held by the public ............................ 72.6% 75.9% 77.7% 78.2% 78.1% 77.3% 76.6% 76.5% 76.4% 76.2%

Debt net o nancial assets ...................... 66.1% 68.7% 70.0% 70.0% 69.4% 68.4% 67.5% 67.1% 66.9% 66.5%


29/72


30/72

Table S2. EFFECT OF BUDGET PROPOSALS ON PROJECTED DEFICIT(Decit increases (+) or decreases () in billions o dollars)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2

Proposed BCA disaster relie capadjustment ................................................. * 2 3 2 * * * * *

Outlay eects o discretionary policy ........... ......... 1 1 3 5 5 4 2 5Debt service and indirect interest eects .... * * 1 * 1 3 6 9 13

Total, additional decit reduction ............ * 1 10 32 43 41 63 111 122

Total proposals in the 2014 MSR ............ 10 12 57 122 181 220 272 316 367

Eect o replacing Joint Committeeenorcement with 2014 MSR defcitreduction proposals:

Programmatic eects ........................................ 14 84 101 104 107 108 108 109 109

Debt service ....................................................... * * * 2 7 15 22 29 35

Total eect o replacing Joint Committeeenorcement ............................................... 14 84 101 107 115 123 131 138 143

Resulting defcits in 2014 MSR ....................... 759 750 626 578 516 496 545 584 566

Percent o GDP .................................................. 4.7% 4.5% 3.5% 3.1% 2.6% 2.4% 2.5% 2.6% 2.4%

* $500 million or less.1 See Tables S-4 and S-7 or inormation on the adjusted baseline.2 For total decit reduction since January 2011, see Table S-3.


31/72


32/72


33/72

TABLE S4. ADJUSTED BASELINE BY CATEGORY1Continu(In billions o dollars)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Memorandum, budget authority or

appropriated programs:

4

Deense .......................................................... 670 601 641 657 670 685 699 714 730 746

Non-deense ................................................... 527 539 516 530 541 552 564 577 590 602Total, appropriated unding ....................... 1,196 1,140 1,157 1,187 1,210 1,236 1,263 1,292 1,320 1,348

* $500 million or less.1 See Table S-7 or inormation on adjustments to the Balanced Budget and Emergency Decit Control Act (BBEDCA) baseline.2 These amounts represent a placeholder or major disasters requiring Federal assistance or relie and reconstruction. Such assista

o discretionary or mandatory outlays or tax relie. These amounts are included as outlays or convenience.3 Includes discretionary cap reductions or 2014 through 2021 and mandatory sequestration or 2015 through 2021.4 Excludes discretionary cap reductions or Joint Committee enorcement.


34/72


35/72

Table S5. PROPOSED BUDGET BY CATEGORYContinued(In billions o dollars)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021



1

Deense ....................................................... 670 640 631 566 577 586 595 604 614 624

Non-deense ................................................ 527 563 514 557 567 575 583 592 600 608Total, appropriated unding ................... 1,196 1,203 1,146 1,123 1,144 1,161 1,178 1,196 1,214 1,232

* $500 million or less.1 The 2014 MSR proposes changes to the current law caps in the BBEDCA or the reclassication o certain transportation programs

the Administrations policy to achieve additional decit reduction.2 These amounts represent a placeholder or major disasters requiring Federal assistance or relie and reconstruction. Such assistan

o discretionary or mandatory outlays or tax relie. These amounts are included as outlays or convenience.


36/72


37/72

Table S6. PROPOSED BUDGET BY CATEGORY AS A PERCENT OF GDP(As a percent o GDP)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021



1

Deense ....................................................... 4.3 4.0 3.8 3.2 3.1 3.0 2.9 2.8 2.7 2.6

Non-deense ................................................ 3.4 3.5 3.1 3.1 3.0 2.9 2.8 2.7 2.7 2.6Total, appropriated unding ................... 7.7 7.5 6.8 6.3 6.1 5.9 5.7 5.5 5.4 5.2

*0.05 percent o GDP or less.1 The 2014 MSR proposes changes to the current law caps in the BBEDCA or the reclassication o certain transportation programs

the Administrations policy to achieve additional decit reduction.2 These amounts represent a placeholder or major disasters requiring Federal assistance or relie and reconstruction. Such assista

o discretionary or mandatory outlays or tax relie. These amounts are included as outlays or convenience.


38/72


39/72

Table S8. MANDATORY AND RECEIPT PROPOSALS(Decit increases (+) or decreases () in millions o dollars)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Savings Consistent with the December Compromise Defcit Reduction Package:

Health Savings:Health and Human Services (HHS):

Medicare providers:

Bad debts:Reduce Medicare coverage o

bad debts ................................. ......... 200 860 1,930 2,570 2,800 3,000 3,190 3,410 3,6

Graduate medical education:

Better align graduate medicaleducation payments withpatient care costs ................... ......... 780 930 960 990 1,050 1,100 1,170 1,250 1,3

Better align payments to ruralproviders with the cost o care:

Reduce Critical Access Hospital(CAH) payments rom 101%o reasonable costs to 100% oreasonable costs ..................... ......... 90 110 120 120 130 150 160 170 1

Prohibit CAH designation or

acilities that are less than10 miles rom the nearesthospital ................................... ......... 40 50 60 60 70 70 80 80

Cut waste, raud, and improperpayments in Medicare:Reduce raud, waste, and abuse

in Medicare ............................. ......... ......... 20 20 30 50 50 50 60 Require prior authorization or

advanced imaging .................. ......... ......... ......... ......... ......... ......... ......... ......... ......... .....

Drug rebates and additional PartD savings:

Align Medicare drug paymentpolicies with Medicaidpolicies or low-incomebeneciaries ............................ ......... 3,140 7,720 8,450 9,720 11,260 12,510 14,310 16,400 18,2

Accelerate manuacturer drugrebates to provide relie toMedicare beneciaries in the

coverage gap ........................... ......... ......... 140 230 450 760 1,210 1,780 2,010 2,3Encourage ecient post-acute care:

Adjust payment updates orcertain post-acute careproviders ................................. ......... 830 1,930 3,220 4,540 6,020 7,870 9,880 12,140 14,9

Equalize payments or certainconditions commonly treatedin inpatient rehabilitationacilities and Skilled NursingFacilities (SNFs) ..................... ......... 140 160 180 180 190 200 210 220 2


40/72


41/72


42/72


43/72


44/72


45/72


46/72


47/72


48/72


49/72


50/72


51/72


52/72


53/72


54/72


55/72


56/72


57/72


58/72


59/72


60/72


61/72


62/72


63/72

Table S8. MANDATORY AND RECEIPT PROPOSALSContinue(Decit increases (+) or decreases () in millions o dollars)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Addendum, business tax policies reservedor revenue-neutral reorm:

Modiy and permanently extendrenewable electricity production taxcredit ................................................... ......... 21 88 332 580 771 957 1,159 1,388 1,5

Expand and simpliy the tax creditprovided to qualied small employersor non-elective contributions toemployee health insurance ................ 10 51 51 50 43 23 13 9 6

20 The provision is estimated to have zero receipt eect under the Administrations current economic projections.21 These additional revenue savings could be used to pay or continuing tax benets provided under the American Taxpayer Relie Act, i Con

be oset.


64/72


65/72


66/72


67/72


68/72


69/72


70/72


71/72


72/72

fy 2014 mid-session review budget of the u.s. government

Documents