Health Economics Unit 11. 2 Budget of the US Government Fiscal Year 2000 l October 1, 1999 to...

Health Economics

Unit 11

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Budget of the US GovernmentFiscal Year 2000 October 1, 1999 to September 30, 2000 Total Government Spending is 29% of Gross

Domestic Product Federal Spending Only is 20% 71% from Private Sources

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Comparability to Other Countries U.S. is comparable to Japan Much less than United Kingdom, Canada,

Germany, France, and Italy

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Federal Government Dollars 10% corporate income taxes 4% Other: fines, customs, Federal Reserve

earnings 4% Excise taxes: alcohol, tobacco, transportation

fuels, and etc. 48% Individual income taxes 34% Social Insurance Payroll Taxes

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Composition of Revenues between 1960 to 1998 Payroll taxes increased for social programs Corporate taxes declined Individual taxes remained constant

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Spending for Year 2000 1.8 trillion dollar budget Surplus of 117 billion in 2000

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Budget for Year 2000 22% Social Security 11% Medicare 6% Medicaid 6% Entitlements - Food Stamps, Veterans 6%Federal Retirements, Insurance, Payments to Farmers 15% Defense

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Budget Continued 17% Discretionary: education, science,

technology, housing, transportation, and foreign aid

11% Interest Payments 6% Will not be spent - save for Social Security

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On and Off Budget Items Items such as Social Security and Postal Service

are Off Budget Items On items include such items as those found in

the discretionary areas Unified budget = On Budget + Off Budget Items

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Budget Process 1st Monday in February, President submits proposed

Federal budget to Congress for next fiscal year White House Office of Management and Budget (OMB)

prepares proposal with advise of Cabinets, Advisors, and President

Thousands of pages to document budget

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Process Continued Congress must pass budget President signs Enacted

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Year 2000 Budget Feb, 1998-December, 1998: Executive Branch

develops requests to OMB President reviews Dec, 1998-February 1999: Transmitted to

Congress Mar-Sept 1999: Congress reviews and approves

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Year 2000 Process Continued Oct 1, 1999 Fiscal Year Begins Oct 1, 1999, to September 30, 2000 Agency

Program Managers execute budget Oct - Nov, 2000 Data analyzed on actual

spending

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Congressional Process Used to Approve Budget Budget Resolution must be passed Serves as Framework to make decisions about

spending and taxes Targets are established for total spending, total

revenues, and addressing the deficit

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Discretionary Spending 1/3 of federal budget is discretionary 13 annual appropriation bills Covers such areas as FBI, Coast Guard,

Housing, Education, Space Exploration, Highway Construction, Defense, and Foreign Aid

Must act on these each year

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Mandatory Items 2/3 of Federal Budget May or may not choose to act to change

allocations on these Includes such items as Social Security,

Medicare, Veterans, Food Stamps, Interest paid on National Debt

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Current Budget Law Imposes a cap on discretionary spending through

the Year 2000

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Process in Congress Con’t Hearings on proposals Approval by Congress Approval by President Monitored by Agency Program Managers, OMB,

Congress, General Accounting Office

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Budget Terms Budget Authority: What law authorizes Federal

Government to Spend Budget Outlay: What actually is spent

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Budget Act

1993: Government Performance and Results Act; Improve government programs by better measurements of effectiveness

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History of Deficits First deficit in 1792 70 deficits between 1900 and 1997 Usually due to wars or recession 1998: Federal budget surplus; first since 1969;

reduced federal debt by 50 billion 2000 Forecasts: surplus for decades to come

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Debt of Government 5.5 Trillion at the end of 1998 Includes deficits that have built up from past 200

years

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History of Budget Acts 1985: Balanced Budget and Emergency Deficit

Control Act; established annual deficit targets for 5 years; never achieved those targets

1990: Budget Enforcement Act: Limit discretionary spending; accomplished, mandatory spending in areas such as healthcare, however made deficit increase

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Budget Acts Continued 1993: 5 year reduction package which included

spending cuts and higher revenues 1997: Balanced Budget Act: Will result in 247

billion in savings over next 5 years; extends solvency of Medicare Trust Fund; benefits higher education, benefits children’s health, and gives tax credits to families with children

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Comparison of Deficit and Surplus Budgets In 1992, deficit was 290 Billion In 1998, 69 Billion surplus

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Year 2000 Budget 3rd Balanced Budget with Surplus Projected use of surplus in Year 2000: 62% to strengthen Social Security over next 15

years 15% to keep Medicare solvent for next 20 years 10% to support Universal Savings Accounts

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Surplus Continued 11% to provide for military readiness, education,

and domestic needs

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Priorities for Budget Education Aid to Working Families Care of Children Healthcare coverage Medicare and Medicaid enhancements Avoidance of Fraud Nature - Parks and etc.

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Priorities Continued Urban green spaces World Peace

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Government Priorities Improving performance through better

management Smaller, more efficient government Programs in 32 Federal Agencies to improve

performance