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The original documents are located in Box 9, folder "FY 1977 - 9/18/75, Budget Reduction
Proposals (2)" of the White House Special Files Unit Files at the Gerald R. Ford
Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 9 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
THE PRESIDENT HAS SEEN
Summary Information
Outlay Reductions
CURRENT BUDGET OUTLOOK
(in billions of dollars)
1976
1977
Base estimate:
Outlays
370.8
419.1
Receipts
292.3
351.4
Deficit
-78.5
-67.7
Suggested changes:
Outlays
-1.4 -23.5
Receipts:
Relatively desirable increases
---
2.4
Offsetting economic effects of all proposals
---
-4.0
Outlays
369.4
395.5
Receipts
292.3
349.8
Deficit
-77.1
-45.7
GERALD FORD LIBRAS,
September 18, 1975
1977 BUDGET OUTLAY REDUCTIONS
(Dollars in millions)
1976
1977
Revised
1978 Outlay
Current
Suggested
Revised
Current
Suggested
Planning
Effect of
Agency
Estimate
Reductions
Estimate
Estimate
Reductions
Guidance
Reductions
Civilian Programs:
Agriculture
14,685
-640
14,045
14,767
-2,815
11,952
-2,970
Commerce
1,789
I
1,789
2,239
-11
2,228
----
Corps of Engineers
1,997
-24
1,973
2,122
-207
1,915
-407
HEW
127,089
-32
127,057
142,798
-9,018
133,780
-10,467
HUD
5,808
-15
5,793
8,723
-488
8,235
-541
Interior
2,469
-30
2,439
2,186
-189
1,997
-144
Justice
2,253
-6
2,247
2,309
-100
2,209
-38
Labor
26,072
-57
26,015
24,801
-783
24,018
-3,023
State
1,242
-14
1,228
1,144
-54
1,100
-24
Transportation
12,075
--
12,075
12,950
-230
12,720
-230
Treasury
46,592
---
45,592
55,614
-1,168
54,446
-73
ERDA
4,059
--
4,059
5,070
-30
5,040
I
EPA
3,185
--
3,185
4,864
-403
4,461
-803
GSA
14
--
14
173
-753
-580
-430
NASA
3,498
-77
3,421
3,805
-250
3,555
-143
VA
18,167
-
18,167
17,704
-1,202
16,502
-1,293
CSC
8,712
--
8,712
10,358
-312
10,046
-339
Export-Import Bank
(1,700)
(-65)
(1,635)
1,700
-390
1,310
-1,170
NSF
720
-12
708
775
-50
725
-69
RRB
3,443
|
3,443
3,567
-110
3,457
-110
TVA
781
|
781
820
-25
795
-1
Foreign Economic Assistance
2,554
--
2,554
3,811
-43
3,768
-68
Military Programs:
Department of Defense
91,800
-505
91,295
98,765
-5,765
93,000
-1,105
Military Assistance
1,238
I
1,238
1,708
-26
1,682
-33
GERALD
R.
FORD
1976
1977
Revised
1978 Outlay
Current Suggested Revised Current Suggested Planning Effect of
Agency
Estimate
Reductions
Estimate
Estimate
Reductions
Guidance
Reductions
All other agencies
6,404
-
6,404
6,261
-71
6,190
---
Allowances:
Pay adjustment
550
--
550
2,600
-1,050
1,550
--
Contingencies
400
-
400
2,000
--
2,000
----
Energy (rebate) payments
750
-
750
1,000
--
1,000
--
Threatened Congressional add-ons
2,500 2/
-
2,500
2/
5,250
3/
--
5,250 3/
-
Undistributed Offsetting Receipts:
OCS Receipts
-8,000
-
-8,000
-8,000
--
-8,000
-
Other
-12,057
--
-12,057
-12,804
--
-12,804
-
Total
370,789
-1,412
369,377
419,090
-25,543
393,547
-23,481
Memorandum:
Assume slower phase-in
2,000
2,000
Total
370,789
-1,412
369,377
419,090
-23,543
395,547
-23,481
Assumes new budget authority at the same level as in FY 1976.
2/
Middle point of $2-3 billion range.
3/ Middle point of $4.5-6 billion range.
GERALD LISEARY FORD
AGRI CULTURE
Department or Agriculture
1977 Outlay Reductions
(In millions of $)
Revised
Planning
Current
Suggested
planning
Program
guidance
Adjustment
estimate
reduction
guidance
Food stamp program
6919
--
6919
1335
5584
Child nutrition program
1900
820
2720
1110
1610
CCC price support and
related programs
1229
--
1229
250
979
Conservation and
related programs
620
--
620
50
570
Rural development & housing
programs
840
--
840
50
790
Public Law 480
1042
---
1042
:
1042
Research, regulatory and
extension
974
I
974
--
974
Forestry
832
|
832
|
832
Other
270
--
270
:
270
Less receipts
-679
--
-679
--
-679
Employment reduction
XX
XX
XX
20
-20
TOTAL
13947
820
14767
2815
11952
NOTE: If, as is likely, the Congress restores programs proposed for termination
in the 1976 budget, 1977 outlays would be increased by about $250 million.
GERALD
A.
FORD
LIBRARY
Summary of Outlay Reductions (Part I)
Department of Agriculture
(dollars in millions)
Date: Sept. 5, 1975
Effect on outlays in
1976
1977
1978
A. 1977 planning guidance
XXX
13,947
XXX
Adjustments:
Congressional inaction,
Child nutrition
820
XXX
XXX
Current estimate
14685
14,767
XXX
B. Suggested program reductions:
Food Stamps (4 items) :
Current estimate
6800
6919
7200
OMB recommendation
6260
5584
6025
Suggested reduction
540
1335
1175
Child Nutrition (2 items) :
Current estimate
2520
2720
3115
OMB recommendation
2520
1610
1740
Suggested reduction
1110
1375
Tobacco Price Support:
Current estimate
89
102
128
OMB recommendation
89
52
78
Suggested reduction
50
50
Peanut Price Support:
Current estimate
620
587
670
OMB recommendation
520
387
420
Suggested reduction
100
200
250
Effect on outlays in
1976
1977
1978
Technical Assistance:
Current estimate
201
200
200
OMB recommendation
201
150
150
Suggested reduction
50
50
Water and Sewer Grants:
Current estimate
66
70
200
OMB recormendation
66
20
150
Suggested reduction
--
50
50
Employment reduction
20
20
Total suggested reduction
640
2815
2970
Revised planning guidance and
related 1976 amount
14045
11952
GERALD
R.FORD
FORD
LIBRAR
1977 Outlay Reductions (Part II)
USDA/Food Stamps
(dollars in millions)
Date:
9/5/75
/
/
appropriation request
deferral action
/XX
/
other administration action
rescission action
/
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
6,800
6,800
6,900
6,900
XXX
7,200
OMB recommendation
6,550
6,550
6,300
6,300
XXX
6,600
Suggested reduction
-250
-250
-600
-600
XXX
-600
Actions required:
Assuming that the legislative prohibitions on changing food stamp regulation lapse on December 31, 1975, amend current
regulations so that selected itemized deductions (i.e., shelter and child support) would not be allowed in excess
of a specific amount; eliminate deductions for education, pension and union dues, and limit medical deductions to
costs in excess of a percentage of income.
Program impact:
This proposal would eliminate from participation or reduce the benefits of some households with relatively high
gross incomes and large shelter expenditures. Depending on the shelter deduction limit assumed, program costs
could be reduced $500-$700 million.
Other consideration:
Changes of this sort are now being considered by the Domestic Council Task Group.
GERALD
3.
FORD
"additive with other food stamp issues
1977 Outlay Reductions (Part II)
USDA/Food Stamps
(dollars in millions)
Date:
9/5/75
appropriation request
deferral action
other administration action
/
rescission action
X
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
6,800
6,800
6,900
6,900
XXX
7,200
OMB recommendation
6,660
6,660
6,625
6,625
XXX
6,925
Suggested reduction
-140
-140
-275
-275
XXX
-275
Actions required:
Resubmit proposed legislation which would make SSI. & public assistance recipients eligible for Food Stamp benefit
only if they qualify under Food Stamp income and assets test.
Program impact:
This proposal would reduce Food Stamp participation by approximately 1.2 million. Program costs would
decrease $250-300 million. Reduced participation would impact elderly households.
Other consideration:
Changes of this sort are now being considered by the Domestic Council Task Group.
BERALD YORK
1977 Outlay Reductions (Part II)
USDA/Food Stamps
(dollars in millions)
Date:
9/5/75
appropriation request
/
deferral action
X
other administration action
/
/
rescission action
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
6,800
6,800
6,900
6,900
XXX
7,200
OMB recommendation
6,800
6,800
6,600
6,600
XXX
6,800
Suggested reduction
-0-
-0-
-300
-300
XXX
-400
Actions required:
Administrately implement an allotment schedule based on the current Economy Food Plan and providing individualized
computation of coupon allotment for all recipient households: and a partial hold-harmless of current participants:
Regulations along these lines are in process.
Program impact:
Would decrease the cost of bonus coupons by $300 million annually. The proposal would reduce allotment
levels for about two thirds of participating households. The major impact would be on the one and two-
person households. This proposal would incur an increase in Administrative costs (certification and issuance).
Other consideration:
SEFALD FORD
* This proposal is related but distinct from the Domestic Council effort.
1977 Outlay Reductions (Part II)
USDA/Food Stamps
(dollars in millions)
Date:
9/5/75
/
/
appropriation request
/
/
deferral action
/
/
other administration action
/
/
rescission action
X
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
6,800
6,800
6,900
6,900
XXX
XXX
OMB recommendation
6,800
6,800
6,740
6,740
XXX
XXX
Suggested reduction
--
--
160,
160
XXX
XXX
Actions required:
Limit cost-of-living increases to 60% of the change in the applicable index.
Program impact:
Food Stamp recipients would receive lower allotments than those to which they might be entitled without
a "cap".
Other consideration:
Congressional enactment is unlikely in view of FY 1976 experience with a similar proposal.
1977 Outlay Reductions (Part II)
USDA/Child Nutrition
(dollars in millions)
Date:
9/5/75
/
appropriation request
/
deferral action
other administration action
/
/
rescission action
substantive legislation
/
other congressional action
1976
1977
1978
BA
Cutlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
2,580
2,520
2,790
2,720
XXX
3,115
OMB recommendation
2,580
2,520
1,695
1,610
XXX
1,740
Suggested reduction
-0-
-0-
-1,095
-1,110
XXX
-1,375
Actions required:
Amend the Block Grant proposal to include use of food stamps by children from eligible households for payment
of school meals. Children from participating food stamp households would be able to purchase meals (now provided
free or at a reduced price) using coupons which represent their per meal portion of the households food stamp
allotment. Severe administrative problems such as determination of children's per meal cost in food stamps by
age, sex and household allotment levels may be encountered and need study. Use of food stamps for this purpose,
however, could reduce the duplication of Federal nutritional support which provide more than 100% of nutritional
needs.
Program impact:
Reduced participation of non-needy children since Block Grant treats only with needy children.
Other consideration:
-- Non-enactment of H.R. 4222 in FY 76: programs authorized under the continuing resolution (includes non-enactment
of Administration's cost-of-living caps) - simple extension of current law.
-- Enactment of the Administration's Block Grant proposal in FY 77 which would replace a number of narrow
categorical programs (including the Special Supplemental Foods for Women, Infants and Children;
Food Donations; and Special Milk) with a comprehensive State grant.
GERALD
*If H.R. 4222 becomes law, FY 76 outlays would be increased to $2,942 million. FY 77 and 78 costs would
proportionately increase.
FORD
1977 Outlay Reductions (Part II)
CCC/Peanut Price Support
(Dollars in Millions)
Date: September 5. 1975
/_/
appropriation request
11
deferral action
/x/
other administrative action
11
rescission action
II
substantive legislation
1-1
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
XXX
620
XXX
587
XXX
670
OMB recommendation
XXX
520
XXX
387
XXX
420
Suggested reduction
XXX
100
XXX
200
XXX
250
Actions required:
Return to USDA's former practice of selling surplus peanuts (acquired under the price support program) to
crushers for conversion into peanut oil. Currently CCC crushes the peanuts and holds the oil for sale
when prices are higher than at present.
Program impact:
Peanut oil prices would be lowered. Outlays would be reduced as shown.
Other consideration:
The current run-up in costs for the peanut program is a result of a decision to make the program look so
bad that Congress would pass peanut legislation more to the Administration's liking. Although the
strategy is not working, USDA is continuing with it, and has proposed shipping the oil through P.L. 480
rather than selling it commercially.
A return to the old practice would mean abandonment of the strategy but not an abandonment of the effort to
reform the peanut program.
1977 Outlay Reductions (Part II)
CCC/Tobacco Price Support
(dollars in millions)
Date: September 5, 1975
II
appropriation request
11
deferral action
/x/
other administrative action
11
rescission action
II
substantive legislation
II
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
XXX
89
XXX
102
XXX
128
OND recommendation
XXX
89
XXX
52 XXX
78
Suggested reduction
XXX
0
XXX
50 1/ XXX
50 1/
Actions required:
Reduce poundage quotas to bring production into better balance with demand.
Program impact:
Would reduce amount of burley and flue-cured tobacco farmers could produce and thus reduce CCC loan outlays.
Other consideration:
Would reduce pressure to ship surplus tobacco under Food for Peace program.
1/ An approximation. Harder estimate expected to follow discussions with USDA.
is FORD GERALD LIBRARY
(
1977 Outlay Re cions (Part II)
USDA: Technical Assistance to Farmers and Landowners
(dollars in millions)
Date: September 5, 1975
[*
appropriation request
1-1
deferral action
I_/
other administrative action
11
rescission action
I_/
substantive legislation
I_/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
200
201
200
200
XXX
200
OMB recommendation
200
201
150
150
XXX
150
Suggested reduction
--
--
50
XXX
50
Actions required:
Reduce budget request for Soil Conservation Service (conservation operations).
Program impact:
Preparation of farm plans (soil suitability for various farm operations) and other technical assistance to
farmers and landowners would be severely curtailed.
Other consideration:
Although there are no specific studies of this program, the assistance it provides improves the income of
the recipient; such assistance is available, for a fee, from private organizations.
1977 Outlay Reductions (Part II)
USDA Water and Sewer Grants
(Dollars in Millions)
Date: September 5, 1975
/x/
appropriation request
II
deferral action
II
other administrative action
[ ]
rescission action
II
substantive legislation
11
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlavs
Amount:
Current estimate
150
66
150
70
XXX
200
OMB recommendation
150
66
--
20
XXX
150
Suggested reduction
--
150
50
50
Actions required:
A one-year moratorium on providing new funding for water and sewer grants for FY 1977.
Program impact:
Eliminate the availability of grants during FY 1977 for approximately 700 water and sewer projects. The
roughly 1,000 projects to be assisted by the $400 M water and sewer 5% loan program would have to be
implemented on a "loan only" basis rather than - on the average - with 1/3 grant assistance. The previous
grant moratorium - FY 1974, when grant funding was reduced to $24 M - did not prevent full utilization of
water and sewer loan funds - $470 M. The lowest income communities would likely not be eligible for project
assistance on a 'loan only" basis.
Other consideration:
This program would be included in any future reforms of community or economic development programs (e.g.,
conversion to block grants).
COMMERCE
DEPARTMENT OF COMMERCE
1977 OUTLAY REDUCTIONS
(dollars in millions)
Revised
Planning
Current
Suggested
planning
Program
guidance
Adjustments
estimate
reductions
guidance
EDA/Regional Commissions
452
+190
642
0
Maritime
691
-
691
0
NOAA
556
-
556
0
Patent
84
-
84
0
DIBA
61
-
61
0
NBS/OT
74
-
74
0
Census
100
-
100
0
Minority Business
51
-
51
0
All other (including offsetting receipts)
(20)
-
(20)
0
Savings from using Job Opportunities funds
-
-
-
10
Personnel reductions
-
-
-
1
Total
2049
+190
2239
11
2228
GERALD LUBURIT ? FORD
SUMMARY OF OUTLAY REDUCTIONS
DEPARTMENT OF COMMERCE
(dollars in millions)
Effect on outlays in
1976
1977
1978
A. 1977 Planning guidance
XXX
2,049
XXX
Adjustments:
Increase resulting from
$375M for Job
Opportunities
XXX
190
XXX
Current estimate.
1,789
2,239
XXX
B. Suggested program reductions:
Job Opportunities Program*
0
- Reduction in Commerce
0
10
- Reduction in other agencies
0
70
C. Personnel reduction
XXX
1
Total suggested reduction
0
11
0
Revised 1977 planning guidance and
related 1976 amount
1,789
2,228*
XXX
*
Every effort would be made to use Job Opportunities funds to substitute for otherwise required 1977
outlays by Commerce and other Federal agencies. We estimate potential reduction of $10M in Commerce
and $70M in other agencies which have not yet been identified.
DERALD
9804
1977 Outlay Reductions (Part II)
Commerce/Job Opportunities Program
(dollars in millions)
Date: September 5, 1975
appropriation request
deferral action
X
other Administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
--
125
:
190
XXX
--
OMB recommendation (net
increase in outlays)
:
125
--
110
XXX
--
Suggested reduction
---
80
XXX
Action Required:
Federal agencies would be requested to submit and the Secretary of Commerce would be instructed to select
projects for Job Opportunities funding which to the maximum extent consistent with authorizing legislation
would reduce the requirement for FY 1977 expenditures.
Program Impact:
Agency projects now planned for FY 1977 which would otherwise result in FY 1977 expenditures would be
funded with the FY 1975 Job Opportunity appropriations of $375M.
AND GERALD FORD
Other Consideration:
Congressional opposition to this approach would be severe if actions in this direction are too blatant and
might result in congressional prohibitions to use the money as a substitute for other Federal funds.
Senator Montoya particularly has advocated that priority in the allocation of funds go to State and local
projects.
+
ENGINEERS
CORPS OF
CORPS OF ENGINEERS
1977 Outlay Reductions
Revised
Planning
Current
Suggested
planning
Program
guidance
Adjustments
estimate
reductions
guidance
Construction
2122
XXX
2122
200
1922
Employment reduction
7
-7
Total
2122
XXX
2122
207
1915
GERALD
?
FORD LIBRARY
SUMMARY OF OUTLAY REDUCTIONS
CORPS OF ENGINEERS
(dollars in millions)
Effect on outlays in
1976
1977
1978
A.
1977 Planning guidance
XXX
2122
XXX
Current estimate
1997
2122
XXX
B. Suggested program reductions:
Construction
20
200
400
C.
Employment reduction:
4
7
7
Total suggested reduction
24
207
407
Revised 1977 planning
guidance and related
1976 amount
1973
1915
XXX
1977 Outlay Reductions (Part II)
Corps of Engineers/Construction
(dollars in millions)
Date:
September 5, 1975
appropriation request
deferral action
other administration action
recission action
substantive legislation
other congressional action
Amount:
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Current estimate
1271
1268
1450
1559
XXX
1485
OMB recommendation
1251
1248
1250
1359
XXX
1085
Suggested reduction
-20
-20
-200
-200
XXX
-400
Actions required:
Reduce the current pace or curtail Corps of Engineers construction on some of the
294 flood control, water supply, navigation and hydroelectric projects now underway
by (A) proposing recission of funds for a large proportion of the new construction
contracts to be let after January 1, 1976, and (B) reducing the currently anti-
cipated budget request in 1977. Although there is a large number of projects in
this program, less than half have contracts to be let within the appropriate time
frame. The size of the savings desired ($200 M) largely eliminates the possi-
bility of selectively choosing among them.
BEYALD
9001
Program impact:
Approximately 130 projects would be affected by the construction slowdown; about
50 of these would be shutdown completely -- have no work in progress -- for various
lengths of time. This would allow all hydroelectric power on-line dates to be
met. The selection of the projects would be arbitrary and depend solely on when
contracts were due as discussed above.
Other considerations:
There are particular projects which could be picked out for environmental or
economic reasons for termination (such as CEQ's dirty dozen) saving considerable
amounts now and in the future. The more practical approach, however, would be
the procedure recommended.
The unemployment rate in the construction industry is at a high level. A $200 M
reduction from the current planning level would imply an unemployment impact of
about 10,000 jobs in the private sector.
These projects are generally popular with the Congressional delegation involved.
HEW
Department of Health, Education, and Welfare
1977 Outlay Reductions
(millions)
1977
Revised
Planning
Current
Suggested
planning
Program
guidance
Adjustments
estimates
reductions
guidance
Health agencies
5,104
5,104
5,104
Medicaid
8,327
711
9,038
-1,230
7,807
Medicare
18,336
1,837
20,173
-2,500
17,673
Education programs
6,503
837
7,340
-406
6,934
Income maintenance and
other
Public assistance
4,977
1,072
6,049
-353
5,696
Social services
1,100
1,240
2,340
-857
1,483
OASDI
83,534
704
84,238
-3,254
80,984
Coal miners benefits.
987
987
-15
972
Supplemental security
income
5,874
5,874
-170
5,704
Human development
...
1,505
1,505
-200
1,305
All other
150
150
150
Employment reduction
(agency-wide)
---
---
---
-33
-33
Total
136,397
6,401
142,798
-9,018
133,780
GERALD
0601'S
0601
Summary of Outlay Reductions
Department of Health, Education, and Welfare
(dollars in million)
Effect on Outlays in
1976
1977
1978
A.
1977 planning guidance & related
1976 amount
XXXX
136,397
XXXX
Adjustments
Congressional failure to enact
cost savings legislation:
Medicare
XXXX
1,837
OASDI
XXXX
704
Public Assistance
XXXX
353
Social Services
XXXX
1,000
Medicaid
XXXX
711
Override of Education
appropriations bill veto
XXXX
837
XXXX
XXXX
5,442
XXXX
GERALD
?
Reestimates of the Base:
Public Assistance
XXXX
719
FORD
Social Services
XXXX
240
XXXX
959
LIBRARY
XXXX
Current estimate
127,089
142,798
XXXX
B.
Suggested program reductions
Medicare:
Current estimate
16,833
20,173
23,193
OMB recommendation
16,833
17,673
20,393
Suggested reduction
-2,500
-2,800
Medicaid:
Current estimate
7,765
9,037
10,188
OMB recommendation
7,765
7,807
8,948
Suggested reduction
-1,230
-1,240
Summary of Outlay Reductions
Department of Hea
,
Education, and Welfare
(Con't)
(doll
in millions)
2
Effect on Outlys in
1976
1977
1978
Public Assistance:
Current estimate
5,763
6,049
6,308
OMB recommendation
5,763
5,696
5,955
Suggested reduction
---
-353
-353
Social Services:
Current estimate
2,331
2,340
2,400
OMB recommendation
2,331
1,483
800
Suggested reduction
---
-857
-1,600
Aging/Nutrition:
Current estimate
131
135
100
OMB recommendation
131
44
20
Suggested reduction
---
-80
-80
Rehabilitation Services:
Current estimate
686
740
720
OMB recommendation
686
620
515
Suggested reduction
---
-120
-205
Black Lung:
Current estimate
996
991
1,021
OMB recommendation
996
976
1,001
Suggested reduction
---
-15
-20
OASDI:
Current estimate
72,865
84,238
92,966
OMB recommendation
72,865
80,984
89,527
Suggested reduction
---
-3,254
-3,439
SSI:
Current estimate
5,517
5,874
6,103
OMB recommendation
5,517
5,704
5,833
Suggested reduction
---
-170
-180
Summary of O- 'ay Reductions
Department of Health
ducation, and Welfare
3
(Con't) (dollars in millions)
Effect on Outlays in
1976
1977
1978
Title I, ESEA:
Current estimate
1,755
1,895
1,897
OMB recommendation
1,755
1,830
1,800
Suggested reduction
---
-65
-97
Adult Education:
Current estimate
66
66
66
OMB recommendation
34
Suggested reduction
-32
-66
-66
Vocational Education - Basic
Grants:
Current estimate
186
446
396
OMB recommendation
186
396
352
Suggested reduction
---
-50
-44
Work-Study:
Current estimate
287
313
310
OMB recommendation
......
287
212
166
Suggested reduction
---
-101
-144
Non-Student Assistance:
Current estimate
284
243
274
OMB recommendation
284
119
108
Suggested reduction
---
-124
-166
C. Employment Reduction
(agency-wide)
---
-33
-33
Total suggested reduction
-32
9,018
-10,467
Revised planning guidance
127,057
133,780
XXX
1977 Outlay Red
ions (Part II)
Medicare
(dollars in millions)
Date:
September 5, 1975
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
18,364
16,833
21,533
20,173
23,193
OMB recommendation
18,364
16,833
21,533
17,673
20,393
Suggested reduction
-2,500
-2,800
Actions required: Legislation would be proposed to freeze the Medicare payment rates for hospitals
and physicians for one year beginning July 1, 1976. Hospital cost increases would be permitted, if
approved by a State, within a maximum of an aggregate average 5% per diem State-wide. Physicians
would also be required to accept Medicare payment as full compensation, i assignment, and pro-
hibited from charging patients more than specified deductible and coinsurance in law (savings of
$1 billion in 1977 and $800 million in 1978). Any limitation on hospital cost increases must be
arbitrary since there is no agreement by the medical profession or by the public as to what
constitutes "quality" of care or how much is a fair or reasonable cost for hospital care. A freeze
on physician reimbursement is justifiable on grounds that physician fees should be permitted to
rise only if higher prices are needed to induce more persons to enter medical schools or if public
policy dictates that prices should be allowed to increase to restrict use of services. Since neither
of these reasons is now applicable, there is no basis in social welfare for allowing physician
incomes to increase beyond their current level.
The Medicare cost-sharing proposal would continue to be supported (savings of $1.5 billion in 1977
and $2.0 billion in 1978). This proposal is consistent with principles in nearly all of the
2
national health insurance proposals that recognize that moderate cost-sharing is needed to prevent
unnecessary utilization of services and that limits must be established on total cost-sharing for
adequate financial protection. The major element of the proposal is to require beneficiaries to
pay 10% of charges from the 2nd to 60th day of hospitalization, which is now free. Lengths of
stay in the Medicare program are often longer than necessary, reflecting variation in the supply
of hospital beds. For example, in the West--which has 5.9 hospital beds for 1,000 population--
lengths of stay for Medicare beneficiaries average 10.1 days. In the Northeast--which has 8.7
hospital beds per 1,000 population--lengths of stay average nearly 50% longer--15.0 days. The
cost-sharing proposal also includes separate $750 limits on cost-sharing for hospital and
physicians' services, replacing current potential liability of about $4,500 for inpatient
services and unlimited financial liability for physicians' services.
Program impact: Medicare hospital cost increases would be reduced from about 14% to 5% per diem
and Medicare physician fee increases would be frozen rather than rising about 10%. To the extent
that a hospital's cost rise exceeded approved limits, these costs would be passed on to other payors
of hospital expenses. The overall 5% limit would permit States to assess the justification for
increases on a case-by-case basis. Announcement of the proposals in the budget would permit nearly
six months for hospitals to adjust spending plans. Less restrictive limits would make transition
a more manageable problem but reduce savings. Some hospitals and physician may, however, refuse
to serve Medicare patients under these reimbursement policies. The cost-sharing proposal would
increase cost-sharing for a typical hospital stay from about $100 to about $275. The proposed $750
cost-sharing limits would assist less than 1% of beneficiaries.
Other considerations: The cost-savings estimates are uncertain and include an assumption that
future legislative proposals would not permit hospitals and physicians to "catch-up" for the limit
period in 1978. Adjusting such, maximum increase amounts by an index, e.g., the CPI, is one alter-
native for future years. Congress will oppose the Administration proposals.
1977 Outlay Re
ions (Part II)
Medicaid
(dollars in millions)
Date:
September 5, 1975
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
7,765
7,765
9,037
9,037
10,188
10,188
OMB recommendation
7,765
7,765
-7,807
-7,807
-8,948
-8,948
Suggested reduction
-1,230
-1,230
-1,240
-1,240
Actions required: Medicaid program expenditures would be limited in FY 1977 by putting a cap on
cost increases eligible for Federal matching consistent with the proposed Medicare limits, i.e., a
5% limit on increases in institutional per diem costs and no increase in physician fees (savings of
$400 million in 1977 and $300 million in 1978). These Medicaid limits would reflect the view that
it is a State responsibility to control health costs through planning and regulation and that the
Federal budget should not be liable for open-ended spending for health programs for which States
largely determine the eligibility, benefits, and reimbursement rates. The limits are essentially
arbitrary, but would create incentives for firmer State actions to control per unit costs of health
services.
Legislation would again be proposed to lower the minimum Federal share of Medicaid from 50% to 40%
in the highest income States (savings of $700 million and $800 million), and thus more equitably
relate Federal matching to States' ability to pay. Current law relates the Federal share of
Medicaid to State per capita income-but assures that the Federal Government will pay at least 50%
of costs for the wealthiest States. As a result, these States have generally established higher
eligibility and benefits than lower income States. Over 50% of Federal Medicaid outlays now go to
only six States, and over 30% to just two States--New York and California.
FORD
2
Legislation would also be proposed to end Federal Medicaid matching for State purchase of the
Medicare physician insurance program for eligible Medicaid beneficiaries (savings of $130 million
in 1977 and $140 million in 1978). The premium for this program is already more than 50% sub-
sidized by Federal funds and the Federal matching through Medicaid results in a Federal subsidy
of 75% of State costs.
Program impact: These proposals do not require benefit reductions, but could have that effect.
States could pay for higher costs than allowed by the "cap" on Federal matching from their own
funds. Announcement of the proposal in the January budget would give States nearly nine months in
which to revise their budget and health costs control plans. The change in the minimum Federal
matching would impact heavily on only a few of the thirteen States. About $350 million of the
$700 million in FY 1977 savings would be in payments to New York, $140 million in California, $70
million in Illinois, and $50 million in New Jersey. The elimination of the Federal Medicaid match
for State government purchase of the Medicare physician insurance program would leave State expenses
more than 50% subsidized by Federal funds. This would still be a bargain for most States, which
could be expected to continue to purchase such coverage.
Other considerations: No "catch-up" inflation is assumed for FY 1978.
Congress, however, is unlikely to enact these proposals. Savings estimates are uncertain. The
Medicaid program could also be "capped" or limited in other ways, e.g., by setting maximum limits
on eligibility, by putting a ceiling on average per capita spending, by lowering the Federal
matching for optional services, etc. The development of such options will depend on decisions
made concerning future Medicaid structure in the context of national health insurance.
1977 Outlay Reductions (Part II)
SRS/Maintenance Payments
(dollars in millions)
Date:
9/5/75
appropriation request
deferral action
other administration action
/
rescission action
X
/
substantive legislation
/
other congressional action
1976*
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
6294
5763
6049**
6049**
XXX
6308**
OMB recommendation
6294
5763
5696
5696
XXX
5955
Suggested reduction
--
:
-353
-353
XXX
-353
Actions required:
Repropose cost-saving legislation contained in 1976 budget, to restrict the Federal matching percentage option
to the Medicaid formula, revise work-related expense provisions and increase the number of redetermination
periods, and collect child support.
Program impact:
In the case of the matching percentage, nine states, mostly low income lower payment level southern states,
would be required to use the Medicaid formula. Approximately one in seven AFDC families would experience
a change in the calculation of their child care and work-related expenditures. Every family would be
subject to the redetermination process, which would tend to remove ineligibles and eliminate overpayments more
rapidly, though with partially offsetting higher State administrative expenses. There are 2,000,000 AFDC
families for which a liable absent parent is not supplying child support. Under this legislative proposal,
a share of the amounts collected would be earmarked for the family, in addition to its welfare benefit.
Other consideration:
No action has been taken by Congress on these proposals, and further action is unlikely since these proposals
were included in a legislative package that included several other, more controversial items, such as the
5% cap on social security benefits.
2
1976 estimates reflect the latest HEW report to Congress (July 15, 1974) on current program level and
assumes July 1, 1976 effective date of legislative proposals. 1976 BA also includes an added $531 M
to provide for FY 1975 costs paid out of advance from 1976 appropriations.
Assumes constant caseload of 11,354,000 persons with average monthly benefits of $74.55 in 1977 and
$78.00 in 1978, reflecting substantial increases in 1975 and 1976, as portrayed in the HEW quarterly
report to Congress. Also reflects loss of $260 M in Quality Control savings due to change in method
of calculating State error liability. Cost of non-AFDC items is assumed constant at $660 M.
1977 Outlay Reduc ons (Part II)
SRS/Social Services
(dollars in millions)
Date:
9/5/75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
2331
2331
2340
2340
XXX
2400
OMB recommendation
2331
2331
1483
1483
XXX
800
Suggested reduction
-857
-857
XXX
-1600
Actions required:
Proposed legislation to reduce the Federal matching rate from 75% to 65% in 1977 and to 50% in 1978. (The 1976
budget proposed such reductions for 1976 and 1977 respectively.)
Program impact:
Assumes the states will maintain or slightly increase their funding participation in this program. Practically
every State would lose approximately one-third of its Federal grant in 1976, with consequent reduction or
elimination of a wide range of services (including child care, protective services, food delivery, services to
alcoholics and drug addicts, etc.) currently affecting approximately 5.5 million individuals. While this pro-
gram is not especially meritorious intrinsically, the proposed reduction cannot be justified on programmatic
grounds, but instead would be simply an effort to shift a major share of the burden of funding from the Federal
government to the states.
Other consideration:
Congress has already placed a $2.5 billion ceiling on Federal expenditures for this program, but has not
shown any interest in the existing 1976 budget proposal. Under extreme pressure from states and localities,
it is highly likely that no action would be taken by the Congress to reduce the matching rate. There is
evidence that the social services program tends to increase dependency for individuals. Placing a greater
funding burden on the states may result in the elimination of some of the more ineffective services.
GERALD
FORD
1848817
1977 Outlay Redue tons (Part II)
OHD/Aging Nutrition
(dollars in millions)
Date:
8/19/75
X
appropriation request
deferral action
other administration action
/
rescission action
/
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
100
131
100
135
XXX
100
OMB recommendation
100
131
--
55
XXX
20
Suggested reduction
-100
-80
XXX
-80
Actions required:
This program duplicates services provided under the Older American's Act Title III authority as well as other
programs -- a Spring Preview issue. As an alternative, these programs could be consolidated with a single
appropriation request. This action would allow for a phase-out of the Title VII -- Aging Nutrition program.
However, this proposal would require either no request for FY 1977 funds or legislation to terminate the Title VII
program, justified on the grounds that this is a welfare-type benefit with no income test, and that poor elderly
can buy such meals with food stamps while wealthier elderly could pay the cost of their food.
Program impact:
275,000 elderly per day (1.3 million annually) would be required to pay for their meal, pay an increased amount,
or discontinue utilizing such service.
Other Consideration:
A wide array of services are linked with the provision of meals. Thus, termination of Title VII might have an
adverse effect on the HEW effort to provide services to the elderly which may delay ínstitutionalization.
Impact measures (evaluations) of these activities will not be available prior to the FY 1978 budget review.
1977 Outlay Reductions (Part II)
HEW/OHD/RSA
(dollars in millions)
9/5/75
Date:
/
appropriation request
/
deferral action
/
other administration action
/
rescission action
X
/
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
720
686
720
740
xxx
720
OMB recommendation
680
686
675
680
XXX
590
Suggested reduction
-40
--
-45
-60
XXX
-130
Actions required:
Propose legislation to reduce the Federal share from 80% to 75%. The program, as originally enacted by the Congress
required a 50% match. Over the years the Federal match has "creeped" upward. This action would more closely
approximate this activity to matching provisions contained in the Social Services Block Grant and the Allied Services
proposal. Such an action would be a step towards moving to consolidate these programs.
Program impact:
This proposal assumes that the States would be able to supply enough additional matching funds to keep the overall
program level constant. This legislative authority is an entitlement to the States up to their ability to match
Federal funds to the authorization level. If the States do not raise additional revenues to meet the modified match,
the proposal could reduce the Federal requirement to as low as $540 million - thus generating a potential BA savings
of $180 million, with outlay savings of about $115 million in 1977.
Other consideration:
The Congress will not be receptive to a proposal which reduces funding for Vocational Rehabilitation.
In addition, the President has decided to call a White House Conference on Handicapped Individuals in
December, 1976, which would place further obstacles to reduced funding.
1977 Outlay Reductions (Part II)
HEW/OHD/RSA
(dollars in millions)
Date:
8/19/75
/
appropriation request
deferral action
X
/
other administration action
/
/
rescission action
X
/
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
720
686
720
740
XXX
720
OMB recommendation
680
686
645
680
645
XXX
Suggested reduction
-40
-0-
-75
-60
XXX
-75
Actions required:
Consideration of this proposal is subordinate to Medicaid modifications proposed by Health Branch. Nonetheless,
propose modifications of the regulations for Medicaid and the Vocational Rehabilitation Services (VR) programs
to require use of Medicaid authority to provide medical services to VR clientele. The Social Security Act would
require amendment.
Program impact:
Presently, States utilize VR authority to provide required health services for rehabilitation - 80% Federal match.
This proposal would require States to utilize Medicaid - 50% Federal match. VR regulations presently require
that other benefits be utilized insofar as they are adequate and do not interfere with achieving the rehabilitation
objective of an individual. HEW conservatively estimates 10% of the VR expenditure is health related.
Other consideration:
States will resist the additional State costs resulting from the reduced match. However, additional State costs
may serve to introduce added efficiencies into the program.
1977 Outlay Reductions (Part II)
HEW/SSA/Black Lung
(dollars in millions)
Date:
9/5/75
appropriation request
deferral action
other administration action
rescission action
X
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
996
996
991
991
XXX
1021
OMB recommendation
996
996
976
976
XXX
1001
Suggested reduction
--
--
-15
-15
XXX
-20
Actions required:
Limit cost-of-living increase to the same level as the Federal salary increase (to which this program's
benefits are tied) --i.e., enactment of proposed 60% limit on CPI increases.
Program impact:
Beneficiaries would receive less than the expected benefit increase.
Other consideration:
GERALD
?
Enactment is extremely unlikely.
FORD
1977 Outlay Reductions (Part II)
DHEW/SSA/OASDI
(dollars in millions)
Date:
9/5/75
/
appropriation request
/
deferral action
/
other administration action
/
rescission action
X
/
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
68,388
74,681
79,055
84,238
XXX
92,966
OMB recommendation
68,388
74,681
79,055
81,788
XXX
90,366
Suggested reduction
--
--
--
-2,450
XXX
-2,600
Actions required:
Limit cost-of-living increase to 60% of the increase in the applicable index.
Program impact:
31 million beneficiaries would receive less than the expected benefit increase.
Other consideration:
Enactment is extremely unlikely.
cros
1977 Outlay Reductions (Part II)
DHEW/SSA/OASDI
(dollars in millions)
Date:
9/5/75
/
appropriation request
deferral action
/
other administration action
/
/
rescission action
X
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
68,388
74,681
79,055
84,238
XXX
92,966
OMB recommendation
68,388
74,681
79,130
83,534
XXX
92,232
Suggested reduction
--
+75
-704
XXX
-739
Actions required:
Enactment of 1976 cost-savings legislation (elimination of monthly retirement test and retroactive payment of
actuarially-reduced benefits.)
Program impact:
The proposal to eliminate retroactive payments (which was recommended by the 1971 Advisory Council on Social
Security), provides that social security benefits not be paid retroactively for months before an application
is filed when this would require a permanent reduction in the beneficiary's future monthly benefits. The
advisory council recommendation is intended to insure that an OASDI beneficiary's continuing benefit income,
on which he has to rely for the remainder of his life, is not reduced. The proposal would make the law more
consistent with the objective of providing adequate benefit income for the aged.
The retirement test would be modified SO that it would no longer include a monthly test except for the first
year an individual receives a cash benefit. This proposal would make the retirement test more equitable and
less complex thereby increasing public understanding and acceptance, and providing for more efficient
administration.
GERALD
Other consideration:
Unlikely of enactment (proposed for 1975 and ignored).
FORD
2849917
1977 Outlay Reductions (Part II)
SSA/HEW/OASDI
(dollars in millions)
Date:
9/5/75
/
appropriation request
/
deferral action
/
other administration action
/
rescission action
X
/
substantive legislation
/
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
68,388
74,681
79,055
84,238
XXX
92,966
OMB recommendation
68,388
74,681
79,055
84,138
XXX
92,866
Suggested reduction
--
--
--
-100
XXX
-100
Actions required:
Enactment of legislation barring receipt of minimum OASDI benefits by those receiving other publicly-
financed pension benefits (primarily Federal employees).
Program impact:
Would reserve welfare-weighted minimum benefit for originally intended recipients -- long-term, low wage
workers. Increases program efficiency and equity.
GERALD FORD
1977 Outlay Reductions (Part II)
HEW/SSA/SSI
(dollars in millions)
Date:
9/5/75
/
appropriation request
/
deferral action
/
other administration action
/
rescission action
/
substantive legislation
/
other congrressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
5,517
5,517
5,874
5,874
XXX
6,013
OMB recommendation
5,517
5,517
5,704
5,704
XXX
5,833
Suggested reduction
--
--
-170
-170
XXX
-180
Actions required:
Limit cost-of-living increases to 60% of the change in the applicable index.
Program impact:
4.5 million beneficiaries would receive less than the expected benefit increase.
Other consideration:
Enactment is extremely unlikely.
1977 Outlay Reduction (Part II)
Attachment B
HEW/OE Education for the Disadvantaged: Title I, ESEA
Date: 9-5-75
X
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
1,900
1,755
1,900
1,895
XXX
1,897
OMB recommendation
1,800
1,755
1,800
1,830
XXX
1,800
Suggested reduction
-100
--
-100
-65
XXX
-97
Actions required: Propose a rescission of $100 million in FY 1976 budget authority and
an immediate budget amendment for the advance funded amount for FY 1977 that is in the
FY 1976 President's budget. Since this program is advance funded, the impact of these
reductions would not be felt until FY 1977.
Program impact: The overall impact of this reduction would be a decrease in the national
average per pupil expenditure under this program of some $18 from $277 to $259 per child.
If State and local educational agencies want to maintain the average per pupil expend-
itures at projected levels, they should do so from their own revenues. This suggestion
is based upon the following considerations.
-- There is an estimated $930 billion from prior year obligations which States
have yet to draw upon.
2
Past evaluations, although some three years old, have indicated that an
average per pupil expenditure of $300 has, in some instances, been
effective. Consequently, $300 per child became a norm of effectiveness.
However, that evaluation also indicated that there were instances and
studies that showed that amounts less than $300 (in some cases $200) have
been effective in significantly increasing pupil achievement.
Other consideration: There have been major efforts in the past several budgets to
consolidate certain Federal education programs. Some success has been achieved
with the smaller programs. However, Congress has been extremely reluctant to
"bloc-grant" large programs. In addition, any "hold-harmless" would prevent the
achievement of any savings from the 1977 planning target.
BERALD
FORD
1977 Outlay Reductions (Part II)
Attachment B
HEW/OE Adult Education
(dollars in millions)
Date:
9-5-75
X
appropriation request
deferral action
other administration action
X
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
68
66
68
66
XX
66
OMB recommendation
--
34
XX
Suggested reduction
-68
- -32
-68
-66
xx
-66
Actions required:
Rescind the advanced funded portion of the 1975 appropriation for Adult
Education and immediately amend the 1976 budget request to eliminate the Adult Education
advance funding request available for obligation in FY 1977.
Program impact: Terminates Federal support for this activity which currently serves some
1 million adults in literacy training and similar activities. If State and local educational
authorities wish to continue to support this activity, they can do so from their own
revenues. However, the implications of this proposal with regard to the Voting Rights Act are
potentially significant. It could hinder citizens who are illiterate from achieving
literacy through adult education. The Voting Rights Act of 1975 defines illiteracy as
failure to complete the fifth primary grade. In terms of voter turnout and registration,
the inability to read and write has had an impact on participation. Further, adult educa-
tion programs have provided the potential of reducing the unemployment and welfare rolls
through increased employability. However, at present, the Federal Government is also
providing nearly $3 billion through Social Services and the Work Incentive program which
can (and is, in part) being used to overcome illiteracy among welfare recipients.
Other consideration: It is unlikely that Congress will approve this reduction.
1977 Outlay Reductions (Part II)
Attachment B
HEW/OE Vocational Education/Basic Grants
(dollars in millions)
Date:
9-5-75
X
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
.
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
359
186
302
446
XXX
396
OMB recommendation
359
186
208
396
XXX
352
Suggested reduction
-94
-50
XXX
-44
Actions required: Reduce the appropriation request by $94 million in FY 1977. This would be an
acceleration of approximately one-year in the proposed increase in non-Federal support in this area.
Program impact: The Federal formula grants to States, used to maintain, extend, or improve vocational
education programs, would be reduced. If State and local educational agencies wish to keep the program at
projected levels, they should do SO from their own revenues. This proposed reduction is reflected in the
legislation the Administration has submitted to the Congress. Rather than continue basic State support,
the legislation would allow Federal funds to be targeted on demonstration and "capacity building"
activities. In addition, GAO has recently issued a study that indicates that there are high overhead costs
at the State level. HEW maintains that this is not the case, however.
Other consideration: It is unlikely that this proposal will meet with congressional approval.
1977 Outlay Reductions (Part II)
Attachment B
HEW/OE Work-Study
(Dollars in millions)
Date:
9-5-75
X
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
250
287
250
313
XXX
310
OMB recommendation
106
287
106
212
XXX
166
Suggested reduction
-144
-144
-101
XXX
-144
Actions required: Rescind FY 1976 funds and alter the ratio of Federal/non-Federal
matching funds from the current one non-Federal to four Federal to a one-to-one basis. Program regulations
would have to be amended accordingly. This results in a savings in FY 1977 of some $100 million. There is
an evaluation study of the program done by the Bureau of Applied Social Research at Columbia University.
One of the conclusions of that study, as well as the consensus of evaluation opinion and congressional
testimony, is that the subsidy could be cut without materially affecting the willingness of colleges to
hire college work-study students. Some estimates of the increased share that colleges could be persuaded
to pay without any employment impact, are as high as 50% of the wage.
Program Impact: If institutions of higher education SO wished, they would make up the reduction in
Federal support from their own revenues. No student employment impact since total level of effort would
remain constant.
Other consideration: It is unlikely that this proposal will meet with the approval of the Congress.
1977 Outlay Redu
on (Part II)
Attac ent B
HEW/OE Non-Student Assistance Portion of Higher Education Support
(dollars in millions)
Date: 9-5-75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
200
284
198
243
XX
274
OMB recommendation
--
284
--
119
XX
108
Suggested reduction
-200
--
-198
-124
XX
-166
Actions required: Rescind funds for all non-student assistance higher education programs.
This would place the Federal role as one based entirely upon direct support for students
in postsecondary education.
Program impact: This would eliminate all non-student assistance programs, such as insti-
tutional support for developing (ie. minority) institutions, support for disadvantaged
students, cooperative education, etc. This would place considerable strain upon the
higher educational community. However, we believe that continued emphasis upon the BEOGs
(Basic Educational Opportunity Grants) program, which serves a great many disadvantaged
students at those institutions that traditionally have served poor students and are now
receiving Federal institutional aid, will offset these reductions. Greater numbers of
these students, due to BEOGs support, should insure institutional vitality. Although
the impact could be reduced by phasing the program out over 4 - 5 years, such an approach
would not produce the assigned 1977 outlay reductions.
BERALD TOHO
2
Other consideration: This would complete the process, already recommended by the
President, of giving aid to needy students, allowing them to pick their college,
rather than subsidizing the colleges. Since Congress rejected this year's first
step, it is unlikely that this reduction will be accepted by the Congress.
HUD
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
1977 OUTLAY REDUCTION
(Outlays in Millions of Dollars)
Revised
Planning
Current
Suggested
Planning
Program
Guidance
Adjustments
Estimate
Reduction
Guidance
Federal Housing Administration
Fund
1,000
+500
1,500
-308
1,192
Government National Mortgage
Association: Special
Assistance Functions Fund
87
...
87
...
87
Housing Payments
2,560
...
2,560
...
2,560
Payments for the Operation of
Low-Income Housing Projects
550
550
-120
430
...
Community Development Grants
2,450
...
2,450
...
2,450
Comprehensive Planning Grants.
67
...
67
-45
22
Urban Renewal
1,125
...
1,125
...
1,125
Flood Insurance
130
...
130
...
130
All Other
254
...
254
-15
239
Total
8,223
+500
8,723
-488
8,235
GERALD
R.
FORD
SUMMARY OF OUTLAY REDUCTIONS
Department of Housing and Urban Development
(dollars in millions)
Effect on outlays in
1976
1977
1978
A.
1977 Planning guidance
XXX
8,223
XXX
Adjustments:
FHA Fund increase in net claims under
mortgage insurance programs
XXX
+500
XXX
Current estimate
5,808
8,723
XXX
(Current estimate, excluding sale of
tandem mortgages deferred from 1975
to 1976)
(7,980)
(8,723)
(xxx)
B. Suggested program reductions:
Federal Housing Administration mortgage
insurance programs:
Higher mortgage insurance premiums
---
-18
-26
Increased foreclosures on multifamily
projects in default
---
-250
-125
Discontinuation of premium rebates
---
-40
-40
Payment for the Operation of Low-
Income Housing Projects
---
-120
-300
Comprehensive Planning Grants
-10
-45
-40
Research and Technology
-5
-15
-10
Total suggested reduction
-15
-488
-541
Revised 1977 planning guidance and related
1976 amount
5,793
8,235
XXX
Attachment B
1977 Outlay Reductions (Part II)
Department of Housing and Urban Development
FHA Fund/Mortgage Insurance Premiums
(dollars in millions)
Date:
9/4/75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
1,570
1,500
1,500
1,500
1,000
1,000
OMB recommendation
1,570
1,500
1,482
1,482
974
974
Suggested reduction
-0-
-0-
18
18
26
26
Actions Required: Make each mortgage insurance program actuarially sound by raising
insurance premiums where warranted. Annual premiums for high risk programs would be
increased up to the 1-percent statutory limit.
Program Impact: The increase in the annual cost of mortgage insurance would reduce the
volume of insurance written (estimate not available). It is not clear, however, what
impact this would have on claims. To the extent the marginal homebuyer is squeezed out,
claims would drop. On the other hand, if the risks still using FHA insurance turned to
the conventional market, the default rate would increase. The proposed action would
require poor families to pay higher premiums.
Other Considerations: Good estimates of actuarially sound premiums are available for
single-family programs; the estimates for the multifamily programs are less reliable.
HUD opposed this action last year on the grounds that the Department could not defend
it with the default data then available. The data has improved considerably since then,
but HUD's likely reaction to this alternative is unclear. HUD is setting up a committee
to review the role of FHA and to develop a Presidential options paper. HUD probably
would prefer to have this reduction considered as part of that decision process.
Attachment B
1977 Outlay Reductions (Part II)
Department of Housing and Urban Development
Federal Housing Administration Fund
(dollars in millions)
Date:
9/4/75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
1,570
1,500
1,500
1,500
1,000
1,000
OMB recommendation
1,570
1,500
1,460
1,460
960
960
Suggested reduction
-0-
-0-
-40
-40
-40
-40
Actions Required: Enactment of legislation halting the rebate of premiums under mutual
and cooperative insurance funds.
Program Impact: The provision for mutuality does not appear to have a significant
influence on the demand for FHA insurance. Few families are aware of the possibility
of a rebate when they obtain FHA insurance. Consequently, few potential insureds would
be influenced by this change. Those homebuyers who would be dissuaded from FHA insurance
could still turn to conventional financing.
Other Considerations: HUD contends that this would be controversial, and that enactment
probably would be difficult to obtain. It also would be unfair to those few families
who obtained FHA insurance with the expectation of receiving rebates. HUD has noted
that even with legislation, it is possible that these participants would still be
legally entitled to payments. If this turned out to be the case, no savings would
result in 1977 or 1978.
Attachment B
1977 Outlay Reductions (Part II)
Department of Housing and Urban Development
Federal Housing Administration Fund
(dollars in millions)
Date:
9/5/75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
1,570
1,500
1,500
1,000
1,000
1,000
OMB recommendation
1,570
1,500
1,250*
1,250*
875
875
Suggested reduction
-0-
-0-
-250*
-250*
-125
-125
Actions Required: Accelerate foreclosure and sale of assigned multifamily housing mort-
gages. This would involve instituting foreclosure on all mortgages assigned for (say)
more than 6 months, followed by sale in "as-is" condition.
Program Impact: Sale proceeds would offset outlays elsewhere in the budget. This action
might lead to rent increases under new ownership, creating a financial Lurden on lower
income families. However, the large write-downs in capital value needed to sell the
projects, plus the location of many projects in low-income areas would tend to limit such
increases. Tenants would still be better off than comparable families not benefiting from
the implicit subsidy of large write-downs. Moreover, they could be protected from severe
changes in rental charges through grandfather clauses or priority on Section 8 subsidy
lists. Greater emphasis on foreclosure-and-sale would have a favorable impact on manage-
ment efficiency, and thus reduce default claims over time.
Other Considerations: Congress would probably respond with operating subsidies to keep the
projects afloat, or a statutory ban on foreclosures. HUD would resist this action on
political grounds, although the Department's own analysis of the multifamily default
problem indicates that this is the most cost-effective solution.
*
Assumes 13% reduction in 1977 inventory, instead of a 13% increase.
Attachment B
1977 Outlay Reductions (Part II)
Department of Housing and Urban Development
Payments for the Operation of Low-Income Housing Projects
(dollars in millions)
Date:
9/5/75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
525
210
572
550
637
602
OMB recommendation
525
210
272
430
337
302
Suggested reduction
-0-
-0-
-300
-120
-300
-300
Actions Required: Enactment of legislation removing the ceiling on rents which public
housing tenants may be charged (the so-called Brooke amendments)
Program Impact: On tenants-Repeal of the Brooke amendment would allow local housing
authorities (LHA's) to charge public housing families higher rents, although deep
subsidies on behalf of these families (covering 100% of capital costs, including
interest) would continue to hold rents well below those prevailing in the private
market. While LHA's would not be obligated to take this opportunity, it would provide
justification for reducing operating subsidies via the Performance Funding System.
Higher rents would represent a major financial burden for the poorest of these families,
although they would still be much better off than families with similar incomes who do
not live in public housing.
On LHA's--LHA's would suffer financially, as tenants faced with rent increases stage
rent strikes and increase vandalism. This would not affect the Performance Funding
2
System, and therefore there need not be any offsetting increase in operating
subsidies.
Other Considerations: HUD would argue that the savings--even from complete repeal
of the Brooke amendment would be infinitesimally small in 1977 because of delays
in implementation due to phase-in of rent adjustments, court suits, and the like.
While complete repeal of the rent ceiling is most unlikely, some improvements might
be possible that would reduce operating subsidy requirements (e.g., legislation
requiring LHA's to charge the maximum rents, improvements in the definition of
income).
Attachment B
1977 Outlay Reductions (Part II)
Department of Housing and Urban Development
701 Comprehensive Planning Grants
(dollars in millions)
Date:
9/5/75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
50
113
50
67
50
45
OMB recommendation
0
103
0
22
50
5
Suggested reduction
-50
-10
-50
-45
-0-
-40
Actions Required: Suspension of the 701 Comprehensive Planning Grants Program in 1976
and 1977. This would require a budget amendment and/or a rescission of the 1976
appropriation. No funding would be requested for 1977.
Program Impact: The 701 program is one of 45 Federal planning assistance programs.
Grants for planning activities are awarded on a discretionary, case-by-case basis, and
there is little equity in the allocation of funds--a recipient who has traditionally
received a large proportion of the 701 funds will tend to receive that same proportion
in the future. The larger, more sophisticated State and local governments receive more
funding because they are better equipped to cope with the paperwork involved in applying
for grants. The 701 funding pattern for 1974 illustrates the traditional yearly funding
pattern:
2
Percent
Recipient
Number Eligible
of Total Funding
States
55
24
Metropolitan regional bodies
270
28
Large cities
422
23
Nonmetropolitan regional bodies
388
16
Counties and small cities
20,000
9
Suspension of the program should have no impact on any high priority projects; presumably,
they would be undertaken by local governments with or without Federal funds. Marginal
projects could not be financed. However, under the Community Development Block Grant
Program, funds may be used for activities leading to formulation of a comprehensive
community development plan and enhancement of a recipient's policy-planning-management
capacity--the same types of activities financed by 701. Further, the House Appropriations
Committee, in its report on the 1976 HUD appropriations bill, endorsed the use of community
development block grants as a supplementary source of planning funds. HUD is studying the
issue as to whether community development block grants can be used for all activities
eligible under 701. Some 701 recipients, specifically regional bodies, are not eligible
for community development block grants; they would lose their independent financing and,
thus, be dependent on recipients of community development block grant money to finance
regional planning activities.
Other Considerations: The 701 program is politically very sensitive.
Attachment B
1977 Outlay Reductions (Part II)
Department of Housing and Urban Development
Research and Technology
(dollars in millions)
Date:
9/4/75
appropriation request
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
57
61
65
65
65
65
OMB recommendation
57
56
35
50
65
55
Suggested reduction
-0-
-5
-30
-15
-0-
-10
Actions Required:
Defer $15 million in 1976 budget authority and reduce the 1977 appropriation request from
$65 million to $35 million.
Program Impact:
This action would allow the Department to continue major ongoing research activities
focusing on housing allowances, lead-based paint hazards, energy conservation, and State
and local management. The cutback would not allow for the initiation of any new research
projects (e.g., research on safety and standards, environmental improvement, and public
service delivery).
Other Considerations:
Opposition from within the Department would be most intense. HUD believes a $70 million
research program is the irreducible minimum.
INTERIOR
1
DEPARTMENT OF THE INTERIOR
1977 OUTLAY REDUCTIONS
Revised
Planning
Current
Suggested
planning
Program
guidance
Adjustments
estimate
reductions
quidance
Indians
$921
0
$921
$8
$913
Territories
125
0
125
0
125
Recreation
900
0
900
66
834
Energy and Minerals
498
0
498
0
498
Land Management
505
0
505
51
454
Water
633
O
633
50
583
Power
-6
0
-E
0
-5
Administration
49
O
49
0
49
Employment Reduction
14
-14
Total, Gross
$3,624
$0
$3,624
$189
$3,635
Offsetting Deductions
-1,438
O
-1,438
0
-1,438 -
Total, Net
$2,186
$0
$2,186
$189
$1,997
FORD
SUMMARY OF OUTLAY REDUCTIONS
DEPARTMENT OF THE INTERIOR
(dollars in millions)
Effect on outlays in
1976
1977
1978
A.
1977 Planning guidance
XXX
2,186
XXX
Adjustments:
XXX
0
XXX
Current estimate
2,469
2,186
XXX
B.
Suggested program reductions
Bureau of Reclamation con-
struction
Current Estimate
602
614
620
OMB Recommendation
592
564
620
Suggested Reduction
10
50
-0-
Land and Water Conservation Fund
Current Estimate
292
338
292
OMB Recommendation
292
288
282
Suggested Reduction
-0-
I
50
10
Office of Surface Mining and
Reclamation
Current Estimate
20
51
100
OMB Recommendation
0
0
0
Suggested Reduction
20
GERALD
51
100
.d
FORD
LIBRANY
Effect on outlays in
1976
1977
1978
BIA construction and road
construction
Current Estimate
140
140
140
OMB Recommendation
140
132
134
Suggested Reduction
0
8
6
Park Service road construction
Current Estimate
39
38
35
OMB Recommendation
39
30
28
Suggested Reduction
0
8
7
Park Service planning and
construction
Current Estimate
54
47
45
OMB Recommendation
54
39
38
Suggested Reduction
0
8
7
Total Suggested Reduction
-30
-175
-130
C.
Employment Reduction
-14
-14
Revised 1977 planning guidance and
related 1976 amount
2,439
1,997
XXX
1977 Outlay Reductions (Part II)
Bureau of Reclamation
(dollars in millions)
Date:
September 5, 1975
appropriation request
X
deferral action
other administration action
rescission action
substantive legislation
other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
592
602
660
614
XXX
620
OMB Recommendation
582
592
610
564
XXX
620
Suggested reduction
10
10
50
50
XXX
0
Actions required:
Deferring $10 million for construction contracts in February 1976 would result in an
outlay reduction below the current estimate for 1977 of approximately $50 million
because these multi-year contracts have small outlays in the first year, and larger
outlays in future years.
Program impact:
The Bureau of Reclamation's program is federally managed construction through competi-
tive bid, fixed price contracts, aimed at economic development in the West, i.e.,
irrigation, municipal and industrial water supply and hydroelectric power development.
Irrigation project costs are partially repaid by the irrigators over 50 years with no
interest. Power and municipal and industrial water supply costs are repaid over 50
years with interest currently computed at approximately 4%, well below the Treasury's
current borrowing costs.
Ongoing work in all the Bureau of Reclamation's seven regions will be slowed down,
but no ongoing projects would be terminated. The projects affected by the deferral
are primarily irrigation projects that are at best economically marginal and require
huge Federal subsidies but some power and water supply projects are affected also.
No shutdown costs would be incurred.
Other consideration:
A $50 million reduction from the current planning level would imply an unemployment
impact of about 2,500 jobs in the private construction industry.
The congressional delegations in the 17 Western States very strongly support the
Bureau's program.
GERALD
R.
FORD
LIBRARY
1977 Outlay Reductions (Part II)
Interior/Land and Water Conservation Fund
(dollars in millions)
Date: Sept. 4, 1975
X
Appropriation request
Deferral action
Other Administration action
Rescission action
Substantive legislation
Other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
330
292
392
338
XXX
292
OMB recommendation
330
292
332
288
XXX
282
Suggested reduction
-0-
-0-
60
50
XXX
10
Actions required:
The current allowance for FY 1977 budget authority consists of $30 million in CA for
which no appropriations to liquidate have been sought in recent years, $62 million
to repay prior advances to the fund, $176 million in grants to States, $6 million for
-
salaries and expenses, and $118 million for Federal agency land acquisition. It is
proposed that the entire $60 million be taken from the Federal land acquisition pro-
gram, reducing it by one-half.
Program impact:
The Federal land acquisition monies are used for recreation, wildlife and conserva-
tion programs in national parks, forests, and wildlife refuges. This reduction would
delay land acquisition for these program areas by about one-half year: but since the
land can be acquired in subsequent years, no serious long-term program consequences
would result. There is no specific programmatic justification for not spending at
the projected level -- except that some lower priority activities would be postponed
until following years.
Other consideration:
This is a very politically sensitive program, and many Congressmen will react strongly.
1977 Outlay Reductions (Part II)
Interior/Office of Surface Mining and Reclamation
(dollars in millions)
Date: Sept. 4, 1975
Appropriation request
Deferral action
X
Other Administration action
Rescission action
Substantive legislation
Other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
30
20
66
51
XXX
100
OMB recommendation
0
0
0
0
XXX
0
Suggested reduction
30
20
66
51
XXX
100
Actions required:
The FY 1977 allowance assumed enactment of a stripmining bill. The President's veto
of this bill has been sustained, and the budget levels shown above forecast no future
action on this issue. No specific affirmative action is needed to achieve reductions.
Program impact:
The program impacts of this reduction are, in effect, the myriad differences between
the Administration's position on stripmining and that of the Congress. These dif-
ferences have been debated at length and are supported by several FEA, Interior,
Commerce, CEQ and congressional studies.
GERALD
?
FORD
LIBRARY
1977 Outlay Reductions (Part II)
Interior/BIA Construction and Road Construction
(dollars in millions)
Date: Sept. 4, 1975
X
Appropriation request
X
Deferral action
Other Administration action
Rescission action
Substantive legislation
Other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
61
140
61
140
XXX
140
OMB recommendation
61
140
54
132
XXX
134
Suggested reduction
0
0
7
8
XXX
6
Actions required:
Reduce program levels in each of the two accounts by $7 million in FY 1977, generating
outlay savings of $8 million in the first year and $6 million in the second. Since
the road construction program involves contract authority, this will require an
increase in the deferral of CA from that which would otherwise be proposed.
Program impact:
This would effectively delay the construction of an estimated two schools for a year,
leaving approximately 600 Indian children in either overcrowded or outdated school
facilities for that year. The reduction in road construction would delay the program
by only two months or less. There is no specific programmatic justification for not
spending at the projected level -- except that some lower priority activities would
be postponed until following years.
GERALD
R.
FORD
LIBRARY
Other consideration:
Both programs are receiving increased congressional attention since authority now
exists to use these funds to assist non-Indian local governments in Indian-impacted
areas. While some criticism from Indians would result, the major sources of opposi-
tion will be Senators and Congressmen from Arizona, New Mexico and the Northern
Plains States.
1977 Outlay Reductions (Part II)
Interior/National Park Service Road Construction
(dollars in millions)
Date: Sept. 4, 1975
X
Appropriation request
X
Deferral action
Other Administration action
Rescission action
Substantive legislation
Other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
0
39
0
38
xxx
35
OMB recommendation
0
39
0
30
XXX
28
Suggested reduction
0
0
0
8
XXX
7
Actions required:
The request for appropriations to liquidate CA would be reduced and an increase in
deferrals of $15 million in obligations would be proposed.
Program impact:
This would represent a reduction of approximately one-third in the program level
for FY 1977, entailing delays in road construction. However, no permanent serious
consequences would be involved. There is no specific programmatic justification
for not spending at the projected level -- except that some lower priority
activities would be postponed until following years.
Other consideration:
This account is regularly the subject of "congressional add-ons" and this reduction
would be resisted. Since it involves both an appropriation request and a deferral
action, it is subject to two types of review by the Congress.
GERALD
?
FORD
LIBRARY
1977 Outlay Reductions (Part II)
Interior/National Park Service Planning and Construction
(dollars in millions)
Date: Sept. 4, 1975
X
Appropriation request
Deferral action
Other Administration action
Rescission action
Substantive legislation
Other congressional action
1976
1977
1978
BA
Outlays
BA
Outlays
BA
Outlays
Amount:
Current estimate
23
54
54
47
XXX
45
OMB recommendation
23
54
39
39
XXX
38
Suggested reduction
0
0
15
8
XXX
7
Actions required:
Reduce appropriation request and program level for the construction of facilities in
National Parks by nearly 30 percent from the proposed FY 1977 level. The current
estimate for FY 1976 as shown above represents a one-time reduction in requests to
permit the agency to use the large unobligated balances it has been carrying forward
each year.
Program impact:
This would involve delays in making a wide range of improvements in National Parks,
but would have no serious long-range program consequences. There is no programmatic
basis for this reduction, except that lower priority activities would be postponed.
Other consideration:
GERALD
?
This account is often subject to congressional add-ons, and this reduction would
incur strong opposition in the Congress.
FORD
LIBRAST