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    "ocrText": "The original documents are located in Box 8, folder \"FY 1976 - 12/19/74, Transportation,\nSmall Agencies\" of the White House Special Files Unit Files at the Gerald R. Ford\nPresidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nDigitized from Box 8 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library\n1976 Budget\nSession With The\nPresident\n12/19/74\n1976 Budget\nSession With The\nPresident\n12/19/74\nFORDO is LIBRARY GERALD\nMEETING WITH\nROY L. ASH\nDEPARTMENT OF TRANSPORTATION\nAND OTHER SMALLER AGENCIES\nThursday, December 19, 1974\n2:00 P.M.\nTHE WHITE HOUSE\nWASHINGTON\nDecember 18, 1974\nMEETING WITH ROY L. ASH\nThursday, December 19, 1974\n2:00 P.M. (60 minutes)\nOval Offic\nFrom: Roy L. Ash\nI. PURPOSE\nTo make final FY '76 budget decisions for the Department of\nTransportation and several smaller agencies.\nII. BACKGROUND, PARTICIPANTS, AND PRESS PLAN\nA.\nBackground: The FY'76 budget submissionsof the Depart-\nment of Transportation and several smaller agencies have\nbeen reviewed and the results have been transmitted to the\naffected agencies. This meeting will focus on the issues\nraised in the above reviews that require Presidential con-\nsideration and determinations.\nB.\nParticipants: Roy L. Ash, Paul O'Neill, Dale McOmber\nand Walter Scott.\nC.\nPress Plan: David Kennerly photo\nFORD it LIBRARY 079839\nIII. TALKING POINTS\nA.\nWally Scott, what is the first issue we should consider for\nthe Department of Transportation?\nB.\nWally Scott, which of the smaller agencies to be discussed\ntoday should we begin with?\nTHE WHITE HOUSE\nINFORMATION\nWASHINGTON\nDecember 19, 1974\nMEMORANDUM FOR\nTHE PRESIDENT\nTHROUGH:\nKEN COLE\nFROM:\nMIKE DUVAL\nSUBJECT:\nTRANSPORTATION BUDGET REVIEW\nTwo of the items in the DOT budget you will be discussing today\nwith Roy Ash involve basic political/policy decisions. In both\ncases, I believe you should defer any final decision until you\nhave heard the direct views of Secretary Brinegar and key Congres-\nsional leaders. The two issues:\n1. Highway Trust Fund. DOT and OMB have agreed on a broad\nstrategy for the Highway Trust Fund which is essentially to\ncontinue it after its expiration date in October 1977 only\nfor interstate purposes. While we concur in this recommenda-\ntion, it is obviously very controversial and will meet with\nconsiderable opposition on the Hill, especially from the\nPublic Works Committee. We recommend that before any final\ndecisions are made, we solicit the views of Senators Randolph\nand Baker and Congressman Jones and Harsha.\n2. Aviation Trust Fund. DOT supports a basic revamping of the\nAviation Trust Fund with retention of a small discretionary\nprogram ($40 million) and a planning grants program ($10 mil-\nlion). OMB objects to both programs but is in agreement with\nDOT on total funding levels. We believe that a limited dis-\ncretionary grant program which combines the airport and planning\nmonies is absolutely essential on the merits, for the new\nprogram to be politically acceptable, and as a means of\ninsuring orderly transition. This fund is essential if small\nto medium cities served by such airlines as Piedmont and\nNorth Central are to have any hope for financing new airports.\nSenator Pearson will be consulted today concerning his views\non the aviation program for next year. As you know, he will\nbe the ranking minority member of the Commerce Committee and\na kay leader on aviation matters. My guess is he is not going\nto like the DOT-OMB proposal at all, but as a rock bottom\nminimum, he will insist on the discretionary fund.\nDepartment of\nTransportation\nTHE WHITE HOUSE\nWASHINGTON\nMEMORANDUM FOR: THE PRESIDENT\nFROM:\nRONDL. ROVIL. ASH\nSUBJECT:\n1976 Budget decisions: Department of Transportation\nThe agency request and my recommendations with respect to 1976 budget\namounts for the Department of Transportation are presented in the\ntabulation attached (Tab A). A summary of the principal budget\ndecisions reflected in my recommendation is provided as background\ninformation (Tab B).\nTwo key legislative issues, five budget issues and one information\nissue have been identified for your consideration (detail at Tab C).\nI.\nAviation Trust Fund Strategy. DOT/OMB agree on submission of\nlegislation to change the airport program from a Federal project ap-\nproval grant program to basically a formula grant program. Legislation\nwould also open aviation trust fund for operating expenses and establish\ngeneral aviation landing fees while reducing domestic passenger ticket\ntax. DOT would include a discretionary grant program, separate planning\ngrants and continuation of Federal grants to general aviation airports.\nOMB recommends all formula funding, no separate planning grants, and\na gradual shift of general aviation airport grants to the states.\nDecision: Approve DOT recommendation\nApprove OMB recommendation\nFORDS LIBRARY 038870\nSee me\nII. Highway Legislation. DOT/OMB agree on submission of legislation\nto fund only the interstate highways from the trust fund and reduce the\ngas tax 1c in 1977 if the states raise their taxes. By legislation\neliminate all deferred highway contract authorizations. DOT has\naccepted OMB interstate highway long range funding recommendation.\nDOT wants an increase in long range non-interstate highway program,\nbut has agreed to further review of OMB recommendation to hold funding\nconstant.\nDecision: Approve DOT/OMB basic recommendation\nSee me\nIII. AMTRAK. DOT/OMB agree on submission of legislation to establish a\nspecific annual operating deficit ceiling for AMTRAK. Change present legis-\nlation to permit AMTRAK to live within the deficit ceiling by eliminating\npoints served, reduce service, raise fares. DOT wants $49M in 1975 for\nNortheast Corridor improvements and OMB recommends $15M\n2\nDecision: Approve DOT recommendation\nApprove OMB recommendation\nSee me\nIV. Tracked Levitated Vehicle Research. DOT recommends continuation\nof research on tracked levitated vehicles (e.g. 300 mph trains). OMB\nrecommends the elimination of this program in 1975.\nDecision: Approve DOT recommendation\nApprove OMB recommendation\nSee me\nV.\nIntermodal Terminals. Recent legislation authorizes the Federal\nGovernment to: (1) plan an intermodal Union Station in D.C., (2) plan\nand fund several other intermodal terminals, (3) fund the preservation\nof historical terminals, and (4) study high speed ground system for the\nWest Coast. DOT recommends initial funds for each of the four new\nfunctions ($7.0M). OMB recommends $2M for planning of Union Station\nand intermodal terminal concept.\nDecision: Approve DOT recommendation\nApprove OMB recommendation\nSee me\nVI. Railroad Safety. DOT recommends an additional $500K for 52 railroad\nsafety inspectors and clerks. OMB recommends denial of appeal, the allowance\nalready includes an increase of 43 positions.\nDecision: Approve DOT recommendation\nApprove OMB recommendation\nSee me\nVII. Coast Guard. DOT requests an additional 200 military personnel to\nGERALD FORD LEVERAL\nman a new ice breaker and new facilities. OMB believes existing resources\nand personnel are sufficient.\nDecision: Approve DOT recommendation\nApprove OMB recommendation\nSee me\nVIII. Regional Rail Restructuring. The U. S. Railway Association will submit\na preliminary plan to Congress in February on how to restructure the North-\neast bankrupt railroad. Additional funds not included in your budget may\nbe required for:\n- Meeting the cash flow problem of Penn Central until\nConrail becomes operational in January 1976.\n- Loan guarantees beyond the $1B presently authorized\nin order to pay off creditors and provide for re-\nhabilitating the system.\n3\n- Initiation of Northeast Corridor passenger improve-\nments program at a level of approximately $1.8 billion\nover eight years.\nAttachments\nFORD\nTab A\nDepartment of Transportation\n1976 B\nt\nSummary Data\nEmployment, end of period\n(In millions)\nFull-time\nBudget Authority\nOutlays\nPermanent\nTotal\n1974 actual\n17,635\n8,111\n69,526\n71,526\n1975 January budget\n9,814\n9,060\n71,300\n73,300\nenacted\n18,562\n8,765\nsupplementals recommended\n201\n358\nOMB recommends\n18,763\n9,123\nOMB ceiling\n18,691\n9,045\n70,128\n72,128\n1976 planning ceiling\n10,660\n9,750\n-\n-\nagency request\n11,677\n10,248\n74,702\n76,702\nOMB recommendation\n6,576\n9,958\n71,615\n73,615\nagency recommendation\n6,596\n9,969\n71,673\n73,673\nTransition period\nagency recommendation\n1,676\n2,630\n72,553\n74,553\nOMB recommendation\n1,676\n2,630\n71,615\n73,615\n1977 OMB estimate\n9,159\n10,755\n73,969\n75,969\nFORD\nTAB A\n4\nLIBRA\nDEPARTMENT OF 1.\nSPORTATION\nPROGRAM LEVEL\n$ in Millions\nJuly 1 -\n1975\n1976\nSept 30, 1976\n1977\n1974\nJan\nAgency\nOMB\nAgency\nOMB\nDOT/Req.\nAgency\nOMB\nActual\nBudget\nRequest\nRecom.\nRequest\nRecom.\nOMB Recom.\nRequest\nRecom.\nCoast Guard\n815\n903\n974\n974\n1,125\n1,072\n281\n1,230\n1,096\nFederal Aviation Administration\n1,907\n2,120\n2,144\n2,144\n2,349\n2,301\n585\n2,360\n2,360\nFederal Highway Administration\n5,012\n4,800\n4,810\n4,810\n5,623\n5,413\n1,346\n6,115\n5,615\nNational Highway Safety\nAdministration\n139\n220\n169\n168\n185\n168\n40\n175\n160\nFederal Railroad Administration\n94\n111\n184\n168\n180\n139\n43\n180\n180\nAMTRAK Request\n373\n279\n651\n617\n460\n460\n120\n485\n485\nUrban Mass Transportation\nAdministration\n1,080\n1,351\n1,446\n1,446\n1,746\n1,724\n400\n1,900\n1,900\nOffice of the Secretary\n58\n92\n72\n72\n82\n74\n18\n73\n73\nSt. Lawrence Seaway\nDevelopment Corporation\n5\n6\n6\n6\n6\n6\n2\n7\n7\nNational Transporation Safety\nBoard\n8\n10\n10\n10\n12\n10\n3\n10\n10\nTotal DOT\n9,491\n9,892\n10,466\n10,415\n11,768\n11,367\n2,838\n12,535\n11,886\nFORD\n5\nTab B\nTAB B\n1976 Budget\n6\nDepartment of Transportation\nBackground Information\nThe OMB recommendations for the Department of Transportation (DOT) provides\nfor approximately a $1 billion Increase In program level. This is a very\nsignificant increase and is primarily for interstate highways, mass transit\nassistance and aviation assistance. Congressional add-ons to the Administration's\nlegislative initiatives in highways, aviation and AMTRAK plus additional Federal\nassistance for bankrupt railroads (see Issue 8) could substantially increase\ntransportation programs in 1976.\nA short summary by major mode follows:\nUnited States Coast Guard: The recommendation of $1,072M provides for the\nfollowing major activities: search and rescue, maintenance of aids to\nnavigation, enforcement of fishing laws and treaties, marine environmental\nprotection, military readiness, supervision of port safety, and replacement\nand improvement of capital equipment. The allowance is an increase of $98M\nover 1975. It is required for increased operating and maintenance costs\nfor aircraft, ships and shore stations, and for continuing major programs.\nMajor changes in 1976 will be operation of the two new polar icebreakers,\nthe first since 1954; beginning replacement of the amphibious search and\nrescue aircraft which have reached the end of their useful life; construction\nof long-range navigation (LORAN-C) stations on the West Coast, including\nAlaska and the Gulf of Mexico, to provide more precise navigation to avoid\npollution incidents; and the beginning of a replacement program for tugs used to\nbreak ice in the Great Lakes and in major harbors.\nGERALD FORD\nFederal Aviation Administration: Allowance provides $2.3 billion for 1976,\nan increase of $157 million from the 1975 estimate. Included is $1.5 billion\nfor operating expenses, primarily funding the agency's 56,000 employees.\nAlmost 29,000 of this staff operate the air traffic control system, and another\n14,000 are engaged in maintenance and logistic support of the traffic control\nand navigation systems. Increases of 900 air traffic control and 600 maintenance\nstaff are provided in 1976 based on projected growth in air traffic and the staffing\nof new FAA facilities. The airway facilities capital program is continued at the\n$250 million annual level and is extended until 1980. A more detailed discussion of\nlegislative proposals to convert the airport grant program to a formula basis,\nadjust user fees, and broaden the uses of aviation trust funds is included in\nIssue #1. $9 million is included for expansion of the passenger terminal and\nother facilities at Dulles Airport.\n7\nFederal Highway Administration: Allowance provides $5.4 billion for 1976\ncompared with the 1975 program level of $4.8 billion. Included is $5.2\nbillion for Federal-aid highway obligations, an increase of $600M over\nthe 1975 program. The interstate highway program level would rise from\n$2.5 billion in 1975 to $3.0 billion in 1976; the urban/rural programs\nwould remain level at $1.55 billion; and safety improvements would increase\n$50 million to $300 million. This larger Lederal-aid program is supportive\nof the Administration's highway legislation. described In Issue #2. which\nwill focus major Federal efforts on the interstate system. These increases\nwill not fully offset the impact of inflation on highway construction. It\nshould be noted that some Congressional review of the $10.8 billion highway\ndeferral is anticipated at the start of the next Congress. A significant\nbut reasonable program increase will be helpful in preventing release of\nadditional deferred funds.\nNational Highway Traffic Safety Administration: Allowance of $168 million\nprovides for the following activities: development of safety standards for\nall classes of motor vehicles, provision of motor vehicle consumer information,\nand assistance to the States in the establishment and development of highway\nsafety programs. The 1976 allowance is approximately the same as 1975 due\nprimarily to the completion of five motor vehicle diagnostic inspection\ndemonstration projects which require no further funding. These funds\nwhich are no longer needed (12.5M) have been shifted primarily to the\nstate grant program for 1976.\nGERALD FORD CIBRARY\nFederal Railroad Administration: Allowance of $138 million provides for rail\nsafety enforcement, studies of conventional rail systems aimed at improving\nfinancial viability of the industry, advanced technology research, and\nrestructuring of the bankrupt Midwest and Northeast rail system. Despite a\nnew provision of $45 million for rail branch line subsidies, the 1976 level\nis $29 million lower than 1975. This is primarily due to decrease in cash\nassistance to bankrupt railroads, from $82 million in 1975 to zero in 1976.\nThe actual need for these funds may approach $400 million, but this is not\nreflected in the budget (see Issue #8 for explanation.) The thrust of rail-\nroad studies continues to shift away from advanced hardware development, toward\nanalysis and demonstration of operating improvements with near term, and less\ncostly, applications. For example, all research on tracked levitated vehicles\nwould be terminated by 1976 under the OMB recommendation (See Issue #4).\n8\nAMTRAK: Federal assistance to AMTRAK currently takes two forms: grants\nused to cover the annual operating deficit; and 100% federally guaranteed\nloans for capital improvements. AMTRAK operating losses have been rising\nrapidly and are now estimated at $298M for this year, requiring an additional\n1975 supplemental of $78M. Operating deficits for 1976 are $350M which\nassumes continued increases in costs. The $350M will represent a ceiling\nwithin which AMTRAK must operate in 1976. To live within the ceiling\nwill require management to raise fares, reduce service frequency, or\neliminate service over some routes. $100M has been allowed in 1976\nfor continuation of the passenger car replacement program, which will\nbe proposed to be financed by Federal grants in lieu of loans to reflect\ntrue costs. $10M has also been allowed for spot improvements on track\noutside the Northeast Corridor.\nUrban Mass Transportation Administration: The agency requested $1,746\nmillion, an increase of $300 million. Minor reductions of $22 million\nwere negotiated for a total program level of $1,724 million. This\namount is consistent with funding assumptions in the $11.8 billion,\nsix-year National Mass Transportation Assistance Act of 1974. Steps\nare currently being taken to implement the new formula grant program\nfor transit capital and operating assistance in FY 1975 at the authorized\nlevel of $300 million. The FY 1976 allowance will increase the formula\ngrants to $500 million and also provides $1,100 million for the existing\ncapital grant program - essentially this year's level. To better control\nthe out-year pressures on the existing discretionary transit capital grant\nprogram, we have reached preliminary agreement with the Department to require\nExecutive Office concurrence in approval and funding of major projects so\nthat funding assumptions for such multi-hundred million dollar projects\ncan be reflected in the Administration's budget planning.\nOffice of the Secretary of Transportation: Funding of $74 million, including\n$35 million for research and planning and $2 million for pipeline safety\ngrants to the states, is provided for the Secretarial offices. The staff of\n2,030 includes about 700 for the department-wide Transportation Systems Center\nin Cambridge, Ma. and 400 for department-wide administrative support activities.\nModest staffing increases for the expanding and sensitive Hazardous Materials\nand Pipeline Safety offices are planned. The research and planning program\ncontinues at the 1975 level but places increased emphasis on regulatory reform\nresearch and the energy problem in transportation.\n0 qe₁\nTAB C\nIssue Paper\n9\nDepartment of Transportation\n1976 Budget\nIssue #1: Aviation Trust Fund Strategy\nStatement of Issue\nWhat strategy should be taken concerning continuation of the Airport and Airway Trust\nFund and the related airport development program?\nBackground\nThe Airport and Airway Trust Fund finances Airport Construction and Planning\nGrants ($325 M \"minimum\"), Airway Facilities ($250 M \"minimum\"), and FAA\nResearch and Development (about $80 M).\nTrust fund receipts are primarily generated by an 8% tax on domestic airline\npassenger tickets, a $3 international passenger tax, a 5% tax on air freight way-\nbills, and a 7¢ per gallon general aviation fuel tax.\nSince passage of legislation in 1971 restricting trust funding to capital develop-\nment programs (excluded operating expenses), tax receipts have exceeded program\nexpenditures. Trust fund balance at end of 1975 will be $2 B.\nAir carriers, through the passenger taxes, pay their share of Federal aviation\noperating and capital expenditures. General aviation (non-air carrier) pays less\nthan 20% of the estimated $500 M annual cost of providing them services.\nAs part of 1975 Budget Restraints, legislation was proposed to establish new\ngeneral aviation landing fees at airports with FAA traffic control towers and to\npen the Airport and Airway Trust Fund to finance the $1.5 B FAA operating expenses.\nis proposal would eliminate the large trust fund surplus, which fuels desires\nfor more development projects, and reduce the general taxpayer subsidy to general\naviation. This legislation will not be acted on by this Congress.\nLegislation is also required in 1976 to continue the airport grant and airway\nfacilities programs. Although continued Federal development of the airway system\nis necessary, there are substantial concerns about the role of the Federal Govern-\nment in financing local airport construction.\nAnalysis\nDOT/OMB have agreed in principle on an aviation legislative proposal. Key object-\ntives of this proposal are to:\n-Eliminate aviation trust fund \"surplus\" and unobligated contract authority.\nReduce Federal involvement in local airport development.\nEstablish principle of user responsibility for financing some part of traffic\ncontrol system operating costs.\nAllocate user fees more equitably among aviation system users.\nTo accomplish these objectives, the legislative proposal would:\nFORD LIBRAS,\nProvide a $350 M airport development grant program, most of which would bè\nallocated to the states and local airports by formula (present program is\n$325 M of grants awarded for specific projects).\nBroaden the grants to permit funding of critical passenger handling con-\nstruction (currently restricted to runways, lighting, etc.) and increase\nfunds provided to larger airports with more significant national system impact.\nReduce domestic passenger ticket tax from 8% to 7% ($110 M annual revenue loss)\nwhile increasing international enplanement fees from $3 to $5 ($30 M revenue\nincrease) and instituting general aviation departure fees of $5 and $10 ($80 M\nrevenue increase) to distribute system cost more equitably among users.\n10\n-Fund maintenance costs of air traffic control system from trust fund (would\nbalance receipts into and expenditures from the fund).\nAllow $194 M in existing unobligated contract authority to lapse on June 30,\n1975 (about $130 M of this amount has been allocated to airports--this will\ngenerate substantial oppostion, but is consistent with highway rescission).\nDOT/OMB have differences regarding some aspects of the legislative proposal. Key\ndifferences concern the desirability of a discretionary fund, long-term Federal\nassistance for general aviation airports, and the necessity for a planning grant\nprogram. There is agreement on the total annual program level of $350 M, but not\non the structure of the program.\nDiscretionary Fund ($40 M)\nDOT recommends that approximately $40 M be included as part of the $300 M air\ncarrier airport program as a discretionary fund for grants to small air carrier\nand reliever airports. DOT believes this would correct inadvertant inequities\nin the formula distribution and permit funding of occassional large projects at\nthese airports.\nOMB recommends that the entire $300 M be distributed by formula. If discretionary\nfunding is allowed, airports will seek matching Federal discretionary funds for\nall projects in which local funds are used (since there are no local matching\nrequirements for the formula allocations). This would generate a large demand\nfor discretionary projects which would quickly force up the unrealistically small\n40 M discretionary program and the total $300 M air carrier program. In addition,\nT proposals concentrate Federal project approval at small airports with smallest\national system impact and perpetuate an ineffective Federal bureaucracy.\nGeneral Aviation Grants ($40 M)\nDOT recommends that funds be allocated to states on a formula basis with gradual\ndelegation to the states of administrative responsibilities for grant programs.\nDOT believes Congress and general aviation users will not accept shift to local\nfunding.\nOMB recommends that funds be allocated to states from Federal taxes for two years,\nat which time Federal gas tax would be reduced in those states which instituted\nlocal general aviation fuel taxes. States would then be responsible for funding\nthis essentially local development program. Anticipate some Congressional oppo-\nsition, but believe general aviation users would not strongly resist lower\nFederal involvement.\nPlanning Grant Program ($10 M)\nDOT recommends a $10 M planning grant program for state, regional, and metropolitan\narea-wide plans. DOT believes a separate categorical grant is necessary to assure\nadequate planning.\nOMB recommends adding these funds to state and airport grants and permitting\ngrantees to use a portion of their formula allocation for planning. Since use of\nFederal construction funds is contingent on development of acceptable plans, there\nis no need to force planning through categorical grants. Present categorical\nplanning grant program, opposed by most users, has been used to fuel extensive\n'stifications for questionable capital development.\nFORD LIBRARY\n11\nIssue Paper\nDepartment of Transportation\n1976 Budget\nIssue #2: Highway Legislation\nStatement of Issue\nWhat should be the focus of the Administration's proposals for providing\nFederal-aid for highway construction for the next five years?\nBackground\nMajor highway legislation is needed in 1976 to extend the highway trust\nfund and provide additional contract authorizations for highway programs.\nTrust fund revenues in recent years have been substantially greater than\nthe level of resources that were allocated to highway programs by the\nExecutive Branch. Congress, using \"trust fund philosophy,\" has tended\nto match authorizations fairly closely to receipts.\n$10.7 billion of Federal-aid highway funds is currently deferred (i.e.\nimpounded). Congressional review of Administration's deferral action\nanticipated early in next Congress with uncertain outcome.\nImbalance between highway program expenditures and trust fund revenues\nwill continue unless Federal-aid is substantially expanded or present\nrevenue/program structure is modified.\nIn addition, the present aid program is hampered by a multitude of\ncategorical grant programs and excessive red tape. Need to focus Federal\neffort on interstate system while providing more state flexibility for\nother local highway programs.\nMajor legislative objectives:\nA. Break long term revenue/program cycle that forces excessive highway funding\nB. Eliminate short term possibility of unprogrammed release of massive\namounts of deferred funds.\nC. Increase efficiency and effectiveness of Federal-aid program.\nDOT/OMB have reached agreement on the major objectives and concepts of the\nlegislative proposal as well as the 1976 program level. Funding levels for\n1977-80 are not yet resolved. Specific legislative proposals are now being\ndeveloped.\nA. Long Term Revenue/Funding Strategy\nAlternatives\nFORD LIBRARY\n1. Continue present tax and program structure\n2. Substantially reduce trust fund revenues and trust funded programs.\n(DOT/OMB recommendation)\n-- Fund Interstate from Trust Fund; other programs from general fund.\n-- Shift 2¢ of gas tax receipts to general fund.\n-- Rescind 1c of motor fuel tax in FY 1978 if states increase their taxes.\n3. Eliminate trust fund. All revenue/programs through the general fund.\n12\nlysis\nNo outlay/receipt impacts on unified Federal Budget through FY 1977. Receipts\nwould be reduced in 1978 and subsequent years by about $1.2 billion annually\nunder Alternative 2.\nContinuation of present tax and program structure would exacerbate impoundment\nproblem--probably forcing Congress to release some deferred funds.\nReduction in trust fund revenues would decrease the \"push\" that \"dedicated\"\nrevenues have on program levels.\nShift of 1 ¢ of motor fuel tax to states would give states more flexibility and\ndecrease Federal role in local highway funding.\nRestricting trust fund program to interstate would help focus resources and\nFederal attention on this \"special\" Federal commitment.\nOther highway assistance for local road construction would be forced to compete\nwith other general fund programs in future.\nElimination of trust fund altogether is not necessary to redirect focus and is\nprobably not politically viable.\nShort-Term Deferral Strategy\nAlternatives\nGERALD FORD LIBRARY\n1. Continue increasing amount of deferrals.\n2. Eliminate deferred amounts by rescinding all unobligated balances at the\nbeginning of FY 1977 (DOT/OMB rec.).\nAnalysis\nAction has no direct outlay/receipt impact.\nRescission has a high political cost--Congress and states will strongly resist\nefforts to \"take away\" highway funds.\nVery difficult to justify continually increasing deferred amounts. Probable\nthat Congress would not permit continued deferrals (Congress can force release\nof all or part of deferred funds).\nNo politically attractive way to rescind funds, but better to request rescission\nas an overall strategy to \"rationalize\" highway program than be forced to have\nit considered independently. This also bypasses Budget Control Act procedures\nwhich would require Congressional action within 45 days of request.\nAlternative 2 includes \"hold harmless provisions\" to insure that no state would\neceive lower obligational limitations in FY 1976-1977 because of the rescission.\nProgram Efficiency and Effectiveness\n13\niternatives\n1.\nContinue present categorical programs.\n2.\nProvide four broad funding categories (interstate, urbanized, rural and safety)\nwith provisions to permit use of non-interstate funds off the Federal-aid\nsystem and prioritize interstate system tunding (DOT/OMB rec.).\nAnalysis\nPresently, categorical funding categories limit local flexibility in use of Federal\nhighway grants. Many restrictions needTessly interject Federal Government in local\naffairs.\nOn the other hand, national priorities, which may differ from local objectives,\nshould be considered in determining what critical segments of the interstate\nsystem should be initially completed.\nAlternative 2 would greatly expand local flexibility in use of non-interstate funds\nwhile emphasizing the national system aspects of the interstate system.\nStates and user groups will support broader funding categories although there will\nbe some Congressional reluctance to relax these constraints.\nPrioritization is a delicate political call because local officials have traditionally\nprioritized interstate projects within their state. DOT is currently reviewing\nalternative mechanisms for encouraging completion of critical interstate links with\nminimal Federal involvement in local resource allocation decisions.\nD. Funding Level\nternatives\n1.\nProvide annual increases for all Federal-aid highway programs through 1980\n(DOT initial request).\n2. Provide annual interstate trust fund increases through 1980, but hold constant\nnon-interstate program (OMB rec.).\nAnalysis\nFORD\nBillions of Dollars (Program Level)\n1975\n1976\n1977\n1978\n1979\n1980\nAlternative 1 - Total\n4.6\n5.2\n5.9\n6.1\n6.3\n6.6\nInterstate\n(2.5)\n(3.0)\n(3.4)\n(3.5)\n(3.6)\n(3.7)\nNon-Interstate\n(2.1)\n(2.2)\n(2.5)\n(2.6)\n(2.7)\n(2.9)\nAlternative 2 - Total\n4.6\n5.2\n5.4\n5.5\n5.8\n5.9\nInterstate\n(2.5)\n(3.0)\n(3.2)\n(3.4)\n(3.6)\n(3.7)\nNon-Interstate\n(2.1)\n(2.2)\n(2.2)\n(2.2)\n(2.2)\n(2.2)\nIncreasing interstate contract authority is consistent with new Federal focus on\ninterstate.\nLarger non-interstate program would increase political support, but it is incon-\nsistent with new policy to deemphasize non-interstate program.\nIn 1978 and beyond, it is anticipated that states would be collecting an additional\n$1.2 B of previously Federal motor fuel taxes, which is available to augment local\nhighway programs. There should be less dependence on Federal-aid funds for non-\ninterstate program.\nDOT has agreed with OMB recommendations for the interstate program, but is still\nreviewing non-interstate funding for 1977-1980. DOT agrees in principle with the\nOMB non-interstate funding levels, but believes that these program levels, which\nare substantially below current non-interstate authorizations, may not be\npolitically viable.\n14\nIssue Paper\nDepartment of Transportation/AMTRAK\n1976 Budget\nIssue #3: AMTRAK\nStatement of Issue\nWhat should be the Administration's proposal for continuation of the AMTRAK\nprogram?\n1975\n1976\n1977\n1974\nDOT\nOMB\nDOT\nOMB\nDOT\nOMB\nActual\nReq.\nRec.\nReq.\nAllow\nAppeal\nRec.\nReq.\nRec.\nDeficit Grant\n198\n298\n298\n240\n260\n+90\n+90\n385\n385\nEquipment &\nFacilities\n135\n304\n304\n100\n100\n+10\n+10\n100\n100\nNortheast\nCorridor\n-\n49\n15\n-\n-\n-\n-\n-\n-\nTotal Pro-\ngram level\n333\n651\n617\n340\n360\n+100\n+100\n485\n485\nckground\nExtending authorization legislation will be required for AMTRAK in 1975.\nThe AMTRAK program represents a large and rising drain on the budget.\nFederally-assumed operating losses have soared from $143M in 1973 to\nover $300M this year (an additional $78M supplemental will be required),\nwith over $600M in Federal loan guarantees committed for capital improve-\nments.\nControl over AMTRAK has been shifting away from the Executive Branch and\ntowards Congress, AMTRAK management and the ICC because of DOT/OMB attempts\nto cut uneconomic service and prevent congressional add-ons. AMTRAK cannot\ndiscontinue service without ICC approval, and recent legislation has mandated\nmany ICC service performance standards (e.g. reservation system requirements,\nnumber of baggage attendants).\nSome key operating characteristics include the facts that Federal subsidies\nexceed passenger revenues, that long-haul trains account for over 1/2 of\nAMTRAK's losses, and that only a few corridor routes have any long-run\nbreakeven potential.\nFrom a social benefit and energy savings viewpoint, the long-haul and\ncongressionally-required \"experimental\" services do not merit Federal\nsupport.\nIn accordance with the Regional Rail Reorganization Act of 1974, DOT\nand AMTRAK are preparing plans for upgrading the Boston-Washington (NEC)\nrail passenger lines. Although these plans have not been finalized a\n$49M program is proposed for this year to remedy certain deferred\nmaintenance ($15M) and to slightly improve normal running times ($34M)\n15\nas a preclude to the major improvements. Estimates of total improvement\nproject costs exceed $1.5B over the next eight years.\nRequests for the AMTRAK program are made by both DOT and AMTRAK. The\ntable given above accurately reflects both the DOT and AMTRAK requests\nin the \"DOT request\" columns, however, the appeal entry is DOT's only.\nAMTRAK has not been informed of the OMB allowance by DOT as yet.\nAlternatives\n#1. AMTRAK request--Continue existing AMTRAK posture of making good all deficits\nincurred. Undertake immediate Boston-Washington corridor upgrading (both DOT\nand AMTRAK favor this).\n#2. OMB Recommendation--seek to contain AMTRAK by establishing specific pre-\ndetermined deficit ceilings for AMTRAK service and requiring operations to be\nconfined within that level. (DOT agrees to this strategy). Approve NEC track\nimprovements only to permit continuation of present speeds and await total up-\ngrading project plans (DOT favors Alternative #1 for the NEC).\nAMTRAK Recommendation--Thr major portions are: (1) Operating deficits--\nContinuation of the status quo, whereby substantial cost overruns which are\nreestimated as the year progresses are covered by supplemental grants, (2)\nNEC track improvements (DOT proposal)--Initiation of track improvements in\ne NEC would begin with a $49M effort in 1975, which assumes $34M in rail\nand tie procurement and roadbed improvements. This would lower running times\nand begin the NEC improvement project and recognize the long lead times on\nmaterials deliveries and heavy congressional interest in immediate action, (3)\nAMTRAK also proposes all 1976 and future capital expenditures be made with\ngrants, rather than loan guarantees, to reduce interest payments.\nFORD\nOMB Recommendation-- (1) Operating Deficits: Seek legislation to establish\nfixed deficit ceilings for AMTRAK and removal of ICC restrictions on service\nLIBRARY\ndiscontinuances and performance standards regulations. Once established\nthese ceilings would represent the maximum Federal funding which the Admin-\ninistration would seek for AMTRAK in a given year, with supplemental requests\nunavailable. AMTRAK management would be required to operate within the ceilings\nor take whatever action required (e.g., fare increases, service frequency re-\nductions, service discontinuances) to live within the limit. In 1976 the\nAMTRAK deficits are funded at $350M, which is $52M in excess of the 1975\nlevel to allow for expected added costs and inflation. This position attempts\nto apply pressure on AMTRAK management to reduce and control costs. It also\nprovides a means for preventing the current open-ended assumption of cost over-\nruns while avoiding the pitfalls of previous Administration attempts to reduce\ncosts by naming specific routes to be dropped. (DOT agrees with this strategy).\n(2) NEC Upgrading: Provide only sufficient funds to correct deferred maintenance\non these Penn Central lines. Deny approval of the remaining $34M since this\nrepresents the initiation of a $1.5B project for which we have no plans. $22M\nof this $34M upgrading funds were to be utilized exclusively for the New York-\nston segment of the NEC, which carries only 15% of NEC riders. This under-\nores the need for considering the $34M simultaneously with the entire NEC\nplan, since we would propose emphasis on the more economically viable and\nheavily-patronized Washington-New York segment first. Denial of the $34M at\n16\ncris time would not preclude improvements beyond the deferred maintenance this\nyear, since $30M in already-authorized AMTRAK loan guarantee funds can be utilized\nwithout requiring further congressional action. (3) Agree on conversion of capital\nimprovements from loan guarantees to grants, since loans have no chance of re-\npayment and grant funding will reflect true program costs. DOT agrees with this.\nFORDO & LIBRARY DIVNI\n17\nIssue Paper\nDepartment of Transportation\n1976 Budget\nIssue #4: Tracked Levitated Vehicle Research\n(Dollars in millions)\n1975\n1976\n1977\n1974\nDOT\nOMB\nDOT\nDOT\nOMB\nDOT\nOMB\nActual\nRequest\nRec.\nRequest\nAllow\nAppeal\nRec.\nRequest\nRec.\nPL\n8.6\n5.9\n4.2\n10.6\n0.1\n+10.5\n-\n11.0\n0.1\n0\n5.2\n4.0\n2.3\n4.5\n0.1\n+ 4.4\n-\n8.0\n0.1\nStatement of Issue\nShould we continue to fund Track Levitated Vehicle (TLV) Research)?\nBackground\nDuring the 1975 budget review, a decision was made to terminate TLV. The\nSecretary appealed, and funding of TLV was approved pending the completion\nof a study of economic and social effects of implementing such a system.\nFindings of Study:\n- Economic viability within 20 years is low.\n- Advantages relative to other modes are not demonstrated.\n- Nevertheless, study called for continued program in promising\nlevitation technology.\nAlternatives\n#1. Continue the TLV research program. (DOT request)\nFORD LIBITA'S\n#2. Terminate TLV in 1975. $100K per year to monitor TLV efforts\nin other countries. (OMB recommendation)\nDOT request: Program consists of research on two kinds of TLV systems:\n\"Air Cushion\" and \"Maglev\" (magnetically levitated). Both operate on\nspecial guideways.\nDOT considers vehicle levitation to be a promising technology, offering\npotential payoff in high and low speed applications. Expected to reduce\nmaintenance cost because of minimum friction.\nWould allow DOT to take advantage of large sunk cost (over $40 million since\n1966). Should keep pace with TLV work in other countries, in case the tech-\nnology proves useful.\n18\nOMB Recommendation\nTLV does not offer significant advantate over existing technology.\n- In low speed range (0-150 mph) conventional rail is less\ncostly, more energy-efficient, and can operate on existing\nrights of way. Possibility of lower TLV maintenance cost\nis more than offset by high initial investment. Germans\nreportedly are discontinuing TLV research in this speed\nrange.\n- In higher speed range (150-300 mph) aviation provides the\nmost viable alternative. Infrastructure is already in place.\nWide bodied jets and other improvements expected to provide\nsufficient capacity for this market in the forseeable future.\nTechnical problems in the higher speed range are substantial.\nFor instance, entering a tunnel at high speed would lead to\nsudden deceleration, due to compression of air.\n- The only case in which DOT cites potential economic viability\nfor TLV is in the Northeast Corridor, and then under such\nquestionable assumptions as 1) complete replacement of air\ntravel by TLV and 2) saturation of high speed rail line (cur-\nrently being planned).\nTLV investment would be very costly to the Federal Government, both in short\nand long term:\n- $50M development cost through 1980.\n- Pressures for Federal implementation in long term. At\nleast $3 billion for Northeast Corridor alone (1971 dollars).\nPueblo test center 1976 budget is decreased from $13 million (DOT request) to\n$11 million, to reflect overall effect of TLV termination on the mission of the\ncenter.\nFORD is LIBRARY\n19\nIssue Paper\nDepartment of Transportation/Federal Railroad Administration\n1976 Budget\nIssue #5: Intermodal Terminals\n(Dollars in Millions)\n1974\n1975\n1976\n1977\nDOT\nOMB\nDCT\nDOT\nDOT\nOMB\nDOT\nOMB\nReq.\nRecom.\nAppeal\nReq.\nAllow\nAppeal\nRecom.\nReq.\nRecom.\nProgram Level\n-\n7.2\n-\n-\n19.0\n2.0\n+ 5.0\n-\n12.0\n-\nBackground\nThe 1975 AMTRAK authorization enacted last October 8 contained $38M in authori-\nzations for DOT to: 1) preserve historic rail stations, 2) design and coordi-\nnate a new intermodal terminal at Union Station in Washington ($5M), 3) con-\nstruction of not less than 3 intermodal station demonstration projects ($15M)\nand grants for state and local planning of such stations ($5M), 4) conduct West\nCoast high speed railroad ground study ($8M). These authorizations were\nsupported by Sen. Magnuson.\nOn December 9 DOT submitted the following request:\nProject\n1975 Supplemental Request\n1976 Request\nHi bric Terminal Preservation\n$ 1M\n$ 1M\nL\nStation Design\n5M\n--\nIntermodal Demonstrations\n--\n15M\nIntermodal Planning Grants\n1M\n1M\nWest Coast Study\n.2M\n2M\nFORD LIBRARY\n$ 7.2M\n$19M\nThe OMB allowance provided no 1975 funds and $2M in 1976, $1.5M to be used\nfor the Union Station intermodal terminal design and $500K for a DOT study\non the merits of the intermodal terminal concept.\nDOT Recommendation: DOT accepts the refusal of 1975 funds and the $1.5M 1976\nallowance for a Washington intermodal station design. They request an additional\n$5M in 1976 for application towards intermodal station demonstrations ($3M), the\nWest Coast study ($1M) and historic terminal preservation ($1M). DOT believes\nthis is a minimal level of effort which is required to pursue Congressional\ndesires as contained in the legislation. Also, certain second-level DOT officials\nhave made promises of an intermodal terminal for Seattle.\nOMB Recommendation: Deny the DOT appeal. All of these projects have the potential\nto be long lasting, expensive programs. The $500K provided to DOT for studying\nthe merits of the intermodal terminal concept should be sufficient to determine\nif rail/bus or rail/mass transit connections are sound. At present DOT has made\nno analysis which supports the concept. The $1M requested for historic station\npreservation is not of sufficient scale to preserve more than a few small\nterminals and will only build a demand for expanded funding. Moreover, approval\nWC mean Federal participation in a presently strictly local activity. The\nWe Loast study should not be performed, given the discontinuation of tracked\nlevitated vehicle research (see Issue #4).\n20\nIssue Paper\nDepartment of Transportation\n1976 Budget\nIssue #6: Rail Safety Enforcement\n(Dollars in millions)\n1975\n1976\n1977\n1974\nDOT\nOMB\nDOT\nDOT\nOMB\nDOT\nOMB\nActual\nRequest\nRecom.\nRequest\nAllow.\nAppeal\nRecom.\nRequest\nRecom.\nPL\n8.0\n9.8\n11.7\n16.5\n15.8\n+ 2.4\n-\n20.8\n16.0\n0\n6.8\n9.8\n11.7\n15.1\n14.0\n+ 2.4\n-\n19.8\n16.0\nEOY ( Inspectors\nand clerks)\n282\n282\n282\n364\n325\n+52\n-\n438\n325\nStatement of Issue\nWhat additional increase, if any, should be allowed for staffing and funding of\nthe Federal Railroad Administration's safety enforcement program in 1976?\nBackground\nRail safety problem generally increasing. Comparing the first half of 1974\nwith the same period in 1973: Accidents up 9%; derailments up 19%; injuries\nup 13%; but fatalities down 13%.\nCARD\nrilroads: Hampered by lack of funds to maintain safe conditions; some\nluction of train speeds has occurred.\nUnions: Favor Federal involvement; strong pressure on Congress to increase\nFederal program.\nCongress: Critical of DOT efforts to date; Rail Safety Improvement Act of\n1974 (pending final floor approval) would authorize a total of 430 positions\nfor inspectors and clerks. This is 53 more than DOT appeal and 105 more\nthan OMB allowance.\nDOT: Current safety program consists of regulation, enforcement by field\ninspectors, and research. Joint Federal/State inspection program just\nbegun. DOT 1976 request for safety enforcement represents a funding increase\nof 230% and a 60% increase in positions since 1973, primarily as a response\nto Unions and Congress. Difficult to assess impact of DOT programs to date.\nAlternatives\n#1. Additional increase of 52 EOY positions and $500K, representing a substantial\n(but not complete) fulfillment of Congressional intent. $1.9M included in\nappeal for two safety inspection cars, originally in 1975 request. (DOT request).\n#2. No further increase in positions. Wait for evaluation of current efforts before\nfurther increases. Fund safety inspection cars in 1975, using savings from\nTLV program (see Issue #4). (OMB recommendation).\nAge\nRequest: Represents \"good faith\" response to cope with safety problem.\nConsidered the minimum increase acceptable to Congress, even though it falls\nshort of the congressional authorization.\n21\nCMB Recommendation: 1976 allowance already includes an increase of 43 positions\ner 1975. These were allowed on a selective basis. For example, DOT signal\ninspectors were denied (only one signal-related accident in 1973). State\ninspection program and use of inspection cars should offset much of need for\nadditional DOT safety personnel. The DOT safety program has grown rapidly over\nthe past four years, and should be examined carefully before further expansion\nis allowed. The role of its new missions needs to be defined more clearly, and\nthe potential impact on DOT staffing determined.\nFORU LIBRARY\n22\nIssue Paper\nDepartment of Transportation\nIssue #7: Additional Coast Guard Personnel\nStatement of Issue\nShould Coast Guard end-of-year military strength be increased by 200?\n1975\n1976\n1977\nCurrent\nDOT\nDOT\nOMB\nDOT\nOMB\n1974\nEst.\nReq.\nAllow.\nAppeal\nRecom.\nReq.\nRecom.\nProgram Level\n815\n974\n1,125\n1,072\n+2\n-\n1,230\n1,096\nMilitary\n(End of Year)\n37,600\n37,486\n38,351\n37,774\n+200\n-\n38,200\n38,200\nAlternatives\n#1. Increase the Coast Guard military end strength by 200 to 37,974 and operating\nexpenses by $2 M.\n#2. Require Coast Guard to stay within an end-of-year military strength of 37,774.\nAnalysis\nDOT recommends an additional 200 positions to adequately carry out operational\nrissions. Activities that would probably be decreased are: 61 to provide full\naffing at Search and Rescue stations; reduction of 10 in surveil/lance of vessels\nrom iron curtain countries; delay in manning second new icebreaker (96); and other\nminor activities.\nOMB believes Coast Guard's requirements can be met by:\n--Reallocation of manpower from adjacent stations to man new Search and Rescue stations\n--Awaiting the results of a comprehensive study of pollution enforcement before\nincreasing staffing.\n--Absorbing other requirements within the total.\nAgency Recommendation: Alternative 1. The Coast Guard mission will be impeded if the\nappeal of 200 is denied.\nOMB Recommendation: Alternative 2: Better allocation of workload should allow absorption\nof all priority items within the ceiling recommended.\nGERALD R. LISAARY FORD\n23\nImpending Issue\nDepartment of Transportation\n1976 Budget\nIssue # 8: Regional Rail Restructuring\nSummary\nIn order to implement the Regional Rail Reorganization Act of 1973, the\nFederal Government is required to provide various types of financial\nassistance. In certain cases, the form and amounts of assistance are\nstill undefined, and represent a major potential outlay threat not\ncurrently specified in the 1976 Budget. The Act also required major up-\ngrading of the Washington-Boston rail passenger lines to provide 5 1/2 hr.\nend to end running times. Estimates of the cost of this project exceed $1.5B.\nBackground\nRegional Rail Reorganization Act designed to restructure bankrupt\nMidwest and Northeast lines into streamlined, profitable, and private\nsystem.\nTwo phases:\n- Planning (January 1974 - January 1976); U.S. Railway Association\n(USRA) has lead role; Congressional approval of final plan.\n- Implementation ( 8-10 years following January 1976); Consolidated\nRail Corporation (ConRail) new operating entity.\nNo direct opportunity for Presidential control in either phase of the\nrestructuring process.\nFederal Financing Presently Available:\n- During Planning Phase\n(Millions)\nPlanning process\n$ 58 salaries and expenses\nEmergency cash assistance\n85 grants\nInterim plant improvement\n150 loan guarantees\n- During Implementation Phase\nBERALD\nService continuation subsidies\n90/yr. grants\nLabor protection\n250 grants\nConRail financing\n1,000 loan guarantees\nGeneral financial assistance\n500 loan guarantees\nfor purchase and improvement\nof rail property\n24\nPotential Additional Funding Requirements\nEmergency cash assistance\n- Original authorization of $85M to meet cash deficits of bankrupt\nlines during planning period will be exhausted by February, 1975,\nbased on the current outlook.\n- Will need to seek additional authorization, since planning will\nlast at least through January 1976.\n- DOT requests a nominal amount ($20 million), to avoid \"bailing out\"\nbankrupt estates, and meanwhile seek other ways to meet the need.\n-. This need is estimated at $200-$400 million (assumes continued\neconomic downturn which may be partially offset by rate increases).\n- DOT strategy reflected in 1976 Budget submission with\nunderstanding that creative alternatives will be generated by DOT,\nto insure that railroads have sufficient cash to maintain service.\nContingency of $400 million will be included in budget summary.\nConRail financing\n- Financing authorized for ConRail ($1B in guaranteed loans) may not\nbe adequate.\n- Updated estimate of ConRail's financial needs will appear in USRA's\nPreliminary System Plan, February 26, 1975.\nFORD LIBRAR,\nComme rce\nAppeal\nis\nFORD\nDepartment of Commerce\nAppeal of Presidential Decision\nGERALD\nExport Promotion Services\nLISEARY\nBudget Authority/Outlays\nJuly 1-Sept.\n($ in millions)\n1974\n1975\n1976\n30, 1976\n1977\nPresidential Allowance\n22\n21\n14\n4\n14\nCommerce Appeal\n22\n21\n20\n5\n20\nSummary of Agency Appeal\nCommerce is appealing your decision that experienced exporters should pay the\nfull cost of the export promotion services provided by the Department.\nCommerce requests that it not be required to implement full cost recovery fees\nfor these experienced exporters, and that its 1976 budget allowance be increased\nby $5.8 million to permit continuation of the subsidy to these firms. The\nassumption underlying the Commerce appeal is that experienced exporters will not\nuse its services if full-cost fees are charged. Therefore, Commerce assumes that\nthis will result in fewer firms receiving Commerce assistance, and that this will\nhave an adverse impact on exports.\nOMB Recommendation\nOMB recommends no change in your decision. We believe that subsidies to\nexperienced exporters are not in the national interest, and that ending these\nsubsidies will not adversely affect U.S. trade.\nThe Commerce assumption that full-cost fees will adversely affect U.S. exports\nhas no basis in fact. Experienced exporters are aware of the availability of a\nvariety of alternative private export services which they can use if necessary.\nThe experienced exporters will decide whether to use the private services or the\nCommerce services based on their evaluation of the cost-effectiveness of each.\nThere is no evidence that these experienced exporters will discontinue their\nexport efforts because of the full-cost fees.\nThe full-cost requirement does not apply to the Commerce programs to promote\nEast-West trade, or to inexperienced exporters, so Commerce will be able to\ncontinue to promote trade with Socialist economies as in the past, and to assist\nsmall firms develop export markets. The decision also will not prevent Commerce\nfrom providing national leadership in encouraging international trade.\nThe Commerce assumption that experienced exporters will not use its services at\nfull-cost fees is not based on any test. There presently is no basis for\nestimating the amount of demand by experienced exporters for the services at full\ncost.\n2\nIf there is substantial use of the full-cost services, then the Commerce appeal\nhas no substantive basis. If there is little or no use of the services, it\ncould result in some increase in the cost of continuing services to inexperienced\nexporters because of fixed overhead costs. In the latter case we would then\nreview the estimates of direct appropriations needed to maintain the program\nfor new exporters. In this way we can avoid any reduction in services to new\nexporters.\n3 3 FORD LIBRARY\nDEPARTMENT\nOF\nCOMMERCE\nTHE SECRETARY OF COMMERCE\nWashington, D.C. 20230\nUNITED STATES OF AMERICA\nDecember 13, 1974\nThe President\nThe White House\nWashington, D. C. 20500\nFOPD\nDear Mr. President:\nConsonant with your objective to restrain Federal spending,\nwe are fully supportive of the adjustments in our FY 1976\nbudget request, with but one exception. This exception,\nwhile small in budgetary magnitude, has such broad policy\nimplications that I am compelled to request your reconsidera-\ntion of this item. It consists of a reduction of $5.8 million\nand 153 positions in our current level of export promotion\nactivities, such as overseas trade centers, trade fairs and\ntrade missions.\nYour Export Council, with whom I work most closely, has urged\nin the strongest terms that we redouble our efforts under\nyour leadership to keep our exports as a strong factor in our\nnational economy. As compared with other nations, we have a\nrelatively modest but highly effective trade promotion apparatus.\nIn these critical times it deserves your fullest support for\nthe following reasons:\n1. Our Government export services directly assist in\ngenerating some $3 - $4 billion of U. S. export sales annually\nwhich affect 210,000 to 280,000 jobs for U. S. workers and\nreturn $1.2 - $2 billion in U. S. tax receipts.\n2. Our Government export services provide national\nleadership to the export drive spearheading the complementary\nexport development activities of regional, state and local groups,\ntrade associations and other industrial development organizations.\n3. Early passage of the trade bill will provide widening\nopportunities for U. S. exporters in a world setting in which\nNear Eastern markets offer a vast new potential; in which the\nSocialist economies are at the beginning of a new era for the\nutilization of American products, and in which our principal\ntrading partners demand increasing usage of high technology\nU. S. manufactures.\n4. Our Government export services are particularly\neffective in assisting medium-and small-sized manufacturers,\nover 10,000 of whom utilize these services annually.\nAt a time when other nations are intensifying their export\npromotion activities, to be curbing our international sales force\nwould seem to be false economy. As we consider the possibility\nof creating Federal employment, it would also seem most unwise\nto be cutting back in an area which is demonstrably productive\nin terms of the economic welfare of the nation.\nTherefore, I urge that you fully restore the proposed reductions\nin our export promotion programs. I feel so strongly on this\npoint that I request the opportunity to review this matter in\ngreater depth with you personally if need be.\nRespectfully,\nSecretary of Commerce\nCivil Service\nCommission\nTHE WHITE HOUSE\nWASHINGTON\nMEMORANDUM FOR THE PRESIDENT\nFrom: Roy L. Ash\nSubject: 1976 Budget Decisions. Civil Service Commission\nThe agency request and my recommendations with respect to 1976 budget\namounts for the Civil Service Commission are presented in the tabulation\nattached (Tab A). A summary of the principal budget decisions on which\nwe have reached agreement with CSC is provided as background information\n(Tab B).\nFour key issues have been identified for your consideration (detail at\nTab c).\nI. Cost-of-Living Adjustments for Civil Service Retirement\nCSC and OMB concur that legislation should be submitted to remove\ndistortions in the present statutory formula for determining\nautomatic cost-of-living increases in retirement annuities. This\nwill reduce costs by $61 million in 1976, $412 million in 1977,\nand $842 million in 1980. In view of the sensitivity of this\nproposal and expected opposition from employee groups, we have\nprepared an issue paper for your review.\nDecision: Approve CSC/OMB recommendation\nDisapprove CSC/OMB recommendation\nFORD LIBRARY i GENALD\nSee me\nII. Contribution to Civil Service Retirement\nCSC would not support a legislative proposal to change employer\nand employee contribution rates to the Civil Service Retirement\nFund. While they do not object to establishing a Presidential\npanel to undertake a policy review of Civil Service retirement\nfinancing, they oppose making any decision to change the rates\nuntil further study and analysis has been completed.\n2\nOMB recommends that legislation be proposed to increase the\nemployer and employee contribution rates to cover anticipated\ncost-of-living increases for Federal retirees. The increased\ncontributions would be phased in over a three-year period with\nthe proposed first step increasing the 7% contribution rate\nto 8 1/4% in 1976. Actual dimensions of the legislative proposal\nwould await completion of review by a top level panel. Reflecting\nanticipated rate increases in the budget would establish a\npresumption of the need for change and demonstrate the seriousness\nof the proposal. The anticipated rate increases would place the\nretirement fund on a sounder financial basis and help to reduce\ntotal budget deficits by $282 million in 1976, $1.2 billion in 1977,\nand $2.2 billion in 1980.\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nIII. Federal Employees Group Life Insurance Premiums\nCSC agrees to increase employee contribution rates to cover\nactuarial costs. However, they would defer the increase until\nJuly 1, 1975, in order to allow for consultation with employee\ngroups. They oppose making the increase effective in 1975 and\nwould prefer not to reflect a proposed increase in the budget.\nOMB proposes that the Commission exercise its authority to\nincrease the rate effective February 1, 1975. The rates are\ndeficient by 17.5% even though the law requires that they be\nperiodically adjusted to cover the liability of the insurance\nprogram. Increasing the rates in February would still allow\nfor consultation with employee groups, but would reduce 1975\noutlays by $40 million.\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\n3\nIV. Central Personnel Operations for Federal Agencies\nCSC proposes that its operations budget (excluding Intergovernmental\nPersonnel Assistance activities) be increased from $85 million\n(adjusted for nonrecurring 1975 costs) to $98 million for 1976. For\nrecruiting and examining activities, which account for nearly half of\nthe operations budget, the CSC request programs a 13% decrease in\nproductivity between 1974 and 1976. CSC maintains this decrease is\nnecessary in order to meet legal obligations placed on the Commission\nby statute and court decisions.\nOMB proposes that the operations budget be increased from $85 million\nto $88 million, primarily for rent costs, full year operation of the\nnew appeals system for employees, and various commitments to improve\nFederal personnel management. The OMB recommendation reflects an\nassumption of 2.5% annual productivity gains for recruiting and\nexamining between 1974 and 1976 which should be achievable in spite\nof legal requirements which were placed on the Commission prior to\n1974. The resulting savings would be used to help finance increased\nworkload and new initiatives to achieve system improvements. We\nsuggest that a comprehensive study be undertaken of the effectiveness\nand efficiency of the recruiting and examining system by reviewing\nthe policies and procedures for hiring Federal employees.\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nBoth CSC and OMB recommend establishing a Presidential panel to review\nthe comparability of total compensation (pay and fringe benefits) for\nFederal employees to that being paid in the private sector (summary at\nTab B).\nCivil Service Commission\n1976 Budget\nSummary Data\n($ in Millions)\nEmployment\nBudget Authority\nOutlays\nFull-time Permanent\nTotal\n1974 actual\n9,185\n5,692\n6,190\n7,334\n1975 January budget\n10,322\n7,341\nenacted\n6,255\n10,322\n7,440\n7,341\nsupplementals recommended\nXXX\nXXX\n(pay and program)\n3\n3\nreestimates\nXXX\nXXX\n927\n19\nprogram change\nXXX\nXXX\n:\n-40\nOMB recommendation\nXXX\nXXX\n11,252\n7,323\n6,363\n7,848\n1976 planning ceiling\n12,272\n8,560\nXXX\nagency recommendation\nXXX\n12,401\n9,127\nOMB recommendation\n7,670\n9,181\n12,815\n9,031\n6,520\n8,000\nTransition period\nagency recommendation\n2,180\n2,489\nOMB recommendation\n7,590\n9,500\n2,424\n2,461\n6,520\n8,000\n1977 OMB estimate\n16,020\n10,257\n6,620\n8,120\nSERALD\n?\nFORD\nLEVERY\n1976 Budget\nCivil Service Commission\nOMB and CSC have reached agreement on budget and program recommendations\nfor the following:\nB\n1. Intergovernmental Personnel Assistance. The agency initially\nrequested that the IPA grant funding be increased from $15 million\nto $45 million for expansion in size and scope of the program.\nAdministrative expenses and technical assistance were also initially\nproposed to be increased from $5 million to $11 million. While\nCSC would prefer to augment the IPA program which they believe to\nbe highly effective, they have agreed that the program should be held\nto the 1975 level and the evaluation of IPA activities scheduled for\n1976 should be completed prior to consideration of future expansion.\n2. Compensation of Federal Employees. Fringe benefits for Federal\nemployees are determined by separate legislative actions and are\nnot taken into consideration in determining Federal pay levels.\nFor example, in the area of retirement benefits, more than six\nbenefit liberalizations, with annual amortization cost of $300 million,\nwere enacted by the Congress in the past two years. The 1976 budget\ncalls for a Presidential panel to make policy recommendations for how\nthe Federal Government can best determine the appropriate level of\ntotal compensation for its employees comparable to the non-Federal\nworkforce. Under the Pay Reform Act, the determination of comparability\nwith private industry is limited solely to pay levels without consideration\nof other forms of compensation such as retirement, health and life\ninsurance, annual and sick leave, and job security.\nFORD LIBRAR i GERAL\nIssue Paper\nCivil Service Commission\n1976 Budget\nIssue #1: Cost-of-Living Adjustments for Civil Service Retirement\nStatement of Issue\nShould legislation be proposed to change the formula for determining cost-\nof-living adjustments for Federal civilian retirees?\nBackground\nThe Civil Service Retirement (CSR) system consists of 2.6 million active\nemployees and 1.4 million retired employees and survivors. In 1969\nlegislation was enacted which significantly increased retirement benefits,\nincluding a 1% bonus added to each automatic adjustment for cost-of-living\nincreases. The 1% bonus provision was added by the Congress largely to\ncompensate for the five month lag between the CPI increase and receipt of\nannuity increases. This provision has been a significant factor in driving\nup annual retirement costs which have increased from $1.8 billion in 1969\nto $5.7 billion in 1974. Costs are projected to reach $9 billion in 1976\nand $15 billion by 1980. Outlays for annuitants as a percentage of total\npayroll have increased from 8% in 1969 to 18% in 1974 and are projected to\nreach 30% by 1980.\nThe present formula for determining cost-of-living adjustments progressively\novercompensates annuitants in the long run. For example, if the CPI increases\nby 6%, a 1% bonus is added giving the annuitant a 7% increase for the rest\nof his life. Yet, the next increase assumes that the annuitant only received\na 6% increase. Assuming a 6% average annual inflation rate, the present\nformula would overcompensate by an aggregate 12% over the 20 year retired life\nwould be 6%.\nof the average annuitant. With 3% annual CPI increases aggregate overcompensation\nAlternatives\nFORD\n1. Continue the present formula for cost-of-living adjustments for\nis\nCS retirement.\n2. Obtain legislation to remove the distortion in the present cost-\nGERALD\nLIBRARY\nof-living formula for CSR by requiring the effect of the 1% bonus\nrecommendation). to be included in determining subsequent increases (CSC/OMB\nAnalysis\nJuly 1-Sept.\nBenefit Outlays\n1974\n1975\n1976\n30,\n1976\n1977\n($ in millions)\n1978\n1979\n1980\nAlt. #1\n5,669\n7,273\n8,960\n2,437\n10,436\nAlt. #2 (OMB rec.)\n11,944\n13,337\n14,664\n5,669\n7,273\n8,899\n2,417\n10,024\n11,442\n12,689\n13,822\n-61\n-20\n-412\n-502\n-648\n-842\n2\nThe Comptroller General reviewed the experience under the CSR system since\n1969 and concluded in a February 1974 letter to OMB and CSC, that the excess\nof annuity adjustments above the cost-of-living index was not the intent of\nthe Congress in enacting the present formula. While his review indicated\nthat the formula will create a sizeable and unintended increase in retirement\ncosts and in total Federal budget outlays, a subsequent formal report by\nGAO was silent on this matter. The present formula enjoys strong support by\nemployee organizations and the Congress, particularly the Post Office and\nCivil Service Committees. The 1% bonus provision is viewed by some as an\nessential provision to compensate for the five month lag in receiving cost-\nof-living increases, maintain the standard of living for Federal retirees\nand allow for possible inaccuracies in CPI caluclations. Proposals to change\nthe formula would be viewed by employee groups as a deliberalization of\nbenefits.\nThe CSR formula under both Alternatives 1 and 2 provides for periodic\nFORD\nadjustment for changes in the cost-of-living since annuity increases are\ngranted whenever the CPI goes up by 3% for three consecutive months. Many\nFederal transfer payment programs do not have automatic cost-of-living\nadjustments. Others provide only for annual increases. CSR on the other\nhand, goes far beyond making timely adjustments by allowing the 1% bonus\nto be continued indefinitely and to compound the rates for subsequent\nincreases. Alternative 2 would eliminate distortions in the present system\nby requiring the effect of the 1% bonus to be included in determining the\nbase for calculating subsequent increases. Alternative 2 would reduce outlays\nby $61 million in 1976 (effective for six months) and $412 million in 1977.\nThrough 1980 aggregate saving would be $2.5 billion.\nSince retirement systems for Military, Foreign Service Officers and some CIA\npersonnel have the same cost-of-living adjustment formula as CSR, the new\nformula should also apply to these other systems. This could be requested\nin joint or separate legislative proposals. Applying the new formula to all\nof the Federal employee retirement systems would broaden the base of organized\nopposition. However, such opposition would be present even if the new\nformula were limited to CSR since the other groups would be fearful of later\nextension.\nCSC/OMB recommendation: CSC agrees that changing the cost-of-living formula\nfor retirees has merit. While the chances for obtaining enactment would be\nmodest, the persistent growth of the uncontrollable part of the Federal budget\nand the exorbitant burden of the present formula on the taxpayer argue that\nthe proposal should be advanced to the Congress and be reflected in the 1976\nbudget.\nIssue Paper\nFORD\nCivil Service Commission\n1976 Budget\nIssue #2: Contributions for Retirement and Disability\nStatement of Issue\nShould legislation be proposed to increase employee and agency contributions\nto Civil Service Retirement to help finance costs of anticipated benefit\nincreases for cost-of-living adjustments?\nBackground\nThe Civil Service Retirement (CSR) program is partially financed by 50/50\nmatching contributions by employer and employee -- now 7% and 7% of payroll.\nThe contribution rates are set by the Congress and are intended to cover\nthe present value of future benefits for participating employees -- referred\nto as \"normal cost\". The fund is also subsidized by appropriations for\npartial payments on the unfunded liability.\nAt present, all CSR funding -- including normal cost calculations for payroll\nwithholdings -- exclude income from anticipated pay raises and outlays for\nanticipated cost-of-living increases. Consequently, the contributions to be\npaid into the fund are understated and the benefits are paid out of the fund\nwithout commensurate income. This weakens the financial soundness of the\nretirement fund and places a burden on the general taxpayer since total budget\ndeficits increase to the extent income from employee withholdings are deficient.\nFor the system to be adequately financed, employer and employee contributions\nwould each need to be increased to 10.75% of payroll.\nThe 1974 Pension Reform Act requires private pension plans to be fully funded\nwithin 40 years and calls for Congressional committees to complete a study\nof levels of participation and financing of Federal, State and local retirement\nsystems. Contrary to our expectation for private plans, the CSR system\n(which is exempt from the Pension Reform Act) continues to face increasing\nunfunded liability. Despite the 1969 Daniels amendments to arrest the\ngrowth of CSR unfunded liability, it has increased from $55 billion in 1969\nto $77 billion in 1974. Unfunded liability is projected to reach $84 billion\nby 1976 and $117 billion by 1980.\nAlternatives\n1. Maintain the present normal cost calculation which excludes cost-\nof-living increases and thereby maintain the present 7% and 7%\nemployer/employee contributions (Agency request).\n2. Propose legislation to adjust normal cost to include future cost-\nof-living increases with increased employer/employee contributions\nto be phased in over three years (OMB recommendation).\n2\nAnalysis ($ in millions)\nJuly 1-Sept.\nIncome from employees\n1975\n1976\n30, 1976\n1977\n1978\n1979\n1980\nand Postal Service\nAlt. #1 (Agency req.)\n-2,959\n-3,138\n-851\n-3,403\n-3,635\n-3,859\n-4,077\nAlt. #2 (OMB rec.)\n-2,959\n-3,420\n-1,003\n-4,618\n-5,582\n-5,926\n-6,261\nTotal Difference\n--\n282\n152\n1,215\n1,947\n2,067\n2,184\n(From employees)\n--\n(230)\n(124)\n(990)\n(1,587)\n(1,685)\n(1,780)\n(From Postal Service)\n--\n( 52)\n( 28)\n(225)\n(\n360)\n(\n382)\n(\n404)\nThe retirement fund can be placed on a sounder basis by either reducing the\nbenefit levels or increasing contribution rates. A 15% reduction in present\nbenefit levels would be the equivalent of a 3.75% increase in contribution\nFORD\nrates for both employers and employees (using most recent 1972 data and\nassuming a 3.5% annual inflation rate over a 20-year period).\nIncreasing the contribution rates is a more viable approach than reducing\nbenefits. While such an increase amounts to a 3.75% payroll tax hike for\nFederal employees, the increases could be phased over three years: from 7%\nto 8.25% in 1976, to 9.50% in 1977 and to 10.75% in 1978.\nA three-step increase in contribution rates should not significantly impair\nthe Government's ability to attract and retain qualified employees. While\nthere is a paucity of good comparative data, the present CSR system is more\ngenerous than most non-Federal plans. The BLS 1972 report on the compensation\nstructure of the Federal Government and private industry indicates that the\nGovernment paid 10.6% of payroll for all sources of funding compared to 8%\npaid by the private sector. The percentage of payroll for the Federal\nGovernment does not take into account automatic cost-of-living increases\nwhich are not covered by any funding and thus remain as a liability which\nmust eventually be met by the Government. If this liability were taken into\naccount, the effective BLS percentage for the Federal Government would\nincrease from 10.6% to 18.2% -- well above contributions by private employers.\nThe CSR compares favorably with most other pension plans only a few of which\nhave any cost-of-living provision.\nAlternative 2 proposes establishment of a Presidential panel to undertake a\npolicy review of the financing of Civil Service Retirement and to determine\nwhat indreases, if any, should be made in the contribution rates to the CSR\nto cover cost-of-living increases. The panel would report in six months and\nthus permit legislation to be submitted in June 1975 for enactment by\nJanuary 1976.\nThe report of the Presidential panel will need to review findings in the\nupcoming actuarial valuation of the fund which will soon be submitted to the\nCongress. The Presidential panel's recommendations need not await the\nCongressional committee review which will cover State and local systems and\nnot be available until December 1976.\nUnder Alternative 2, the budget would reflect an increase in the contribution\nrates from 7% to 8.25% effective in the second half of 1976 and through the\ntransition quarter, with the second and third steps scheduled for 1977 and\n1978 respectively. These increases would: (a) increase Governmental receipts\n3\nfrom additional employee withholdings (treated as tax revenues) and (b) reduce\noutlays through additional offsetting receipts from Postal Service employer\ncontributions -- assuming no concomitant increase in Federal subsidy to\nPostal Service. Alternative 2 would reduce budget deficits by $282 million\nin 1976; $1.2 billion in 1977 and by a rate accelerating above $2.1 billion\nby 1980.\nAgency request. The Civil Service Commission does not support a proposal\nthat the cost-of-living adjustments should be included in establishing\nemployer/employee contributions to the fund. They would not object to a\nPresidential panel studying this issue, but strongly oppose reflecting a\nproposal in the 1976 budget. They believe that the review should be\ncompleted along with consultations with employee unions before arriving at\nany decisions. They argue that to do otherwise would place the President\nin a position of appearing to act unfairly and arbitrarily and in a manner\nwhich would appear to foreclose chances for the Commission to be objective.\nOMB recommendation: Establishing a Presidential panel would provide for a\nlong overdue review of the policy basis on which contribution rates should\nbe established; namely, whether cost-of-living increases should be included\nin normal cost calculations or remain as a liability solely of the general\ntaxpayer. We recommend the budget estimate reflect the proposal for\nincreasing retirement fund contribution rates and believe this would establish\na presumption of the need for change and demonstrate the Administration's\nseriousness in addressing this issue. The actual dimensions of the\nlegislative proposal woud, of course, await completion of the panel review\nscheduled for June 30, 1975.\nGERALE FORD LIBRARY\nIssue Paper\nCivil Service Commission\n1976 Budget\nIssue #3: Federal Employees Group Life Insurance Premiums\nStatement of Issue\nFORD\nShould premiums for Federal Employees Group Life Insurance be increased?\nBackground\nPremiums for FEGLI are collected from Federal employees (2/3 share) and\nemployer agencies (1/3 share). The Civil Service Commission is required\nto administratively set premiums for FEGLI at the level cost. Level cost\nis the biweekly amount per $1,000 coverage required to cover projected\ngroup liability in the insurance fund.\nLevel cost is estimated at 50.0¢ per thousand for 1975 and 50.25¢ for 1976.\nPresent collections remain at the 1968 rate of 41.25c. The increase in\nlevel cost since 1968 is attributable to: (1) decreases in the proportion\nof total coverage for females and younger employees; (2) a trend toward\nearlier retirements; and (3) a loss of interest income from shortfall in\ncollections.\nIn 1973, the Commission completed an evaluation of the fund, which indicated\nthat the rates had been deficient since 1968. CSC has deferred increasing\nthe rates because it wanted to allow the Congress time to consider options\nfor increasing minimum coverage or other benefit changes. Continued underpayment\nof premiums (now 17.5% short) will continue to compound fund deficits and\nincrease the requirement for future income. The reduced income due to\nunderpayment also has the effect of increasing outlays through loss of trust\nfund income from Federal employees.\nThe Commission believes that any increase in premiums should be accompanied\nby legislation to increase minimum coverage and to provide optional family\ninsurance paid entirely by employees. The present minimum coverage of $10\nthousand was established in 1968 and, in view of pay raises in the last six\nyears, the minimum should accordingly be raised to $14 thousand. Such an\nincrease in minimum coverage would lower the level cost by 2.2c by reducing\nthe ratio between projected income and group liability since a larger\nproportion of total insurance coverage would be for women and younger\nemployees. Consequently, level cost would be 48¢ per $1,000. Employee\norganizations have been seeking family insurance with the Government paying\n1/3 or more of the cost. The CSC proposal for 100% employee financing of\noptional family coverage would not change level cost, but would provide a\nconvenient payroll deduction for a family plan.\nAlternatives\n1. Defer increase in premiums until July 1, 1975, and submit legislation\nto increase minimum coverage and allow family option, but do not\nreflect the proposals in the 1976 budget (Agency request).\n2. Increase premiums, effective February 1, 1975, to level cost (48¢)\nand propose legislation to increase minimum coverage and allow family\noption. Proposals to be reflected in the 1976 budget (OMB recommendation).\n2\nAnalysis\nJuly 1-Sept.\nFEGLI outlays*\n1974\n1975\n1976\n30,\n1976\n1977\n1978\n1979\n1980\n($ in millions)\nAlt. #1 (Agency req.)\n-156\n-244\n-320\n-66\n-301\n-330\n-363\n-399\nAlt. #2 (OMB rec.)\n-156\n-284\n-320\n-66\n-301\n-330\n-363\n-399\n* Contribution from employees and employers creates minus outlays in CSC fund.\nFurther delay in increasing the premium rates would compound the loss of\nrevenue in the fund and increase future deficits. Increasing premiums\nto 48c per thousand (assuming acceptable Congressional action on proposed\nbenefit legislation) would cost only 75c per paycheck for the average\nparticipating employee (GS 9-4). If no change were made CSC outlays would be\nabout $100 million higher per year.\nAn increase in the premiums will not be popular with employee unions.\nHowever, the proposed benefit legislation should help to mollify opposition.\nA legislative proposal carries some risk that the Congress might amend\nthe bill to require 100% Federal funding of employee life insurance (as\nis already the case for Postal employees) and/or Federal cost sharing for\nthe family option. If so amended, the proposed benefit bill would become\nunacceptable -- costing over $700 million per year.\nBoth CSC and OMB concur that the premium rates should be increased but\ndisagree over the effective date:\nFORD\nCSC would defer increase until July 1, 1976, to allow time for\nLIBRARY\nconsultation with employee groups prior to announcement of any\ndecision. They would prefer that the proposed increase not be\nreflected in the budget.\nOMB believes the premiums should be increased to 48c per thousand\neffective February 1, 1975, and further increased to 50c per thousand\non July 1, 1975, if the Congress has not enacted the proposed\nbenefit legislation. This timing would still allow for CSC consultation\nwith employee groups but would enable proposed benefit legislation\nto be considered on its own merits. An unacceptable benefit bill\ncould still be opposed without rescinding the increase in premium\nrates which would have already been effected administratively.\nAgency request: CSC deferral of rate increase until July 1, 1976, would allow\nsix months for consultation.\nOMB recommendation: Making rate increase effective February 1, 1975, would\nallow 30 days for consultation without tying it to action on proposed\nlegislation. The rates could be increased further if the minimum coverage\nbill were not enacted. Since the law requires that premium rates be\nadjusted periodically by the Commission to recover the level cost and the rates\nhave been deficient since 1968, we recommend they be adjusted on February\n1, 1975.\nIssue Paper\nCivil Service Commission\n1976 Budget\nIssue #4: Central Personnel Operations\nStatement of Issue\nWhat is the appropriate level of resources for Federal central personnel\noperations?\nBackground\nFor directly funded Federal central personnel operations (adjusted for non-\nrecurring 1975 costs) the Commission is proposing a 1976 budget increase\nof $13 million (from $85 million to $98 million) and a 20% increase in\npersonnel above the 1975 recommended level.\nOver the last five years, resources for central personnel operations have\nsteadily increased. Between 1969 and 1974 the program level has increased\nmore than 40% after allowing for annual pay raises. The 1976 request (also\nadjusted for pay raises and rental costs) would be about 17% above the 1974\nlevel. The Commission's total permanent employment for all activities increased\nat an average annual rate of 4.9% between 1969 and 1974. During this same\nperiod, Government-wide civilian employment, excluding DOD civilian and military,\nincreased at an average annual rate of only 1.4%. For 1976, the Commission is\nrequesting 24.3% in personnel increase over 1974. The Commission's employment\nwas not reduced in the 1975 Government-wide employment cutback which affected\nmost other agencies.\nAlternatives\n1. Provide full amount of request for 1976 by allowing a decrease in\nproductivity in response to greater demands for documentation in\nrecruiting and examining and an increase in resources for new\ninitiatives (Agency request).\n2. Provide an increase of $3 million and require increase in produc-\ntivity to offset additional workload and new initiatives (OMB\nrecommendation).\nAnalysis\n1974\n1975*\nJuly 1-Sept.\nBudget Authority\nactual\nadjusted\n1976\n30, 1976\n1977\n($ in millions)\nAlt. #1 (Agency req.)\n68\n85\n98\n26\n103\nAlt. #2 (OMB rec.)\n68\n85\n88\n24\n90\n*Adjusted to exclude 1975 nonrecurring costs of $2.7 million for ADP acquisition.\nNearly one-half of the resources for central personnel operations for Federal\nagencies (excluding direct funding for strenthening State and local personnel\nadministration) are for recruiting and examining activities. The remaining\nresources are spread among a wide variety of activities including: personnel\n2\ninvestigations, training, employee appeals and labor relations, and\npersonnel policy development. A review of the total resource and program\nlevels for recruiting and examining indicates that the Commission's 1976\nrequest would result in an overall 12.8% decrease in productivity from 1974.\nThe decrease ranges from -5.5% to -30.0% for the various recruiting and\nexamining workload elements:\nProductivity Index (PI) and Man-Years (MY)\n(1968 Base Year)\nRecruiting and\n1974 actual\n1975 req. *\n1976 req.\n1974-76\nExamining:\nPI\nMY\nPI\nMY\nPI\nMY\nchange\nApplications\n151.20\n663\n136.40\n706\n131.90\n730\n-12.8%\nInquiries\n123.77\n552\n119.25\n607\n116.94\n619\n-5.5%\nHires\n73.69\n533\n53.46\n652\n51.56\n676\n-30.0%\nExaminiations\n127.70\n300\n114.86\n353\n114.21\n355\n-10.6%\nTotals\n117\n2,048\n105\n2,318\n102\n2,380\n12.8%\n*Estimates reflect initial CSC request which proposed 1975 supplemental.\nThe Commission maintains that decreases in productivity must be tolerated in\norder to improve the quality of recruiting and examining activities and\nincrease the documentation of hiring decisions. Without deliberately pro-\ngramming productivity decreases, the Commission believes it could not meet\nthe legal obligations placed on it by the Veterans Preference Act, the Civil\nRights Act, and the Griggs decision of the Supreme Court that hiring\nstandards be job related and free from discrimination.\nThe recruiting and examining program is basically labor intensive and represents\nrelatively routine work. Modest annual productivity gains should be realized in\nCSC's recruiting and examining activities as a result of annual pay comparability\nincreases and systematic within-grade promotions. Additional gains should be\nexpected through various CSC personnel management efforts for job enrichment and\ndesign, training and career development, and use of cash incentives for group\nperformance. While the Commission is faced with many external forces (e.g.,\nmore active employee groups and court decisions) the same holds true for other\nagencies as well -- e.g., environmental impact, protection of privacy, freedom\nof information, economic conditions. There is little reason to depart from the\n2.5% guideline of annual productivity gain expected for most agency activities.\nThe productivity decreases programmed by the Commission are not justified:\nThe 20 year old Veterans Preference Act, the six year old Civil\nRights Act and the five year old Griggs decision have been\nimpacting on recruiting and examining operations for several years\nand should not now suddenly deflate productivity below the 1974 level.\nThe Griggs vs. Duke Power decision requires that employment examinations\nmust be job related unless they are demonstrated not to result in de\nfacto exclusion of minorities or women. In the past, the Commission has\nlong argued that their examinations have been nondiscriminatory and,\ntherefore, their program should not be appreciably affected by this\ndecision.\n3\nThe Commission has not defined specific improvement objectives which\nmanagement would expect to achieve in 1976 by incurring the programmed\ndecrease in productivity.\nPressures on the Commission to make their recruiting and examining\nmore job related or clearly nondiscriminatory appear to raise\nfundamental questions concerning qualification requirements and\nselection criteria rather than suggesting increases in basic\nresources for administering the system. The impact on CSC resources\nshould be primarily for developmental efforts to change the system.\nWhile there might be some resource impact on administering examinations,\nthere is little evidence that these pressures should increase\nresources required for the larger workload elements -- answering\ninquiries, processing applications and placing new hires.\nThe Commission believes it is unable to achieve normal productivity gains in\nits operations and in fact is proposing a program which reflects substantial\nproductivity decreases. Consequently, a comprehensive review of recruiting and\nexamining operations should be undertaken to examine major changes which could\nimprove effectiveness and efficiency by reviewing the policies and procedures\nfor hiring Federal employees. The study should be carried out under the\ndirection of an interagency steering group to assure responsiveness to agency\nprogram objectives.\nOMB recommendation would increase operations budget from $85 million to $88\nmillion, primarily to allow for increased rent costs and full-year operation\nof new appeals systems as well as for various commitments to improve Federal\npersonnel management. Workload increases and system improvements would be\nfunded through savings resulting from deliberate actions to increase productivity\nby 2.5% per year between 1974 and 1976. Should expected productivity gains\nnot be fully realized, improvements could be selectively scaled down or deferred.\nAgency request: CSC would respond to pressures to strengthen its central\npersonnel operations by requesting additional resources rather than taking\nsteps to increase productivity.\nOMB recommendation: Holding resources for central personnel operations to\nthe 1975 level would require the Commission to increase productivity and\nselectively reporgram its priorities. OMB recommends a comprehensive study\nof recruiting and examining and believes it would be premature to increase\nresources until such a review is completed. This would not rule out later\nconsideration of supplemental funding for 1976.\nFORD LIBRARY &\nTreasury\nAppeal\nDepartment of the Treasury\n1976 Budget\nAppeal of Presidential Decision\nBudget Authority ($ Millions)\n1975\n1976\n1974\nDOT\nPres.\nDOT\nPres.\nActual\nReq.\nAllow\nAppeal\nRecom.\nReq.\nAllow\nAppeal\nRecom.\nCustoms Service\n241\n282\n282\n--\n--\n301\n285\n+16\n+7\nInternal Revenue\nService\n1,309\n1,530\n1,526\n+5\n--\n1,651 1,586\n+65\n--\nOther\n376\n475\n475\n--\n--\n535\n535\n--\n--\nTotal\n1,926\n2,287\n2,283\n+5\n--\n2,487\n2,406\n+81\n+7\n1975\nSummary of agency appeal\nSecretary Simon is appealing $4.6 million to be added to a 1975 supplemental\nappropriation for the Internal Revenue Service to carry out Treasury responsibilities\nunder the new Employee Retirement Security Act of 1974.\nrecommendation\nOMB recommends no further additions to the $6.6 million already included in the\nproposed 1975 supplemental, deferring additional resources until more precise\nworkload data are available. At that time OMB would entertain a request for an\nadditional supplemental appropriation.\n1976\nGERALD FORD LIBRERY\nSummary of agency appeal\nSecretary Simon is appealing your decisions on the Internal Revenue Service and the\nCustoms Service. Your decisions assumed that the 1976 program requirements of these\ntwo bureaus could be accomplished with significantly less staff than requested by\nthe Treasury Department by requiring productivity improvements in their work-\nforce. Both of these bureaus have experienced productivity declines over the\npast few years. Secretary Simon's appeal letter states that the Treasury Department\nhas made \"great strides\" in improving productivity in most Treasury operations, and\nhe suggests that OMB did not take these gains into account in the 1976 budget\nrecommendation. He questions whether productivity improvements can be forced\nduring the budget process by \"simply reducing manpower in the face of increasing\nworkloads.\n\"\nThe Secretary requests restoration of $65 million and 4,365 man-years for the\nernal Revenue Service and $16 million and 644 man-years for the Customs Service.\n2\nOMB recommendation\nOMB recommends no change in your decision for the Internal Revenue Service. The\nproductivity improvements cited by the Secretary as being projected throughout\nthe Treasury Department are not evident in the 1976 budget request for this bureau.\nTreasury has presented no new information beyond that utilized to develop the OMB\nrecommendation. Your decision provided the IRS with an increase of $60 million\nover 1975 and 2,296 additional man-years. The 2.8 percent increase in personnel\nalready approved for 1976 compares favorably with the projected 2.0 percent growth\nin tax filings, the principal workload measure in IRS.\nCustoms Service\nOMB recommends that you grant $6.9 million and 347 man-years of the Secretary's\nappeal to recognize that it will take more than one year to move the Customs\nService from a declining to an increasing productivity. The recommended restoration\nwill still require a small productivity improvement in 1976. There was no additional\njustification offered by the Department to support granting of any higher level of\nresources.\nFor your information and referral, we have attached summary materials you reviewed\nin making decisions on the Treasury Department budget request for 1976.\nGE34L5 FORD LIBRARY\nTHE WHITE HOUSE\nWASHINGTON\nMEMORANDUM FOR: THE PRESIDENT\nFROM:\nRoy L. Ash\nSUBJECT:\n1976 Budget decisions: Department of the Treasury\nThe agency request and my recommendations with respect to 1976 budget\namounts for the Department of the Treasury are presented in the tabula-\ntion attached (Tab A). A summary of the principal budget decisions\nreflected in my recommendation is provided as background information\n(Tab B).\nSeven key issues have been identified for your consideration (detail at\nTab C).\nI.\nIRS Tax Audit\nTreasury proposes strengthening tax compliance by raising the level\nof audit coverage to 2.6 per cent of tax returns filed, thereby generating\nadditional revenues and contributing to a balanced budget.\nOMB recommends maintaining the 1975 level of 2.5 per cent audit\ncoverage which will increase the absolute number of tax audits. Tax\ncompliance will be encouraged by program increases in areas other than\naudit.\n1030\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nII. IRS Information Returns Processing (document matching)\nTreasury proposes annually transcribing, correcting, and matching\none-fourth of all information documents and tax returns.\nOMB recommends initiating a selective program of document matching\nto stimulate voluntary taxpayer compliance by concentrating on documents\nwith the highest potential yield or greatest likelihood of reporting in-\naccuracy.\n2\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nIII. IRS Data Processing\nTreasury proposes adding 950 man-years in 1976, representing a 3\nper cent growth in personnel, to process an estimated increase of 2 per\ncent in the number of tax returns filed.\nOMB recommends maintaining the 1975 level of manpower, thereby relying\non increased productivity aided by additional automatic data processing equip-\nment to process the larger number of returns.\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nIV. IRS Administration of Pension Reform\nTreasury proposes a supplemental appropriation of $10.0 million in\n1975. For 1976 they request a further increase of $14.1 million. This\nwould provide funds to handle increased responsibilities under the new\nEmployee Retirement Security Act of 1974.\nOMB recommends $6.6 million of the $10.0 million 1975 request and\na further increase of $4.1 million for the program in 1976. It defers\nadditional increases in 1976 pending receipt of actual workload data.\nThis is the same approach being recommended in the Labor Department\nrequest for this program.\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nGLRRAT FORD CEBRARY\nV.\nIRS Tax Fraud Investigation\nTreasury proposes adding 8 man-years in 1976 to handle increased\ncase complexity, as part of an overall effort to demonstrate to taxpayers\nthat those who do not meet their tax obligations are identified and pro-\nsecuted.\nOMB recommends investigating the same number of criminal cases which\nIRS projects for 1975 and 1976, using an investigation-to-man-year standard\nsimilar to the ratio achieved in 1973 and 1974 and budgeted for in 1975,\nthereby reducing the 1976 budget 329 positions below the 1975 level.\n3\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nVI.\nTaxpayer Service\nTreasury proposes adding 63 positions on top of the base of 3,956\nman-years provided in the OMB alternative (which reflects an increase of\n878 man-years over the 1975 base) to conduct a special assistance program\nfor the elderly and inner city taxpayers.\nOMB recommends accomplishing the special emphasis program by redeploy-\ning some of the 3,956 man-years already provided in the 1976 budget for tax-\npayer service.\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nVII. U. S. Customs Service\nTreasury proposes to add 311 man-years and $19 million in 1976 to\nhandle additional imports and people entering the United States and to\nexpand enforcement programs to uncover duty fraud and interdict narcotics\nand other contraband.\nOMB recommends handling the additional imports and people through a\n2.5% increase in productivity, thereby reducing 323 positions below the\n1975 level.\nDecision: Approve agency recommendation\nApprove OMB recommendation\nSee me\nGEBRLO FORD LIGRARY\nAttachments\nTab B\n1976 Budget\nDepartment of the Treasury\nBackground Information\nTreasury requests $40.8 billion in new budget authority for 1976. Of this\namount, $38.1 billion is requested for uncontrollable accounts such as\nInterest on the Public Debt, Payments from the General Revenue Sharing\nTrust Fund, and other permanent accounts. The remaining $2.7 billion\nis requested for discretionary operating programs, which fund the\nDepartment's major activities.\nThe OMB recommendation provides $40.5 billion, which grants the Department's\nfull request for uncontrollable programs but reduces the initial request for\noperating programs by $217 million. OMB and Treasury have subsequently come\ninto agreement on most 1976 budget recommendations, and the areas of dispute\nhave been reduced to $86 million. Items still in dispute, which are confined\nto the Internal Revenue Service and the Customs Service, are discussed in\ndetail at Tab C.\nThe reductions in the Treasury request recommended by OMB in Treasury's\noperating programs stem largely from two major concerns:\n- very large staff expansion beyond the requirements of reasonable\nworkload increases (a requested 13 percent staffing increase\nover 1975); and,\nFORD LISKAN,\n- failure by the Department to reflect increased productivity in\nsome of its major programs.\nThe requested 13 percent increase in staff comes on top of substantial increases\nprovided to the Department over the past few years. In both 1974 and 1975\nemployment increased by 4 percent over the previous year. These increases\nwere well in excess of population growth (a basic ingredient in several\nTreasury programs) or workload.\nThe major staff expansion proposed by the Department comes in the Internal\nRevenue Service and the Customs Service, which historically have accounted\nfor approximately 80 percent of the total Treasury work force. Over the\nyears, the Department has been accustomed to requesting and receiving size-\nable increases for these bureaus because, as revenue producers, they have\nbeen considered essentially costless. Treasury has maintained and continues\nto maintain that rapidly increasing staff in its tax collections and compliance\nforcing programs are necessary to avoid revenue losses. In several of these\nprograms, staffing increases have exceeded actual workload requirements, result-\ning in static or declining employee productivity.\nIn light of the Administration's policy of maximum budget restraint In 1976,\nOMB has subjected the Treasury budget request to a more critical review than\nin recent years. While OMB agrees with Treasury on the need to maintain and\nimprove the integrity and capability of the tax collection and enforcement\nsystem, we have attempted to more accurately relate staffing and budget\nneeds to projected workload requirements and to assume productivity increases\nwhere appropriate. Although the OMB recommendation proposes significant re-\nductions from Treasury's initial budget request for operating programs, it\ndoes provide $118 million and 2,647 additional staff (2.4 percent increase)\nover 1975 to cope with workload increases and priority program improvements.\nGiven the sizeable work force already in place, we believe this recommendation\nis adequate to successfully accomplish the 1976 program proposed by the Depart-\nment and to continue progress toward the overall goal of the tax system:\nmaximum voluntary compliance.\nFORD\nSmaller\nAgencies\nTreasury\nAppeal\nINDEX FOR\nSMALLER AGENCIES\nBlack\nAgency\nTab\nWhite House/Executive Office Accounts\nA\nSpecial White House Accounts\nB\nPanama Canal\nC\nCouncil on Wage and Price Stability\nD\nGeneral Services Administration\nE\nAdvisory Committee on Federal Pay\nF\nCivil Aeronautics Board\nG\nFederal Home Loan Bank Board\nH\nFederal Maritime Commission\nI\nFederal Trade Commission\nJ\nInterstate Commerce Commission\nK\nMarine Mammal Commission\nL\nNational Credit Union Association\nM\nPostal Service\nN\nSecurities and Exchange Commission\nO\nNational Commission on Productivity\nP\nU.S. Railway Association\nQ\nCommission on Electronic Funds Transfer Systems\nR\nCORD LIBRARY &\nWHITE HOUSE/EXECUTIVE OFFICE ACCOUNTS\nA summary of the White House\nrequest follows. OMB concurs\nwith the request.\nFORDO LIBRARY & GERALD\nWHITE HOUSE/EXECUT\nOFFICE ACCOUNTS\n1976 Budget\nACTION\nSummary Comparison of Agency Totals ($000)\nJuly 1 -\n1974\n1975\n1976\nSept. 30, 1976\n1977\n1978\n1979\n1980\nAct.\nReq.\nRecom.\nReq.\nRecom.\nReq.\nRecom.\nEst.\nEst.\nEst.\nEst.\nExecutive Office of the President\nCompensation of the President:\nBudget authority\n250\n250\n250\n250\n250\n63\n63\n250\n250\n250\n250\nOutlays\n250\n250\n250\n250\n250\n63\n63\n250\n250\n250\n250\nSpecial Projects\nBudget authority\n414\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nOutlays\n659\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nUnanticipated Personnel needs:\nBudget authority\nXX\n500\n500\n500\n500\n125\n125\n500\n500\n500\n500\nOutlays\nXX\n500\n500\n500\n500\n125\n125\n500\n500\n500\n500\nExecutive Residence:\nBudget authority\n1,433\n1,744\n1,744\n1,826\n1,826\n457\n457\n1,951\n1,851\n1,851\n1,851\nOutlays\n1,788\n1,722\n1,722\n1,750\n1,750\n438\n438\n1,951\n1,851\n1,851\n1,851\nFull-time perm\n70\n82\n82\n82\n82\n82\n82\n82\n82\n82\n82\nTotal employment\n70\n82\n82\n82\n82\n82\n82\n82\n82\n82\n82\nOfficial Residence of the\nVice President:\nBudget authority\nXX\n315\n315\n104\n104\n26\n26\n61\n61\n61\n61\nOutlays\nXX\n300\n300\n100\n100\n25\n25\n63\n61\n61\n61\nFull-time perm.\nXX\n8\n8\n8\n8\n8\n8\n8\n8\n8\n8\nTotal employment\nXX\n8\n8\n8\n8\n8\n8\n8\n8\n8\n8\nDomestic Council:\nBudget authority\n1,100\n1,250\n1,250\n1,320\n1,320\n330\n330\n1,320\n1,320\n1,320\n1,320\nOutlays\n956\n1,240\n1,240\n1,320\n1,320\n330\n330\n1,320\n1,320\n1,320\n1,320\nFull-time perm.\n30\n30\n30\n30\n30\n30\n30\n30\n30\n30\n30\nTotal employment\n40\n33\n33\n33\n33\n33\n33\n33\n33\n33\n33\neffect\nJuly 1 -\nNew\n1974\n1975\n1976\nSept. 30, 1976\n1977\n1978\n1979\n1980\nAct.\nReq.\nRecom.\nReq.\nRecom.\nReq.\nRecom.\nEst.\nEst.\nEst.\nEst.\nOffice of Management and\nBudget:\nBudget authority\n19,400\n21,500\n21,500\n24,150\n24,150\n6,750\n6,750\n24,150\n24,150\n24,150\n24,150\nOutlays\n18,350\n21,898\n21,898\n24,162\n24,162\n6,750\n6,750\n24,150\n24,150\n24,150\n24,150\nFull-time employment\n(e.o.y.)\n606\n618\n640\n640\n640\n640\n640\n640\n640\n640\n640\nTotal employment (eoy)\n688\n700\n700\n722\n722\n722\n722\n722\n722\n722\n722\nOffice of Federal Procurement\nPolicy:\nBudget authority\nXX\n660\n660\n1,000\n1,000\n250\n250\n1,000\n1,000\n1,000\n1,000\nOutlays\nXX\n620\n620\n1,000\n1,000\n250\n250\n1,000\n1,000\n1,000\n1,000\nFull-time employment\nXX\n25\n25\n25\n25\n25\n25\n25\n25\n25\n25\nTotal employment\nXX\n25\n25\n25\n25\n25\n25\n25\n25\n25\n25\nunds Appropriated to the President\n/\nEmergency Fund for the President\nBudget authority\n1,000\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nOutlays\n436\n25\n25\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nExpenses of Management\nImprovement:\nBudget authority\n350\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nOutlays\n15\n760\n760\nXX.\nXX\nXX\nXX\nXX\nXX\nXX\nXX\nDiscussion of Recommendation\nThe above amounts represent continuation of activities at approximately the 1975 levels, including cost for the\n1975 pay raise. Analysis of the estimates reflects the following:\nUnanticipated Personnel Needs:\nThese estimates are consistent with the authorization which would be provided in Twhich the pending\nLISRARY NERALD\nWhite House authorization bill\nI (H.R. 14715) is currently\nawaiting Senate concurrence. House agreed on August 12, 1974, to conference report containing\nSenate amendments.\nExecutive Residence:\nThese estimates were informally provided by the Department of Interior. The official submission of\nthis account is still pending clearance in the White House although no change is expected. An\nincrease of $100K is requested for 1977 to provide for painting the White House which is done four\nmonths before the inauguration.\nOfficial Residence of the Vice President:\nThe Secretary of the Navy is requesting 1976 appropriations of $104K for this account and $252K\nfor this activity through the Navy's own budget. At present, the residence at the Naval\nobservatory is vacant and final decisions on decoration are awaiting confirmation of a Vice President.\nMr. Rocke feller has not reviewed this request, although the Navy advises that if confirmed, he would ele\nto reside at the observatory. The Secretary of the Navy proposes to staff the residence and grounds as\nfollows: 5 civilian groundkeepers (funded through Navy Operations and Maintenance Account);\n3 civilian security personnel (funded through Navy Operations and Maintenance Account); and\n10 Navy Stewards for food preparation, serving and domestic chores (funded through military\npersonnel appropriations).\nThe $104K requested for the Official Residence account is entirely for maintenance, repair expenses and\nutilities for the residence itself. The Navy funding for nonreimbursable support will be authorized UD\nenactment of the pending 1975 Militarv Construction Authorization bill.\nOffice of Management and Budget and Office of Federal Procurement Policy:\nThese estimates represent levels which were approved by the Deputy Director on 11/22/74. Estimates\nfor OFPP will not be included within OMB totals as they will be shown as a separate account in the\nExecutive Office of the President.\nExpenses of Management Improvement\nCongress denied the 1975 requested appropriations for this account and no funds are requested for\n1976. At present, (11/29/74) $455K is available for obligation.\nThe estimates in this report exclude accounts for White House- Office and Special Assistance to the President\n(Vice President). These two accounts are still pending in the White House and will be covered in separate\nmemoranda.\nNo funds were appropriated by the Congress for these three accounts for fiscal year 1975. The unanticipated\npersonnel needs account was established as alternate funding.\nGERALD\nP.\nFORD\n1188684\nB\nSPECIAL WHITE HOUSE ACCOUNTS\n1976\ndget\nSummary Comparison i\njency Totals ($000)\nExecutive Office of the President\nJuly 1 -\n1974\n1975\n1976\nSept. 30, 1976\n1977\n1978\n1979\n1980\nAct.\nReq.\nRecom.\nReq.\nRecom.\nReq.\nRecom.\nEst.\nEst.\nEst.\nEst.\nWhite House Office:\nBudget authority\n11,260\n16,367\n16,367\n16,946\n16,946\n4,237\n4,237\n16,946\n16,946\n16,946\n16,946\nOutlays\n10,384\n16,367\n16,367\n16,946\n16,946\n4,237\n4,237\n16,946\n16,946\n16,946\n16,946\nFull-time-perm.\n510\n540\n540\n500\n500\n500\n500\n500\n500\n500\n500\nTotal Employment\n515\n555\n555\n515\n515\n515\n515\n515\n515\n515\n515\nSpecial Assistance to\nthe President:\nBudget authority\n692\n910\n910\n1,040\n990\n260\n248\n990\n990\n990\n990\nOutlays\n609\n965\n965\n1,040\n990\n260\n248\n990\n990\n990\n990\nFull-time-perm.\n30\n30\n30\n30\n30\n30\n30\n30\n30\n30\n30\nTotal employment\n31\n31\n31\n40\n40\n40\n40\n40\n40\n40\n40\nDiscussion of Recommendations\nWhite House Office:\nThe above amounts represent a decrease in 1976 staffing level with an increase in funding levels reflecting costs for\nannualization of the 1975 pay raise and increased costs for rent to GSA. The decreased staff size is part of the\nAdministration's objective for a leaner Executive Office.\nSpecial Assistance to the President (Vice-President's Office):\nThese estimates were informally provided. The official submission for this account is still pending clearance in\nthe White House. The request holds staffing level but calls for a 7.7% increase in Budget authority. The requested\n$130,000 increase over the 1975 appropriated level is due to an increase of $36,000 in annual cost of the Federal\nBuilding Fund Standard Level User Charge for GSA and annualization of 1975 pay raise. The remaining $94,000 represents\nincreases in; travel, printing, supplies and material, equipment and special personal service payments. The increase\nis a little generous and could reasonably be trimmed by $50,000. Budget staff agrees that these cuts would be\nreasonable and we are recommending a reduction of $50,000 from the request for 1976, and by $12,000 for the\nTransition period.\nPrepared by:\nApproved by:\nGERALD FORD LIBRARY\nTHE PANAMA CANAL\nComments\nThe Panama Canal enterprise is made up of\nthe Panama Canal Company, a revolving\nfund, and the Canal Zone Government, an\nindependent agency financed by appropriations.\nThe OMB recommendation provides for program\nincreases to insure the health and safety of\nZone employees and to maintain the quality\nof service to ships using the waterway.\nThe recommendation reflects a compromise on an\nagency appeal on outlays.\nBudget\nFull-time\nauthority\nOutlays\npermanent\n(in thousands of dollars)\nemployment\n1974 actual\n2,310\n1,095\n13,841\n1975 current estimate\n5,038\n8,105\n13,840\n1976 agency request\n7,027\n16,940\n14,283\n1976 OMB recommendation\n2,531\n4,561\n13,840\nEffect of OMB recom-\nmendation on agency\nrequest\n-4,496\n-12,379\n-443\nTransition period\n1,725\n1,895\n13,942\n1977 estimate\n2,500\n2,500\n13,942\ne FORD LIBRARY\nCOUNCIL ON WAGE AND PRICE STABILITY\nComments\nOMB recommendation provides for annuali-\nzation of the anticipated 1975 appropriation.\nReduction in employment reflects a phase-\ndown of the Council's activities in the\nlatter part of 1976.\nBudget\nFull-time\nauthority\nOutlays\npermanent\n(in thousands of dollars)\nemployment\n1974 actual\n1975 current estimate\n1,000\n935\n41\n1976 agency request\n1,600\n1,561\n41\n1976 OMB recommendation.\n1,600\n1,561\n30\nEffect of OMB recom-\nmendation on agency\nrequest\n---\n- 11\nTransition period\n---\n104\n1977 estimate\nRALO GERALO R. LICTARY FORD\nE\nGENERAL SERVICES ADMINISTRATION\nComments\nOMB and the agency have settled\ndifferences between the request\nand recommendation; GSA has in-\ndicated that they will not appeal\nto the President.\nThe estimates may be revised in\nthe future to reflect 1) 1975\nrental estimates in light of the\nenrolled supplemental appropriation\nbill, and 2) allowances being in-\ncluded in other agencies' totals for\nStandard Level User Charges to GSA.\nBudget\nFull-time\nauthority\nOutlays\npermanent\n(in thousands of dollars)\nemployment\n1974 actual\n-677\n-276\n36,733\n1975 current estimate\n-918\n-1,008\n36,370\n1976 agency request\n-338\n-435\n39,773\n1976 OMB recommendation.\n-331\n-475\n36,687\nEffect of OMB recom-\nmendation on agency\nrequest\n+7\n-40\n-3,086\nTransition period\n-107\n-126\n36,904\n1977 estimate\n-153\n-279\n37,421\nGERALD FORD LIBRARY\nF\nADVISORY COMMITTEE ON FEDERAL PAY\nComments\nNo change from agency request.\nBudget\nFull-time\nauthority\nOutlays\npermanent\n(in thousands of dollars)\nemployment\n1974 actual\n130\n63\n1\n1975 current estimate\n130\n106\n1\n1976 agency request\n140\n145\n1\n1976 OMB recommendation\n140\n145\n1\nEffect of OMB recom-\nmendation on agency\nrequest\nTransition period\n35\n36\n1\n1977 estimate\n140\n140\n1\nGERALD R. LIBRARY FORD\nIssue Paper\n1976 Budget\nCivil Aeronautics Board\n1974\n1975\n1976\n1977\nActual\nEst.\nReq.\nAllow\nAppeal\nRecom.\nEst.\nBudget Authority ($M)\n88.7\n85.2\n81.0\n80.1\n+.9\n--\n80.1\nSalaries & Expenses\n(15.6) (17.5)\n(20.3)\n(19.4)\n(+.9)\nPayments to air carriers\n(73.1) (67.7)\n(60.7)\n(60.7)\nOutlays ($M)\n88.5\n84.0\n85.8\n85.0\n--\n85.0\n80.1\nEmployment\nFull-time permanent\n700\n711\n823\n751\n+ 72\n--\n751\nStatement of Issue\nShould the Civil Aeronautics Board significantly increase its enforcement and\naudit programs?\nAlternatives\nCAB requests on appeal an additional $.9 million and 72 additional positions\nfor the enforcement and audit programs which would represent full restoration\nof its origianl request.\nOMB recommends no increase over the allowance of $19.4 million for salaries\nand expenses and 40 new positions.\nAnalysis\nGERALD FORD ( IBRANT\nMajor difference between the request and the recommendation:\nCAB places the highest priority on the enforcement and audit programs and\nconsiders additional resources to be essential to curb major compliance\nproblems such as illegal ticket discounting on the North Atlantic.\nRestoration of tariff integrity, particularly the elimination of discounting\non the North Atlantic, is a key action item of the Administration's plan to\nimprove the financial situation of the U.S. flag international air carriers.\nOMB considers the 1976 allowance for enforcement adequate and reasonable and\nbelieves that the present audit capability is at a level sufficient to\ncarryout the Board's statutory authority.\nOMB's allowance for 1976 has provided for increased enforcement at a level believed\nsufficient to accomplish the Board's stated enforcement objectives. The allowance\nwill permit the Board to take steps to restore tariff integrity, particularly on\nthe North Atlantic, consistent with the Administration's action plan. Additional\ninformation and rationale for increased audit program funding does not provide\nsufficient justification to alter OMB's allowance.\nH\nFEDERAL HOME LOAN BANK BOARD\nComments\nThe estimates below assume that the\n1975-1976 outlay effects of the FHLBB\npart of the May 10 housing program will\nbe offset.\nThe agency has no major disagreements\nwith the OMB recommendations.\nBudget\nFull-time\nauthority\nOutlays\npermanent\n(in thousands of dollars)\nemployment\n1974 actual\n-370\n1,290\n1975 current estimate\n---\n-304\n1,385\n1976 agency request\n---\n160\n1,385\n1976 OMB recommendation\n---\n-340\n1,385\nEffect of OMB recom-\nmendation on agency\nrequest\n---\n-500\n---\nTransition period\n---\n-131\n1,385\n1977 estimate\n---\n-428\n1,385\nFORD\nif\nGERALD\nFEDERAL MARITIME COMMISSION\nComments\nConsistent with a policy of decreasing rather\nthan increasing Federal regulatory activities,\nthe OMB recommendation would disallow a re-\nquested increase in funding for expanded regu-\nlatory efforts.\nAn increase to cover mandatory costs is\nrecommended.\nThe agency has no objection.\nFull-time\nBudget\npermanent\nauthority\nOutlays\nemployment\n(in thousands of dollars)\n1974 actual\n6,372\n6,475\n293\n1975 current estimate\n7,307\n7,343\n316\n1976 agency request\n8,255\n8,272\n350\n1976 OMB recommendation\n7,894\n7,910\n316\nEffect of OMB recommenda-\ntion on agency request\n-361\n-362\n-34\nTransition period\n1,973\n1,943\n316\n1977 estimate\n7,894\n7,894\n316\nFORDO LIBRARY &\nIssue Paper\nFORD\nFederal Trade Commisison\n1976 Budget\nGERALD\nLIBRARY\n1975\n1974\nCurrent\n1976\nActual\nEst.\nRequest\nAllowance\nAppeal\nRecom.\nBudget Authority ($M)\n32.3\n39.0\n50.9\n44.0\n+6.9\n+1.6\nOutlays ($M)\n32.4\n41.2\n50.1\n43.5\n+6.6\n+1.6\nEmployment (EOY)\nFull-time permanent\n1,560\n1,569\n1,727\n1,569\n+158\n+65\nStatement of Issue\nIn the FTC's \"maintenance of competition\" programs, what level of resources\nshould be devoted in 1976 to antitrust activities and to enforcement of the\nRobinson-Patman Act?\nAlternatives\nAgency request: FTC requests 158 new man-years of effort for maintenance of\ncompetition, including 128 man-years for antitrust activities and 30 man-years\nfor expanded enforcement of the Robinson-Patman Act.\nOMB recommendation: Provides 95 new man-years of effort for antitrust activities\nand no further expansion for enforcement of the Robinson-Patman Act.\nAnalysis\nThe major differences between the FTC request and the OMB recommendation are:\nAntitrust activities. FTC is requesting an increase of 128 man-years\nfor antitrust activity. The OMB recommendation allows for an additional\n95 man-years of effort in this area, targeted primarily in the \"key\nindustries\" of food, energy, and health care. These industries have\ncontributed over 40% of the past year's inflation. The OMB recommendation\nis based on a sensitivity to the President's recent statements on the need\nfor antitrust as an anti-inflationary toal and on FTC's proposal to target\nits efforts on high priority efforts.\nRobinson-Patman Act enforcement. The FTC request would increase the effort\nfor this activity by approximately 30 man-years and $1 M over the 1974 level.\nSince there are strong indications that this statute is anti-competitive\nand contributes upward pressure on prices (especially food prices), OMB\nseriously questions the advisability of any expansion in this area. OMB\nrecommends denying the increase and beginning a major effort to determine\nthe effect of this statute on costs and prices and, if warranted, develop-\ning an Administration initiative to reform it.\nOther Expenses. The OMB recommendation allows only a 50% increase in\ntravel, rather than 100%, to $1,593 K; cuts $712 K for new space rental -\nwhich is not required; cuts $464 K for new ADP rentals which are not\nurgent; cuts $175 K for staff training increases, cuts $200 K of\nthe increase for supplies and equipment; disallows $477 K for previously\nunbudgeted personnel; and disallows a contingency reserve of $500 K.\nK\n1976 Budget\nInterstate Commerce Commission\nThe OMB recommendation for the Interstate Commerce Commission (ICC) provides a\n$4.9 million increase in budget authority and total funds of $49.7 million for\n1976. The Commission initially requested $51.8 million but has reached agreement\nwith OMB on budget and program recommendations.\nDecisions on the Commission's budget were made within the context of the Admin-\nistration's regulatory reform objectives. The recommended increases will permit\nthe Commission to improve the quality of its regulation of the surface trans-\nportation industries by providing resources for:\n-- The initiation of proceedings to deal with key issues effecting the national\ntransportation system which is the principle means of policy formulation.\n-- The maintenance of a manageable case backlog in the face of constantly increasing\nworkload.\n-- Increased emphasis on management improvements and application of ADP techniques.\nThe Commission and OMB have discussed the need for improvement in the\npresent economic regulation of surface transportation. The Commission has initiated\na special internal study to identify areas for change and to prepare recommendations\naimed at increasing productivity and improving the quality of regulation.\nGREATE YORD\nInterstate (\nrce Commission\nIs. Budget\n($ Millions)\nBudget Authority\nOutlays\nEmployment\n1974 Actual\n$40.3\n$37.7\n1950\n1975 Enacted\n42.9\n43.9\n2084\nSupplemental Recommended\n1.9\n1.6\n-\nOMB Recommendation\n44.8\n45.5\n2061\n1976 Agency Recommendation\n51.8\n53.0\n2282\nOMB Recommendation\n49.7\n51.0\n2101\nTransition Period\nAgency Recommendation\n13.0\n13.5\n2202\namB Recommendation\n12.5\n13.0\n2101\n1977 OMB Estimate\n49.7\n50.5\n2101\n0001\nMARINE MAMMAL COMMISSION\nComments\nNo change from agency request.\nBudget\nFull-time\nauthority\nOutlays\npermanent\n(in thousands of dollars)\nemployment\n1974 actual\n412\n134\n6\n1975 current estimate\n750\n735\n8\n1976 agency request\n1,000\n1,000\n10\n1976 OMB recommendation\n1,000\n1,000\n10\nEffect of OMB recom-\nmendation on agency\nrequest\nTransition period\n250\n250\n10\n1977 estimate\n1,000\n1,000\n10\nGCRALD K. FORD\nM\nNATIONAL CREDIT UNION ADMINISTRATION\nComments\nOMB recommends additional\nrequested positions to deal\nwith voluntary credit union\nliquidations.\nBudget\nFull-time\nauthority 1/ Outlays 2/\npermanent\n(in thousands of dollars)\nemployment\n1974 actual\n---\n-11,677\n526\n1975 current estimate\n---\n-10,355\n552\n1976 agency request\n---\n-14,070\n595\n1976 OMB recommendation\n---\n-14,632\n558\nEffect of OMB recom-\nmendation on agency\nrequest\n---\n-562\n-37\nTransition period\n---\n-3,500\n558\n1977 estimate\n---\n-17,562\n558\n10R0 is LIBRARY GERALD\nN\nIssue Paper\nU.S. Postal Service\n1976 Budget\nAnalysis\nBudget Authority/Outlays\n($ in millions)\n1975\n1976\n1977\n1978\n1979\n1980\nAlt. #1 (Agency req.)\n615.5\n639.3\n605.9\n574.2\n545.3\n521.9\nAlt. #2 (OMB rec.)\n571.5\n542.3\n459.8\n467.3\n474.7\n482.7\nStatement of Issue\nShould additional Federal subsidies be provided to extend the time period for\ncertain mailers to adjust to higher postage rates?\nBackground\nUnder the Postal Reorganization Act of 1970, Federal subsidies were authorized\nto ease the adjustment of mailers in moving from the old rate structure to one\nwhich more properly reflects the actual cost of the mail service provided. The\nsubsidies allow for phasing in the rate increases over a period of years. Phasing\nveriods of five years for profit related mailings and ten years for non-profit\nmailings were established. A portion of the Federal subsidies to the Postal\nService is to make up for the revenue foregone associated with carrying these\nclasses of mail at less than full cost recovery rates.\nUnder pressure from mailers, who have argued that postal rate increases are\nhigher than were anticipated at the time of postal reorganization, Congress acted\nlast June to extend the authorized phasing period. P.L. 93-328 (S. 411), as\nenacted, extended the phasing periods by three years and six years. The revenue\nforegone subsidies associated with this extension would cost the taxpayer at least\n$753.7 million over the next 13 years. Major beneficiaries of these sub-\nsidies would be magazine, newspaper, and book publishers. Nearly one-half of the\nadditional subsidies would go to direct support of these regular-rate second class\nmail users; the balance would support preferential, library, and non-profit classes\nof mail users.\nAlternatives\n#1. Request full funding for all authorized phasing - including all portions of\nextended phasing. (Agency Request)\n#2.\nContinue to request funding for the originally authorized phasing schedule\nset out in the Reorganization Act, but request no funding for the extended\nphasing subsidies authorized by P.L. 93-328. (OMB Recommendation)\nAgency request: Postal Service has requested the full level of funding authorized\nor phasing. This would require an additional subsidy of $44 million in 1975 and\n97 million in 1976 to cover the revenue foregone associated with extended phasing\nboth profit and non-profit categories of mail.\n2\nUnder the provisions of section 3 of P.L. 93-328 the Postal Service is required\nto request all authorized subsidies. These amounts are also required to be\npresented in the budget along with the President's recommendation. Postal Service\nhas supported extended phasing in an effort to avoid a confrontation with mailers.\nExtended phasing would lessen the direct impact of postage rate increases on\nmailers, and from the Postal Service's perspective would probably help to hold\ndown strong objections to further proposed postage increases.\nOMB recommendation: OMB recommends not requesting additional funding for the\nextended phasing. Since the provisions of P.L. 93-328 only authorize these sub-\nsidies, it is within the President's authority to request less than the full amount.\nFunding for the originally authorized five and ten year phasing periods would\ncontinue.\nAlthough President Nixon signed the authorization bill, you decided last September\nagainst requesting a $44 million 1975 supplemental for the first year of extended\nphasing on the grounds that it was contrary to our efforts to reduce Federal\nspending in 1975.\nThroughout the development of S. 411 (P.L. 93-328) the Administration argued that\nextended phasing was unnecessary and was a low priority use of Federal funds. The\nsubsidies are inflationary and provide direct Federal assistance to already profit-\nable businesses. This is particularly true of the magazine publishing industry\nwhich is a heavy user of regular rate second class mail service. The potential\navings to publishers from the authorized extended subsidy would be a very small\nportion of total publishing costs (generally less than 1%), and we believe that\nthis will not have a critical impact on the health of the publishing industry.\nThe intent of the postal reorganization was to foster a self-sufficient Postal\nService in which users pay for the services they receive from the postal system.\nTo extend the phasing period would run contrary to that principle.\nThird Class Mail Subsidy: Since 1972, the budget has not included a request to\ncover the revenue foregone associated with the phasing of regular rate third class\nmail (advertising matter). This policy was established to eliminate what we believe\nto be an unnecessary and improper expenditure of Federal funds. This subsidy would\nhave directly supported an already profitable direct mail advertising business.\nThe Congress has agreed with the President's Budget over the years and not appropri-\nated any funding for third class phasing. Accordingly, the Postal Service has\nimplemented full cost recovery rates for this class of mail.\nUnder the Reorganization Act, one more year of phasing is still authorized for\nthird class mail. No extended phasing for regular rate third class mail was\nprovided for in P.L. 93-328 (S. 411), but the Act as noted above does require the\nPostal Service to request all amounts authorized. Therefore, the Postal Service\nhas included $118.8M in its 1976 request for this last year of phasing. In the\npast the Postal Service has excluded this amount from its request owing to existing\nPresidential policy and known Congressional action.\nOMB recommends not requesting funding for this last year of regular rate third\nlass phasing. The Postal Service is not appealing this recommendation.\nO\nIssue Paper\nSecurities and Exchange Commission\n1976 Budget\n1975\n1974\nCurrent\n1976\nAct.\nEst.\nReq.\nAllow.\nAppeal\nRecom.\nBudget Authority ($ M)\n36.2\n44.4\n51.6\n47.2\n+4.4\nOutlays ($ M)\n34.5\n45.1\n52.6\n48.1\n+4.5\nEmployment:\nFull-time permanent (EOY)\n1,798\n2,086\n2,270\n1,960\n+310\n---\nStatement of Issue\nShould SEC staffing resources be constrained in 1976 as a means of gaining\nmore effective utilization of existing staff?\nAlternatives\nSEC requests an additional $7.2 M and 184 positions in 1976 in response to\nan anticipated increase in securities registrations and to expand its efforts\nin securities fraud investigations and enforcement.\nOMB recommends an increase of $2.8 M in 1976 and a reduction of 126 positions\nᶜrom 1975 levels to require SEC to take actions (by increasing staff productivity\nnd undertaking other management improvements) to insure more effective\nutilization of existing staff.\nAnalysis\nOMB believes that sizeable staffing increases granted to SEC over the past\nfew years, combined with the agency's lack of progress in updating several\ninefficient management practices, have resulted in (1) staffing levels which\nexceed actual and predicted workload requirements and (2) ineffective use of\nstaffing in several of its major programs. Several factors have contributed\nto this problem:\nTORD\nIn fiscal years 1974-75 SEC received total staff increases of\nDISRARY\n488 positions, 354 of which were added by the Congress.\nDuring the period 1972-1975, securities registrations, an important\nworkload determinant, fell by over 25%. Productivity in the enforce-\nment program declined by 16% between 1971-1974 while staffing increased\nby almost 20%.\nSEC continues outdated management practices in several areas which,\nif corrected, would obviate the need for staffing increases: (a)\nobsolete procedures in the review of Full Disclosure Program\nStatements without attempts at streamlining the review process;\n(b) continued setting of shorter, arbitrary cycles for inspection\nof broker dealers without sampling; (c) a \"last-in, first-out\"\napproach to enforcement in which certain cases grow old as new\nones come in, and which involves no strategy for maximizing the\neffect of the resources.\n2\nOMB believes that action should be taken to establish SEC employment levels\nwhich reflect increasing productivity and are more consistent with current\nworkload requirements. To accomplish this, OMB recommends establishment of\na 1976 employment target of 1,960, which is 126 positions lower than the\ncurrent 1975 estimate and 310 less than SEC's 1976 request. As a means\nof beginning staffing reductions in 1975, OMB had earlier considered a\nrescission of 150 positions added by the Congress, but is not now\nrecommending this action because of the likely adverse Congressional\nreaction. Instead, the OMB recommendation allows the SEC 18 months,\nbeginning now, in which to make the adjustments necessary to achieve the\nrecommended staffing reductions. This action will require the SEC to\ndevelop a 1975 staffing plan in keeping with the reduced target for 1976.\nEighteen months should allow the agency time to design and implement improved\nmanagement systems and strategies. Assuming increased productivity, OMB\nbelieves that SEC will be able to accomplish its budgeted program for 1976\nunder the reduced employment level. Even with the reduced OMB employment\nrecommendation for 1976, SEC employment will have increased by 162 (over 9%)\nsince 1974.\nvero\nP\nNATIONAL COMMISSION ON PRODUCTIVITY\nAND WORK QUALITY\nComments\nAccommodation to agency appeal.\nOMB recommendation provides for the\ncontinuation of the program at essen-\ntially the 1975 level.\nFull-time\nBudget\npermanent\nauthority\nOutlays\nemployment\n(in thousands of dollars)\n1974 actual\n900\n1,000\n9\n1975 current estimate\n2,000\n2,102\n20\n1976 agency request\n4,461\n3,981\n43\n1976 OMB recommendation\n2,500\n2,500\n20\nEffect of OMB recommenda-\ntion on agency request\n-1,961\n-1,481\n-23\nTransition period\n625\n625\n20\n1977 estimate\n2,500\n2,500\n20\nFORD LIBRARY & GERALD\nU.S. RAILWAY ASSOCIATION\nComments\nThe United States Railway Association (USRA)\nwas established by the Regional Rail Reorgani-\nzation Act of 1973 to restructure the bank-\nrupt Midwest and Northeast rail lines.\nAdditional funding of $15 million is required\nto complete the planning process through\nJanuary, 1976. Instead of including this\nentire amount in a 1975 Supplemental as re-\nquested by USRA, OMB recommends that the\nSupplemental be limited to $5 million, with\nthe remaining $10 million included in the\n1976 budget.\nFull-time\nBudget\npermanent\nauthority\nOutlays\nemployment\n(in thousands of dollars)\n1974 actual\n18,000\n2,950\n1975 current estimate\n12,000\n27,050\nNot\n1976 agency request\n10,000\n1976 OMB recommendation\n10,000\n10,000\napplicable\nEffect of OMB recommenda-\ntion on agency request\n+10,000\n---\nto\nTransition period\n---\n---\nthis\n1977 estimate\n---\nagency\nFORD LIBRARY is\nR\nNATIONAL COMMISSION ON ELECTRONIC\nFUND TRANSFERS\nThe enrolled supplemental appropriations bill (H.R. 16900)\nprovides $500 thousand for this program in FY 1975.\nOMB is deferring a recommendation for FY 1976 until the\nCommission has had an opportunity to organize and formulate\nits own plans.\nFORD LIBRARY & DENALD"
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