Museado / NARA Collection grf-0010 — Collection grf-0010
Recent Folios
Login Register
English (inglés) español magyar (húngaro)

Survos folio item chat

Back to FY 1977 - 09/18/75 - Budget Reduction Proposals (4)

Ask the Scholar

Document scope · 1 page
doc
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory. For page-specific OCR and visual context, open one of the page chats.

Scholar Source Context

Document identity
localId
6283052
label
FY 1977 - 09/18/75 - Budget Reduction Proposals (4)
core
doc
dtoType
document
citationUrl
https://catalog.archives.gov/id/6283052
pageCount
1
Source metadata
id
6283052
sourceUrl
https://catalog.archives.gov/id/6283052
contentType
document
title
FY 1977 - 09/18/75 - Budget Reduction Proposals (4)
citationUrl
https://catalog.archives.gov/id/6283052
collections
White House Special Files Unit Files
Budget Review Decision Papers
subjects
Federal budget
Federal budget deficit
iiifBase
https://s3.amazonaws.com/NARAprodstorage/opastorage/live/52/2830/6283052/content/library/document/0010/6283052.pdf
thumbnailUrl
https://s3.amazonaws.com/NARAprodstorage/opastorage/live/52/2830/6283052/content/library/document/0010/6283052.pdf
largeImageUrl
https://s3.amazonaws.com/NARAprodstorage/opastorage/live/52/2830/6283052/content/library/document/0010/6283052.pdf
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
url
https://catalog.archives.gov/id/6283052
naId
6283052
coverageEndDate
logicalDate
1975-09-30
month
9
year
1975
coverageStartDate
logicalDate
1975-09-01
month
9
year
1975
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
url
https://s3.amazonaws.com/NARAprodstorage/opastorage/live/52/2830/6283052/content/library/document/0010/6283052.pdf
mediaId
d70af34585fe63b0
ocrText
The original documents are located in Box 9, folder "FY 1977 - 9/18/75, Budget Reduction Proposals (4)" of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library. Copyright Notice The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United States of America his copyrights in all of his unpublished writings in National Archives collections. Works prepared by U.S. Government employees as part of their official duties are in the public domain. The copyrights to materials written by other individuals or organizations are presumed to remain with them. If you think any of the information displayed in the PDF is subject to a valid copyright claim, please contact the Gerald R. Ford Presidential Library. from Box 9 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library $ NATIONAL SCIENCE FOUNDATION 1977 OUTLAY REDUCTIONS Revised Planning Current Suggested planning Program guidance Adjustments estimate reductions guidance Research Project Support 395 -- 395 -- 395 National Research Centers and Programs 172 -- 172 -- 172 Research Applied to National Needs (RANN) 82 -- 82 -- 82 Science Education in 69 --- 69 -50 19 Graduate Student Support Other 57 -- 57 -- 57 Total 775 -- 775 -50 725 GERALD R. FORD LIBRARY Summary of Outlay Reductions (Part I) National Science Foundation (dollars in millions) 9/5/75 Effect on outlays in: 1976 1977 1978 A. 1977 planning guidance and related 1976 amount XXX 775 XXXX B. Suggested program reductions in Science Education and Training: Current estimate 65 69 69 OMB recommendation 53 19 0 Suggested reduction - -12 -50 -69 Total suggested reduction - -12 - -50 - -69 Revised 1977 planning guidance and related 1976 amount 708 725 XXXX 1977 Outiny Reductions (Part II) NSF/Science Education and Training (dollars in millions) Date: September 5, 1975 appropriation request deferral action other administrative action rescission action substantive legislation other congressional action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 65 65 69 69 XXX 69 OMB recommendation 40 53 0 19 XXX 0 Suggested reduction -25 -12 -69 -50 XXX -69 Actions required: Eliminate support in NSF for science education programs and graduate student support through fellowships. Because only about one-half of new budget authority is expended in the year of obligation, a recission will be needed for part of the 1976 program in order to reduce outlays by $50M in FY 1977. Program impact: Would eliminate program. However, of all NSF activities, science education is considered as lowest priority on programmatic grounds. The only other option for reducing 1977 outlays is a cut in research programs. Because only about 27% of new authority is expended in the first year in these programs, BA in FY 1977 would have to be reduced by over $100M even with rescission in FY 1976. Furthermore, NSF research support plays a pivotal role now that basic research in mission agencies is more and more being squeezed by inflation. Despite criticism from Senator Proxmire of some research projects supported by NSF that appear trivial from their titles, research proposals must generally pass rigorous qualitative review before grants are made. Less than 50% of proposals for support are funded by NSF. 2 Other consideration: NSF would strongly oppose this reduction both because the Foundation believes it has a responsibility in improving science education and because of the strong congressional support for these programs. A reduction in the research program, however, would send a strong! negative signal that the Administration is generally anti-science, because NSF symbolizes Federal support of basic research in all fields of science to underpin future economic growth and improvements in the quality of life. RAILROAD RETIRE- MENT BOARD 1977 Outlay Reductions (Part II) RRB Railroad Retirement (dollars in millions) Date: 9/5/75 / / appropriation request / deferral action / / other administration action / / rescission action / X / substantive legislation / other congressional action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 3,443 3,443 3,567 3,567 XXX 3,829 OMB recommendation 3,443 3,443 3,567 3,457 XXX 3,719 Suggested reduction -- -- -- -110 XXX -110 Actions required: Limit cost-of-living increase to 60% of the increase in the applicable index. Program impact: 1 million beneficiaries would receive less than the expected benefit increase. Other consideration: Enactment is extremely unlikely. GERALD FURD ? TVA ; TENNESSEE VALLEY AUTHORITY 1977 Outlay Reductions ($ millions) Revised Planning Current Suggested planning Program guidance Adjustments estimate reductions guidance Power plant construction program 725 XXX 725 22 703 Nonpower program 95 XXX 95 2 93 Employment reduction 1 -1 - Total 820 XXX 820 25 795 CYROLOR 764817 FORD SUMMARY OF OUTLAY REDUCTIONS TENNESSEE VALLEY AUTHORITY ($ in millions) Effect on outlays in 1976 1977 1978 A. 1977 planning guidance XX 820 XX Current estimate 781 820 XX B. Suggested program reductions: power 0 22 0 nonpower 0 2 0 C. Personnel reduction: 1 1 Total suggested reduction 0 25 1 Revised 1977 planning guidance and related 1976 amount 781 795 XX LIGHARY CERALD FROM 1977 Outlay Reductions (Part II) TENNESSEE VALLEY AUTHORITY (dollars in millions) Date: September 5, 1975 X appropriation request X deferral action X other administration action rescission action substantive legislation other congressional action 1976 1977 1978 Amount: BA Outlays BA Outlays BA Outlays Current estimate 10,087.8 1/ 781 94.1 820 XXX 961 OMB recommendation 10,087.8 781 81.4 796 XXX 961 Suggested reduction 0 0 12.7 24 XXX 0 1/ Assumes passage of $10 B bonding legislation Actions Required: Reduce construction outlays by delaying new starts on 3 new power plants and with some slowdown on water program. TVA's past forecast for the demand for electri- city exceeded the actual demand which enables the deferring of power construction. Moreover, this reduction of outlays will assist in improving its financial position. Program Impact: Relatively minor program impact assuming TVA's power demand grows at or about pro- jected demand rate. Staff analysis estimated the growth rate to be 5.5% in May which is slightly lower than the rate used in June of 5.8% by Nuclear Regulatory Commission. XYV9917 AGENCY FOR INTERNATIONAL DEVELOPMENT 1977 OUTLAY REDUCTIONS Revised Planning / Current Suggested planning Program guidance Adjustments estimate reductions guidance Functional Development Assistance 894 - 2 892 -22 870 International Organizations and Programs 210 -- 210 -15 195 Operating Expenses 209 -- 209 - 2 207 Allowance for Foreign aid requirements -- +1294 1294 -- 1294 Other AID 120 +57 177 -- 177 Less Receipts -390 -- -390 I -390 Employment Reduction - 4 - 4 Total 1043 1349 2392 -43 2349 a/ Approved by the President but not yet transmitted. GERALD LIBRARY R. FORD SUMMARY OF OUTLAY REDUCTIONS AGENCY FOR INTERNATIONAL DEVELOPMENT (dollars in millions) Effect on outlays in: 1976 1977 1978 A. 1977 Planning guidance XXX 1043 XXX Adjustments: + 55 Allowance for Foreign aid requirements XXX +1294 XXX Current estimate 1014 2392 XXX B. Suggested program reductions: Functional Development Assistance -22 -55 International Organizations and Programs -15 - 9 Operating Expenses - 2 -- C. Employment Reduction - 4 Total suggested reduction - 43 - 68 Revised 1977 planning guidance and related 1976 amount 1014 2349 XXX 1977 Outlays Reductions (Part II) AID Functional Development Assistance (dollars in millions) Date: 9/6/75 / / appropriation request / / deferral action / / other administration action / / rescission action / / substantive legislation / / other congressional action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 858 820 1010 892 XXX 1040 OMB recommendation 858 820 863 870 XXX 985 Suggested reduction 147 22 55 Actions required Holding appropriation request to 1976 level for functional accounts. Program impact: By adjusting among functional accounts, would permit modest increases in highest priority areas of food production and population over 1976 request levels. It would necessitate a budget request for less than we have already sought in the authorizing legislation. Other consideration: This would probably not be too inconsistent with Secretary Kissinger's UN speech, which did not stress increasing bilateral aid. BERALD R.CORD FORD 1977 Outlay Reductions (Part II) International Organizations and Programs (dollars in millions) Date: 9/6/75 / X / appropriation request / / deferral action / / other administration action / / rescission action / / substantive legislation / / other congressional action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 190 140 215 203 XXX 214 OMB recommendation 190 140 190 188 XXX 205 Suggested reduction -- 25 15 9 Actions required: Hold appropriation request to 1976 level. Program impact: Probably very slight, since Congress can be expected to reduce the 1976 request substantially; so this would still constitute an increase. GUEALS 1977 Outlay Reductions (Part II) AID Operating Expenses (dollars in millions) Date: 9/6/75 / X/ appropriation request / / deferral action / / other administration action / / rescission action 11 substantive legislation / / other congressional action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 205 191 208 209 XXX 208 OMB recommendation 205 191 205 207 XXX 208 Suggested reduction -- -- 3 2 -- Actions required: Hold appropriation request to 1976 level. Program impact: Virtually none in this account. Genner. 1977 Outlay Reductions Defense The attachment identifies potential outlay reductions of $5.8B from the 1977 Defense Military planning ceiling of $98.2B. This would reduce Defense out-lays about S2B below the recommended 1976 level in real terms. Since the Defense planning process is already $7B higher in outlays than the $98.2B level, the recommended reductions would involve total adjustments of about $12B from the internal DOD planning level. In conducting this exercise a ground rule was established to protect existing force levels. The identified reductions are concentrated in the following areas: Military/civilian pay - $3.1B, reflecting a 5% limit on the October 1975 and October 1976 pay raises and identified budgetary issues. Military/civilian manpower reductions - $.7B. This includes a 30,000 man reduction in military end strength for transients and an additional 50,000 reduction in Defense civilian personnel by end FY 1977. Defense operations - $.8B. This will require a tightening up in non-readiness related areas such as travel and stock funds and includes a 5% reduction in operational activity across the three services. Investment programs - $1.2B. This would provide sharply lower levels than now planned for Defense R&D and production in 1977 but still permits a real growth of 6% over the 1976 level. Non-operational construction would be sharply reduced in both 1976 and 1977. About half of the proposed reductions - those concerned with military/ civilian pay - could be accomplished with no adverse effects on Defense readiness and capabilities. The other half, however, would require lower modernization levels and reduced Defense readiness and would be vigorously opposed by Secretary Schlesinger. The recommended reductions could be accomplished without seriously degrading U.S. defense capability, but the resulting cut in real defense resources could signal at home and abroad withdrawal of Administration support for strengthened defense capabilities. The reductions would have little overall effect on the economy, but could impact on localities that depend upon defense employment and contracts. DEPARTMENT OF DEFENSE - MILITARY 1977 OUTLAY REDUCTIONS (dollars in billions) Revised Planning Current Suggested planning Program guidance Adjustments estimate reductions guidance Military and civilian personnel 37.2 37.2 1.2 36.0 . Military and civilian pay increases 6.6 6.6 2.6 4.0 Retired pay 7.9 .6 8.5 .1 8.4 Operations, R&D, procurement, construction 46.5 46.5 1.9 44.6 Total 98.2 .6 98.8 5.8 93.0* *Current Defense planning levels imply about $105 billion for 1977. GERALD P. FORD LIERARY SUMMARY OF OUT! REDUCTIONS Department of Defense - Military (dollars in millions) Effect on outlays in 1976 1977 1978 A. 1977 Planning guidance 98,200 Adjustments: Retired pay CPIs 565 565 Current estimate 91,800 98,765 B. Suggested program reductions: Cap Military and classified pay increases 2400 Cap Wage Board pay increases 145 Cap Military retired cost of living increases 100 Reduce leave, overtime and pay related costs 500 Reduce Military Manpower 20 200 Reduce Civilian Manpower 60 460 10 Reduce tempo of Operations 215 830 80 GERALD Slow pace of R&D and procurement 400 760 Freeze non-urgent construction 160 avoi 540 170 LIBRATY Reduce intelligence-related procurement and construction 50 190 85 Total suggested reduction 505 5765 1105 Revised 1977 planning guidance and related 1976 amount 91,295 93,000 1977 Outlay Reductions DOD Military and Classified Civilian Pay Increases (dollars in millions) Date: August 19, 1975 X Substantive legislation 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 2,108 2,100 5,560 5,550 XXX 0 OMB recommendation 2,108 2,100 3,160 3,150 XXX 0 Suggested reduction -- - 2,400 2,400 XXX 0 Actions required: Limit comparability increases for military and classified civilian pay to 5% on 10/1/75 and 10/1/76. BEFALD FORD revant 1977 Outlay Reductions DOD Wage Board Pay Increases (dollars in millions) Date: August 19, 1975 X substantive legislation 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate -- -- 1010 1010 XX 0 OMB recommendation -- -- 865 865 XX 0 Suggested reduction -- -- 145 145 XX 0 Actions required: Limit comparability increases for wage board pay to 5% in 1977. 1977 Outlay Reductions DOD Retired Pay (dollars in millions) Date: August 19, 1975 X substantive legislation 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate (12/1/76 CPI @ 4.91%) 8,478 8,478 XXX 0 OMB recommendation (12/1/76 CPI @ 3.41%) 3,378 8,378 XXX 0 Suggested reduction -100 -100 XXX 0 Actions required: Enact a cost-of-living cap that will reduce the 12/1/76 CPI by 1.5%. CERRED 0203 48V8917 1977 Outla eductions Leave, Overtime and Pay-related Costs (dollars in millions) Date: September 5, 1975 X appropriation request X other Administration action substantive legislation 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate* 37,200 37,200 37,200 37,200 xx 0 OMB recommendation 37,200 37,200 36,700 36,700 xx 0 Suggested reduction - - 500 500 XX 0 Actions required: Congressional approval of the requested change in military reenlistment leave entitlements ($75 million). Administrative action to reduce military travel costs by increasing tour lengths and reducing personnel turbulence ($275 million). A 50% reduction in civilian overtime or a Congressional approval of changes in the Federal Wage System that are likely to be proposed by the President's Panel on Federal Compensation ($150 million). Program impact: The reduction in overtime will be difficult to achieve at the same time as a personnel reduction and will result in temporary backlogs. *Military @ $22.7 B + civilian @ $14.5 B = 37,200 1977 Outlay Reductions Military Manpower (dollars in millions) Date: September 5, 1975 /X/ reduced 1977 appropriation request /X/ rescission 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 22,732 22,277 22,700 22,700 XXX 0 OMB recommendation 22,707 22,257 22,500 22,500 XXX 0 Suggested reduction 25 20 200 200 XXX 0 Actions required: Reduce total military end strength by 10,000 in 1976 and 30,000 in 1977. The 1976 action could be accomplished through a budget amendment before the appropriations bill is acted on. Program impact: The reduction would be 1.4% of the January Agency plan for 1977. The reduction could be spread evenly across the services and across programs with minimal impact, or it could be totally applied against the transient account, which totals 88,000 in 1977. In the latter case, the reduction would have some impact on readiness, to the extent that-permanent change of station travel and leave would have to be accomplished without providing additional manpower authorizations to compensate for personnel in route to the next duty assignments. In wartime, however, travel and leave would be curtailed, and many of the personnel in that status would be called back to their units, thereby bringing these units up to strength. Other Consideration: Congress appears ready to cut at least 9,000 end strength in FY 1976. GENALD FORD TOTAL MILITARY END STRENGTH (thousands) Year President's Budget Director's Preview OMB Recommendation 1976 2,100 2,100 2,090 1977 2,127 2,127 2,097 1977 Outlay Reductions Civilian Manpower (dollars in millions) Date: September 5, 1975 appropriation request 1976 1977 1978 BA Outlays BA Outlays Outlays Amount: Current estimate 14,700 14,400 14,880 14,500 300 OMB recommendation 14,640 14,340 14,410 14,040 290 Suggested reduction 60 60 470 460 10 Actions required: In addition to the Director's Preview cut of 22,000 in 1976 and 1977, reduce total civilian end strength by 18,000 in 1976 and 50,000 in 1977. The 1976 action could be accomplished through a budget amendment before the appropriations bill is acted on. Program impact: The 1977 reduction, including the Director's Preview cut, would be 7.2% of the January agency plan for 1977. If applied evenly across the board to services and programs, the largest impact would be on logistics, primarily depot maintenance, and secondly on base operations. The reduction over the 2-year period would be about 75,000 from current actual employment levels and would require productivity improvements of about double the current goals. Base closings would be desirable to permit achieving such improved productivity with minimal disruptions on readiness. TOTAL DIRECT HIRE CIVILIAN END STRENGTH (thousands) Year President's Budget Director's Preview POM OMB Recommendation 1976 985 963 985 945 1977 994 972 1,012 922 0301 1977 Outlay Reductions Operations and Maintenance (dollars in millions) Date: September 5, 1975 appropriation request X recission action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate* 14,600 13,100 14,700 12,100 XXX OMB recommendation 14,340 12,885 14,010 11,270 XXX Suggested reduction. 260 215 690 830 80 * non-pay O&M, prior to Congressional action. Actions Required: Reduce consumable supplies, material and minor equipment purchases (except food and fuel) by 5%; defer about 10% of total DOD real property maintenance, mainly the portion which is per- formed contractually; reduce flying and steaming hours by 5%; and, reduce temporary duty travel by 10%. Outlay savings exceed budget authority savings due to draw-down of stocks. Program Impact: These reductions could result in slightly reduced training levels, but can be accomplished without significant impact on Defense readiness. The reductions in real property maintenance might face Congressional resistance. GERALD P. FORD 1977 Outlay Reductions Defense R&D and Procurement (dollars in millions) Date: September 5, 1975 /X/ appropriation request 1976* 1977, 1978 BA Outlay BA Outlay BA Outlay Amount: Current estimate 31,000 26,400 36,200 30,400 XXX OMB recommendation 31,000 26,400 34,800 30,000 XXX Suggested reduction -- -- 1,400 400 XXX 760 Actions required: Hold the level of Defense R&D and Procurement to a real dollar increase of 6% above the 1976 level after anticipated Congressional action. This involves a reduction of about $6B in BA below the Defense FY 1977 planning level and would defer several ship construction programs, and reduce production and development rates of tactical aircraft, missiles, ammunition and communications and electronics equipment. Illustrative program reductions are provided in the attachment. Program impact: Reduces rate of general purpose force modernization mainly by stretching out planned procurements. While stretch-outs allow reductions in annual expenditures, they may add to total systems procurement costs. Strategic forces modernization proceeds according to Defense plans. Other consideration: Reduced level still consistent with President's decision to allow real growth in Defense modernization, in addition to allowances for inflation. * reflects 1976 authorization and anticipated appropriations reductions. GERALD FOND Illustrative R&D and Procurement Reductions (BA in $ billions) Program 1977 1977 1976 Spring Planning OMB Recommendation Comments Ship Construction Build 1 vs 2 Trident boats in 1977 .6 1.4 1.0 -.4 Reflected in tentative Defense plans. Would help relieve ship yard backlog. Cancel Patrol Hydrofoil Ship after 1976 buy .1 .4 -- -.4 Cancellation desirable on cost effectiveness grounds. Probably acceptable to Defense. Slip new carrier construction by 2 years -- .4 -- -.4 Defense would object to more than a 1 year slip. Build 2 vs 3 Nuclear Attack Submarines in 1977 .5 .9 .6 -.3 Little program impact; would also relieve, shipyard backlogs. Tactical Aircraft Stretchouts Procure A-10's at 10 vs 20 per month .4 .9 .5 -.4 Production rate likely to decline because of cost escalation. Procure F-15's at 6 vs 9 per month 1.6 1.4 .9 -.5 Reduce level of F-4 and other aircraft modifications 1.3 1.7 1.5 -.2 Tactical Missiles and Munitions Deferrals Stretchout procurement of air launched missiles 1.5 1.7 1.5 -.2 Would delay achievement of War Reserve Material Slow increase in ammunition procurement requirements. rate and defer munition plant modernization .8 1.2 1.0 -.2 Communications, Electronics and Support Equipment Miscellaneous reductions in communications & electronics equipment allowing 4% real dollar increase above 1976 1.7 2.2 1.9 -.3 Reduce support vehicle procurement deferring purchases of trucks and passenger vehicles .4 .7 .6 -.1 Research and Development Miscellaneous reductions allowing 6% real dollar increase above 1976 9.5 11.0 10.7 -.3 TOTAL -3.7 1977 Outlay Reductions Military Construction (dollars in millions) Date: September 5, 1975 X appropriation request X other administration action X recission action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Current estimate 4,261 3,000 XXX OMB recommendation 2,553 2,500 XXX Suggested reduction. -1,708 160 -500 540 XXX -670 Actions Required: Invoke a military construction "freeze" of all authorized projects not directly related to the acquisition of new weapons systems, urgent training, safety of personnel, or facilities otherwise urgently required for national security. Request waiver of Congressional mandate so that appropriated funds may be impounded, as indicated above. Major 1976 rescission package will be required to implement this proposal. Program Impact: This recommendation would delete several specific projects: Aeronautical Systems Test Facility, the NSA administration building, and a large portion of the aircraft shelter program, remove all but critical construction of military family housing projects, uniform services University of Health Sciences and reduce construction of excess hospital beds at NNMC Bethesda. In addition, this recommendation would defer modernization and improvement projects to family housing. Agency may be expected to request about $4.5 B. 1977 Outlay ductions Intelligence Activities: Department of Defense (dollars in millions) September 4, 1975 Rescission Action/Disapproval of Budget Submission 1976 197T 1977 1978 BA Outlays BA Outlays BA Outlays BA Outlays Amount: Current estimate 190 55 40 35 195 190 XX 90 OMB recommendation 0 0 0 0 0 0 XX 0 Suggested reduction 190 55 40 35 195 190 XX 90 Actions required: Prepare a rescission action for the portion of these projects funded in 1976 and 197T and disapprove the expected budget submission for 1977. Program impact: The three projects that are affected are: (1) the Defense Intelli- gence Agency Headquarters building ($86M BA in 1976 with $34M in 1977 outlays) which is now being considered by both Armed Services Committees. A rescission of this re- quest would allow a cost-effective alternative to be found to consolidate DIA head- quarters and would entail the continuation of a modest courier service and some incon- venience to DIA; (2) the modernization of high frequency intelligence collection ($45M BA per year 1976-1977 with $37M in 1977 outlays) This proposal, which is to begin in 1976, would automate the collection activities now performed by large numbers of mili- tary personnel overseas. Capability would not be increased. The predicted personnel reductions which were planned to offset this investment do not appear possible now. As a consequence, return on investment will take more than 20 years - with little im- provement in the quality of intelligence; (3) a technical collection system ($60M BA in 1976 and $150M BA in 1977 with $118M in 1977 outlays). This system is designed to replace (in the early 1980's) a collection system now in operation. Because of the changing character of the target, however, serious doubts about the value of this sys- tem have been raised. Disapproval would have no immediate impact on U. S. intelligence capability. Other considerations: The congressional committees have indicated some displeasure with all three projects; reductions in funding are anticipated. The Secretary of Defense is also considering cancellation of the technical collection system at this time. ASSISTANCE 'Military Assistance Accounts 1977 OUTLAY REDUCTIONS Revised Program Planning Adjustments Current Suggested planning guidance estimate reductions guidance Grant Military Assistance 809 16.0 825 -33 792 Foreign Military Sales 410 2.0 412 + 7 419 Allowance for Middle East requirements - 890 890 I 890 FMS Trust Fund - -200 -200 - -200 All other -219 -219 - -219 Total 1000 708 1,708 -26 1,682 September 5, 1975 GERALD ? FORD LIBRARY SUMMARY OF OUTLAY REDUCTIONS Military Assistance Accounts (dollars in millions) Effect on outlays in 1976 1977 1978 A. 1977 Planning guidance XXX 1000 XXX Adjustments: Presidential decisions on MAP & FMS levels 18 Reestimate of Trust Fund outlays XXX -200 XXX Allowance for Middle East requirements XXX 890 XXX Current estimate 1038 1708 XXX 6. Accelerated shift from MAP to FMS credit in 1977 Total suggested reduction -26 -33 Revised 1977 planning guidance and related 1976 amount 1038 1682 XXX GERALD : FORD LIBRARY 1977 Outlay Redu Lons (Part II) Military Assistance Accounts (dollars in millions) X appropriation request deferral action other administrative action rescission action substantive legislation other congressional action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amount: Suggested reduction --- -16 -26 XXX -33 Action required: A decision by the President to offer foreign military sales credits to selected countries for procurement of defense articles and services that would be given on a grant basis under current plans. Program impact: The affected countries would have to borrow, albeit at preferred rates, rather than receive the items with no obligation. To the extent that this were necessary, bilateral relations with these countries would be affected. Other consideration: A reduction in grant military assistance is in accordance with expressed Congressional desire. BERALD : med OTHER CHANGES 1977 Outlay Reductions Executive Branch Personnel Reductions (dollars in millions) Date: 9/5/75 /X/ appropriation request 11 deferral action /X/ other administrative action 11 rescission action 11 substantive legislation II other congressional action No. of FTP posi- tions to be 1976 1977 reduced by end of BA 0 BA 0 1977 Agriculture --- --- 20 20 1,000 Commerce --- --- 1 1 80 Corps of Engineers 3.6 3.6 7.2 7.2 425 Health, Education, & Welfare --- --- 33 33 1,950 Interior --- --- 14.5 14.5 850 Justice --- --- 19 18 960 Labor --- --- 3 3 150 State 0.5 0.5 4 4 340 Transportation --- --- 5 5 400 FORD i GERALD LIBRARY Treasury --- --- 52 51 2,709 Agency for Inter- national Development --- --- 4 4 400 Environmental Pro- tection Agency --- .... 1 2.5 2.5 150 General Services Administration --- --- .... 3 3 300 National Aeronautics and Space Admin --- -- 10 10 500 Tennessee Valley Authority 0.4 0.4 0.8 0.8 50 United States Informa- tion Agency 0.2 0.2 2 2 164 Veterans Admin .... 53 53 3,400 Total 4.7 5.7 234.0 232.0 13,828 Purpose: These proposed reductions are aimed at reducing end-of-year 1977 civilian personnel in the civilian agencies by 13, 828 positions below the levels that would otherwise exist. In addition, proposed reductions in the Department of Defense amount to $460M in 1977 outlays and 50,000 positions for FY 1977. These Department of Defense amounts are reflected in the Department of Defense package displayed elsewhere. Actions required: Insure that 1977 personnel ceilings reflect the dollar and personnel reductions. Program impact: Some of the personnel reductions will have programmatic impact and may slow down or delay affected programs. FORD & LIBRARY 1977 Outlay Reductions Allowance for Pay Adjustment (dollars in millions) X Administrative action 1976 1977 1978 BA Outlays BA Outlays BA Outlays Amounts: Current estimate 550 550 2,600 2,600 XXX XXX OMB recommendation 550 550 1,550 1,550 XXX XXX Suggested reductions 1,050 1,050 -- Action required: Limit cost-of-living increases in Federal salaries to 5% in 1976 and 1977. Program Impact: None Estimates of savings are consistent with the President's expected announcement regarding the October 1976 pay raise; the 1977 estimate represents the savings from a 5% pay limit in place of a "catch-up" cost-of-living increase. GENALD P. FORD LIBRARY Receipt Increases SUMMARY OF CHANGES IN RECEIPTS (fiscal years; in billions of dollars) FORD is LIBRARY 038870 1976 1977 1978 A. 1977 Planning guidance 298.4 364.1 XXX Adjustments: Reestimates and changes in economic assumptions 1 +3.4 +4.7 XXX Tax cut extension (to maintain current withholding rates) -5.9 -16.1 XXX Revision of Administration energy proposals -4.9 +0.6 XXX Other changes 2 +1.3 -1.9 XXX Current base estimate 292.3 351.4 XXX B. Suggested receipt changes: Some reductions or elimination of tax expenditures +6.4 +6.4 Tax simplification -4.0 -4.0 Tax social security benefits (in lieu of 60% limit on indexed programs) (2.4) (2.4) Total suggested increases 2.4 2.4 C. Offsetting economic effects of all proposals -4.0 -4.0 Revised receipt estimate 292.3 349.8 XXX MEMORANDUM Other possible receipt changes: Delay for one year the proposed transfer of 1¢/gallon of gasoline tax receipts to States +1.0 Increase freight transportation charges +1.0 +1.0 1 The staff currently estimates the upward revisions to be twice these magnitudes, but the more conservative estimates are used here pending further review. 2 Includes revised accounting for the earned income credit in 1976 and capital formation tax proposals and transfer of gasoline tax receipts to States in 1977. September 18, 1975 1977 OUTLAY JCTIONS (in millions 01 dollars) Tax Expenditures and Tax Simplification [ ] Appropriation request [X] Substantive legislation [ ] Rescission action [ ] Other Administration action [ ] Deferral action [ ] Other congressional action Amount: 1976 1977 1978 Receipts Receipts Receipts Current estimate n.a. n.a. n.a. OMB recommendation n.a. n.a. n.a. Suggested receipt increase 0 2,4251 2,425 1 1 To be selected from the alternatives presented in Attachment I. Action required: Attachment I lists tax expenditures that could be eliminated or reduced to increase receipts. Most of them are based on "proposals for Consideration in First Phase of Tax Reform, " recently released by the Ways and Means Committee. The Committee will, of course, be considering many proposals that would result in revenue losses. The $2,425 million increase in receipts shown above is net of a $4,000 million receipts loss due to tax simplification. Some additional items have been listed by OMB staff. Also attached are some Treasury data showing 1974 estimates of the distribution of tax expenditures by AGI class (Attachment II). Program impact: The impact will vary depending upon which tax expenditure items are selected. GERALD ages ANNUSIT Attachment I TAX REFORM PROPOSALS (in millions of dollars) Items in 1974 Items on Ways & Means bill Recommended Ways & Means and generally Affects 1977 for current agreed to by the individuals Revenue consideration agenda Administration only gain by OMB staff Real estate tax shelters X X $ 250 X (Application of limitation on artificial accounting losses (LAL) would apply only prospectively with some phase-in provisions.) Agricultural tax shelters X X --- 200 X (Application of LAL) Minimum tax for individuals X X X 500 X (The 1974 bill followed Treasury's recom- mended substitution of a tax on minimum taxable income (MTI) for the present minimum tax provisions. Ullman now recom- mends a stiffening of the current minimum tax.) Allocation of deductions* X X 400 X (Ullman has proposed a provision that was in a 1969 House bill that would require itemized deductions to be prorated to non-taxable income above $10,000 -- an indirect means of taxing income from tax-exempt bonds.) Business use of homes X X X 150 X (Tightens rules for deduction of expenses) GERALD * Indicates item that is relatively less acceptable. FORD TIBRARY Items in 1974 Items on Ways & Means bill Recommended Ways & Means and generally Affects 1977 for current agreed to by the individuals Revenue consideration agenda Administration only gain by OMB staff Vacation home rentals X X X $ 50 X (Tightens rules for deduction of expenses) Sick pay exclusion X X X 200 X (Repeal exclusion of temporary but not permanent sick pay.) Dividend exclusion X X X 360 (Repeal. Related to capital formation proposals and should be held for a capital formation package) Deductibility of State and local gasoline taxes* X X X 850 X (Repeal is consistent with energy policy.) Casualty losses X X X 150 X (A 3% of AGI floor would be imposed.) Employee business expenses X X X 400 ---- (A $200 floor would be imposed for miscellaneous expenses. The floor is less justifiable without the simplification deduction.) Medical expenses X X X 1,500 X (A 5% floor would be imposed.) * Indicates item that is relatively less acceptable. Items in 1974 Items on Ways & Means bill Recommended Ways & Means and generally Affects 1977 for current agreed to by the individuals Revenue consideration agenda Administration only gain by OMB staff Interest deductions X X $ 300 x¹ (Ullman has proposed a $9,000 limit on itemized interest deductions.) Limitations on foreign tax credit X X 100 X (Includes requirement that dividends from LDC corporations be "grossed up" in computing foreign tax credit.) Deferral of income of controlled foreign corporations X 200 X (The provisions of the 1974 bill were enacted in the 1975 Act. Ullman now proposed that one-half of income of controlled foreign corporations be taxed currently.) Exclusion of income earned abroad X X X 25 X (Exclusion to be phased out over 4-year period. Would also make allowances paid to government employees working abroad taxable.) Western hemisphere trade corporations X X 10 X (Repeal phased over 5 years.) Domestic international sales corporations* X --- 1,300 X 1. If investment interest (such as interest on funds borrowed to invest in stocks and bonds) is not included. * Indicates item that is relatively less acceptable GERALD LIBRARY Items in 1974 Items on Ways & Means bill Recommended Ways & Means and generally Affects 1977 for current agreed to by the individuals Revenue consideration agenda Administration only gain by OMB staff Increase capital gains holding period to one year X X $ 100 X (Phased in over 3 years.) Alternative tax X X X 300 (Repeal 25% alternative capital gains tax rate for the first $50,000 of capital gains. Related to capital formation package.) Allocation of expenses by financial institutions* 2,000 X (Would require financial institutions to allocate a portion of their expenses to their tax-exempt income from State and local government securities.) Restrictions on pollution control industrial revenue bonds 30 X (Proposed in Secretary Simon's Ways and Means testimony.) Capital gains at death* X 2,500 X (Assumes constructive realization of capital gains at death and adjusts for reduced estate tax liabilities. Ways and Means has this item on its agenda for a anos subsequent phase of tax reform. There are problems with respect to family farms and LIBRARY small businesses.) * Indicates item that is relatively less acceptable. Items in 1974 Items on Ways & Means bill Recommended Ways & Means and generally Affects 1977 for current agreed to by the individuals Revenue consideration agenda Administration only gain by OMB staff Unemployment compensation* X $3,000 X (Would treat payments as taxable income; estimate depends on level of unemployment. Extension of the 1975 tax cuts would reduce estimate by $200.) Workmen's compensation* X 670 X (Would treat payments as taxable income. Extension of 1975 tax cuts would reduce estimate by $100.) Excess of percentage over cost depletions* 1,300 X (Repeal provision for all minerals. Ways and Means has this item on its agenda for a subsequent phase of tax reform.) Subtotal 18,445 Less, items that are relatively less desirable (*) 12,020 Subtotal 6,425 Less, offsetting cost of tax simplification. 4,000 Total 2,425 * Indicates items that are relatively less desirable. FORD 9/5/75 LIBRAP Estimated Distribution of Tax Expenditures of Individuals by Adjusted Gross Income Class Fiscal Year 1974 Key to list. 16 2 2 26 ($ llions) : (1) : (2) : (3) : (4) : (5) : (6) : (7) : (8) : (9) : : : Exclusion : : : : : : Adjusted : Exclusion : Exclusion: of : Expensing : Capital : Expensing : Excess of : Capital : Deductic gross : of benefits : of : certain : of certain : gains : of explora- : percent-: gains : of non- income : and allow- : military : income : agriculture: treatment : tion and : age over: treatment : business class : ances to :disability: earned : capital : of certain:development: cost :of certain: state : Armed Forces: pensions : abroad by : outlays : agriculture: costs : depletion: timber : gasolin : personnel : : US citizens: : income : : : income : taxes ($000) 0 - 3 10 1 15 10 10 * 1 * ] 3 - 5 135 13 13 35 30 1 5 2 5 5 - 7 160 16 7 60 55 1 4 2 22 7 - 10 125 13 9 90 80 2 11 3 81 10 - 15 110 11 7 115 105 10 19 4 198 15 - 20 55 6 7 70 60 8 21 3 215 20 - 50 50 5 24 125 115 19 76 10 307 50 - 100 4 * 6 40 35 13 62 9 28 100 and over 1 * 2 35 30 26 106 22 w Total 650 65 90 580 520 80 305 55 865 GERALL FORD LIBRARY - 2 - 12 ($ millions) : (10) : (11) : (12) : (13) : (14) : (15) : (16) : (17) : : : : Parental : : : Exclusion : : : Adjusted : Housing : Exclusion : personal : Deduction : Deduction : of employer : Exclusion Exclusi gross : rehabilita- of scholar-texemptions:of contri- : of child : contributions: Deduction:of social :of soci income : tion 5-year: ships and : for :butions to : and depend-: to medical : of medical:security :securit class : amortiza- : fellow- : student : educational : ent care : insurance : expenses :disability: CASI : tion : ships : age 19 : institutions: expenses : premiums and : : insurance benefit : : : and over : : medical care : : benefits :for age ($000) 0 - 3 2 6 * * 26 4 44 470 3 - 5 * 39 8 * 1 73 38 43 460 5 - 7 * 48 38 1 7 131 112 35 380 7 - 10 * 41 100 2 31 285 264 44 470 10 - 15 2 31 212 3 85 662 481 31 330 15 - 20 2 19 129 20 92 655 376 13 140 20 - 50 6 11 74 64 14 827 634 20 215 50 - 100 14 * 73 65 0 193 145 4 45 100 and over 24 * 21 200 0 88 71 1. 20 Total 50 195 655 355 230 2,940 2,125 235 2,530 GERALD ? FORD LIBRARY 3 - 7 24 25 ($ millions) : (19) : (20) : (21) : (22) : (23) : (24) : (25) : (25) : Exclusion : : : : : : Net exclusion of pension Adjusted : of social : Exclusion : : Exclusion : Exclusion : Exclusion: contributions and earnings gross : security : of rail- : Exclusion:of unemploy- : of work- : of public: : income : benefits : road retire- : of sick : ment insur- : men's : assist- : Employer : Plans for class : for depend- ment system : pay : ance : compensa- : ance : plans : self- : ents and : benefits : : benefits : tion benefits : benefits : : employed : survivors : : : : : : : and others ($000) 0 - 3 80 30 10 50 25 30 15 3 - 5 75 29 16 80 40 25 50 5 - 7 60 24 17 100 50 15 110 1 7 - 10 75 30 24 160 80 5 290 2 10 - 15 55 21 66 250 120 * 790 6 15 - 20 20 9 60 150 75 * 990 11 20 - 50 35 13 57 200 100 * 1,740 107 50 - 100 5 3 4 50 25 * 545 87 100 and over 5 1 1 10 5 * 260 16 Total 410 160 255 1,050 520 75 4,790 230 0000 LIBRARY - 4 - ($ millions) : (27) : (28) : (29) : (30) : (31) : (32) : (33) : (34) : (35) : : Exclusion : Exclusion : : : Excess of : : : Adjusted : Exclusion: of : of : Exclusion : Exclusion : percentage : Additional: Additional: gross : of : premiums on : privately : of employer: of capital : standard : exemption: exemption: Fecire- income : premiums accident and: financed : furnished : gain on : deduction : for the : for age 65: ment class : on group : accidental : supplementary : meals and : house sales:over minimum: blind : or over : income : term life: death unemployment : lodging : if age 65 : standard : : : credit : insurance: insurance : benefits : : or over : deduction : : : ($000) 0 - 3 5 * * 1 1 -- * 7 1 3 - 5 15 1 * 4 * 1 1 95 18 5 - 7 30 2 1 8 * 13 3 185 22 7 - 10 65 4 1 17 1 64 3 268 20 10 - - 15 155 9 2 39 1 645 3 196 19 15 - 20 155 9 1 39 1 352 2 106 9 20 - 50 190 11 * 50 2 178 2 211 10 50 - 100 45 3 * 12 2 6 1 56 1 100 and over 20 1 * 5 2 1 * 26 * Total 680 40 5 175 10 1,260 15 1,150 100 ? FORD LIBRARY - 5 - 22 ($ millions) 4 1 : (36) : (37) : (38) : (39) : (40) : (41) : (42) : (43) : : : : : : : Deduction of : Depreciation Adjusted : : : : : Exclusion : Exclusion : nonbusiness : on gross : Exclusion : Exclusion: Exclusion: Credits and : of interest: of income : state and local: : rental income : of : of : of GI : deduction : on state : earned in : taxes (other : housing class : veterans : veterans: Bill : for political: : and local : US : than on : in excess : disability : pensions : benefits : contributions: debt : possessions: owner-occupied : of : compensation: : : : : : homes and : straight : : : : : : : gasoline) : line ($000) 0 - 3 61 17 34 * * * 1 2. 3 - 5 39 8 124 * * * 13 6 5 - 7 44 * 60 1 * * 55 10 7 -- 10 67 * 35 1 1 * 239 21 10 - 15 102 -- 16 2 4 1 661 42 15 - 20 72 -- 10 2 22 2 1,016 38 20 - 50 87 -- 9 3 98 2 2,968 123 50 - 1CO 10 -- 2 1 389 * 1,063 80 100 and over 3 -- * * 546 * 939 48 Total 485 25 290 10 1,060 5 6,955 375 FORD - 19 20 1 8 13 $ millions) : (44) : (45) : (46) : (47) : (48) : (49) : (50) : (51) Adjusted : Depreciation : : : : : : Deduction : Deduction gross : on buildings : : : Capital : Exclusion : Deferral of :of mortgage: of property income : (other than : Investment : Dividend: gain : of interest: capital gain:interest on: taxes on class : rental housing) : credit : exclusion: (other than: on life :on home sales: owner- : owner : in excess of : : : farming and: insurance : : occupied : occupied : straight line : : : timber ) : savings : : homes : homes ($000) 0 - 3 2 1 3 76 10 1 * 1 3 - 5 3 12 8 34 60 7 13 24 5 - 7 6 32 11 81 90 9 52 66 7 - 10 13 71 26 158 120 19 265 221 10 - 15 25 149 42 304 200 42 886 583 15 - 20 22 135 46 282 170 47 1,133 771 20 - 50 75 300 134 1,137 420 98 2,078 1,774 50 - 100 47 108 37 969 195 21 348 407 100 and over 27 72 13 3,109 155 11 95 213 Total 220 880 320 6,150 1,420 255 4,870 4,060 FORD LIBRAR 7 13 10 23 ($ millions) 15 : (52) : (53) : (54) : (55) : (56) : (57) Adjusted : : Deduction : : Additional items for Senator Mondale gross : Deduction : of charitable : Deduction : Untaxed : Deferral of : income : of : contributions : of interest : capital : income of : Asset class : casualty : (other than : on consumer : gains : controlled : depreciation : losses : for : credit : at : foreign : range : : education) death 1/ : : : corporations : ($000) 0 - 3 * 3 * 18 * * 3 - 5 3 18 7 8 * * 5 - 7 4 67 26 18 * 5 7 - 10 13 190 133 36 9 10 - 15 54 445 443 70 1 10 15 - 20 42 548 567 64 2 10 20 - 50 74 1,251 1,039 194 7 36 50 - 100 34 506 174 112 7 25 100 and over 26 792 45 180 13 10 Total 255 3,820 2,435 700 30 105 Office of the Secretary of the Treasury Office of Tax Analysis CVOH May 5, 1975 1/ Carryover of basis to heirs. (Effect after 10 years. Assumes heirs have lower marginal rates.) 1977 OUTLAY JCTIONS (in millions dollars) Tax Social Security Benefits (in lieu of 40% "cap") [ ] Appropriation request [X] Substantive legislation [ ] Rescission action [ ] Other Administration action [ ] Deferral action [ ] Other congressional action Amount: 1976 1977 1978 Receipts Receipts Receipts Current estimate 0 0 0 OMB recommendation 0 2,400 2,400 Suggested receipt increase 0 2,400 2,400 Action required: Would treat social security and railroad retirement benefits in excess of contributions as taxable income and repeal retirement income credit. Program impact: Would reduce the disposable income of social security recipients, but in a more equitable way than an across-the-board reduction in benefit payments. 1977 Outlay Reductions Department of Transportation/Highway Trust Fund (dollars in millions) / / appropriation request / / deferral action / / other administration action / / rescission action /x/ substantive legislation / / other congressional action 1976 1977 1978 Receipts Receipts Receipts Amount: Current estimate 5,839 4,900 5,000 OMB recommendation 5,839 5,900 5,000 Suggested receipt increase 0 1,000 0 Action required: Assuming enactment of new highway legislation permitting State preemption of 1¢ of Federal gas tax ($1 billion annually), enactment of highway legislation to postpone the effective date of the preemption provision from October 1, 1976 to October 1, 1977. (If new highway legislation is not enacted prior to January, 1976, the Administration's proposal would be amended to reflect this shift). Program impact: The amendment would delay implementation of an Administration proposal that would provide substantial additional flexibility to the states by permitting them to increase their revenues by $1 billion without increasing net taxes. Since a large portion of these funds will be used for highways, it would delay some highway constructions. Other considerations: It may appear as if the Administration has reneged on one of its most substantial highway reform proposals. The change is attractive, however, because of the immediate 100% impact on receipts (even if we eliminated the entire $5.6 Billion Federal assistance program for 1977, we would save less than $1 billion in 1977 outlays). Although in the short term it is not supportive of the thrust of our highway proposals, it does not effect in the longer term (1978 and beyond) our reform proposals. 1977 L. ay Reductions Department of Transportation/Freight Transportation Fees (dollars in millions) Date: August 19, 1975 / appropriation request / / deferral action / / other administration action / / rescission action / substantive legislation / / other congressional action 1976 1977 1978 Receipts Receipts Receipts Amount: Current estimate* 0 0 0 OMB recommendation 0 1,000 1,000 Suggested Revenue Increase 0 1,000 1,000 *does not reflect existing marine tonnage and highway taxes Actions required: Legislation to increase Freight Transportation Charges Trucks--increase diesel fuel tax (a 4c per gallon increase would provide $400 million annually) Rail institute new 2% freight waybill tax (about $350 million) combination of new lockage-segment fees on inland waterways, domestic petroleum tax (3c), and increases in foreign tonnage taxes (in combination about $250 million) Program impact: New fees would substantially reduce the indirect subsidy presently provided to large trucks and marine interests, and establish the principle that rail freight users will have to pay for massive Federal rail capital assistance efforts. The new marine taxes, in particular, would serve to provide a more rational allocation of freight movement by increasing the artificially low inland marine rates (inducing more rail movements) and in the longer term would reduce pressure for Federal investment in costly, inefficient waterway projects. Other considerations: This package of fees is exemplary--additional analysis is required to assure proper balancing to achieve reasonable cost allocations and better redistribution of freight. Packages with lower or higher total revenues could also be prepared. All users will strongly resist tax increases. Substantial additional analysis of impact of rail increases is also necessary.