EMBARGOED UNTIL 2 PM EDT Treasury Contact: Rob Nichols

October 20, 2003 (202) 622-2920

OMB Contact: Garrette Silverman

\(202\) 395-7254

**JOINT STATEMENT OF**

**JOHN W. SNOW,**

**SECRETARY OF THE TREASURY,**

**AND**

**JOSHUA B. BOLTEN,**

**DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET,**

**ON**

**BUDGET RESULTS FOR FISCAL YEAR 2003**

SUMMARY

The Administration is today releasing the September 2003 Monthly
Treasury Statement of Receipts and Outlays of the United States
Government[^1]. The statement shows the actual budget totals for the
fiscal year that ended September 30, 2003, as follows:

-   A deficit of \$374 billion;

-   total receipts of \$1,782 billion; and

-   total outlays of \$2,157 billion.

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Table 1. TOTAL RECEIPTS, OUTLAYS AND SURPLUS/DEFICIT (-)

(in billions of dollars)

> [Receipts]{.underline} [Outlays]{.underline} [Surplus/Deficit
> (-)]{.underline}

2002 Actual\...\...\...\...\...\...\...\...\...\...\...\... 1,853 2,011
-158

FY 2003 Estimates:

FY 2004 Budget\...\...\...\...\...\...\...\... 1,836 2,140 -304

FY 2004 Mid-Session Review\... 1,756 2,212 -455

Actual\...\...\...\...\...\...\...\...\...\...\...\...\..... 1,782 2,157
-374

NOTE: Details may not add to totals due to rounding.

The FY 2003 unified deficit was \$374 billion, or an estimated 3.5
percent of the Gross Domestic Product (GDP). The deficit for FY 2003 is
\$81 billion lower than projected in the Mid-Session Review (MSR) with
receipts higher by \$26 billion and outlays lower by \$55 billion.

Receipts in 2003 were 3.8 percent below the level in 2002, while outlays
grew by 7.2 percent above the previous year. Departments with the
largest rates of growth included Education (24 percent), Defense (17
percent), and the newly created Homeland Security Department.

RECEIPTS

Number range CHAPTERTotal receipts for FY 2003 were \$1,782 billion,
\$26 billion higher than the MSR estimate of \$1,756 billion. The MSR
estimate contained an adjustment for revenue uncertainty beyond what the
economic and tax models forecast. This adjustment accounts for \$15
billion of the increase in receipts relative to the MSR. The remaining
\$11 billion increase in collections relative to the MSR was largely due
to higher-than-expected collections of individual and corporation income
taxes of \$4 billion and \$6 billion, respectively. Excise taxes and
social insurance and retirement receipts were also above forecast, but
were partially offset by lower-than-estimated collections of other
sources of receipts. Table 2 displays actual receipts and estimates from
the Budget and the MSR by source.

[Individual income taxes]{.underline} were \$794 billion, \$4 billion
higher than the MSR estimate. This increase was due to
higher-than-estimated payments of withheld and non-withheld taxes, which
were partially offset by higher-than-expected refunds.

[Corporation income taxes]{.underline} were \$132 billion, \$6 billion
greater than the MSR estimate. Higher-than-estimated corporate tax
payments and lower-than-estimated refunds were responsible for this
increase.

[Social insurance and retirement receipts]{.underline} were \$713
billion, \$2 billion higher than the MSR estimate. A one-time unexpected
increase in State deposits to the unemployment insurance trust fund
accounted for a large part of this increase.

[Miscellaneous receipts]{.underline} were \$35 billion, \$1 billion
lower than the MSR estimate. Lower-than-estimated deposits of earnings
by the Federal Reserve accounted for most of the decline in this source
of receipts.

OUTLAYS

Total outlays were \$2,157 billion, \$55 billion or 2.5 percent below
the MSR estimate. Most agency outlays were down, although increases
occurred in Medicare and Defense procurement. Table 3 displays actual
outlays by agency and major program as well as estimates from the Budget
and the MSR. The largest changes in outlays were in the following areas:

-   [Department of Defense - Military]{.underline} -- In FY 2003,
    outlays for the Department of Defense -- Military were \$389
    billion, a decrease of \$20 billion from the MSR estimate. Of this
    difference, \$17 billion is due to the operations and maintenance
    (O&M) accounts outlaying their FY 2003 obligations at a slower than
    expected rate, particularly obligations funded under the
    supplemental appropriations for Iraq. The MSR estimates applied O&M
    outlay rates that are appropriate for annual appropriations,
    received in the first quarter of the year. These outlay rates
    overestimate outlays for funds made available in the third quarter
    of the year, such as the Iraq supplemental. The MSR did not fully
    recognize the impact of the late enactment of the supplemental. In
    addition, the MSR estimates did not foresee a \$3.5 billion
    rescission to the supplemental\'s Iraqi Freedom Fund, which is
    largely comprised of O&M activities. Moreover, the MSR assumed that
    all of the Iraqi Freedom Fund would be spent on O&M, whereas several
    billion of these funds are being used for slower-spending
    procurement purposes. The slower-than-anticipated outlays in FY 2003
    and the unusually large percentage of O&M obligations made late in
    FY 2003 are expected to result in increased outlays for FY 2004.

-   [Department of Treasury]{.underline} -- The Department of Treasury
    had FY 2003 actual outlays of \$367 billion, \$7 billion lower than
    the MSR estimate. Interest on the public debt, which includes
    interest paid to government accounts as well as interest paid to the
    public, was \$318 billion, \$6 billion below the MSR estimate. This
    difference was largely due to lower interest paid to trust funds
    (\$4 billion below the MSR) and other government accounts (\$1
    billion). However, these interest payments to trust funds and other
    government accounts had no impact on the deficit, because they were
    offset by changes in undistributed offsetting receipts (discussed
    below) and various agency totals. Interest paid to the public was
    \$1 billion below the MSR estimate.

-   [Department of Agriculture]{.underline} -- Actual outlays for the
    Department of Agriculture were \$72 billion, a decrease of \$5
    billion from the MSR estimate. Commodity Credit Corporation (CCC)
    outlays were \$1 billion below the MSR estimate. A third of the
    reduction is due to a lag in making disaster assistance payments,
    while about one quarter is due to smaller-than-anticipated disaster
    payments. Nearly one-quarter was due to lower Milk Income Loss
    Contract payments caused by stronger-than-anticipated milk prices.
    Most of the remainder of the difference resulted from
    lower-than-expected net lending and export credit guarantees
    volumes. Net outlays for the Rural Utilities Service were \$1
    billion below MSR mainly due to increased collections of borrower
    prepayments associated with borrower refinancing at current low
    interest rates. Lower Food and Nutrition Service outlays of \$1
    billion below MSR estimates were caused by lower-than-anticipated
    participation in the Child Nutrition programs and Special
    Supplemental Nutrition program for Women, Infants and Children (WIC)
    and a lag in Food Stamp program State administrative expenses.

-   [Department of Homeland Security]{.underline} -- Actual outlays for
    the Department of Homeland Security were \$32 billion in FY 2003,
    \$4 billion below the MSR estimate. The Department has outlayed
    funds more slowly than anticipated in the MSR for a variety of
    reasons. Within the Border and Transportation Security and Emergency
    Preparedness and Response divisions, several large contracts and
    inter-agency agreements were signed later in the fiscal year than
    anticipated. In addition, flood insurance funds were disbursed at a
    slower rate than expected since this year\'s flood season was less
    severe than anticipated.

-   [International Assistance Programs]{.underline} -- FY 2003 outlays
    for International Assistance Programs were \$13 billion, \$3 billion
    less than the MSR estimate. The largest difference is in the
    International monetary program, which experienced an increase of \$2
    billion from the MSR estimate due to valuation changes in the U.S.
    reserve position (which is similar to a deposit) in the
    International Monetary Fund (IMF). The valuation gains are accounted
    for as an offset to outlays because they represent an unrealized
    gain on an asset. Outlays for the Economic Support Fund were \$1
    billion lower than MSR, largely because Supplemental funds for
    Turkey, which have been obligated, were not in fact disbursed in
    FY 2003. Other differences from MSR estimates included a slight
    decrease in outlays for Foreign Military Financing, other than funds
    for Israel, and a slight increase in outlays for Foreign Military
    Sales.

-   [Department of Health and Human Services]{.underline} -- Actual
    outlays for the Department of Health and Human Services were \$505
    billion, \$3 billion lower than the MSR estimate. Although FY 2003
    outlays for Medicaid were nearly 9 percent higher than FY 2002, the
    outlays were \$3 billion lower than the MSR estimate, due to
    lower-than-expected growth in State spending. Outlays for the
    Administration for Children and Families were \$1 billion less than
    the MSR estimate as a result of slower-than-expected spending in the
    Temporary Assistance for Needy Families and Child Support
    Enforcement programs. These decreases were partly offset by Medicare
    outlays, which were \$1 billion above the MSR estimate, largely due
    to higher-than-projected utilization of physician-administered drugs
    and durable medical equipment and higher-than-projected outlays for
    hospital outpatient services.

-   [Department of Education]{.underline} -- Department of Education
    outlays in FY 2003 were \$57 billion, \$2 billion below MSR
    estimates. Most of this decrease was in the Office of Elementary and
    Secondary Education, and is attributable to slower-than-anticipated
    State implementation of some elementary and secondary education
    programs.

-   [Office of Personnel Management]{.underline} -- FY 2003 Office of
    Personnel Management outlays were \$54 billion, a decrease of \$2
    billion from MSR. The bulk of the decrease occurred in the Civil
    Service Retirement and Disability Fund (\$1 billion) due largely to
    lower-than-expected retirements, and in the Employees and Retired
    Employees Health Benefits Funds (\$1 billion) due mostly to
    lower-than-estimated claims and contingency reserve payments.

-   [Undistributed offsetting receipts]{.underline} -- Undistributed
    offsetting receipts were \$210 billion in FY 2003, \$1 billion below
    the MSR estimate. Offsetting receipts are deducted from gross
    outlays in calculating net outlays; therefore, decreases in these
    figures increase the deficit. The largest increase was in interest
    received by trust funds, \$4 billion below MSR. As indicated in the
    paragraph above on the Department of Treasury, this difference is
    offset by lower interest paid on the public debt by Treasury and
    does not affect total outlays. This difference was largely offset by
    increased receipts for Employer share, employee retirement, of \$3
    billion more than the MSR estimate. Of this increase, \$2 billion
    was in receipts for military retirement and health.

-30-

[^1]: The September 2003 Monthly Treasury Statement of Receipts and
    Outlays of the United States Government containing these results can
    be found on the Financial Management Service website at:
    www.fms.treas.gov.