?F=mns Used 

InThe 

Budgetary 

Process 

JULY 1977 

PAD-77-9 

-- 
FOREWORD 

The Legislatrve Reorgankatron Act of 1970, as amended by trtle VIII 

of the Congressional Budget Act of 1974, provides m sectron 202(a)(l). that 

“The Comptroller General of the Uruted Stdtes. m cooperatron with the Secretary of the Treasury, the Director of the 

Office of Management and Budget, and the Director of the 

Congressional Budget Office, shall develop, estabbsh, maintain, 

and publish standard terminology, definrtions, classificatrons, and 

codes for Federal fiscal, budgetary, and program-related data and 

information. The authority contained in this section shall include, 

but not be limited to, data and information pertaining to Federal 

fiscal policy, revenues, receipts, expenditures, functions, programs, projects, and activitres. Such standard terms. definrtions, 

classifications, and codes shall be used by all Federal agencies in 

supplying to the Congress fiscal, budgetary, and program-related 

data and informatron.” 

In accordance \kith thus requirement we published a glossary, “Budgetary Definitions” (OPA-76-8) in November 1975, whrch mcluded the initial 

standard terms and definitions. 

This glossary, which supersedes OPA-76-8, is a compilation of those 

terms previously published and additional terms that have been suggested by 

various users. The glossary is divided into three sections. The first section is a 

compilation of those terms that are of significance and importance in the 

budget process. The second section contains proposed terms and definitions 

applicable to zero-base budgeting that have been developed by the Office of 

Management and Budget, but which have not been reviewed by GAO or 

coordinated by us with the other agencies responsible for standard terms and 

definitions. They are, therefore, included for informational purposes only. 

The last section includes economic terms that are used in connection with the 

budget, especially in discussions of the economic assumptrons underlying the 

budget proposals and estimates. 

The terms and definitions in this glossary have been developed in 

cooperation with the Department of the Treasury, the Office of Management 

and Budget, and the Congressional Budget Office, except the zero-base 

budgat terms. Suggestions and assistance were also obtained from various 

congressional committees as well as other Federal agencies. 

We welcome any suggestions or recommendations for additional terms 

or revisions to definitions by users of this publication. 

Comptroller General 

of the United States 
CONTENTS 

Foreword I 

Budgetary Terms .md Drlmitl~ln~ I 

Zero-base Budgetmg lermh Jnd Delmltwns 30 

Economic Terms and Delirutlons 37 
BUDGETARY TERMS AND DEFINITIONS 

These terms are published under the authority of section 202(0]( 1) 

of the Legislutir;e Reorgarkotton Act of 1970. (IS amended by title 

VIII of the Corrgressional Budget Act of I9 74. The terms t~s drfined 

in this section shall be used by all Federal agencies in submitting 

fiscal. budgetaty. and program-related data and information to the 

Congress. 

ACCRUAL BASIS OF ACCOUNTING 

A method of accountmg m whrch revenues are recognized in the perrod 

earned and costs are recogmzed in the period mcurred, regardless of 

when payment rs received or made. (See also CASH BASIS OF 

ACCOUNTING.) 

ACTIVITY 

Any project, task, or process required to carry out a program. A 

combination of several activities, such as research and development, 

training of personnel, and distrrbution of mformation, may be elements 

in a particular program. Activities constituting a program vary with the 

nature and purpose of the program. 

ADVANCE APPROPRIATION 

An appropriation provided by the congress for use in a fiscal year, or 

more, beyond the fiscal year for which the appropriation act is passed, 

e.g., the 1976 appropnation for use m fiscal year 1976 for the 

Washington Metropolitan Area .Transit Authority contained in the 

Department of Transportation and Related Agencies Appropriation 

Act, 1975, which was passed on August 28, 1974. Advance appropriatrons allow State and local governments and others sufficient time to 

develop plans with assurance of future Federal funding. An advance 

appropriation is sometimes mistakenly referred to as “forward funding” 

which permits an agency to obligate funds in the current year for the 

operation of programs in subsequent fiscal years. (See also ADVANCE 

FUNDING and FORWARD FUNDING.) 

ADVANCE FUNDING 

Authority provided in an appropriations act to obligate and disburse 

during a fiscal year from the succeeding year’s appropriation. The funds 

1 
c 

so obligated are added to the budget authority for the hscal year and 

deducted from the budget authortty of the succeeding fiscal year. The 

appropnatton language usually states the date after which the funds of 

the succeedmg year may be obbgated. The “Public Asststance” 

approprtation account, HEW, ts an example. (See ADVANCE APPROPRIATION and FORWARD FUNDlNC ) 

AGENCY 

Any department, office, commission, authority, administration, board, 

Government-owned corporation, or other independent establishment of 

any branch of the Government of the United States. 

AGENCY DEBT 

See FEDERAL DEBT. 

AGENCY MISSIONS 

Those responsibilities for meeting national needs assigned to a specific 

agency. Agency missions are expressed in terms of the purpose to be 

served by the programs authorized to carry out functions or subfunctions which, by law, are the responsibility of that agency and its 

component organizations. (See section 201 of the Budget and Accounting Act, 1921, as amended. See also ACTIVITY and NATIONAL 

NEEDS.) 

ALLOCATION 

This term has two definitions: (1) For purposes of Government 

accounting, an allocation is the amount of obligational authority 

transferred from one agency, bureau, or account to another agency, 

bureau, or account that is set aside in a transfer appropriation account 

to carry out the purposes of the parent appropriation or fund. For 

example, allocations are made when one or more agencies share the 

administration of a program for which appropriations are made to only 

one of the agencies or to the President. (2) For purposes of section 

302(a) of the Congressional Budget Act of 1974, an allocation is the 

distribution of the total budget outlays or total new budget authority 

in a concurrent resolution on the budget to the various committees 

having spending responsibihties. 

ALLOTMENT 

Authority delegated by the head or other authorized employee of an 

agency to agency employees to incur obligations withm a specified 

amount p 

other stat1 

ALLOWANCES 

Amounts 

cover posr 

contingen 

ments. As 

represent 

to cover 

contingent 

applicable 

classificati 

APPORTIONME 

A distribu 

available 

executive 

basis of tit 

objects, o 

tended to, 

Deficiency 

A di 

that 

wc 

31 

wc 

defic 

APPROPRIATIC 

An authot 

agencies tc 

for specifit 

authorkin, 

means of T 

in some ( 

authority. 

represent ( 

in the app 

agencies m 

appropriat. 

not counte 

incur addit 

2 BEST DOCUMENT AVAILABLE 
amount pursuant to OMB apportumment or reapportionment actron or 

other statutory authortty making funds available for obltgation. 

ALLOWANCES 

Amounts Included in the Prestdent’s budget request or projections to 

cover posstble additional proposals, such as statutory pay increases and 

contingencies for relatively uncontrollable programs and other requirements. As used in a concurrent resolution on the budget, allowances 

represent a special functronal clasufication designed to include amounts 

to cover possible requirements, such as civihan pay ratses and 

contingencies, until they occur or become firm, at whtch point 

applicable amounts are distributed to the appropriate other functional 

classification(s). 

APPORTIONMENT 

A distribution by the Office of Management and Budget of amounts 

avarlabie for obligation in appropriation or fund accounts of the 

executive branch. The distribution makes amounts avadable on the 

basis of time periods (usually quarterly), programs, activities, projects, 

objects, or combinations thereof. The apportionment system is intended to achieve an effective and orderly use of funds. 

Deficiency Apportionment 

A distributton of available budgetary resources for the fiscal year 

that antrcipates the need for supplemental budget authority Such 

apportionments may only be made under condtttons provtded in 

31 USC. 665(e) and 66Sa. The issuance of a deficiency 

apportionment does not authorize the agency head to incur a 

deficit. 

APPROPRIATION 

An authorization by an act of the Congress that permits Federal 

agencies to incur obligations and to make payments out of the Treasury 

for specified purposes. An appropriation usually follows enactment of 

authorizing legislation. An appropriation act is the most common 

means of providing budget authority (see BUDGET AUTHORITY), but 

in some cases the authorizing legislation itself provides the budget 

authority. (See BACKDOOR AUTHORITY.) Appropriations do not 

represent cash actually set aside in the Treasury for purposes specified 

in the appropriation act; they represent limitattons of amounts which 

agencies may obligate durmg the time period spectfied m the respective 

appropriations acts. There are several types of appropriations that are 

not counted as budget authority, since they do not provide authorrty to 

mcur additional obligations: 

3 
- Appropriation 10 hquldate contract authority ~-congressional a&on 

fo provide funds to pay obligations mcurred agamst contract 

authority. 

- Appropriation to reduce outstanding debt~&congrewonal actron to 

provide funds for debt retuement. 

- Approprration for refund of receipts. 

APPROPRIATION (OR FUND) ACCOUNT 

A summary account established m the Treasury for each appropriauon 

and/or fund showing transactions to such accounts. 

APPROPRIATION ACT 

An act under the jurisdlctlon of the Committees on Approprlatlons 

which provrdes funds for Federal programs. At the time these 

definitions were published, there were 13 regular appropriation acts. 

There are also enacted from time to time supplemental appropriation 

acts. 

APPROPRIATION LIMITATION 

A statutory restriction in an appropriation act, which establishes the 

maximum amount which may be obligated and expended for specified 

purposes from an appropriation or other funds, such as special or trust 

funds. 

AUTHORITY TO BORROW FROM THE TREASURY 

AND THE PUBLIC 

See BORROWING AUTHORITY. 

AUTHORIZATION (AUTHORIZING LEGISLATION) 

Basic substantive legislation enacted by Congress which sets up or 

continues the legal operation of a Federal program or agency either 

indefinitely or for a specific period of time or sanctions a particular 

type of obligation or expenditure within a program. Such legislation is 

normally a prerequisite for subsequent appropriations or other kinds of 

budget authority to be contained III appropnation acts. It may hmit the 

amount of budget authority to be provided subsequently or may 

authorize the appropriation of “such sums as may be necessary.” In 

some instances budget authority may be provided III the authonzatron 

(see BACKDOOR AUTHORITY), which obviates the need for subsequent appropriations or requrres only an appropriation to lIquIdate 

contract authority or reduce outstandmg debt. 

4 BEST DOCUMENT AVAILABLE 

AUTHORIZING 

A standing 

subject m; 

the legal ( 

of obligat 

spending I 

(“backdoc 

legislation 

BACKDOOR Al 

Budget au 

tions corn 

backdoor 

other case 

tion is prc 

the Congr 

specifies c 

accounts 

trust fund 

and the so 

BALANCED BL 

A budget 

BUDGET 

BALANCES OF 

Balances I 

Unexpend 

The 

con 

and 

Obligated 

The 

has 

mdc 

Unobligt 

The 

In 

avai 

mu1 

for\ 
AUTHORIZING COMMITTEE 

A standmg comm~rtee of the House or Senate Hrtti lurtsdrctron over the 

SubJect matter of those laws, or pdrts of laws, that set up or continue 

the legal operatrons of Federal programs, agencres. or particular types 

of obligatrons wrthm programs. The authorlrmg committee also has 

spending responsrbrhty m those rnstances where the budget authority 

(“backdoor authority”) ts also provtded m the basrc substantwe 

legislation. 

BACKDOOR AUTHORITY 

Budget authorrty provided m legislation outsrde the normal (approprrations commtttees) appropriations process. The most common forms of 

backdoor authority are borrowing authority and contract authortty. In 

other cases (e.g., Interest on the pubhc debt), a permanent appropriation is provided that becomes avarlable without any current action by 

the Congress. Sectron 401 of the Congressronal Budget Act of 1974 

specifies certain limtts on the use of backdoor authority. Examples of 

accounts that have backdoor authority are the Federal-aid hrghways 

trust fund, the Environmental Protection Agency‘s construction grants, 

and the social security trust funds. 

BALANCED BUDGET 

A budget m whrch recerpts are equal to or greater than outlays. (See 

BUDGET DEFICIT and BUDGET SURPLUS.) 

BALANCES OF BUDGET AUTHORITY 

Balances may be classified as 

Unexpended Balance 

The amount of budget authority unspent and still available for 

conversion into outlays in the future; the sum of the obligated 

and unobligated balances. 

Obligated Balance 

The amount of obligations already incurred for which payment 

has not yet been made. This balance can be carried forward 

mdefinitely until the obligations are paid. 

Unobligated Balance 

The portion of budget authority that has not yet been obligated. 

In I-year accounts the unobligated balance expires (ceases to be 

available for obligatron) at the end of the ftscal year. In 

multiple-year accounts the unobligated balance may be carried 

forward and remam available for obhgatron for the period 
specified. In no-year accounts the unobhgated balanLt> IS Larrled 

forward indefinitely untd specifically rescinded by IN or until 

the purposes for which it was provided have been acc’mlplished. 

BORROWING AUTHORITY 

Statutory authority (substantive or appropriation) that permits a 

Federal agency to incur obligations and to make payments for specified 

purposes out of borrowed moneys. Section 401 of the Congressional 

Budget Act of 1974 limits new borrowing authority (except for certain 

instances) to such extent or in such amounts as are provided in 

appropriation acts. Borrowing authority, also called “authority to 

borrow from the Treasury and the Public,” may be one of the following 

types: 

Authority To Borrow From the Treasury 

The legislative authority to borrow funds from the Treasury that 

are realized from the sale of public debt securities. 

Authority To Borrow From the Public 

The legislative authority to sell agency debt securities 

Authority To Borrow From the Treasury and the Public 

A combination of the legislative authorities noted above. 

BUDGET ACTIVITY 

Categories included in the budget appendix for each appropriation and 

fund account which identify the services to be performed under the 

appropriation or fund for which the budget estimate (or request) is 

being made. 

BUDGET AMENDMENT 

A formal request submitted to the Congress by the President, after his 

formal budget transmittal but prior to completion of appropriation 

action by the Congress, that revises previous requests, such as the 

amount of budget authority. 

BUDGET AUTHORITY 

Authority provided by law to enter into obligations which will result in 

immediate or future outlays involving Government funds, except that 

such term does not include authority to insure or guarantee the 

repayment of indebtedness incurred by another person or government. 

The basic forms of budget authority are appropriations, contract 

authority, and borrowing authority. Budget authority may be classified 

by the pe 

timing of 

manner of 

PERIOD 0 

One-year (, 

BudE 

speci 

Multiple-y4 

BudI 

exce’ 

No-year AI 

Budi 

indel 

the a 

TIMING D 

Current au 

Bud[ 

cedti 

Permanent 

Budj 

viou! 

priat 

Con! 

be ‘ 

“per 

betas 

pub1 

“Cot 

shari 

it is I 

DETERMI 

Definite A 

Autl 

auth 

exce 

Indefinite 

Aud 

dete 

sour 

6 BEST DOCUMENT AVAILABLE 
by the period u! avatlabthty (I-year, multrple-year, no-year), by the 

timmg of congressional action (current or permanent), or by the 

manner of determmmg the amount a&able (defimte or indefinite). 

PERIOD OF AVAILABILITY 

One-year (Annual Authority) 

Budget authority that is available for obligatton only during a 

spectfied fiscal year and expires at the end of that ttme. 

Multiple-year Authority 

Budget authortty that is available for a spectfied period of time in 

excess of 1 fiscal year. 

No-year Authority 

Budget authortty that remains available for obligation for an 

indefinite period to time, usually until the objectives for whrch 

the authorrty was made available are attained. 

TIMING OF CONGRESSIONAL ACTION 

Current authority 

Budget authority enacted by Congress in or immediately preceding the ftscal year in which tt becomes available. 

Permanent Authority 

Budget authority that becomes available as the result of prevtously enacted legislation (substantive legislation or prior appropriation act) and does not require current action by the 

Congress. .4uthority created by such legtslation is considered to 

be “current” in the first year in which it is provided and 

“permanent” in succeeding years. It is possible to distinguish 

between “fully permanent” authority (such as interest on the 

public debt), where no subsequent action is required, and 

“conditionally permanent” authority (such as general revenue 

sharing), where authority expires after a set period of time unless 

it is reenacted. 

DETERMINATION OF AMOUNT 

Definite Authority 

Authority which is stated as a spectfic sum at the time the 

authority is granted. This includes authority stated as “not to 

exceed” a specified amount. 

Indefinite Authority 

Authority for which a specific sum ts not stated but is to be 

determined by other factors, such as the receipts from a certain 

source or obligations incurred. 
. .._.. 

BUDGET DEFICIT 

The amount by wtuch the Government’s budget outlab, exieed Its 

budget receipts for any @ven perlad. Deficits are financed prnnarlly by 

Treasury borrowing from the pubk 

BUDGET OUTLAYS 

See OUTLAYS 

BUDGET RECEIPTS 

Amounts received by the Federal Government from the pubhc that 

arise from. 

- The exercise of governmental or sovereign power (consisting 

primarily of tax revenues, but also including receipts from premiums 

of compulsory social msurance programs, court fines, certam hcense 

fees, and the hke). 

- Premiums from voluntary participants m Federal soCLa1 msurance 

programs (such as deposits by States for unemployment Insurance 

and for social security for their employees) that are closely related 

to compulsory social insurance programs. 

- Cifts and contributions. 

Excluded from budget receipts are OFFSETTING RECEIPTS, which 

are counted as deductions from budget authority and outlays rather 

than as budget receipts. 

BUDGET SURPLUS 

The amount by wtuch the Government’s budget receipts exceed Its 

budget outlays for any given perlad. 

BUDGET UPDATE 

A statement summartzing amendments to or revisions m budget 

authority requested, estimated outlays, and estimated receipts for a 

fiscal year that has not been completed. The President may submit 

updates at any time but is required by the Congressional Budget Act of 

19’74 to transmit such statements to the Congress by Aprd IO and July 

15 of each year. 

BUDGET YEAR 

I See FISCAL YEAR 

I 

8 

BSI' DOCUMENT AVAILABLE 

BUDGETARY 

Portions 

Antldefic 

Control 

savings a 

greater e 

Control 

and rea.1 

DEFERF 

CASH BASIS ( 

A methc 

payment 

payment 

CHANGE IN S 

An adju 

President 

costs ant 

those asr 

not yet t 

Details f 

sectlon 3 

COLLECTION 

Any mar 

of the I 

offsettin: 

BUDGE 

DEPOSI 

CONCURREN 

A resolu 

signature 

congress’ 

year. The 

The first 

congress1 

by Septe 

for a fist 

- 
i, 

,-,.. . _ 

BUDGETARY RESERVES 

Portions of budget authortty set aside under authority of the 

Antideficrency Act (3 I U.S C. 665), as amended by the Impoundment 

Control Act of 1974, for contingenctes or to effect savings whenever 

savmgs are made possible by or through changes in requtrements or 

greater effictency of operations. Section 1002 of the Impoundment 

Control Act of 1974 restricts the establishment of budgetary reserves 

and requires that all reserves be reported to the Congress. (See 

DEFERRAL OF BUDGET AUTHORITY.) 

CASH BASIS OF ACCOUNTING 

A method of accountmg in which revenue IS recognized at the time 

payment is received and costs are considered incurred at the time 

payment is made. (See also ACCRUAL BASIS OF ACCOUNTING.) 

CHANGE IN SELECTED RESOURCES 

An adjustment m the program and financing schedules of the 

President’s budget appendix representing the bridge between program 

costs and obligations. It measures the aggregate increase or decrease in 

those assets and habilities that have entered into obligations but have 

not yet become costs, or vice versa. (See COST BASED BUDGETING.) 

Details for computing “change m selected resources” are included in 

section 32.3 of OMB Circular A-l I. 

COLLECTIONS 

Any moneys received by the Government. Depending upon the nature 

of the transaction, collections may be treated as budget receipts, 

offsetting collecttons, refunds, or credits to a deposit fund. (See 

BUDGET RECEIPTS, OFFSETTING COLLECTIONS. REFUNDS, 

DEPOSIT FUNDS.) 

CONCURRENT RESOLUTION ON THE BUDGET 

A resolution passed by both- Houses of Congress, but not requiring the 

stgnature of the President, setting forth, reaffirming, or revising the 

congressional budget for the United States Government for a fiscal 

year. There are two such resolutions required precedtng each fiscal year. 

The first required concurrent resolution, due by May 15, establishes the 

congressional budget. The second required concurrent resolution, due 

by September 15, reaffirms or revises it. Other concurrent resolutions 

for a fiscal year may be adopted at any time followmg the first required 

concurrent resolution for that fiscal year. 

9 
-, 

.- .- 

CONGRESSIONAL BUDGET 

The budget as set forth by Congress in a concurrent resolutron on the 

budget. These resolutions shall include 

(1) the appropriate level of total budget outlays and of total new 

budget authority, 

(2) an estimate of budget outlays and new budget authorrty for each 

major functional category, for contmgencies, and for undrstributed 

offsetting receipts based on allocations of the appropriate level of 

total budget outlays and of total new budget authority, 

(3) the amount, if any, of the surplus or deficit in the budget 

(4) the recommended level of Federal revenues, and 

(5) the appropriate level of the public debt. 

CONTINGENT LIABILITY 

A conditional commitment which may become an actual liability 

because of a future event beyond the control of the Government. 

Contingent liabilities include such items as guaranteed loans and insured 

bank deposits. 

CONTINUING RESOLUTION 

Legislation enacted by the Congress to provide budget authority for 

specific ongoing activities in cases where the regular fiscal year 

appropriation for such activities has not been enacted by the beginning 

of the fiscal year. The continuing resolution usually specifies a 

maximum rate at which the agency may incur obligations, based on the 

rate of the prior year, the President’s budget request, or an appropriation bill passed by either or both Houses of the Congress. 

CONTRACT AUTHORITY 

A form of budget authority under which contracts or other obligations 

may be entered into in advance of an appropriation or in excess of 

amounts otherwise available in a revolving fund. Contract authority 

must be funded by a subsequent appropriation or the use of revolving 

fund collections to liquidate the obligations. Appropriations to liquidate contract authority are not classrfied as budget authorrty smce they 

are not available for obligation. Section 401 of the Congressional 

Budget Act of 1974 limits new contract authority, with few exceptions, 

to such extent or in such amounts as are provided in approprratron acts. 

10 

BEST DOCUMENT AVAILABLE / 

CONTROLLABILI’ 

The ability u 

during a giver 

spending that 

existing subst 

of openende 

veterans’ ben 

incurred durir 

COST-BASED BUC 

Budgeting in 

consumed in 

acquire the r 

addition to I 

presents the 

based budge1 

regardless of 

the financing 

the “prograr 

required to z 

RESOURCE! 

CROSSWALK 

The expressi 

and another. 

legislation or 

sional comm 

CURRENT AUTH 

See BULGE 

CURRENT POLIC 

Projections 

upcoming fi 

by enacted 2 

without pol 

numbers ant 

continuatior 

CURRENT SERV 

Estimated b 

based on co 
CONTROLLABILITY 

The ablhty under exrstmg law to control budget authority or outlays 

during a gven fiscal year. “Relatively uncontrollable” usually refers to 

spending that cannot be increased or decreased without changes m 

existing substantive law. The largest parr of such spending is the result 

of openended programs and fixed costs, such as social secunty and 

veterans’ benefits, but also includes payments due under obhgations 

incurred durmg prior years. 

COST-BASED BUDGETING 

Budgeting in terms of costs to be incurred, i.e., the resources to be 

consumed in carrying out a program regardless of when the funds to 

acquire the resources were obhgated or pald. Cost-based budgeting, in 

addition to reflecting the obhgational requirements for the program, 

presents the cost of what is planned 10 be accomplished. (Obligationbased budgeting 1s expressed in terms of obhgations to be Incurred, 

regardless of when the resources acquired are to be consumed.) When 

the financing schedules in the appendix to the President’s budget state 

the “program by activities” in terms of costs, an adjusting entry is 

required to arrive at total obligations. (See CHANGE IN SELECTED 

RESOURCES.) 

CROSSWALK 

The expression of the relationship between one set of classifications 

and another, such as between appropriation accounts and authorlring 

legislation or between the budget functIonal structure and the congressional committee spending jurisdictions. 

CURRENT AUTHORITY 

See BUDGET AUTHORITY. 

CURRENT POLICY BUDGET 

Projections of the estimated budget authority and outlays for the 

upcoming fiscal year to operate Federal programs at the level implied 

by enacted appropriations and authorizations for the current fiscal year 

without policy changes, but adjusted for inflation, changes in the 

numbers and kinds of beneficiaries, and in some instances to reflect the 

continuation of certain programs scheduled to terminate. 

CURRENT SERVICES ESTIMATES 

Estimated budget authority and outlays for the upcoming fiscal year 

based on continuation of existing levels of Service. i.e., assuming that all 

11 
-. ,-, -.. ,-. 

programs and actnrtres wtll be carrred on at the same level as rn the 

fiscal year rn progress and without pohcy changes rn such programs and 

activities. These estrmates of budget Juthorrty and outlays. dccompanied by the underlymg economrc and programmsru dssumptrons 

upon which they are based (such as the rate of mflation, the rate of real 

economic growth. the unemployment rate, program caseloads. and pay 

Increases), are requrred to be transmrtted by the Presrdent to the 

Congress by November 10 of each year. 

CURRENT YEAR 

See FISCAL YEAR 

DEBT HELD BY THE PUBLIC 

See FEDERAL DEBT 

DEBT SUBJECT TO STATUTORY LIMITATION DIRECT LOAN 

See FEDERAL DEBT Outlays, : 

without ir 

90 days’ d DEFERRAL OF BUDGET AUTHORITY 

Any actron or inactron by any officer or employee of the United States 

that withholds, delays, or effectively precludes the oblrgatron or 

expenditure of budget authority, including the establishment of 

reserves under the Antideficiency Act as amended by the Impoundment 

Control Act. (See BUDGETARY RESERVES.) Section 1013 of the 

Impoundment Control Act of 1974 requires a special message from the 

President to the Congress reporting a proposed deferral of budget 

authority. Deferrals may not extend beyond the end of the fiscal year 

in which the message reporting the deferral is transmitted and may be 

overturned by the passage of an impoundment resolution by either 

House of Congress. (See IMPOUNDMENT RESOLUTION.) 

DEFICIENCY APPORTIONMENT 

See APPORTIONMENT. 

DEFICIENCY APPROPRIATION 

An appropriation made to an expired account to cover obligations 

mcurred in excess of the available budget authority. 

DEFINITE AUTHORITY 

See BUDGET AUTHORITY. 

BEST DOCUMENT AVAILABLE 

DEOBLIGATIO 

A downw: 

be attribu 

or correctr 

DEPOSIT FUNC 

Accounts 1 

either (a) 

some oth, 

determina 

Covernme 

of the def 

and they 

they do pr 

DISBURSEMEF 

In budget; 

issued, ci 

disbursem 

credited 

received t 

OUTLAY 

ENTITLEMEN 

Legislatio 

governmel 

social set 

Congressi( 

enactmen 

EXPENDITURI 

A term gt 

(At one r 

other beu 
DEOBLIGATION 

A downward ad~ustmcnt of prevtously rccordcd \~hhgattons Thts may 

be dttributable to cancellation of ,I pro)ect or contract. prtce revtstons. 

or corr?;tions of~mounts previously recorded as ~~bbgattuns. 

DEPOSIT FUNDS 

Accounts establtshed to facilitate the accoutttmg for collections that are 

etther (a) held tn suspense temporarily and later refunded or pard mto 

some other fund of the Government upon admmrstrative or legal 

determutation as to the proper disposition thereof or (b) held by the 

Government as banker or agent for others and paid out at the discretion 

of the depositor. These accounts are not mcluded ut the budget totals 

and they are not available for expenses of the Government. although 

they do provtde a means of financing the budger. 

DIRECT LOANS 

Outlays, all or part of whtch are contracted to be repaid with or 

wtthout Interest. Sales of Federal assets on credtt terms of more than 

90 days’ duration are also classified as dtrect loans 

DISBURSEMENTS 

In budgetary usage, gross dtsbursements represent the amount of checks 

issued. cash. or other payments made, less refunds received. Net 

disbursements represent gross disbursements less mcome collected and 

credtted to the appropnation or fund account, such as amounts 

received for goods and services provtded. (See LXPENDITLJRES and 

OUTLAYS.) 

ENTITLEMENT AUTHORITY 

Legislation that requires the payment of beneftts to any person or 

government meeting the requirements established by such law, e.g., 

soctal securtty benefits and veterans’ pensions. Section 401 of the 

Congressional Budget Act of 1974 places certatn restrictions on the 

enactment of new entttlement authority. 

EXPENDITURES 

A term generally used utterchangeably wtth outlays. (See OUTLAYS.) 

(At one ttme. the term was used to describe one form of outlays, the 

other brmg “net lendtng.” This usage ts now obsolete ) 

13 
EXPIRED APPROPRIATION 

An appropriation that 1s no longer available for obhgattiln but IS still 

available for payment of zxlsttng obhgattons. (See “M” ACCOVUTS.) 

FEDERAL DEBT 

Federal debt consists of pubhc debt and agency debt. 

Public Debt 

That portion of the Federal debr incurred when the Treasury 

Department or Federal Fmancing Bank (FFB) borrows funds 

directly from the public or another fund or account. To avoid 

double counting, FFB borrowing from Treasury is not included in 

public debt. (The Treasury borrowing required to obtam the 

money to lend FFB 1s already part of the public debt.) 

Agency Debt 

That portion of the Federal debt incurred when a Federal agency 

authorlted by law, other than Treasury or the Federal Fmancing 

Bank (FFB), borrows funds directly from the public or another 

fund or account. To avoid double counting, agency borrowing 

from Treasury or the FFB and Federal fund advances to trust 

funds are not included tn the Federal debt. (The Treasury or FFB 

borrowing required to obtain the money to lend to the agency is 

already part of the public debt.) Agency debt may be incurred by 

agencies within the Federal budget (such as the Tennessee Valley 

Authority) or by off-budget Federal entities (such as the Postal 

Service). Debt of Government-sponsored, privately owned 

enterprises (such as the Federal National Mortgage Association) is 

not included in the Federal debt. 

There are three basic concepts or tabulations of Federal debt: gross 

Federal debt, debt held by the public, and debt subject to statutory 

limit. 

Gross Federal Debt 

The sum of all public and agency debt issues outstanding. 

Debt Held by the Public 

That part of the gross Federal debt held by the public. (The 

Federal Reserve System is included in “the public” for this 

purpose.) Debt held by Government trust funds (e.g., Social 

Security Trust Fund), revolving funds, and off-budget Federal 

entities is excluded from debt held by the public. 

Debt Sub) 

Defi 

At I 

age* 

FEDERAL FUN 

Accounts 

owns, and 

classes of 

fund recei 

or fund ac 

tions, pub 

General FI 

Accc 

for a 

!Special Fu 

ACU 

earn 

General FI 

Accc 

Con) 

GOW 

Special Fu 

Accc 

fund 

with 

Public Ent 

Funs 

printo fi 

lntregover 

Accc 

and 

intro 

lntragover 

Fun1 

men 

Off% 

BEST DOCUMENT AVAILABLE 

14 
-- - _.. ---. -- -.., 

Debt Subject to Statutory Limit 

Defined by the Second Liberty Bond Act of 1917, as amended. 

At present virtually all public debt, but only a small portion of 

agency debt, is included in debt subject to statutory limit. 

FEDERAL FUND ACCOUNTS 

Accounts in which the Government credits receipts which it collects, 

owns, and uses solely for its purposes. They are composed of two 

classes of receipt accounts-general fund receipt accounts and special 

fund receipt accounts-and four classes of appropriation (expenditure) 

or fund accounts-general fund appropriations, special fund appropriations, public enterprise revolving funds, and intragovernmental funds. 

General Fund Receipt Accounts 

Accounts credited with all receipts that are not earmarked by law 

for a specific purpose. 

Special Fund Receipt Accounts 

Accounts credited with receipts from specific sources that are 

earmarked by law for a specific purpose. 

General Fund Appropriation Accounts 

Accounts established to record amounts appropriated by the 

Congress to be expended for the general support of the 

Government. 

Special Fund Appropriation Accounts 

Accounts established to record appropriated amounts of special 

fund receipts to be expended for special programs in accordance 

with specific provisions of law. 

Public Enterprise Revolving Fund Accounts 

Funds authorized by Congress to be credited with receipts, 

primarily from the public, that are generated by, and earmarked 

to finance, a continuing cycle of business-type operations. 

Intragovernmental Fund Accounts 

Accounts established to facilitate financing transactions within 

and between Federal agencies. These funds may be classified as 

intragovernmental revolving funds or management funds. 

Intragovernmental Revolving Fund Accounts 

Funds authorized by law to carry out a cycle of intragovernmental business-type operations. These funds are credited with 

offsetting collections from other agencies and accounts. 

15 
Management Fund Accounts 

Funds authorrzed by law to credit collectrons trorn two or more 

approprrattons rn order to finance a common purpose or prqect 

not involvmg d contmumg cycle of burrness-type operatton\ 

FEDERAL INTRAFUND TRANSACTIONS 

See OFFSETTING RECElPTS 

FISCAL POLICY 

Federal Government pohcres wrth respect to taxes, spending, and debt 

management, intended to promote the Natron’s economrc goals, 

particularly with respect to employment, gross national product, prrce 

level stability, and equilibrmm in balance of payments. The budget 

process IS a major vehrcle for determinmg and implementmg Federal 

fiscal policy. The other major component of Federal economrc pohcy is 

MONETARY POLICY, defined in the section on economic terms. 

FISCAL YEAR 

Any yearly accounting period, without regard to its relationship to a 

calendar year. The fiscal year for the Federal Government begins on 

October 1 and ends on September 30. The fiscal year is destgnated by 

the calendar year in which it ends; e.g., fiscal year 1977 ts the fiscal 

year ending September 30, 1977. (Prior to fiscal year 1977 the fiscal 

year began on July 1 and ended on June 30.) 

Budget Year 

The fiscal year for which the budget IS bemg considered; the fiscal 

year following the current year 

Current Year 

The fiscal year m progress 

Past Year 

The fiscal year immediately preceding the current year; the last 

completed fiscal year. 

FOREIGN CURRENCY ACCOUNT 

An account established in the Treasury for foreign currency that IS 

acquired wrthout payment of United States dollars, primarrly m 

payment for commodities (such as through the Agricultural Trade 

Development Assistance Act, P.L. 480). These currenctes may be 

expended without charge to dollar approprrattons. They may be 

available for obligatron without further congressional actton. or 

1 16 BEST DOCUMENT AVAILABLE 

Congress r 

FOREIGN 

FORWARD FUf 

The oblig; 

contract a 

ongoing gr 

the “High 

HEW, stuc 

student lo 

APPROPR 

FULL EMPLOY 

The estrm 

tf the ecoi 

full capac 

ment rate 

FUNCTION (FI 

The Con! 

estrmate 

function. 

authority. 

purposes 

generally 

that best 

admimste 

narrower 

GENERAL FUI 

See FEDE 

GOVERNMEN’ 

Enterprm 

banks art 

Federal C 

are not ir 

operatron 

President 
Congress may dpproprratr these forergn currencies. (Sez also SPECIAL 

FOREIGN CURREKCY PROGRAM APPROPRIATlON.r 

FORWARD FUNDING 

The obligatton of funds in one fiscal year (e.g., the awarding of a 

contract and estabhshment of a letter of credrt) for the financing of 

ongomg grantee programs during the succeedtng year. For example, m 

the “Higher Education” appropriation account, Office of Education, 

HEW, student loan funds are obhgated at the end of the fiscal year for 

student loans to be made in the following year (See also ADVANCE 

APPROPRIATION and ADVANCE FUNDING.) 

FULL EMPLOYMENT BUDGET 

The esttmated recerpts, outlays, and surplus or deficrt that would occur 

if the economy were continually operating at a rate defined as being at 

full capacity (traditionally defined as a certain percentage unemployment rate for the crvrhan labor force). 

FUNCTION (FUNCTIONAL CLASSIFICATION) 

The Congresstonal Budget Act of 1974 requrres the Congress to 

esttmate outlays, budget authority, and tax expenditures for each 

function. The functional classtficatton is a means of presenting budget 

authority, outlay, and tax expenditure data in terms of the principal 

purposes that Federal programs are intended to serve. Each account is 

generally placed in the ungle function (e.g., national defense, heal,th) 

that best represents tts major purpose, regardless of the agency 

admmtstering the program. Functions are generally subdivtded into 

narrower categories called subfunctions. 

GENERAL FUND ACCOUNTS 

See FEDERAL FUND ACCOUNTS. 

GOVERNMENT-SPONSORED ENTERPRISES 

Enterprises with completely private ownership, such as Federal land 

banks and Federal home loan banks, established and chartered by the 

Federal Government to perform specialized functions. These enterprises 

are not included in the budget totals, but financial information on theu 

operations is published in a separate part of the appendix to the 

President’s budget. 

17 
GRANTSIN.AID 

For purposes of the budget, grants-u-nd consist of budget outlays by 

the Federal Government to support State or local programs of 

governmental service to the public. Grants do not include purchases 

from State or local governments (I.e., payments for research or support 

of Federal prisoners). 

GROSS FEDERAI. DEBT 

See FEDERAL DEBT 

GUARANTEED LOANS 

Loans for which the Federal Government guarantees in whole or in part 

the repayment of principal and/or interest. 

IDENTIFICATION CODE 

An 11-digit number assigned to each appropriation or fund account 

included in the budget, The identification code identifies the agency, 

the appropriation or fund account symbol, the timing of the transmittal 

(regular, supplemental), the type of fund (general, special), and the 

functional classification of each account (see FUNCTION). 

IMPOUNDMENT 

Any action or inaction by an officer or employee of the United States 

that precludes the obligation or expenditure of budget authority 

provided by the Congress. (See DEFERRAL OF BUDGET AUTHORITY and RJZSCISSION.) 

IMPOUNDMENT RESOLUTION 

A resolution of the House of Representatives or the Senate disapproving a deferral of budget authority set forth in a special message 

ordinarily transmitted by the President under section 1013 of the 

Impoundment Control Act of 1974. Passage of an impoundment 

resolution by either House of Congress has the effect of overturning the 

deferral and requires that such budget authority be made available for 

obligation. 

INDEFINITE AUTHORITY 

See BUDGET AUTHORITY. 

BEST DOCUMENT AVAILABLE 

18 

INTRABUDGETd 

See OFFSE 

INTRAFUND TF 

See OFFSE 

INTRAGOVERh 

See FEDEI 

INTRAGOVERh 

See FEDEI 

INTAAGOVERh 

See OFFSE 

LIQUIDATION ’ 

See APPR( 

“M” ACCOUNT 

Unliquidat 

(merged in 

following 

payment 

appropriat 

MANAGEMENT 

See FEDE 

MISSION 

See ACEb 

MULTIPLE-YEI 

See BUDC 

NATIONAL NE 

Those Fee 

by budge: 
INTRABUDGETARY TRANSACTIONS 

See OFFSETTING RECEIPTS. 

INTRAFUND TRANSACTIONS 

See OFFSETTING RECEIPTS. 

INTRAGOVERNMENTAL FUND ACCOUNTS 

See FEDERAL FUND ACCOUNTS. 

INTRAGOVERNMENTAL REVOLVING FUND ACCOUNTS 

See FEDERAL FUND ACCOUNTS. 

INTRAGOVERNMENTAL TRANSACTIONS 

See OFFSETTING RECEIPTS. 

LIDUIDATION OF CONTRACT AUTHORITY 

See APPROPRIATION. CONTRACT AUTHORITY 

‘W’ ACCOUNT 

Unliquidated obligations under an appropriation are transferred to 

(merged into) an “M” account at the end of the second full fiscal year 

following expiration. The “M” account remains available for the 

payment of the unliquidated obligations charged to variousyear 

appropriation accounts. 

MANAGEMENT FUND ACCOUNTS 

See FEDERAL FUND ACCOUNTS. 

MISSION 

See AGENCY MlSSlON. 

MULTIPLE-YEAR AUTHORITY 

See BUDGET AUTHORITY. 

NATIONAL NEEDS 

Those Federal functions which describe the end purposes being served 

by budget authority, outlays, and tax expenditures, without regard to 

19 
the means that may be chosen to meet those purposes. Natlond needs, 

in current budgetary usage. may be assumed to be synonymous with 

“function.” 

NEW OBLIGATIONAL AUTHORITY 

This term is now obsolete and has been replaced by the term “budget 

authority.” (At one time the term was u=,d to distinguish one of two 

types of budget authority-the other being “loan authority,” which is 

also obsolete.) 

NO-YEAR AUTHORITY 

See BUDGET AUTHORITY. 

OBJECT CLASSIFICATION 

A uniform classification identifying the transactions of the Federal 

Government by the nature of the goods or services purchased (such as 

personnel compensation, supplies and materials, or equipment) without 

regard to the agency involved or the purpose of the programs for which 

they are used. (General instructions are provided in OMB Circular No. 

A-l 2). 

OBLIGATIONS 

Amounts of orders placed, contracts awarded, services rendered. or 

other commitments made by Federal agencies during a given period, 

which will require outlays during the same or some future period. (See 

3 1 U.S.C. 200.) 

OFF.BUDGET FEDERAL ENTITIES 

Entities, federally owned m whole or in part, whose transactions have 

been excluded from the budget totals under provisions of law, e.g., the 

Federal Financing Bank. The fiscal activities of these entities are not 

included in either budget authority or outlay totals, but are presented 

in a separate part of the budget appendix and as memorandum items in 

various tables in the budget. 

OFFSETTING COLLECTIONS 

Moneys received by the Government as a result of business-type 

transactions with the public (sale of goods and services) or as a result of 

a payment from one Government account to another. Such collections 

are netted in determining budget outlays. (See OFFSETTISG RECEIPTS and REIMBURSEMENTS.) 

1 20 BEST DOCUMENT AVAILABLE 

OFFSETTING RI 

All collecti’ 

budget autk 

computing 

tions not 

receipts ant 

level. These 

as “offsettil 

Offsetting 

subfunctior 

three cases 

interest ret 

Continental 

BUTED OF 

than being ( 

Offsetting r 

Proprietary 

Thou 

whid 

lntragovern 

All c 

Paw 

trans; 

BUD{ 

Fedel 

or II 

payin 

lntral 

three 

-Ink 

a tr 

-Fed 

rect 

-Tru 

recc 

ONE-YEAR AU1 

See BUDGI 

OPEN-ENDED PI 

Entitlemen 

outlays arc 
-- 

Of FSETTING RECEIPTS 

All collections depostted into receipt accounts that are offset against 

budget authority and outlays rather than reflected as budget receipts in 

computing budget totals. Under current budgetary usage, cash collections not deposited into receipt accounts (such as revolving fund 

receipts and reimbursements) are deducted from outlays at the account 

level. These transactions are offsetting collections but are not classified 

as “offsetting receipts.” 

Offsetting receipts are generally deducted at the budget function or 

subfunction level and from agency budget authority and outlays. In 

three cases-employer share of employee retirement. intragovernmental 

interest received by trust funds, and rents and royalties from the Outer 

Continental Shelf lands-the deductions, referred to as UNDISTRIBUTED OFFSETTING RECEIPTS, are made from budget totals rather 

than being offset by function and subfunction and by agency. 

Offsetting receipts are subdivided into two major categories: 

Proprietary Receipts From the Public 

Those collections from the public deposited in receipt accounts 

which arise from the conduct of business-type activities. 

Intragovernmental Transections 

All collections or deposits into receipt accounts in which the 

payment is made by a Federal agency. Intragovernmental 

transactions may represent either RECtlFTS FKOM OFFBUDGET FEDERAL ENTITIES. where a payment comes from a 

Federal enttty whose funds are excluded from the budget totals. 

or INTRABUDCETARY TRANSACTIONS, where both the 

paying and the receiving accounts are within the budget. 

lntrabudgetary transactions in turn are further subdivided into 

three groups: 

-1nterfund transactions, where the payment ts from a Federal to 

a trust fund or vice versa. 

--Federal intrafund transactions, where both the paying and 

receiving accounts are Federal funds. 

-Trust intrafund transactions, where both the paying and 

receiving accounts are trust funds. 

ONE-YEAR AUTHORITY 

See BUDGET AUTHORITY, 

OPEN-ENDED PROGRAMS 

Entitlement programs under which actual obligations and resultant 

outlays are limited only by the number of eligible persons meeting 

?I 
. _. 

eligibility requirements fixed by law who apply for benefit\ and the 

actual benefits received, e.g.. medicaid. 

OUTLAYS 

The amount of checks issued, interest accrued on most public debt, or 

other payments; net of refunds and reimbursements. Total budget 

outlays consist of the sum of the outlays from appropriations and funds 

included in the unified budget, less offsetting receipts. The outlays of 

off-budget Federal entities are excluded from the unified budget under 

provisions of law, even though these outlays are part of total 

Government spending. Federal outlays are recorded on the “cash basis 

of accounting”-with the exceptionbf most interest on the public debt, 

for which the “accrual basis of accounting” is used. 

OVERSIGHT COMMITTEE 

The congressional committee charged with general oversight of the 

operation of an agency or program. In some, but not all, cases the 

oversight committee for an agency also is the authorizing committee for 

that agency’s programs. (See AUTHORIZING COMMITTEE.) 

PAST YEAR 

See FISCAL YEAR. 

PERMANENT AUTHORITY 

See BUDGET AUTHORITY. 

PRESIDENT’S BUDGET 

The budget for a particular fiscal year transmitted to the Congress by 

the President in accordance with the Budget and Accounting Act of 

1921, as amended. Some elements of the budget, such as the estimates 

for the legislative branch and the judiciary, are required to be included 

without review by the Office of Management and Budget or approval 

by the President. 

PROGRAM 

Generally defined as an organized set of activities directed toward a 

common purpose, objective, or goal, undertaken or proposed by an 

agency in order to carry out responsibilities assigned to it. In practice, 

however, the term “program” has many usages and thus does not have a 

22 

BEST DOCUMENT AVAILABLE 

well-defined 

has been u: 

activities. ser 

PROJECTIONS 

Estimates 01 

amounts thai 

are intended 

current or cc 

period of tin 

and ranges o 

regarded as I 

nor as recomi 

PROPRIETARY R 

See OFFSET 

PUBLIC DEBT 

See FEDERP 

PUBLIC ENTEAPF 

See FEDERA 

A revision b 

apportionmel 

account. A n 

activity cove 

MENT.) 

REAPPROPRIATh 

Congressiona 

the same or r 

of budget au 

current accol 

act. 

RECEIPT ACCOUI 

Accounts es 

Treasury for 

~..- _..-.. . . 
well-defined standardized meaning in the legislative proces. “Program” 

has been used as a description for agency missions, “programs,” 

activities, services, projects, and processes. 

PROJECTIONS 

Estimates of budget authority, outlays, receipts, or other budget 

amounts that extend several years into the future. Projections generally 

are intended to indicate the budgetary implications of continuing 

current or currently proposed programs and legislation for an indefinite 

period of time. These include alternative program and policy strategies 

and ranges of possible budget amounts. They generally should not be 

regarded as firm estimates of what actually will occur in future years 

nor as recommendations regarding future budget decisions. 

PROPRIETARY RECEIPTS FROM THE PUBLIC 

See OFFSETTING RECEIPTS. 

PUBLIC DEBT 

See FEDERAL DEBT. 

PUBLIC ENTERPRISE REVOLVING FUND ACCOUNTS 

See FEDERAL FUND ACCOUNTS. 

REAPPORTIONMENT 

A revision by the Office of Management and Budget of a previous 

apportionment of budgetary resources for an appropriation or fund 

account. A revision would ordinarily cover the same period, project, or 

activity covered in the original apportionment. (See APPORTIONMENT.) 

REAPPROPRIATION 

Congressional action to restore the obligational availability, whether for 

the same or different purposes, of all or part of the unobligated portion 

of budget authority in an expired account. Obligational availability in a 

current account may also be extended by a subsequent appropriation 

act. 

RECEIPT ACCOUNTS 

Accounts established for recording collections deposited into the 

Treasury for appropriation by the Congress. These accounts may be 
classified as general, special, or trust fund receipt accounts. (See 

FEDERAL FUND ACCOUNTS and TRUST FUNDS.) 

RECEIPTS FROM OFF-BUDGET FEDERAL AGENCIES 

See OFFSETTING RECEIPTS 

RECONCILIATION BILL 

See RECONCILIATION PROCESS 

RECONCILIATION PROCESS 

A process used by the Congress to reconcile amounts determined by 

tax, spending, and debt legislation for a given fiscal year with the 

ceilings enacted in the second required concurrent resolution on the 

budget for that year. Section 310 of the Congressional Budget Act of 

1974 provides that the second required concurrent resolution on the 

budget, which sets binding totals for the budget, may direct 

committees to determine and recommend changes to laws, bills, and 

resolutions, as required to conform with the binding totals for budget 

authority, revenues, and the public debt. Such changes are incorporated 

into either a reconciliation resolution or a reconciliation bill. 

Reconciliation Bill 

A bill, requiring enactment by both Houses of the Congress and 

approval by the President, making changes to legislation that has 

been enacted or enrolled. 

Reconciliation Resolution 

A concurrent resolution, requiring passage by both Houses of 

Congress but not the approval of the President, directing the 

Clerk of the House or the Secretary of the Senate to make 

specified changes in bills or resolutions that have not yet reached 

the stage of enrollment. 

RECONCILIATION RESOLUTION 

See RECONCILIATION PROCESS 

REFUND 

The return of an advance or the recovery of an erroneous disbursement 

from an appropriation or fund account that is directly related to, and a 

reduction of, previously recorded outlays from the account. It is also 

the return of excess collections deposited in receipt accounts that are 

treated as a reduction of receipts. 

BEST DOCUMENT AVAILABLE 

REIMBURSEMEl 

Sums recei 

furnished e 

are authorh 

and fund 

obligations 

outlays) for 

REPROGRAMMI 

Utilization 

than those 

is generally 

agencies an, 

RESCISSION 

The conseq 

previously 

would othe 

1012 of tl 

message frc 

rescission c 

whole or ir 

of Congress 

RESCISSION 811 

A bill or jo 

part, of but 

Impoundmc 

rescission b 

proposal, t 

(See RESCI 

REVENUES 

A term cc 

BUDGET I 

REVOLVING FI 

A fund est 

received b] 

enterprise, 

also FEDEl 

24 
REIMBURSEMENTS 

Sums received by the Government for commodities sold or senxes 

furnished either to the public or to another Government account that 

are authorized by law to be credited directly to specific appropriation 

and fund accounts. These amounts are deducted from the total 

obligations incurred (and outlays) in determinmg net obligations (and 

outlays) for such accounts. 

REPROGRAMMING 

Utilization of funds in an appropriation account for purposes other 

than those contemplated at the time of appropriation. Reprogramming 

is generally accomplished pursuant to consultation between the Federal 

agencies and the appropriate congressional committees. 

RESCISSION 

The consequence of enacted legislation which cancels budget authority 

previously provided by Congress prior to the time when the authority 

would otherwise lapse (i.e., cease to be available for obligation). Section 

1012 of the Impoundment Control Act of 1974 requires a special 

message from the President to the Congress reporting any proposed 

rescission of budget authority. These proposals may be accepted in 

whole or in part through the passage of a rescission bill by both Houses 

of Congress. 

RESCISSION BILL 

A bill or joint resolution that provides for cancellation, in whole or in 

part, of budget authority previously granted by the Congress. Under the 

Impoundment Control Act of 1974, unless Congress approves a 

rescission bill within 45 days of continuous session after receipt of the 

proposal, the budget authority must be made available for obligation. 

(See RESCISSION.) 

REVENUES 

A term commonly used interchangeably with budget receipts. (See 

BUDGET RECEIPTS.) 

REVOLVING FUND 

A fund established to finance a cycle of operations through amounts 

received by the fund. There are three types of revolving funds: public 

enterprise, intragovernmental revolving, and trust revolving funds. (See 

also FEDERAL FUND ACCOUNTS and TRUST FUNDS.) 

25 
SCOREKEEPING 

A procedure used by the Congresstonal Budget Office for up-to-date 

tabulations and reports of congressional budget actions on bills and 

resolutions providing new budget authority and outlays and changing 

revenues and the public debt limit for a fiscal year. Such reports shall 

include, but not be limited to, status reports on the effects of these 

congressional actions to date and of potential congressional actions, and 

comparisons of these actions to targets and ceilings set by Congress in 

the budget resolutions. Periodic scorekeeping reports are required by 

section 308(b) of the Congressional Budget Act of 1974. 

SPECIAL FOREIGN CURRENCY PROGRAM APPROPRIATION 

An appropriation made available to incur obligations for which 

payments must be made only in U.S.-owned foreign currencies that are 

declared in excess of the normal requirements of the United States by 

the Secretary of the Treasury. The appropriation is made in general 

fund dollar amounts which are credited to the account or fund 

generating the currency, or to miscellaneous receipts of the Treasury, as 

appropriate. The appropriated dollars are thereby exchanged for excess 

foreign currency (held in Treasury foreign currency fund accounts) that 

is used to make the necessary payments. (See also FOREIGN 

CURRENCY ACCOUNT.) 

SPECIAL FUND ACCOUNTS 

See FEDERAL FUND ACCOUNTS 

SPENDING AUTHORITY 

As defined by the Congressional Budget Act of 1974, a collective 

designation for borrowing authority, contract authority, and entitlement authority, for which the budget authority is not provided in 

advance by appropriation acts. These are also commonly referred to as 

backdoor authority. (See BACKDOOR AUTHORITY.) 

SPENDING COMMITTEES (SPENDING RESPONSIBILITY) 

The standing committees of the House and Senate with jurisdiction 

over legislation that permits the obligation of funds. For most 

programs, the Approptiations Committees are the spending committees. 

For other programs, the authorizing legislation itself permits the 

obligation of funds (backdoor authority), in which case the authorizing 

committees are then the committees tith spending responsibility. 

26 

SPENDING LEGISI 

A term used 

provides bud) 

tions leglslati~ 

without the 

entitlement I 

tions action, 

authorization 

ments, when 

that funds ar 

SUCCESSOR AC0 

See “M” ACC 

SUPPLEMENTAL 

An act apT 

appropriation 

budget autht 

(including n 

appropriation 

postponed UI 

TAX EXPENDITL 

Losses of ta: 

which allow 

income or H 

deferral of 1; 

TAX EXPENDIT 

An enumer: 

under existir 

Budget Act 

be presentec 

TOTAL OBLIGA’ 

The sum of 

Congress in 

specific fun 

previous ye 

term is user 

but could bl 
SPENDING LEGISLATION (SPENDING BILL) 

A term used in budget scorekeeping to indicate legislation that directly 

provides budget authority or outlays. The term includes (1) appropriations legislation, (2) legislation that provides budget authority directly 

without the need for subsequent appropriations action, and (3) 

entitlement legislation which, while requiring subsequent appropriations action, essentially “locks in” budget authority at the time of 

authorization (except legislation which establishes conditional entitlements, where recipients are entitled to payments only to the extent 

that funds are made available in subsequent appropriations legislation). 

SUCCESSOR ACCOUNT 

See “M” ACCOUNT. 

SUPPLEMENTAL APPROPRIATION 

An act appropriating funds in addition to those in an annual 

appropriation act. Supplemental appropriations provide additional 

budget authority beyond original estimates for programs or activities 

(including new programs authorized ‘after the date of the original 

appropriation act) for which the need for funds is too urgent to be 

postponed until enactment of the next regular appropriation act. 

TAX EXPENDITURES 

Losses of tax revenue attributable to provisions of the Federal tax laws 

which allow a special exclusion, exemption, or deduction from gross 

income or which provide a special credit, preferential rate of tax, or a 

deferral of tax liability. 

TAX EXPENDITURES BUDGET 

An enumeration of revenue losses resulting from “tax expenditures” 

under existing law for each fiscal year. Section 601 of the Congressional 

Budget Act of 1974 requires that estimated levels of tax expenditures 

be presented in the President’s budget. 

TOTAL OBLIGATIONAL AUTHORITY (TOA) 

The sum of (I) all budget authority granted (or requested) from the 

Congress in a given year, (2) amounts authorized to be credited to a 

specific fund, and (3) unobligated balances of budget authority from 

previous years which remain available for obligation. In practice, this 

term is used primarily in discussing the Department of Defense budget 

but could be applied to other agencies’ budgets as well. 

27 
TRANSFER APPROPRIATION ACCOUNT 

A separate account established to receive and disburse allocatlons from 

another appropriation or fund account to carry out the purposes of the 

parent account or fund. The subsequent transactions of the transfer 

appropriation account are reported with the transactions of the parent 

account. 

TRANSITION QUARTER ITO) 

The )-month period (July 1 to September 30, 1976) between fiscal 

year 1976 and fiscal year 1977 resulting from the change from a July 1 

through June 30 fiscal year to an October 1 through September 30 

fiscal year beginning with fiscal year 1977. 

TRUST FUNDS 

Funds collected and used by the Federal Government for carrying out 

specific purposes and programs according to terms of a trust agreement or statute, such as the social security and unemployment trust 

funds. Trust funds are administered by the Government in a fiduciary 

capacity and are not available for the general purposes of the 

Government. Trust fund receipt accounts are credited with receipts 

generated by the terms of the trust agreement or statute. Trust fund 

receipts that are not anticipated to be used in the immediate future are 

generally invested in interest-bearing Government securities and earn 

interest for the trust fund. Trust fund expenditure accounts record 

amounts appropriated from trust fund receipts to be expended in 

carrying out the specific purposes or programs under the trust 

agreement or statute. A special category of trust funds called trust 

revolving funds is used to carry out a cycle of busmess-type operations, 

e.g., the Federal Deposit Insurance Corporation. 

TRUST INTRAFUND TRANSACTIONS 

See OFFSETTING RECEIPTS 

TRUST REVOLVING FUNDS 

See TRUST FUNDS and REVOLVING FUND 

UNDISTRIBUTED OFFSETTING RECEIPTS 

See OFFSETTING RECEIPTS 

UNIFIED BUDGET 

The present fo 

receipts and cn 

dated. When I 

totals, transact 

the other fund 

double countir 

included in th 

OFF-BUDGET 

WARRANT 

The official dc 

Treasury that 

withdrawn fro! 

ZERO-BASE BUDGI 

A budgeting 

requests withc 

funding. Unde 

budgeted in a 

on all propor 

levels of 0~ 

activities are 

performance i 

ranked in pric 

at which each 

BEST DOCUMENT AVAILABLE 

28 
. . -, 

UNIFIED BUDGET 

The present form of the budget of the Federal Government, in whtch 

receipts and outlays from Federal funds and trust funds are consolidated. When these fund groups are consolidated to display budget 

totals, transactions whtch are outlays of one fund group for payment to 

the other fund group (i.e., interfund transactions) are deducted to avoid 

double counting. Transactions of off-budget Federal entities are not 

included in the unified budget. (See OFFSETTING RECEIPTS and 

OFF-BUDGET FEDERAL ENTITIES.) 

WARRANT 

The official document issued pursuant to law by the Secretary of the 

Treasury that establtshes the amount of money authorized to be 

withdrawn from the Treasury. 

ZERO-BASE BUDGETING 

A budgeting technique that generally attempts to analyze budget 

requests without an implicit commitment to sustaining past levels of 

funding. Under this system programs and activities are organized and 

budgeted in a detailed plan that focuses review, evaluation, and analysis 

on all proposed operations-rather than on increases above current 

levels of operations, as in incremental budgeting. Programs and 

activities are analyzed in terms of successively increasing levels of 

performance and funding, starting from zero, and then evaluated and 

ranked in priority order. The purpose is to determine the level, if any, 

at which each program or activity should be conducted. 

29 
ZERO-BASE BUDGETING 

TERMS AND DEFINITIONS 

The Office of Management and Budget is prepating Govemmentwide guidelines for the development of zero-base budgeting for use 

in the fiscal year 1979 budget process. In this context, OMB has 

prepared initial definitions for the following terms applicable to 

zero-base budgeting. These terms and defmitions have not been 

reviewed by GAO or coordinated by us with the agencies responsible 

for the standard terminology and definitions for Fedeml fiscal, 

budgetary, and program-related data These terms and their initial 

definitions are therefore included for informational purposes only. 

They will no doubt be revised several times as they are used in the 

new zero-base budgeting process 

DECISION UNIT 

The program or organizational entity for which budgets are prepared 

and for which a manager makes significant decisions on the amount of 

spending and the scope or quality of work to be performed. 

DECISION PACKAGE 

A brief justification document that includes the information necessary 

for managers to make judgments on program or activity levels and 

resource requirements. A series of decision packages (a decision package 

set) is prepared for each decision unit and cumulatively represents the 

total budget request for that unit. 

CONSOLIDATED DECISION PACKAGES 

j 

I 

I 

I 

i 

I 

30 

Packages prepared at higher management levels that summarize and 

supplement information contained in decision packages received from 

lower level units. Consolidated packages may reflect different priorities, 

including the addition of new programs or the abolition of existing 

ones. 

RANKING 

The process by which managers array program or activity levels (as 

shown in decision packages) in decreasing order of priority. This 

BEST DOCUMENT AVAILABLE 

rankiig proc 

package incr 

the benefits 

levels. 

MINIMUM LEVEI 

The progran 

continue th 

contribution 

level: 

-may not I 

perspective 

-may not r 

unit. 

CURRENT LEVE 

The level tf 

activities we 

major pohc: 

nevertheless 

statutory at 

other object 

Circular No. 
ranking process identities the relative priority assigned to each decision 

package increment contained in the manager’s budget request, based on 

the benefits to be gamed at and the consequences of various spending 

levels. 

MINIMUM LEVEL 

The program, activity, or funding level below which it is not feasible to 

continue the program, activity, or entity because no constructive 

contribution can be made toward fulfilling its objective. The minimum 

level: 

-may not be a fully acceptable level from the program manager’s 

perspective; and 

-may not completely achieve the desired objectives of the decision 

unit. 

CURRENT LEVEL 

The level that would be reflected in the budget if Rscal year 1978 

activities were carried on at 1978 service or other output levels without 

major policy changes. A concept, not unlike current services, that 

nevertheless permits internal realignments of activities within existing 

statutory authorization. Estimates of personnel compensation and 

other objects of expenditure wiU be made in accordance with OMB 

Circular No. A-l 1. 

31 
ECONOMIC TERMS AND DEFINITIONS 

This section contailrs economic terms and definitions that are used 

in connection with the budget, especially in discussions of the 

economic assumptions underlying the budiet proposals and estimates These terms are not formally or directly in the budget, fiscal, 

and program decision process; therefore, we are not suggesting that 

they be considered stanakd definitions If we find that a term 

comes into regukr use in the budget, congressional budget resolutions, appropriation& or authorizations, we will recommend a 

standmd definition. 

ABILITY TO PAY 

The principle that the tax burden should LX distributed according to a 

person’s income. It is based on the assumption that as a person’s 

income increases, the person can and should contribute a larger 

percentage of his income to support the Government. The progressive 

Federal income tax is an example of a tax based on this principle. 

A~TOMATICSTABILIZER (BUILT-IN STABILIZER) 

A mechanism having a countercyclical effect that automatically 

moderates changes in incomes and output in the economy without 

specific decisions to change Government policy. Unemployment insurance and the progressive income tax are among the most important 

of the automatic stabilizers in the United States. 

BALANCE OF PAYMENTS 

A statistical record of economic transactions between one country (the 

United States) and the rest of the world. The balance of payments 

accounts normally distinguish among transactions involving goods, 

services, short-term capital, and long-term capital. 

BUSINESS CYCLES 

The recurrent phases of expansion and contraction in overall business 

activity, evidenced by fluctuations in measures of aggregate economic 

activity, such as gross natimml product. Although business cycles are 

recurrent, both the duration and the magnitude of the individual cycles 

vary greatly. 

32 

CAPITAL 

The designat 

major factor! 

can refer eitf 

the financial 

CONSTANT DOLl 

A dollar valu 

derived by d 

by appropria 

The result is 

same througt 

constant pur 

only changer 

figures are 

components. 

CONSUMER PRIG 

A statistical 

services pun 

day-to-day I 

about 400 “ 

the same got 

Although th 

index, ” it ml 

important fi 

monthly bas 

COUNTERCYCLI’ 

Actions aims 

cyclical actic 

as more dire 

programs. A 

without net 

MATIC STA 

CROWDING OUT 

Refers to tl 

competes in 

required to 

could raise i 
. 

CAPITAL 

The designation applied in classical economic theory to one of the 

major factors of production, the others being land and labor. Capital 

can refer either to physical capital, such as plant and equipment, or to 

the financial capital resources required to purchase physical capital. 

CONSTANT DOLLAR 

A dollar value adjusted for changes in prices. Constant dollar series are 

derived by dividing current dollar (see CURRENT DOLLAR) estimates 

by appropriate price indexes, a process generally known as deflating. 

The result is a series as it would presumably exist if prices were the 

same throughout as in the base year-in other words, as if the dollar had 

constant purchasing power. Any changes in such a series would reflect 

only changes in the real (physical) volume of output. Constant dollar 

figures are commonly used for gross national product and its 

components. 

CONSUMER PRICE INDEX (CPI) 

A statistical measure of the average change in prices of goods and 

services purchased by urban wage earners and clerical workers for 

day-to-day living. The index compares the price (including taxes) of 

about 400 “market basket” items at current levels with the price for 

the same goods and services expressed in terms of a selected base year. 

Although the consumer price index is often called the “cost-of-living 

index,” it measures only price changes, which is just one of the several 

important factors affecting living costs, The index is published on a 

monthly basis by the Bureau of Labor Statistics. 

COUNTERCYCLICAL 

Actions aimed at smoothing out swings In economic activity. Countercyclical action may take the form of monetary and fiscal policy, as well 

as more direct policies, such as countercyclical revenue sharing or jobs 

programs. Automatic (built-in) stabilizers have a countercyclical effect 

without necessitating changes in governmental policy. (See AUTO- 

. 

MATIC STABILIZERS, STABILIZATION.) 

CROWDING OUT 

Refers to the shortage of credit for business mvestment as business 

competes in the credit market against sales of Government securities 

required to fiance budgetary needs. If money were tight, such sales 

could raise interest rates sufficiently to “crowd out” private borrowing. 

33 
Y,-,-_.- -.-.-. -. -,. _.., -_. _.. - -. 

CURRENT DOLLAR 

The dollar value of a good or service in terms of prices current at the 

time the good or service was sold. This is opposed to the value of the 

good or service in constant dollars. (See CONSTA!!T DOLLAR.) 

DEBT MANAGEMENT 

Operations of the U.S. Treasury Department that determine the 

composition of the Federal debt. Debt management consists primarily 

of manipulating the level of interest rates, the pattern of ownership of 

debt, and the maturity structure of debt. 

DEFICIT FINANCING 

A situation in which the Government’s excess of expenditures over 

revenue for a given period of time is financed primarily by borrowing 

from the public. 

DEFLATION 

A decrease in the general price level usually accompanied by declining 

levels of output, increasing unemployment, and a contraction of the 

sup.ply of money and credit. A significant general price decline during 

the contraction phase of the business cycle no longer occurs in 

advanced economies because of institutional barriers to downward 

adjustments in wages and prices. Declines in output with increases in 

unemployment, however, are sometimes themselves referred to as 

deflationary changes. 

DEVALUATION 

The lowering of the value of a nation’s currency in relation to gold or 

to the currency of other countries, when this value is set by government 

intervention in the exchange market. It is normally used with reference 

to futed exchange rates. 

DISCOUNT RATE 

The interest rate that a commercial bank pays when it borrows from a 

Federal Reserve bank. The discount rate is one of the tools of monetary 

policy used by the Federal Reserve. The Federal Reserve customarily 

raises or lowers the discount rate to signal a shift toward restraining or 

easing its money and credit policy. (See MONETARY POUCY.) 

34 

BEST DOCUMENT AVAILABLE 

DISPOSABLE PEP 

Personal inc 

Government. 

saving. 

ECONOMETRICS 

A subdiscipl 

techniques it 

theories. Ecc 

economic vz 

forecast fut 

economic po 

ECONOMIC GAO\ 

An increase 

in the prod1 

measured by 

national prot 

ECONOMIC INDIt 

A set of stat 

business cyc 

lagging, depe 

of, coincide1 

Although no 

predictor of 

for identifyir 

ECONOMIC MOD 

A simplified 

A model ca 

mathematics 

EMPLOYMENT 

All persons 

taken, did a 

more withot 

the family. 

work but h 

absent durin 

--- _I^..__. -.. . . . . . . . . . .._. . 
I’ 

DISPOSABLE PERSONAL INCOME 

Persona) income less personal taxes and nontax payments to the 

Government. It is the income available to persons for spending or 

saving. 

ECONOMETRICS 

A subdiscipline of economics that uses mathematical and statistical 

techniques in estimating economic relationships and testing economic 

theories. Econometric models attempt to measure the impact of one 

economic variable on another in order to explain past events, to 

forecast future events, or to evaluate the results of a particular 

economic policy. 

ECONOMIC GROWTH 

An increase in a nation’s productive capacity coupled with an increase 

in the production of goods and services. Economic growth usually is 

measured by the annual rate of increase in real (constant dollars) gross 

national product. 

ECONOMIC INDICATORS 

A set of statistical series that have had a systematic relationship to the 

business cycle. Each indicator is classified as leading, coincident, or 

lagging, depending on whether it generally changes direction in advance 

of, coincident with, or subsequent to changes in the overall economy. 

Although no one indicator or set of indicators is a wholly satisfactory 

predictor of the business cycle, taken as a whole they are valuable tools 

for identifying and analyzing business cycle movements. 

ECONOMIC MODEL 

A simplified representation of relationships among economic variables. 

A model can be presented verbally, diagramaticafly, or as a set of 

mathematical equations. 

EMPLOYMENT 

All persons who, during the week when the employment survey was 

taken, did any work for pay or profit, or who worked for 15 hours or 

more without pay on a farm or in a business operated by a member of 

the family. Also included are persons who did not work or look for 

work but had a job or business from which they were temporarily 

absent during the week. 

35 
,_- _- .,.. -

GROSS NATIONAL PRODUCT (GNP) 

The market value of all goods and services produced by labor, caprtal, 

and property supplied by residents of the United States in a given 

period of time. Depreciation charges and other allowances for business 

and institutional consumption of fvted capital goods are subtracted 

from GNP to get net national product. GNP comprises the purchases of 

goods and services by persons and Government, gross private domestic 

investment (including the change in business inventories), and net 

exports (exports less imports) The GNP can be expressed in current or 

constant dollars. 

GNP GAP 

The difference between the economy’s output of goods and services 

and its potential output at full employment, i.e., the difference 

between actual GNP and the potential GNP. 

IMPLICIT PRICE DEFLATOR (GNP DEFLATOR) 

A price index for all goods and services produced in the economy, 

derived by calculating the ratio of the gross national product in current 

prices to the gross national product in constant prices. It is a weighted 

average of the price indexes used to deflate the components of current 

dollar GNP, the implicit weights being expenditures in the current 

period. 

INFLATION 

A persistent rise in the general price level which results rn a decline in 

the purchasing power of money. 

LABOR FORCE 

Those persons who are employed plus those who are seeking work but 

are unemployed. The total labor force includes members of the armed 

forces stationed either in the United States or abroad (these are 

excluded from the civilian labor force). 

LIDUIDITY 

The ease with which an asset can be converted to cash at prevailing 

prices. Demand deposits (checking accounts) are more hquid than time 

(savings) deposits, but both are more liquid than real estate or plant and 

equipment. 

36 

BEST DOCUMENTAVABABLE 

MACROECONOM 

The branch 

analysis as 

markets, or 

study of the 

employment 

income and ( 

MICRDECONOMI 

The branch 

economic t 

(macroeconr 

output am0 

resources ar 

prices of par 

MONETARY PO1 

Policies affi 

ability, that 

employmen 

policy is pt 

Reserve Sy 

policy worl 

This is acco 

sale of secu 

of reserves 

and change! 

MONEY SUPPLI 

The amoun 

of current: 

accounts). 

defined mc 

savings de1 

Ma include 

NATIONAL INC 

Accounts , 

the Depart 

tion of th 

terms the 

distributio 

..--- - 
MACROECONOMICS 

The branch of economics that 1s concerned wrth aggregate economic 

analysis as opposed to the analysis of individual economic units, 

markets, or industries (microeconomics). For example, it includes the 

study of the general price level, national output or income, and total 

employment, rather than the prices of individual commodities or 

income and employment of individual firms. 

MICROECONOMICS 

The branch of economics concerned with analysis of individual 

economic units, markets, or industries as opposed to aggregates 

(macroeconomics). For example, it deals with the division of total 

output among industries, products, and firms; with the allocation of 

resources among competing uses; and with the determination of relative 

prices of particular goods. 

MONETARY POLICY 

Policies affecting the money supply, interest rates, and credit availability, that are intended to promote national economic goals such as 

employment, economic growth, and price level stability. Monetary 

policy is primarily directed by the Board of Governors of the Federal 

Reserve System and the Federal Open Market Committee. Monetary 

policy works by influencing the cost and availability of bank reserves. 

This is accomplished through open-market operations (the purchase and 

sale of securities, primarily Government securities), changes in the ratio 

of reserves to deposits that commercial banks are required to maintain, 

and changes in the discount rate. 

MONEY SUPPLY 

The amount of money in the economy, variously defmed. Mr consists 

of currency (coin and paper money) plus demand deposits (checking 

accounts). Mr is also known as the “money stock” or “the narrowly 

defined money supply.” Ma is M, plus commercral bank time and 

savings deposits other than large certificates of deposits (CDs), while 

Ma includes large CDs as well. 

NATIONAL INCOME ACCOUNTS 

Accounts prepared and published on a quarterly and annual basis by 

the Department of Commerce, providing a detailed statistical description of the United States economy. These accounts depict in dollar 

terms the composition and use of the Nation’s output and the 

distribution of national income to different recipients. The accounts 

37 
make it possible to trace long-term trends and current fluctuations in 

economic activity. The data that measure the Nation’s total output are 

estimated in two principal ways: 

-The value of the goods and services produced by the economyreferred to as the product side of the account. Thrs IS divided mto 

the major uses for the output of the economy. consumer purchases, 

business mvestment, exports, and Government purchases. 

-The costs Incurred and types of mcome earned in producmg those 

goods and services-referred to as the mcome side. This presents 

wages and salaries, profits, and other forms of income, tndirect 

taxes, and capital consumption allowances generated m the production process. 

Because the national income accounts offer a consistent picture of the 

economy, these accounts are basic tools used in analyzing past and 

current performance of the economy and also in forecasting future 

economic developments. Furthermore, this quantitative framework 

makes these accounts of great importance in the formulation of 

national economic policies. 

NET NATIONAL PRODUCT (NNP) 

The net market value of the goods and services produced by labor and 

property supplied by residents of the United States. Net national 

product equals gross national product less capital consumption allowances, which are estimates of the value of the capital goods “used up” 

in producing the gross national product. 

OPEN-MARKET OPERATIONS 

The purchase and sale of various securities, chiefly marketable 

Government securities, by the Federal Reserve System in the open 

market for the purpose of implementing Federal Reserve monetary 

policy. Open-market operations, one of the most flexible instruments 

of monetary policy, affects member bank reserves and thus the 

availability and cost of credit. 

PERSONAL INCOME 

The income received by persons (i.e., individuals, nonprofit institutions, 

private noninsured welfare funds, and private trust funds) from all 

sources. These sources include production; transfer payments from 

Government and business; and Government interest, which is treated 

like a transfer payment. Personal income is the sum of wage and salary 

disbursements, other labor income, proprietors’ income, rental income 

of persons, r 

less personal 

POTENTIAL GRC 

An estimate 

utilization c 

utilization h 

about 4 pert 

PRIME RATE 

The rate of 

to their mos 

RECESSION 

A decline ti 

of at least 

identified 

Economic I 

consecutive 

RESERVE REQL 

The percen 

required to 

their vaults 

policy. The 

of the bank 

of reserves 

STABI LI ZATIOI 

The maintl 

severe cycl 

of fluctuat 

economic i 

STAGFLATION 

The simull 

I 

38 

, 
of persons, dividends, personal interest income, and transfer payments, 

less personal contributions for social insurance 

. . . 

--. 

POTENTIAL GROSS NATIONAL PRODUCT 

An estimate of how much the economy could produce with full 

utilization of its productive resources and existing technology. Full 

utilization has conventionally been defmed as an unemployment rate of 

about 4 percent. 

PRIME RATE 

The rate of interest charged by commercial banks for short-term loans 

to their most creditworthy customers. 

RECESSION 

A decline in overall business activity which is pervasive, substantial, and 

of at least several months duration. Historically, recessions have been 

identified by a private research groupthe National Bureau of 

Economic Research-as a decline. in real gross national product for two 

consecutive quarters. 

RESERVE REOUIREMENTS 

The percentage of deposit liabilities that U.S. commercial banks are 

required to hold as a reserve at their Federal Reserve bank or as cash in 

their vaults. The reserve requirement is one of the tools of monetary 

policy. The Federal Reserve authorities can control the lending capa&y 

of the banks, and thus influence the money supply, by varying the ratio 

of reserves to deposits that commercial banks are required to maintain. 

STABI Ll ZATION 

The maintenance of high-level economic activity with an absence of 

severe cyclical fluctuations. Stability is usually measured by an absence 

of fluctuations in production, employment, and prices, three aspects of 

economic activity that tend to fluctuate in a cyclical fashion. 

STAGFLATION 

The simultaneous existence of high unemployment and high inflation. 

39 
SlJBSIOY 

Generally, a payment by rhe (;overnmenr or another benerlt for Yhrch 

no current service is rendered and which IS desrgned to support the 

conduct of an economic enterprise or activity, such as shop operating 

subsidies. It may also refer to provisions of the tax system that provide 

certain tax benefits (see TAX EXPENDITURES in the sectrun on terms 

used in the budget process) and to the public provisions of loans, goods, 

services, etc., at lower prices than the recipients would have to pay in 

the market, such as interest subsidy. 

TRANSFER PAYMENTS 

Government or business payments to individuals or organnations for 

which no current or future goods or services are required to be provided 

in return. Government transfer payments include social security 

benefits, unemployment insurance benefits, Government retirement 

and veterans benefits, and welfare payments. Business transfer payments include corporate gifts to nonprofit institutions and bad debts 

incurred by customers. 

TREASURY BILLS 

The shortest term Federal security issued by the U.S. Government. 

Treasury bills have maturity dates varying from 3 to 12 months and are 

sold at a discount from face value rather than carrying an explicit rate 

of interest. 

UNEMPLOYMENT 

Persons who, during a specified week, had no employment but were 

available for work and had sought employment within the past 4 weeks, 

were laid off from a Job, or were waiting to report to a new Job within 

30 days. 

UNEMPLOYMENT RATE 

The number of unemployed persons expressed as a percentage of the 

civilian labor force. 

UNEMPLOYMENT RATE, INSURED 

The number of insured unemployed as a percentage of covered 

employment, i.e.. those persons who are eligible to receive unemployment compensation benefits. 

40 

WAGES AND SAI 

Monetary rer 

corporate off 

represent in0 

WHOLESALE PRl’ 

A measure I 

designed to 

volume at th 

the Bureau t 

2,700 comm 

fmished appa 

BEST DOCUMENT AVAILABLE 

._. . . . . . . _,__.._ _.. . . . . ..-... -- .--- - 
WAGES AND SALARIES 

Monetary remuneratron of employees, includmg rhe compensation of 

corporate officers, commissions, tips. bonuses, and recetpts in kind that 

represent income to the receipients. 

WHOLESALE PRICE INDEX 

A measure of producer prices in the United States. The index is 

designed to show changes in prices of commodnies sold in substantial 

volume at the primary market level. The index is compiled monthly by 

the Bureau of Labor Statistics and includes a representative group of 

2,700 commodities, ranging from crude rubber, cotton, and iron ore to 

finished apparel, tires, and machinery. 

., . . . . -..---, 

, 

41