Budget Trends

Obligations by Item of Expense, Fiscal Years 1971-1994 Gao ID: AIMD-95-227 September 12, 1995

The budget object classification structure presents budgetary information in terms of the items of government expenditures--the personal and contractual services obtained, capital assets acquired, and other charges and payments. During fiscal years 1971-94, object class obligations trends mirrored the better known trends seen in federal outlays. For example, gross obligations for interest charges and "transfer payments," such as grants and social and health insurance, have grown at about twice the rate of the U.S. gross domestic product. Correspondingly, gross obligations of what remains--what could be called the "operating expenses" of the federal government--represent a declining share of total obligations and have shown overall growth rates of less than one-half the pact of gross domestic product growth. Within this category of obligations, only a few object classes--benefits to current and former personnel; rent, communications, and utilities; and consulting and other services--have experienced real growth greater than the overall pace of economic growth during the 24-year period studied in this report.

GAO found that: (1) most object series and classes have shown real growth since FY 1971; (2) interest costs and transfer payments have increased at nearly twice the average annual rate of growth for the U.S. economy; (3) these costs tripled between FY 1971 and FY 1994, while overall federal obligations doubled; (4) operating expenses increased at less than 40 percent of the increase in the gross domestic product over the 24-year period; (5) over the last 12 fiscal years, operating expense categories experienced low or negative increases due to several statutory spending restraints, while interest costs and transfer payments continued to grow; and (6) examination of FY 1994 obligations will help clarify federal spending patterns, the object classification system, and annual growth rates for each object series and class.

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