Federal Fiscal Trends

In recent years, GAO has examined various cross-cutting patterns in the federal government's budget structures, processes, and reporting mechanisms. This staff study focuses on the fiscal components of the budget--the trends in revenues and outlays as well as the underlying factors contributing to these trends. This staff study is primarily derived from data published by the Office of Management and Budget as part of the President's fiscal year 1997 budget submission. Trend data are presented in graphs accompanied by brief descriptions. The data are presented (1) in constant dollars, using 1995 as the base year; (2) as a percent of gross domestic product; and (3) as a share of totals. Analyses of the data cover fiscal years 1971 through 1995.

GAO noted that: (1) although federal revenues have more than doubled in constant dollars over the last 25 years, they have maintained a generally consistent share of the gross domestic product (GDP) during this period; (2) all revenue sources, except excise taxes, have shown real growth over the last 25 years, but only social insurance taxes have increased as a share of total revenues; (3) tax expenditures increased significantly in constant dollars and as a share of revenues until the Tax Reform Act of 1986, but since 1989 they have resumed their upward climb, constituting 32 percent of revenues in 1994; (4) collections which arise from business-type transactions with the public have doubled in constant dollars since 1971; (5) these receipts have generally been the third largest revenue source during this period and, since 1981, have annually exceeded the combined shares of corporate and excise taxes as a percent of total federal revenues; (6) a few large entitlement programs, such as Social Security, Medicare and Medicaid, and interest payments have accounted for over three-quarters of the total outlay growth since 1971; (7) overall spending for entitlement and other mandatory programs arising outside of the annual appropriations process grew more than four times faster in real terms than appropriated spending; (8) within discretionary spending, defense and domestic outlay patterns have varied during this period, showing both periods of growth and decline; (9) during the last 25 years, changes in outlay patterns have also documented shifts in the mission priorities of the federal government; and (10) although overall levels differ, the United States has generally allotted a smaller share of its GDP to government activities than most other governments.