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CBO's Projections of Federal Receipts and Expenditures in the National Income and Product Accounts 1 (May 2013)

handle is hein.congrec/cbo11045 and id is 1 raw text is: MAY 2013 CBO's Projections of Federal Receipts and Expenditures in the National Income and Product Accounts The fiscal transactions of the federal government are recorded in two major sets of accounts. One is The Budget of the United States Government, prepared by the Office of Management and Budget, which is the framework gener- ally used by executive branch agencies and the Congress and commonly discussed in the press. It focuses on cash flows-the inflow of revenues (funds generated from taxes and fees) and the outflow of spending (cash dis- bursed for the various federal functions). The main objectives of the budget are to provide information that can assist lawmakers in their policy deliberations, to facil- itate the management and control of federal activities, and to help the Treasury manage its cash balances and determine its borrowing needs. The second major set of accounts is the national income and product accounts (NIPAs), which are produced by the Department of Commerce's Bureau of Economic Analysis (BEA). Like the budget, the NIPAs record the federal government's fiscal transactions, but they have dif- ferent objectives in doing so. The NIPAs are intended to provide a comprehensive accounting of activity in the U.S. economy, and as such, they are used extensively in macroeconomic analysis. Specifically, they measure cur- rent production (the process by which goods and services are provided for use) and the income generated by that production. A well-known measure of overall production in the NIPAs is gross domestic product (GDP). The accounts divide the economy into four major sectors business, government, household, and the rest of the world (that is, the foreign sector)-each with its own set of accounts.' This report focuses on the federal sector, which is one component of the government sector.2 Because the aims of the NIPAs differ from those of the federal budget, the two accounting systems treat some government transactions very differently. Conceptual Differences Between the Federal Budget and the Federal Sector in the NIPAs The budget of the federal government is best understood as an information and management tool. It focuses pri- marily on cash flows, recording revenues and spending 1. Some accounts in the NIPAs-such as the domestic capital account, which shows saving and investment-focus on compo- nents of GDP or income rather than on a specific sector. Those accounts bring together relevant information from all four sectors. 2. For information on the NIPAs generally, see www.bea~gov/ For other discussions of the federal sector in the NIPAs, see Bureau of Economic Analysis, NIPA Transla- tion of the Fiscal Year 2013 Federal Budget (March 2012), (pdf, 482 KB), and A Primer on Govern- ment Accounts, Survey of Current Business (March 2012 and March 2008), www bea.gov/seb/c/0308cont.htn; and Office of Management and Budget, Budget ofthe United States Govern- ment, Fiscal Year 2014: Analytical Perspectives (May 2013), http://go.usa.gov/rDNQ.The state and local sector is the other component of the government sector. More formally, BEA regards the federal government and state and local governments as subsec- tors. The treatment of state and local governments' transactions in the NIPAs closely resembles the treatment of the federal government's transactions. Note: Numbers in the text and tables may not add up to totals because of rounding.

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