The Reagan administration plans to propose putting all so-called off-budget spending into the regular budget to bring such outlays under better control, Office of Management and Budget officials said yesterday.
An estimated $13 billion of spending is off-budget this fiscal year. The bulk of it is lending by the Federal Financing Bank on behalf of federal agencies such as the Rural Electrification Administration (REA) and the Farmers Home Administration (FmHA). The other major off-budget items are the Strategic Petroleum Reserve and the Postal Service Fund, the latter of which currently has a surplus.
An off-budget program is one that involves spending or loans but by law is not counted in the regular federal budget. More are lending than spending programs.
OMB Director David A. Stockman sought to include off-budget spending in the overall budget totals last year but was rebuffed at the White House because the change would have made the deficit appear about $16 billion larger, according to congressional budget sources.
"The purpose is to record everything that is a Treasury outlay," an OMB official said. "Now is the right time to do it. The change is small . . . and deficits are more than $200 billion."
Off-budget spending for fiscal 1986 is estimated at $8 billion.
The change, which has been supported in principle in the past by the Congressional Budget Office, is "like being for motherhood among budgeteers," said a CBO official.
The shift likely will be opposed by backers of REA subsidies and FmHA programs, because placing the lending of such agencies on-budget would give the House and Senate Appropriations committees more power to limit it.
Separately, the administration plans to seek to restrict such lending to the point that, as current loans are repaid, the net spending total for items currently off-budget would fall to zero by fiscal 1987, from this year's $13 billion. In addition, the administration will try to halt adding more oil to the strategic reserve, which at year's end held about 450 million barrels of crude oil in salt domes along the Gulf Coast. The official target for the reserve is 750 million barrels, nearly five months' worth of oil imports at current rates.
The Federal Financing Bank was created years ago to consolidate borrowing from the public by various federal agencies, effectively allowing them to raise money as cheaply as the Treasury. It was not supposed to engage in net lending -- that is, all the money borrowed was supposed to be counted as lending by the agencies that actually got the money.
But backers of some programs saw the bank as a way to get around budget constraints imposed on the agencies, and they persuaded Congress to allow the agencies to count the sale of agency securities to the bank as if it were a sale to the public. A variation of this approach has allowed agencies to turn loan guarantees into direct lending by the bank as well.
In fiscal 1981, off-budget outlays reached a record $21 billion, largely because of net lending by the Federal Financing Bank, which approached $20 billion. The total has fallen since then as the administration and Congress have sought to hold down total spending.
The cost of purchasing oil for the Strategic Petroleum Reserve, about $3 billion this year, was put off-budget beginning in fiscal 1982. There had been suggestions that the entire cost of the reserve be borne by the private sector, and therefore placed off-budget. Even though no legislation was passed to implement that idea, the strategic reserve went off-budget in order to meet the terms of a budget resolution reducing spending.
Another item that had been off-budget, foreign military sales credits, was put back on-budget last year, partly to avoid the rule that beneficiaries of off-budget credit programs are supposed to pay at least as much in interest as it cost the Treasury to borrow the money.
The administration proposal will not address the requirement in current law that, beginning in fiscal 1992, spending for Social Security be placed off-budget.