President  |  Vice President  |  First Lady  |  Mrs. Cheney  |  News & Policies 
History & ToursKids  |  Your Government  |  Appointments  |  JobsContactGraphic version

Email Updates  |  Español  |  Accessibility  |  Search  |  Privacy Policy  |  Help


Commodity Futures Trading Commission

   The Commodity Futures Trading Commission (CFTC) regulates U.S. futures and options markets.  It protects investors by preventing fraud and abuse and ensuring adequate disclosure of information.  Major activities of the agency include:  promulgating regulations governing commodities futures markets; detecting and prosecuting complicated investor fraud schemes involving derivatives; and monitoring the markets in order to prevent illegal price manipulation efforts.  In 2002, CFTC opened more than 100 investigations against suspected violators of commodity trading laws.  The 2004 Budget proposes $88 million for CFTC.

Consumer Product Safety Commission

   The Consumer Product Safety Commission (CPSC) was established as a federal regulatory agency in 1972 to protect the public against unreasonable risks of injuries and deaths associated with consumer products.  As a consequence, CPSC has within its jurisdiction some 15,000 types of consumer products.

   CPSC helps develop uniform safety standards for consumer products, and conducts and promotes research into preventing product-related deaths, injuries, or illness.  CPSC works to develop voluntary standards with industry, issue and enforce mandatory standards, ban consumer products if no feasible standard would adequately protect the public, obtain the recall of products or arrange for their repair, and conduct research on potential product hazards.  An important part of the Commission’s task is to inform and educate the public about product hazards.

   The 2004 Budget provides $60 million for CPSC.  The budget will enable the Commission to continue to fund, among other initiatives, the National Electronic Injury Surveillance System and various data collection activities.

Corporation for National and Community Service

   The Corporation for National and Community Service (CNCS) provides service opportunities for more than 1.5 million Americans through programs such as AmeriCorps and the National Senior Service Corps, also known as Senior Corps.  CNCS is a part of the USA Freedom Corps Coordinating Council—the President’s initiative to engage Americans in domestic and international volunteer service.  The 2004 Budget proposes $962 million, a $200 million, or 26 percent, increase above the level expected to be available when the Congress completes its work on the 2003 Budget.  However, if the 2003 appropriation is higher than expected, the Administration will work with the Congress on the 2004 Budget to ensure additional resources are provided to support the President’s call to service.  The request would support a target enrollment of 75,000 AmeriCorps members, strengthen homeland security efforts that utilize volunteers, and provide service opportunities for 585,000 seniors.  The budget also includes support for about 6,800 AmeriCorps Volunteers in Service to America members to provide outreach and technical assistance to community and faith-based organizations.  In addition, the budget provides support for the Learn and Serve America programs.    

   National Service and Homeland Security. Since the terrorist attacks of September 11th, the President’s call to service asking Americans to dedicate at least two years of their lives in service to their communities has generated unprecedented interest in AmeriCorps and other service programs.  The budget includes $118 million across all CNCS programs to support these efforts and place senior citizens and other volunteers in community activities geared toward strengthening homeland security.  CNCS will award grants to support volunteers in public safety, public health, disaster relief, and preparedness.   

   Expanding Opportunities for Service. AmeriCorps enables Americans to serve in local communities through programs sponsored by nonprofit organizations.  The budget includes $313 million to support AmeriCorps service opportunities.  CNCS’s programs also will support community and faith-based organizations on a non-discretionary basis in meeting the needs of communities.  In addition, the budget includes $212 million to support service opportunities for older Americans to meet a wide range of community needs through the Senior Corps.  Senior Corps programs help young people with special needs, help seniors live independently in their homes, and provide support services to youth ex-offenders.  Finally, the budget proposes $20 million for Special Volunteer Programs for 40,000 seniors to take part in homeland security activities.

District of Columbia

   The President’s Budget provides $58 million, including new federal support to help improve the Anacostia River for the District of Columbia’s (D.C.'s) neighborhoods and visitors.  The 2004 Budget proposes $10 million to create an Anacostia riverwalk along the water’s edge, from Hains Point to the Kenilworth Aquatic Gardens, and an additional $15 million toward priority projects undertaken by the local water and sewer authority to reduce combined sewer overflows into the Anacostia River.

   The budget also supports “budget autonomy” for D.C.  This proposal would allow D.C.’s local budget to go into effect without prior congressional approval, provided that any general provisions from the previous year stay in effect until the Congress acts and provided that the Congress retains the right to redirect by law portions of the local budget after it goes into effect.  This proposal reflects the dramatic improvement in the District’s ability to manage its budget processes in the post-Control Board era.

   The budget continues to support D.C.’s public safety response to events directly related to the federal government’s presence in the District, with $15 million.  The budget also continues to support the D.C. Resident Tuition Assistance program, with $17 million.  This program was started in 1999 and primarily allows District residents to attend public colleges nationwide at in-state tuition rates.

District of Columbia Courts

   The District of Columbia (D.C.) Courts continue work to plan and implement the Family Court of the D.C. Superior Court.  The President’s Budget provides $196 million to the D.C. Courts, which includes $32 million to continue addressing the long-term needs associated with the expansion of the Family Court.

Equal Employment Opportunity Commission

   The Equal Employment Opportunity Commission (EEOC) enforces federal law that prohibits workplace discrimination on the basis of race, color, sex, religion, national origin, age, and disability.  EEOC also seeks to prevent discrimination through outreach, education, and technical assistance that promotes employers’ voluntary compliance with the law. 

   The 2004 Budget provides $335 million for EEOC.  With this budget, EEOC will begin implementing a major restructuring that will streamline its decision-making layers and serve citizens more efficiently.  As part of this restructuring, EEOC will work to reduce its office space requirements by 35 percent over the next five years and will implement innovations to serve citizens better at lower cost.  The budget includes $19 million for information technology improvements and $30 million for payments to state and local fair employment practices agencies for resolving charges and to tribal employment rights organizations for promoting equal employment opportunity.

Executive Office of the President

   The Executive Office of the President (EOP) includes a number of organizations dedicated to serving the President.  As part of the 2004 Budget, the Administration requests a two-part financial restructuring initiative, which would:

   This initiative provides enhanced flexibility in allocating resources and staff in support of the President and the Vice President, and permits more rapid response to changing national needs and priorities.

   Resources requested for EOP and support of the executive functions of the Vice President in 2004 total $342 million.  These resources will support approximately 1,850 personnel, information technology, and other infrastructure needs to serve the President and the Vice President.

Federal Communications Commission

   The President’s Budget proposes $281 million for the Federal Communications Commission (FCC), $252 million of which would be offset directly by regulatory fees.  This funding will improve the FCC’s testing facilities, strengthen its engineering expertise, and increase oversight by the Inspector General’s office. 

   FCC’s spectrum auctions have proven to be efficient and effective in assigning licenses for certain spectrum-based services.  New companies have entered the market and innovative wireless technologies have been developed.  Ninety-four percent of the U.S. population has access to at least three competing mobile phone services and 80 percent to at least five competing mobile phone services.  As a result, consumers benefit from more choices and lower prices.  

   Since the auctions program’s inception in 1994, communications service providers have won over 22,000 licenses and paid over $14 billion into the Treasury.  The Administration is proposing legislation to extend indefinitely the FCC’s auction authority, which expires in 2007.  Estimated additional receipts from this proposal are $2.2 billion over the next 10 years.

   To continue to promote efficient spectrum use, the Administration is proposing legislation permitting new authority for FCC to set user fees on unauctioned spectrum licenses, based on public-interest and spectrum-management principles.  Fee collections are estimated to begin in 2005 and total $1.9 billion in the first 10 years.

   To encourage television broadcasters to vacate the analog spectrum after 2006, as required by law, the Administration is proposing legislation authorizing FCC to establish an annual lease fee totaling $500 million for the use of analog spectrum by commercial broadcasters beginning in 2007.  Upon return of their analog spectrum license to FCC, individual broadcasters will be exempt from the fee, and fee collections would decline.

   As discussed in the Department of Commerce chapter, the Administration will again propose establishing a Spectrum Relocation Fund for federal agencies that must move from spectrum that has been auctioned. 

Federal Deposit Insurance Corporation and National credit union administration

   The purpose of deposit insurance is to maintain stability and public confidence in the nation’s banking system.  Federal deposit insurance, offered by the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA), is designed to protect depositors from losses due to failures of insured commercial banks, thrifts (savings institutions), and credit unions.  Individual deposits of up to $100,000 are covered in virtually all U.S. banks, savings associations, and credit unions.

   Currently, the federal government insures almost $4 trillion in deposits at almost 20,000 institutions through the FDIC and the NCUA.  These agencies maintain insurance reserves to absorb losses in failed institutions.  The FDIC and the NCUA add to reserves through assessments on insured institutions and interest credited to holdings of U.S. Treasury securities.  The past year has seen an increase in the number of depository institution failures.  In 2002, 23 commercial banks, thrifts, and credit unions failed, amounting to approximately $2.5 billion in assets. 

   The Administration proposes to strengthen the deposit insurance system for banks and thrifts, drawing on the recommendations of FDIC and the testimony of Treasury Department officials.

   The President's Budget also supports merging the bank and thrift funds, which offer an identical product.  A single merged fund would be stronger and better diversified than either fund alone.  A merged fund would prevent the possibility that institutions posing similar risks would again pay significantly different premiums for the same product.  A merger would also underscore the fact that the two funds are already hybrid funds:  each one insures the deposits of commercial banks, savings banks, and savings associations.  Additionally, merging the funds would reduce administrative costs for the many institutions that currently hold deposits insured by both funds.

Federal Election Commission

   The Federal Election Commission (FEC) administers the federal laws governing financing of candidates for the Presidency, Vice Presidency, U.S. Senate, and the U.S. House of Representatives.  FEC discloses campaign finance information, enforces financing and contribution limits, and oversees the public funding of Presidential elections.

   FEC expects a 25-percent workload increase in its Reports Analysis Division’s review of additional reports that will be required under the recently enacted Bipartisan Campaign Reform Act (BCRA).   The Commission also expects a 33-percent to 50-percent increase in electronic data processing due to additional software programs necessary to accommodate filings mandated by the BCRA.  The President’s Budget proposes $50.4 million to fund these and other activities in 2004.

Federal Trade Commission

   The Federal Trade Commission (FTC) enforces consumer protection and antitrust laws that prohibit business practices that are anticompetitive, deceptive, or unfair to consumers.  FTC also works to promote consumer choice and public understanding of free markets.

   In 2004, FTC will contribute to the Administration’s consumer privacy agenda by helping the victims of identity theft, providing enforcement and outreach on children’s on-line privacy, and enforcing against deceptive, mass e-mails (“spam”).  The Commission also will keep rolling out a national “do-not-call” list that will protect consumers from intrusive telemarketing calls, and bring consistency to the current patchwork of “do-not-call” lists administered by the states and private sector.  To carry out these aims, the 2004 Budget proposes $191 million, which will be primarily offset by fee collections from businesses for merger filings and the do-not-call list.

General Services Administration

   In 2003, the General Services Administration (GSA) initiated steps to improve relationships with its agency customers.  It announced a 25-percent reduction in fees that agencies pay for goods and services from GSA.  GSA also began to integrate marketing activities across all its business lines to use resources more efficiently and provide better customer service.  Completing these tasks successfully will be a major challenge.

   GSA has expanded its role in helping federal agencies interact with citizens, businesses, and other levels of government.  GSA’s new Office of Citizen Services and Communications combined the operations of the award-winning FirstGov website with the Federal Consumer Information Center into a new Federal Citizen Information Center (FCIC).  The FCIC serves as the official federal portal for providing citizens with one-stop access to federal services via the Internet or telephone.  GSA’s challenge in 2004 will be to expand FCIC’s capability to help other agencies meet their citizen-oriented communications needs.    

   GSA is also involved in several other projects that are expected to produce significant results in 2004.  These include E-Travel, Integrated Acquisition, E-Authentication, and E-Payroll. E-Authentication, for example, will eliminate the need for separate identity and electronic signature verification processes, thereby minimizing the burden on businesses, the public, and other government entities obtaining federal services online.   By the end of 2004, 22 federal payroll providers will shrink to two.  GSA will be a member of one of the partnerships that continue to provide payroll services to federal employees.  

   GSA’s Public Building Service (PBS) owns nearly 1,700 buildings accounting for 182 million square feet of space.  In 2002, PBS introduced a strategy to restructure the real estate portfolio so that it consists primarily of properties generating sufficient funds to meet their own capital reinvestment needs.  In 2004, an added $400 million is proposed for construction projects, most of which address homeland security needs.  

Institute of Museum And library Services

   The Institute of Museum and Library Services (IMLS) provides state grants and competitive awards to assist the nation’s museums and libraries in expanding their services to the public.  The Administration continues its commitment to encourage libraries and museums to support learning in schools, families, and communities.  The Administration supports the role of libraries and museums to enhance lifelong learning with a 2004 Budget proposal of $242 million, a $32 million increase over the 2003 request. 

   The budget proposes targeted investments in priority programs, such as a $15 million increase for the Library State Grants program, which funds states’ efforts to make library resources more accessible to the public and to improve libraries’ technological capacity to share information with their communities.  To recruit a new generation of library professionals, the Administration requests $20 million, a $10 million increase, for its 21st Century Librarian initiative.  In addition, the budget proposes a $5 million increase for IMLS museum programs to enhance educational and technological linkages and to foster better evaluation of the impact of these programs on the communities they serve.

National Archives and Records Administration

   The National Archives and Records Administration (NARA) safeguards records of all three branches of the federal government and ensures ready access to records documenting the rights of American citizens and the actions of federal officials.  In 2004, the budget proposes $298 million for NARA.  Of these resources, $22 million will let NARA undertake the design phase of the Electronic Records Archives project—a comprehensive means for preserving and providing access to the government's electronic records.  NARA is also the lead partner in the Electronic Records Management Initiative, one of the 24 E-Government initiatives.  This effort provides guidance and tools federal agencies need to manage their electronic records.

National Endowment for the Arts

   The National Endowment for the Arts (NEA) supports projects aimed at enriching the nation’s cultural heritage.  In 2004, the budget requests $117 million, a slight increase over 2003, for NEA to improve internal operations and interaction with the public.  This effort will increase grant-making efficiency and help extend the reach of the arts through the support of works of artistic excellence, provide skills development in the arts for children and youth, and promote projects in geographically and economically isolated communities that traditionally have not had access to quality arts programming.  The NEA will support these projects with public and private partners, including state arts agencies and regional arts organizations.

National Endowment for the Humanities

   The National Endowment for the Humanities (NEH) supports educational and scholarly activities in the humanities, preserves America’s cultural and intellectual resources, and provides opportunities for Americans to engage in learning in the humanities.  In 2004, the agency will expand the We the People initiative to promote the study of our nation’s history, institutions, and culture.  NEH also will continue partnerships with state humanities councils; the strengthening of humanities teaching and learning in schools and higher education institutions; efforts to preserve and increase access to brittle books, U.S. newspapers, documents, and other reference materials; and museum exhibitions, documentary media projects, and reading programs in the humanities that reach popular audiences.  The budget requests $25 million to support We the People as part of a $152 million request for NEH programs and initiatives.

National Labor Relations Board

   The National Labor Relations Board (NLRB) regulates private sector employer and union relations to minimize interruptions to commerce caused by strikes and worker-management discord.  NLRB supervises elections in which employees determine whether to be represented by a union.  The Board is also authorized to prevent and remedy unlawful acts, called unfair labor practices, by unions or employers.  In 2004, NLRB expects to receive 30,000 unfair labor practice cases and 6,000 representation cases.

   Fair and expeditious case resolution is NLRB’s highest priority.  The agency is more effective when it can achieve a voluntary resolution of meritorious cases, thereby reducing the need for time-consuming and costly litigation.  NLRB will continue its goal of settling 95 percent of its unfair labor practice cases before they require a decision by the five-member Board; in 2002, the settlement rate was 94 percent.  Through its performance goals, NLRB will continue to place a high priority on reducing its case backlog, especially on the oldest pending cases.

   The 2004 Budget proposes $243 million for NLRB’s main activities, including $185 million for pay and benefits, which make up 76 percent of the agency’s budget, and $14 million for ongoing information technology projects.

National Transportation Safety Board

   The National Transportation Safety Board (NTSB) is charged with determining the causes of transportation accidents and promoting transportation safety.  Besides investigating accidents, the Board conducts studies and issues recommendations on safety, and evaluates the effectiveness of other government agencies in preventing transportation accidents.  NTSB also coordinates federal assistance to the families of victims of catastrophic domestic accidents.  In 2004, NTSB expects to investigate more than 2,000 transportation accidents.

   The 2004 Budget provides $71 million for salaries and expenses for the NTSB to fulfill its role of enhancing the nation’s transportation safety.  

Nuclear Regulatory Commission

   The Nuclear Regulatory Commission (NRC) regulates the commercial use of nuclear material in the United States.  NRC's actions protect public health, safety, and the environment while promoting common defense and security.

   NRC faces significant challenges and an expanding workload in 2004.  One of the most important issues is the continued strengthening of the security of NRC-licensed facilities and the control of nuclear material in the aftermath of the September 11, 2001, terrorist attacks.  The 2004 Budget will enable the NRC to conduct licensing and other regulatory oversight activities necessary to ensure the safe operation of the nation’s 104 existing nuclear reactors.  The budget also will support certification of new standard reactor designs, in preparation for potential license applications for constructing new nuclear power plants.  In addition, the budget will enable the NRC to consider an increasing number of reactor license renewal applications to extend the useful lives of existing nuclear power plants and to begin its review of the Department of Energy’s application to construct a high-level waste geologic repository at Yucca Mountain, Nevada. 

   To carry out these and other necessary activities, the budget proposes $626 million in 2004 for the NRC.

Office of Personnel Management

   The Office of Personnel Management (OPM) is leading agencies in implementing the President’s human capital initiative.  This effort is designed to make the federal government more citizen-centered and to meet a standard of excellence by preparing the federal workforce to attain goals important to the nation.  Specifically, OPM is working closely with federal agencies to ensure that they strategically use the broad range of existing human resources management tools to recruit, retain, and develop a high-performing workforce in line with organizational missions and objectives.  In 2003, OPM and the Department of Defense (DoD) will propose legislation to transfer DoD’s personnel security investigations function and associated personnel to OPM effective in 2004.

   Total discretionary funding of $771 million in 2004 will finance OPM’s two major missions—managing and overseeing its government-wide human resources responsibilities and administering the federal employees’ benefits trust funds (retirement, health insurance, and life insurance).  Of this amount, the budget proposes $500 million for a new Human Capital Performance Fund.  OPM will administer the Fund for the purpose of allowing agencies to deliver additional pay to certain civilian employees based on individual performance or other human capital needs, in accordance with OPM-approved agency plans.  This proposal is discussed in more detail in the Governing With Accountability chapter of this volume. 

   The request also includes $8 million for a number of new information technology projects aimed at increasing efficiency and maximizing citizen service.

   OPM leads several projects under the President’s E-Government initiative, including E-Payroll, E-Clearance, and E-Training.  These initiatives are reducing the number of government offices providing payroll services from 22 to four, saving at least $1.2 billion over the next 10 years; cutting the time to complete security clearances by at least two to four weeks; and electronically delivering E-Training products and services to over 28,000 registered users in more than 100 departments and agencies.  OPM is also leveraging technology to modernize its retirement system to make claims processing faster, cheaper, and more accurate.  By the end of 2004, the average cost to process a claim will decrease by about 12 percent from $100 to $89 per claim, while increasing accuracy from 93 percent to 96 percent.

   In addition, OPM will pay out about $82.6 billion in benefits in 2004:  $53 billion to more than 2.4 million retired federal employees, their survivors, and other beneficiaries; $27.6 billion in health insurance for nine million enrollees and dependents; and over $2 billion in life insurance claims from policyholders. 

   Medicare and the Federal Employees Health Benefits Program jointly finance health insurance for about 2.1 million federal retirees and their dependents.  The Administration will work with stakeholders to better coordinate these two programs and look to the practices of the private sector to ensure high quality, cost-conscious choices for retirees.

Postal Service

   On December 11, 2002, the President’s Commission on the U.S. Postal Service (USPS) was established through Executive Order 13278.  This nine-member, nonpartisan entity will identify the operational, structural, and financial challenges facing the USPS, and recommend to the President legislative and administrative reforms needed to ensure the long-term viability of postal service in the United States.  

   In addition, integrated into the budget is a legislative proposal that corrects an anticipated USPS over-funding of Civil Service Retirement System (CSRS) retirement benefits.  This anticipated over-funding is due to a number of factors, including higher than expected past pension investment yields and overly prescriptive and inflexible statutory language.  While the legislative proposal would reduce USPS payments to the Retirement Fund, it ensures that USPS meets its pension obligations so that no employee or retiree would lose any benefits.  The proposal is consistent with the structure and financing of the Federal Employees’ Retirement System as well as the Administration’s legislative proposal to fully fund CSRS liabilities for non-USPS employees and retirees.

Regional Economic Development Agencies

   The President's 2004 Budget proposes $56 million for three regional economic development agencies: the Appalachian Regional Commission, the Denali Commission, and the Delta Regional Authority.  The President’s proposal refocuses these agencies from grant-makers to regional planners and investment coordinators.  The goal is to decrease duplicative grant-making and increase efficient investment of federal, state, and local resources.  The Administration also proposes to more tightly focus funding of the Department of Commerce’s Economic Development Administration on distressed communities. 

Securities and Exchange Commission

   The Securities and Exchange Commission (SEC) protects investors and works to maintain fair, honest, and efficient markets.  The assurance of integrity provided by SEC is critical to the health of the nation’s financial markets, which are a vital part of the economy.  In 2002, the dollar volume of shares traded on the New York Stock Exchange and the NASDAQ stock markets alone accounted for more than $21 trillion.  In addition, SEC oversaw approximately 8,000 regulated broker-dealers who held $20 trillion in assets and 5,194 investment companies with approximately $6.7 trillion in assets.

    The 2004 President’s Budget calls for $842 million for the SEC, nearly double the 2002 level.  With it, the SEC will be able to hire more accountants, attorneys, and examiners to protect investors, root out fraud, and instill corporate responsibility.

    Protecting Investors.  The SEC works to ensure that all investors have access to certain basic facts about investment opportunities prior to purchase and to prevent fraud and misrepresentation of those facts in securities markets.  The SEC requires that public companies submit detailed financial information, which, in turn, is made available to the public through its EDGAR database and at   In 2002, the SEC brought a record 598 civil enforcement actions against individuals and companies accused of breaking the securities laws. 

    Encouraging Corporate ResponsibilityRecent exposure of long-standing problems has raised serious questions in the minds of investors concerning the integrity of financial reporting.  In response, the President has:

Smithsonian Institution

   The Smithsonian Institution is an instrumentality of the United States that operates 15 museums and a half dozen research facilities to further its mission: “the increase and diffusion of knowledge.”  The Institution receives two-thirds of its funding from federal appropriations.  The remainder comes from its endowment fund, business activities, such as retail shops, and private donations.

   The 2004 Budget provides $567 million in federal funding for the Smithsonian.  That level supports the opening of the Smithsonian’s newest museums—the National Museum of the American Indian in the Fall of 2004, and the National Air and Space Museum Steven F. Udvar-Hazy Center near Washington Dulles Airport in December 2003.  The President’s Budget also continues the extensive renovation of the Patent Office Building, which houses the National Portrait Gallery and the Smithsonian American Art Museum, and begins revitalization of the National Museum of American History. 

   To ensure that its funding is spent effectively, the Smithsonian will improve its management of financial resources and its workforce.  The Institution is developing an Enterprise Resource Planning information technology system, which will improve Smithsonian’s ability to produce timely and accurate financial information.  Initial components of this system were installed in the Fall of 2002 and it has replaced the Institution’s outdated financial management system.

   The Smithsonian’s progress in its financial systems is not matched by improvements in the management of its workforce.  The cost of over 4,000 Smithsonian employees is a driving force behind its rising funding needs.  Between 1998 and 2003, Smithsonian personnel costs increased by $70 million, or nearly 30 percent, much of the increase due to legislated pay raises, additional staff for new museums, and increased security.  Despite this rate of increase, the Smithsonian remains without a strategic plan for managing its human capital.  The Institution seeks to develop its initial plan by Spring 2003.

   Keeping up its buildings is the Smithsonian’s biggest management challenge.  The Smithsonian is faced with enormous maintenance costs and will need to make difficult decisions regarding future funding priorities.  A 2001 National Academy of Public Administration report estimated that $1.5 billion in repairs would be needed over the next 10 years to return the Smithsonian’s buildings to a state of good repair.

   Faced with cost increases that exceed likely future federal budget levels, the Smithsonian must now consider significant and innovative cost-cutting measures and changes to its traditional operating procedures. 

Tennessee Valley Authority

   The Tennessee Valley Authority (TVA) is a federal regional development agency serving 8.3 million people in Tennessee and six neighboring states.  TVA receipts and expenditures show up, dollar for dollar in the federal budget.  Consequently, TVA reduces the size of the federal budget deficit when it pays down its debt, as the Administration proposes that the federal power agency do. 

   To promote development in the region it serves, TVA operates a large electric utility (the fifth largest in the country), with annual power sales of over $7 billion.  TVA also runs a natural resource and river management program with an annual operating budget of $83 million.  The TVA river management program received a PART assessment of “effective” and one of the highest ratings government-wide.

   The primary program TVA manages, its electric power program, gets mixed reviews in the PART evaluation process.  TVA operates its existing assets efficiently and has received industry awards for running its nuclear and coal-fired power plants cost-effectively, a significant improvement from the past when those plants posed major problems.  TVA’s power program scores less well, however, in terms of strategic planning, competitive bidding and debt reduction. 

   As the President and TVA Board have stated, TVA needs to be run like a business.  A healthy business has a healthy balance sheet and a plan in place to guide its investments and risk profile in a changing market.  TVA currently has neither:  It is carrying excessive debt relative to its assets, and is planning major investments before it has a strategic plan in place.  TVA had a 1997 plan that would have reduced its debt to $13 billion by 2007, but it has abandoned that plan and its debt is significantly above its originally intended target levels (see accompanying graph).

   TVA needs to determine a new debt-reduction goal and design a plan to get there.  TVA’s debt is statutorily capped at $30 billion; at the end of 2002, TVA had outstanding bonds and notes of $25.3 billion.  That amount, however, gives an incomplete picture of TVA’s debt position, because it excludes $865 million in lease/leaseback arrangements.  Under a lease/leaseback, TVA receives a lumpsum for leasing out one or more of its assets, then leases it back at a fixed annual payment for a set number of years.  These arrangements carry as much risk as traditional debt and are recorded as a liability on TVA’s balance sheet under generally accepted accounting principles.  Because current authorizations are unclear on the point, the Budget proposes legislation to ensure that lease/leasebacks, and other arrangements that are equivalent to traditional debt financing, are included under TVA’s debt cap.  

   The Administration believes a healthier debt level for TVA would be in the range of $13 to $15 billion, based on its 1997 plan and the need to reach a fixed-cost level that will position TVA for a more competitive electricity market.  The budget shows TVA’s planned debt reduction over five years under current conditions would reduce TVA’s debt to approximately $24 billion by 2008, including lease/lease-backs counted as debt.  However at this rate, it will take 25 years to get to the higher end of the “healthy” debt level range.  Moreover, if  TVA carries out planned capital construction actions, such as completing the Brown’s Ferry nuclear plant using its own debt directly or creating more long-term liabilities, it may actually increase rather than decrease its debt, further compromising its competitive position in a restructured electricity market.  Debt reduction and a sound strategic plan are key elements needed to ensure that TVA continues to aid economic development in its service territory in the future.  The Administration is committed to identifying a TVA debt reduction target within the “healthy” range, and having a plan by September 30, 2003, to reach the number in a reasonable period of time.

Previous Table of Contents Next

  |   Issues Homeland Security Hurricane Recovery Immigration Jobs & Economy Judicial Nominations National Security Pandemic Flu Patriot Act Renewal in Iraq Social Security More Issues »   |     |   News Current News Press Briefings Proclamations Executive Orders Radio RSS Feeds      |   News by Date   |   December 2005   |   November 2005   |   October 2005   |   September 2005   |   August 2005   |   July 2005   |   June 2005   |   May 2005   |   April 2005   |   March 2005   |   February 2005   |   January 2005   |   December 2004   |   November 2004   |   October 2004   |   September 2004   |   August 2004   |   July 2004   |   June 2004   |   May 2004   |   April 2004   |   March 2004   |   February 2004   |   January 2004   |   December 2003   |   November 2003   |   October 2003   |   September 2003   |   August 2003   |   July 2003   |   June 2003   |   May 2003   |   April 2003   |   March 2003   |   February 2003   |   January 2003   |   December 2002   |   November 2002   |   October 2002   |   September 2002   |   August 2002   |   July 2002   |   June 2002   |   May 2002   |   April 2002   |   March 2002   |   February 2002   |   January 2002   |   December 2001   |   November 2001   |   October 2001   |   September 2001   |   August 2001   |   July 2001   |   June 2001   |   May 2001   |   April 2001   |   March 2001   |   February 2001   |   January 2001
Ask the White House White House Interactive   |   Appointments Nominations Application



     |   Federal Facts   |   Federal Statistics      |   West Wing   |   History