    [Analytical Perspectives]
    [Other Technical Presentations]
    [20. Off-Budget Federal Entities]
    [From the U.S. Government Printing Office, www.gpo.gov]

      The Federal Government has used the unified budget concept as the
    foundation for its budgetary analysis and presentation since the 1969
    budget. This concept was developed by the President's Commission on
    Budget Concepts in 1967. It calls for the budget to include all the
    Federal Government's programs and all the fiscal transactions of these
    programs with the public.
      Since 1971, however, one or more Federal entities each year have been
    off-budget. Off-budget Federal entities are federally owned and
    controlled, but their transactions are excluded from the budget totals
    by law. When a Federal entity is off-budget, its receipts, outlays, and
    deficit or surplus are not included in budget receipts, budget outlays,
    or the budget deficit; and its budget authority is not included in the
    totals of budget authority for the budget. The off-budget Federal
    entities conduct programs of the same type as entities included in the
    budget totals. Most of the tables in the budget document include the on-
    budget and off-budget amounts in combination, or add them together to
    arrive at the consolidated Government totals, in order to show Federal
    outlays and receipts comprehensively.

                                                               TABLE 20-1.  COMPARISON OF TOTAL, ON-BUDGET, AND OFF-BUDGET TRANSACTIONS\1\
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                                                                                        Receipts                                   Outlays                           Surplus or deficit (-)
                                Fiscal Year                            -----------------------------------------------------------------------------------------------------------------------------
                                                                            Total       On-budget    Off-budget       Total       On-budget    Off-budget       Total       On-budget    Off-budget
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    1970..............................................................      192.8         159.3          33.5         195.6         168.0          27.6          -2.8          -8.7           5.9
    1971..............................................................      187.1         151.3          35.8         210.2         177.3          32.8         -23.0         -26.1           3.0
    1972..............................................................      207.3         167.4          39.9         230.7         193.8          36.9         -23.4         -26.4           3.1
    1973..............................................................      230.8         184.7          46.1         245.7         200.1          45.6         -14.9         -15.4           0.5
    1974..............................................................      263.2         209.3          53.9         269.4         217.3          52.1          -6.1          -8.0           1.8

    1975..............................................................      279.1         216.6          62.5         332.3         271.9          60.4         -53.2         -55.3           2.0
    1976..............................................................      298.1         231.7          66.4         371.8         302.2          69.6         -73.7         -70.5          -3.2
    TQ................................................................       81.2          63.2          18.0          96.0          76.6          19.4         -14.7         -13.3          -1.4
    1977..............................................................      355.6         278.7          76.8         409.2         328.5          80.7         -53.7         -49.8          -3.9
    1978..............................................................      399.6         314.2          85.4         458.7         369.1          89.7         -59.2         -54.9          -4.3
    1979..............................................................      463.3         365.3          98.0         504.0         404.1         100.0         -40.7         -38.7          -2.0

    1980..............................................................      517.1         403.9         113.2         590.9         476.6         114.3         -73.8         -72.7          -1.1
    1981..............................................................      599.3         469.1         130.2         678.2         543.1         135.2         -79.0         -74.0          -5.0
    1982..............................................................      617.8         474.3         143.5         745.8         594.4         151.4        -128.0        -120.1          -7.9
    1983..............................................................      600.6         453.2         147.3         808.4         661.3         147.1        -207.8        -208.0           0.2
    1984..............................................................      666.5         500.4         166.1         851.8         686.0         165.8        -185.4        -185.7           0.3

    1985..............................................................      734.1         547.9         186.2         946.4         769.6         176.8        -212.3        -221.7           9.4
    1986..............................................................      769.1         568.9         200.2         990.3         806.8         183.5        -221.2        -238.0          16.7
    1987..............................................................      854.1         640.7         213.4       1,003.9         810.1         193.8        -149.8        -169.3          19.6
    1988..............................................................      909.0         667.5         241.5       1,064.1         861.4         202.7        -155.2        -194.0          38.8
    1989..............................................................      990.7         727.0         263.7       1,143.2         932.3         210.9        -152.5        -205.2          52.8

    1990..............................................................    1,031.3         749.7         281.7       1,252.5       1,027.5         225.1        -221.2        -277.8          56.6
    1991..............................................................    1,054.3         760.4         293.9       1,323.6       1,081.9         241.7        -269.4        -321.6          52.2
    1992..............................................................    1,090.5         788.0         302.4       1,380.9       1,128.5         252.3        -290.4        -340.5          50.1
    1993..............................................................    1,153.5         841.6         311.9       1,408.7       1,142.1         266.6        -255.1        -300.5          45.3
    1994..............................................................    1,257.7         922.7         335.0       1,460.8       1,181.5         279.4        -203.1        -258.8          55.7

    1995..............................................................    1,355.2       1,004.1         351.1       1,519.1       1,230.5         288.7        -163.9        -226.3          62.4
    1996 estimate.....................................................    1,426.8       1,059.3         367.4       1,572.4       1,270.3         302.1        -145.6        -211.0          65.3
    1997 estimate.....................................................    1,495.2       1,107.2         388.0       1,635.3       1,317.7         317.7        -140.1        -210.4          70.3
    1998 estimate.....................................................    1,577.9       1,171.6         406.3       1,675.9       1,346.9         329.0         -98.0        -175.3          77.3
    1999 estimate.....................................................    1,652.5       1,224.8         427.8       1,716.9       1,375.0         342.0         -64.4        -150.2          85.8

    2000 estimate.....................................................    1,733.8       1,283.9         450.0       1,761.4       1,403.5         357.8         -27.5        -119.7          92.1
    2001 estimate.....................................................    1,819.8       1,348.6         471.2       1,811.5       1,439.2         372.3           8.3         -90.6          98.9
    2002 estimate.....................................................    1,912.2       1,417.6         494.6       1,868.3       1,479.8         388.5          43.9         -62.2         106.1
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\Off-budget transactions consist of the social security trust funds for all years and the Postal Service fund as of 1989.

      The off-budget Federal entities currently consist of the two social
    security trust funds, old-age and survivors insurance and disability
    insurance, and the Postal Service fund. Social security was removed from
    the budget in 1985 and the Postal Service fund in 1989. The Budget
    Enforcement Act of 1990 excludes these entities from the deficit targets
    and other enforcement calculations except for the administrative
    expenses of social security. Other entities were off-budget before 1986
    but were moved onto the budget under subsequent law.
    [[Page 284]]
      The preceding table compares the total Federal Government receipts,
    outlays, and deficit with the amounts that are on-budget and off-budget.
    Social security is classified as off-budget for all years, in order to
    provide consistent comparison over time. The much smaller Postal Service
    transactions are classified as off-budget starting in 1989. Entities
    that were off-budget at one time but are now on-budget are classified as
    on-budget for all years.
      In 1997 the off-budget receipts are an estimated 26 percent of total
    receipts, and the off-budget outlays are an estimated 19 percent of
    total outlays. The 1997 total deficit of $140.1 billion consists of an
    off-budget surplus of $70.3 billion and an on-budget deficit of $210.4
    billion. The off-budget surplus consists almost entirely of social
    security. It grew substantially from the early 1980s to 1990 and is
    estimated to increase each year throughout the projection period.
      The Federal Credit Reform Act of 1990 refined budget concepts by
    distinguishing between the costs of credit programs, which are budgetary
    in nature, and the other transactions of the credit programs, which are
    not. For 1992 and subsequent years, the costs of direct loans and loan
    guarantees have been calculated as the present value of estimated cash
    outflows from the Government less the present value of estimated cash
    inflows to the Government. These costs are equivalent to the outlays of
    other Federal programs and are included in the budget as outlays of
    credit program accounts when the Federal Government makes a direct loan
    or guarantees a private loan. The cash transactions with the public--the
    disbursement and repayment of loans, the payment of default claims on
    guarantees, the collection of interest and fees, and so forth--are
    recorded in separate financing accounts. The transactions of the
    financing accounts do not represent costs to the Government above and
    beyond those costs that are already included in the credit program
    accounts. Therefore, they are non-budgetary in concept, and the Act
    excludes them from the budget.\1\ Because the financing accounts are
    non-budgetary in concept, they are not classified as off-budget Federal
    entities.
      \1\See sec. 505(b).
    ---------------------------------------------------------------------------
      The budget outlays of credit programs thus reflect only the cost of
    Government decisions, and they reflect this cost when the Federal credit
    assistance is provided. This enables the budget to better fulfill its
    purpose of being a financial plan for allocating resources among
    alternative uses: comparing the cost of a program with its benefits,
    comparing the cost of credit programs with the cost of other spending
    programs, and comparing the cost of one type of credit assistance with
    the cost of another type. Since the financing accounts do affect the
    Government's cash position, they are a means of financing the deficit as
    explained in Chapter 11 of this volume, ``Federal Borrowing and
    Debt.''\2\
      \2\Credit reform is further explained in Chapter 8 of this volume and
    in Chapter VIII.A of the 1992 Budget, Part Two, pp. 223-26.
    ---------------------------------------------------------------------------
      Insurance programs have economic effects and pose a financial risk to
    the Government, but under present budgetary accounting they do not
    result in budget outlays unless the insured event occurs and the
    Government pays a claim. In this respect their budgetary treatment is
    similar to the treatment of loan guarantees before the Credit Reform
    Act. Insurance programs are discussed in Chapter 8, ``Underwriting
    Federal Credit and Insurance.''
      Other activities related to the Federal Government are outside the
    scope of budget outlays because of their inherent nature. The
    Government-sponsored enterprises, which are mostly financial
    intermediaries, are excluded from the budget on the grounds that they
    are privately owned and controlled. However, because of their close
    relationship to the Federal Government, detailed estimates of their
    activities are reported in a separate chapter of the budget appendix and
    an assessment of the risk they pose to the Government is presented in
    Chapter 8.
      Taxation provides the Government with income, which is included in the
    budget as ``receipts'' and which withdraws purchasing power from the
    private sector in order to finance Government expenditure. In addition
    to this primary effect, taxation has important effects on the allocation
    of resources among private uses and the distribution of income among
    individuals. These effects are caused by the choice of taxes and by the
    rates and other structural characteristics of each tax. The effects of
    taxation on resource allocation and income distribution are analogous to
    the effects of outlays, but they are not recorded as outlays nor are
    they measured by receipts. Some of these effects arise from revenue
    losses caused by special exclusions, exemptions, deductions, and so
    forth. Such revenue losses have been defined as ``tax expenditures'' and
    are discussed in Chapter 5, ``Tax Expenditures.''
      Some types of regulation have economic effects that are similar to
    budget outlays by requiring the private sector to make expenditures for
    specified purposes such as safety and pollution control. Reforming
    Federal regulation is discussed in Chapter 13 of the Budget-Supplement,
    ``Improving Government Performance,'' and the regulatory planning
    process is described annually in Regulatory Plan and the Unified Agenda
    of Federal Regulation.\3\
      \3\The most recent publication was issued by the Regulatory
    Information Service Center on November 28, 1995.