    [Economic Outlook, Highlights from FY 1994 to FY 2001, FY 2002 Baseline Projections]
    [III. Major Functions of the Federal Government]
    [20.  Undistributed Offsetting Receipts]
    [From the U.S. Government Printing Office, www.gpo.gov]

    [[Page 201]]

                     20.  UNDISTRIBUTED OFFSETTING RECEIPTS

      ----------------------------------------------------------------------

                                     Table 20-1.  Undistributed Offsetting Receipts
                                              (Dollar amounts in millions)
    ----------------------------------------------------------------------------------------------------------------
                                                                                                            Percent
                                    Function 950                                     1993        2001       Change:
                                                                                    Actual     Estimate    1993-2001
    ----------------------------------------------------------------------------------------------------------------
    Spending:
      Mandatory outlays.........................................................    -37,386     -47,177         26%
    ----------------------------------------------------------------------------------------------------------------

      ----------------------------------------------------------------------
      Undistributed offsetting receipts fall into two categories: (1) the
    Government's receipts from performing certain business-like activities,
    such as proceeds from oil and gas leases on the Outer Continental Shelf;
    and, (2) collections of Federal agencies' contributions to Federal
    employees' retirement plans. Receipts from all business-like activities
    are offset against budget authority and outlays, instead of being
    recorded as governmental receipts, so that the budget totals represent
    the amount of resources allocated by the Government rather than by the
    market mechanism. Unlike most business-like receipts, which are offset
    within the same function as the spending that gives rise to the receipt,
    some are so large that it would distort the functional totals to
    distribute them by function. Instead, they are undistributed by function
    and offset against the budget totals. Receipts of agency retirement
    contributions are offset against the payments, so that the budget totals
    measure the Government's transactions with the public. These
    intrabudgetary transactions are important for allocating costs to
    programs that incur the cost, but they have no net impact on total
    budget authority and outlays. They are offset against total budget
    authority and outlays because offsetting them within the functions in
    which the payments are recorded would cause the totals for those
    functions to seriously understate current expenditures.

    Rents and Royalties on the Outer Continental Shelf

      The Department of the Interior's Outer Continental Shelf (OCS) lands
    leasing program, which began in 1954, currently generates about 26
    percent of total U.S. domestic oil production and 27 percent of domestic
    natural gas production. Since the OCS program's inception, it has held
    150 lease sales, covering areas three to 200 miles offshore and
    generating over $134 billion in rents, bonuses, and royalties--mainly
    for the General Fund of the Treasury--with an estimated $6 billion in
    OCS receipts in 2001. OCS revenues also provide nearly all funding for
    the Land and Water Conservation Fund. In 1998, the Clinton-Gore
    Administration extended a leasing moratoria for environmentally
    sensitive areas--offshore California, Oregon, and Washington; the
    Eastern Seaboard; the southwestern coastline of Florida, including the
    Everglades; and, certain parts of Alaska.

    Employee Retirement

      In 2001, Federal agencies are expected to pay an estimated $39.5
    billion on behalf of their employees to the Federal retirement trust
    funds, the Medicare health insurance trust fund, and the Social Security
    trust funds. (The major programs of the Federal retirement trust funds
    are the Military Retirement System, the Civil Service Retirement System,
    and the Federal Employees'

    [[Page 202]]

    Retirement System.) As civilian and military employees' pay rises,
    agencies must make commensurate increases in their payments to recognize
    the rising cost of retirement. The amount of receipts also changes with
    increases or decreases in the number of employees and changes in the
    retirement accruals charged to agencies. The agency payments and trust
    fund receipts are offsetting and do not affect the unified budget
    totals. Under the 1997 Balanced Budget Act, agency contributions for
    employees covered by the Civil Service Retirement System were increased
    from seven percent of salary to 8.51 percent beginning in 1998. These
    higher contributions are set to expire in 2003.

    Other Undistributed Offsetting Receipts

      In 1993, the President and the Congress gave the Federal
    Communications Commission (FCC) authority to assign spectrum licenses
    through competitive bidding, which has proven to be a very efficient and
    effective way to allocate this finite public resource. Until the auction
    program was implemented in 1994, valuable spectrum licenses were awarded
    for free through lotteries or time-consuming comparative hearings.
    Through auction, the FCC awards licenses about 40 percent faster than
    lotteries and 70 percent faster than comparative hearings. By the end of
    2001, the FCC will have auctioned over 14,300 licenses and collected
    over $20 billion in actual and estimated cash receipts--encouraging the
    development of innovative telecommunications services and ensuring that
    the public is compensated for the private use of a public resource.