[Analytical Perspectives]
[Other Technical Presentations]
[19. Off-Budget Federal Entities and Non-Budgetary Activities]
[From the U.S. Government Publishing Office, www.gpo.gov]
19. OFF-BUDGET FEDERAL ENTITIES AND NON-BUDGETARY ACTIVITIES
The budget does not include some programs of the Federal Government
that result in the same kind of spending as budget outlays. Despite
their exclusion from the budget, these programs channel economic
resources toward particular uses in the same way as budget spending.
They are discussed in the following section on off-budget Federal
entities.
The budget also does not include some activities that are related to
the Federal Government but that are non-budgetary by their inherent
nature. In some cases this is because they are not activities of the
Government itself, and in other cases this is because the transactions
are not costs to the Government. Nevertheless, many of these activities
are discussed in the budget documents, and in some cases the amounts
involved are presented in conjunction with budget data. They are
discussed in the section of this chapter on non-budgetary activities.
Off-Budget Federal Entities
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.
Every year since 1971, however, at least one Federal entity has 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
surplus or deficit are not included in budget receipts, budget outlays,
or the budget surplus or deficit; and its budget authority is not
included in the totals of budget authority for the budget. The Budget
Enforcement Act of 1990 excludes these entities from general enforcement
provisions (except for the administrative expenses of Social Security),
although it has special enforcement provisions for Social Security.
The off-budget Federal entities conduct programs of the same type as
the on-budget entities (i.e., Federal entities included in the budget
totals). Most of the tables in the budget documents include the on-
budget and off-budget amounts both separately and in combination, or add
them together, in order to arrive at the unified budget totals that show
Federal outlays and receipts comprehensively.
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. A number of
other entities were off-budget at different times before 1986 but were
moved onto the budget by law as of 1986 or earlier.
The following table divides the total Federal Government receipts,
outlays, and surplus or deficit between the on-budget and off-budget
amounts. The column for the on-budget surplus is labeled ``on-budget/
contingencies,'' since for future years the on-budget estimates include
a reserve for contingencies as well as estimated receipts and outlays.
If future decisions are made to use the contingency reserve for higher
spending or lower tax receipts, the future on-budget surplus would be
correspondingly reduced.
Within this table 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 2002, the off-budget receipts are an estimated 24 percent of total
receipts, and the off-budget outlays are an estimated 18 percent of
total outlays. The off-budget surplus consists almost entirely of Social
Security. Social Security had a deficit in the latter 1970s and early
1980s, but since the middle 1980s it has had a large and growing
surplus. This surplus is expected to continue to grow by very large
amounts throughout the projection period. The on-budget accounts had
deficits for many years until 1999, when they were essentially balanced,
and 2000, when they had an $87 billion surplus. The on-budget accounts
(including the contingency reserve) are estimated to have significant
surpluses throughout the projection period, though much less than Social
Security. The off-budget surplus of $172 billion in 2002 accounts for
three-quarters of the unified budget surplus of $231 billion, and
throughout the projection period the off-budget surplus remains around
three-quarters to two-thirds of the unified budget surplus (including
the contingency reserve).
Non-Budgetary Activities
Federal credit: budgetary and non-budgetary transactions.--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 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
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TABLE 19-1. COMPARISON OF TOTAL, ON-BUDGET, AND OFF-BUDGET TRANSACTIONS \1\
(In billions of dollars)
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Receipts Outlays Surplus or deficit (-)
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Fiscal Year Off- Off- On-budget/ Off-
Total On-budget budget Total On-budget budget Total Contingencies \2\ budget
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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........................................... 666.5 500.4 166.1 851.9 686.1 165.8 -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........................................... 769.2 569.0 200.2 990.5 807.0 183.5 -221.2 -238.0 16.7
1987........................................... 854.4 641.0 213.4 1,004.1 810.3 193.8 -149.8 -169.3 19.6
1988........................................... 909.3 667.8 241.5 1,064.5 861.8 202.7 -155.2 -194.0 38.8
1989........................................... 991.2 727.5 263.7 1,143.7 932.8 210.9 -152.5 -205.2 52.8
1990........................................... 1,032.0 750.3 281.7 1,253.2 1,028.1 225.1 -221.2 -277.8 56.6
1991........................................... 1,055.0 761.2 293.9 1,324.4 1,082.7 241.7 -269.4 -321.6 52.2
1992........................................... 1,091.3 788.9 302.4 1,381.7 1,129.3 252.3 -290.4 -340.5 50.1
1993........................................... 1,154.4 842.5 311.9 1,409.5 1,142.9 266.6 -255.1 -300.5 45.3
1994........................................... 1,258.6 923.6 335.0 1,461.9 1,182.5 279.4 -203.3 -258.9 55.7
1995........................................... 1,351.8 1,000.8 351.1 1,515.8 1,227.2 288.7 -164.0 -226.4 62.4
1996........................................... 1,453.1 1,085.6 367.5 1,560.6 1,259.7 300.9 -107.5 -174.1 66.6
1997........................................... 1,579.3 1,187.3 392.0 1,601.3 1,290.7 310.6 -22.0 -103.4 81.4
1998........................................... 1,721.8 1,306.0 415.8 1,652.6 1,336.0 316.6 69.2 -30.0 99.2
1999........................................... 1,827.5 1,383.0 444.5 1,703.0 1,382.3 320.8 124.4 0.7 123.7
2000........................................... 2,025.2 1,544.6 480.6 1,788.8 1,458.1 330.8 236.4 86.6 149.8
2001 estimate.................................. 2,136.9 1,633.1 503.9 1,856.2 1,508.5 347.7 280.7 124.6 156.1
2002 estimate.................................. 2,191.7 1,660.8 530.9 1,960.6 1,601.4 359.2 231.2 59.4 171.8
2003 estimate.................................. 2,258.2 1,697.4 560.8 2,016.2 1,648.7 367.6 242.0 48.8 193.2
2004 estimate.................................. 2,338.8 1,748.5 590.3 2,076.7 1,697.0 379.7 262.1 51.6 210.5
2005 estimate.................................. 2,437.8 1,808.8 629.0 2,168.7 1,776.4 392.4 269.0 32.4 236.6
2006 estimate.................................. 2,528.7 1,870.2 658.5 2,223.9 1,817.8 406.1 304.8 52.4 252.4
2007 estimate.................................. 2,643.3 1,950.0 693.3 2,303.4 1,880.5 422.9 339.9 69.5 270.4
2008 estimate.................................. 2,770.6 2,044.4 726.2 2,397.9 1,959.2 438.7 372.7 85.2 287.5
2009 estimate.................................. 2,909.9 2,148.9 761.0 2,490.3 2,032.2 458.1 419.6 116.7 302.9
2010 estimate.................................. 3,058.4 2,254.9 803.5 2,593.5 2,113.2 480.3 465.0 141.7 323.3
2011 estimate.................................. 3,232.6 2,386.3 846.3 2,706.3 2,202.7 503.7 526.2 183.6 342.6
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\1\ Off-budget transactions consist of the social security trust funds for all years and the Postal Service fund as of 1989.
\2\ The actual amount of annual debt retirement will vary depending on the availability of eligible redeemable debt, and the use, if any, of the
contingency reserve.
accounts when the Federal Government makes a direct loan or guarantees a
private loan. The complete 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 are not costs to the Government except for 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.
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\1\ See sec. 505(b).
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The budget outlays of credit programs thus reflect only the cost of
Government credit decisions, and they reflect this cost when the Federal
credit assistance is provided. This enables the budget to fulfill better
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. Because the financing accounts do affect the
Government's cash position, they change the amount of the Government's
debt repayment or borrowing requirement as explained in chapter 12 of
this volume, ``Federal Borrowing and Debt.'' \2\
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\2\ For more explanation of the budget concepts for direct loans and
loan guarantees, see the section on Federal credit in chapter 24 of this
volume, ``Budget System and Concepts and Glossary.'' The structure of
credit reform is further explained in chapter VIII.A of the Budget,
Fiscal Year 1992, Part Two, pp. 223-26. The implementation of credit
reform through 1995 is reviewed in chapter 8, ``Underwriting Federal
Credit and Insurance,'' Analytical Perspectives, Budget of the United
States Government, Fiscal Year 1997, pp. 142-44. Refinements and
simplifications enacted by the Balanced Budget Act of 1997 or provided
by later OMB guidance are explained briefly in chapter 8, ``Underwriting
Federal Credit and Insurance,'' Analytical Perspectives, Budget of the
United States Government, Fiscal Year 1999, p. 170.
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Credit programs are discussed in chapter 8 of this volume, ``Federal
Credit and Insurance.''
Premiums and discounts on debt buybacks.--The Treasury Department is
buying back outstanding bonds as part of its efforts to manage the
reduction of the publicly held debt. The premiums on debt buybacks are
recorded outside the budget totals as a ``financing other than the
change in debt held by the public.'' The concept is explained in a
section of chapter 24, ``Budget System and Concepts and Glossary.''
Buyback premiums are discussed further in chapter 12 of this volume,
``Federal Borrowing and Debt,'' and their actual or estimated amounts
are shown for 2000 and 2001.
Deposit funds.--Deposit funds are non-budgetary accounts that record
amounts held by the Government temporarily until ownership is determined
(such as earnest money paid by bidders for mineral leases) or held by
the Government as an agent for others (such as State income taxes
withheld from Federal employees' salaries and not yet paid to the
States). The largest deposit fund is the Thrift Savings Fund, which
holds stocks and bonds for Federal employees who participate in the
Thrift Savings Plan, a defined contribution retirement plan. Because
these assets are the property of the employees and are held by the
Government in a fiduciary capacity, the transactions of the fund are not
transactions of the Government itself and therefore are non-budgetary in
concept. The administrative costs and the transactions of budgetary
accounts with the fund are included in the budget.
Beginning in 2000, the Federal budget excludes funds that are owned by
Indian tribes and held and managed by the Government in a fiduciary
capacity on the tribes' behalf. The transactions of these funds are not
transactions of the Government itself and are non-budgetary in concept,
like the transactions of the Thrift Savings Fund. Reclassification does
not affect the ownership of the fund assets, the legal obligations of
the Secretary of the Interior, or the Federal management of the funds as
prescribed by law. The change in classification is discussed in chapter
15, ``Trust Funds and Federal Funds,'' in Analytical Perspectives for
the fiscal year 2000 budget. Deposit funds as such are further discussed
in a section of chapter 24 of this volume, ``Budget System and Concepts
and Glossary.''
Taxation and tax expenditures.--Taxation provides the Government with
income, which is included in the budget as ``receipts,'' and which
withdraws purchasing power from the private sector 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 composition of the Federal tax system, and by the rates and other
structural characteristics of each Federal tax. These last 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 last effects, but not all, arise from revenue losses
caused by special exclusions, exemptions, deductions, and similar
provisions as identified by comparison of the tax law with a baseline.
Revenue losses caused by these special provisions are defined as ``tax
expenditures'' and are discussed in chapter 5 of this volume, ``Tax
Expenditures.'' Tax expenditures are also discussed in the individual
chapters of Section III of the Budget, ``Creating a Better Government,''
in conjunction with the outlays that serve the same major purposes.
Government-sponsored enterprises.--The Federal Government has
established a number of Government-sponsored enterprises, such as the
Federal National Mortgage Association and the Farm Credit Banks, to
provide financial intermediation for specified public purposes. They are
excluded from the budget because they are privately owned and
controlled. However, primarily because they were established by the
Federal Government for public-policy purposes, estimates of their
activities are reported in a separate chapter of the budget Appendix,
their activities are analyzed in chapter 8 of this volume, ``Credit and
Insurance,'' and their lending and borrowing are summarized in tables 8-
11 and 8-12 of that chapter.
Regulation.--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. The regulatory planning process is described annually in The
Regulatory Plan and the Unified Agenda of Federal Regulatory and
Deregulatory Actions. \3\
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\3\ The most recent publication was issued by the Regulatory
Information Service Center in October 2000 and printed in the Federal
Register of November 30, 2000.
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In the fall of 1997 the Office of Management and Budget published a
report on the costs and benefits of Federal regulation. That report
discussed the development of the regulatory system and regulatory
analysis, estimated the total annual costs and benefits of Federal
regulatory programs, estimated the costs and benefits of recent major
rules, and recommended ways to improve regulatory programs. It has been
updated twice, the last time in 2000, \4\ and it is required by statute
to be issued annually starting in 2002.
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\4\ Office of Information and Regulatory Affairs, Office of Management
and Budget, Report to Congress on the Costs and Benefits of Federal
Regulation (2000).