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1 1 (August 07, 2020)

handle is hein.crs/govdbff0001 and id is 1 raw text is: August 7,2020 The Social Security Trust Funds and the Budget Social Security, a self-financing program, is the federal government's single largestprogramin terms ofthe number ofpeople affected(i.e., covered workers andbeneficiaries) and its finances (i.e., receipts and expenditures). This In Focus provides an overview ofthe Social Security trust funds anddescribes their status within the federal budget. fe S&Q c, cS ic'M Social Security is comprised oftwo programs: Old-Age and Survivors Insurance (OA SI) and Dis ability Insurance (DI). Current law requires each to use a trust fund mechanismto account forits dedicated receipts (primarily taxrevenues and interest) and expenditures (primarily benefit payments and administrative costs) andto provide an accounting of any accumulated as sets. They are frequently referredto on a combined basis as the Social Security, orOASDI, trust funds. The trust funds are legally distinct, with no general authorityto borrow ortransfermoney between them. Accumulated assets are dedicatedto paybenefits to current and future Social Security beneficiaries. This arrangement legally requires benefits be paid to workers andtheir family members who meet eligibility requirements. The trustffunds have mandatory budget authority, meaning funds canbe spent to pay benefits without further appropriation. This feature allows Social Security to continue payingb enefits during lapses in appropriations. Money is creditedto and debited fromthe trust funds on a daily basis; the balance functions as the program's accumulatedholdings. Accumulated holdings can be drawn down throughyears ofdeficit when the programs' expenditures are larger than receipts. Said differently, the trust funds can actas contingency funds andbeusedto supplement taxrevenues duringyears in which taxrevenues are less than expenditures. However, once depleted, the trust funds can neitherborrowmoney fromthe General Fund ofthe U.S. Treasury nor enter into debt. Although the trust funds would no longerhave accumulatedholdings, they would still exist as designated accounts thatprovide a mechanismto track continuing receipts and expenditures. The unified budget accounts for all federal receipts and expenditures on a consolidatedbasis. It does notdistinguish between sources ofreceipts andtypes ofexpenditures or how a programis fiscally structured. Thus, a programthat is self-financed through a trust fundstructure, such as Social Security, is grouped togetherwith all other federal receipts and expenditures. This provides lawmakers with a single measure, giving a comprehensive picture ofall federal fiscal activity and its impact on the economy. Most receipts and spending includedin the unified budget are designated as on-budget. By statute, however, the receipts and expenditures ofthe Social Securitytrust funds are designatedas off-budget. Specifically, Section 13301 of the BudgetEnforcement Act of 1990 (P.L. 101-508, Title XIII; see 2 U.S.C. § 632 note) provides that Notwithstanding any other provision of law, the receipts and disbursements ofthe Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, recepts, or deficit or surplus forpurposes of- (1) the budget of the United States Government as submittedby thePresident, (2) the congressionalbudget, or (3) the Balanced Budget and Emergency Deficit ControlAct of 1985. The off-budget status alsois providedin Section 710 ofthe Social Security Act (42U.S.C. §710). The off-budget status does notaffect the Social Securityprograms' funding, spending, oroperations. (The Postal Service Fundis the only other account designated as off-budget.) This off-budget status results in the reporting ofthree measures ofthe federaldeficit/surplus: (1)the unified budget deficit/surplus; (2) the on-budget deficit/surplus; and (3) the off-budget deficit/surplus. The Social Securitytrust fund balances, in any year, affect thesemeasures. For example, during years in which the Social Security program operates a surplus (totalreceipts exceed total expenditures), its off-budget surplus is subtracted fromthe on-budget deficit in the unified budget deficit calculation. That is, the Social Security surplus improves theposition ofthe unified budget. Alternatively, during years in which the program operates a deficit (total expenditures exceed totalreceipts), its off-budget deficit would be addedto the on-budget deficit in the unified budget deficit calculation, making the position ofthe unified budget worse. The trust funds' off-budget status largely excludes them frommost budget enforcement rules. For example, the general enforcement rules associatedwith the budget resolution, enforceable during congressional consideration, and the requirements ofthe Statutory Pay-As-You-Go Act of 2010 (P.L. 111-139, Title I), enforceable after enactnrnt, do not apply to legislation that is estimatedto affect Social Security revenues or expenditures. That is, any estilmted effects to Social Securityrevenues or expenditures are not N...0' N k yg

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