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[G4] Offsetting Receipts; Interest Earned By The Trust Funds (157)

There are a couple of points of confusion. In the budget figures of this section, where is the interest earned by the trust funds accounted for? And what are "Offsetting Receipts?"

From section non144, where I show the budget overview, I show the Outlays section as follows:
==============================================

                                  Actual
Fiscal Year:                      1998      2009
Outlays:
__Discretionary_spending_(a)       554       680
__Mandatory_spending               939     1,708
__Offsetting_receipts              -84      -127
__Net_interest                     243        85
                                  ----     -----
___Total                         1,651     2,346

As for interest earned by the Social Security and other Trust Funds, they are included in the net interest figure. See section non155 for a discussion of net interest and gross interest.

For FY 1998, the government paid out $364 Billion in interest (gross interest). However, $47 Billion went to the Social Security trust funds, and $67 Billion went to other trust funds. Thus they never left the federal government. So as far as what interest payments the federal government made to entities outside the federal government, that amounts to roughly 364 - 47 - 67 = $250 billion, which is the interest on the publicly - held debt.

(To be more exact, the amount of interest payments the federal government made to entities outside the federal government needs to include the "other interest" amount. "Other interest" is primarily interest on loans to the public, such as student loans that the federal government receives. In FY 1998, the federal government on net received $7 billion in "other interest". So the net amount of interest paid by the federal government to outside entities is 250 - 7 = $243 billion.

The interest on the trust funds, like all trust fund receipts, is loaned to the general fund, and is spent on current general federal programs.
==============================================

  Interest On The National Debt, FY 1998 (Actual)
  In Billions Of Dollars

   Gross Interest                    364
   Interest Received By Trust Funds
       Social Security               -47
       Other Trust Funds             -67
   Other Interest                     -7
   Total (Net Interest)              243

Actual disbursements to pay current Social Security and Medicare beneficiaries are included in the Mandatory Spending figures.

From section non144, where I show the budget overview, I show the Outlays section as follows:
==============================================

Fiscal Year                      Actual
                                  1998    2009
Revenues:
__Individual_income                829   1,323
__Corporate_income                 189     273
__Social_insurance                 572     923
__Other                            132     208
                                  ----   -----
___Total                         1,721   2,727

The Social Insurance revenues, $572 billion in FY 1998, are Social Security taxes, including both payroll taxes and taxation of Social Security benefits ($416 B), Medicare Part A payroll taxes ($120 B), Unemployment Insurance ($28 B), Railroad Retirement ($4 B), and Other Retirement ($4 B). These figures are from E&B0199.pdf, Table 3-7 p. 55 {79}.

As for what is included in the Offsetting Receipts, see Table T158.1, in section non158 below. The confusing thing to understand is the part of Offsetting Receipts that is related to Social Security in the below:
==============================================

  Some Offsetting Receipts, in billions of dollars
  
  Fiscal Year:                            1998  2009 
  Employer Share of Employee Retirement   
     Social Security                       -7   -15 
     Military Retirement                  -10   -13 
     Civil Service Retirement and other   -17   -26   

The $7 Billion related to Social Security is just in regards to federal employees. The federal government is an employer, and pays Social Security payroll taxes on its employees' payroll earnings, just like any other employer. But in the case of the federal government, the money it pays in taxes goes to itself (namely to the Social Security trust funds). (As for the original federal government expenditure of the $7 billion in SS payroll taxes, that is included in Discretionary Spending and Mandatory Spending, as these categories include federal government employee salaries, benefits, and the SS payroll taxes being discussed).

Likewise, the Military Retirement and Civil Service Retirement are what the federal government contributes to the military retirement and civil retirement trust funds for its military and civilian employees' retirements. And, as was the case for Social Security just described, the spending side of these are included in Discretionary Spending and Mandatory Spending, as these categories include federal government employee salaries, benefits, and the SS payroll taxes being discussed.

The other part of Offsetting Receipts that might be confusing to some is "Medicare Premiums". Medicare consists of two parts, Part A (paid for by payroll taxes and included in the "Social Insurance" part of Revenues, and Part B (paid for in part by Medicare premiums). The part that is paid for by Medicare premiums is included in the Offsetting Receipts section as shown below.
==============================================

 Some Offsetting Receipts, in billions of dollars
  
   Fiscal Year:                         1998  2009 
   Medicare Premiums                     -21   -55

Medicare premiums only pay for about 25% of Part B's costs. The remainder of Part B's costs, about 75%, is paid for by general tax revenues. All general tax revenues are included in the individual income, corporate income, and other parts of Revenues. As for expenditures, all Medicare expenditures are included in the Mandatory Spending section.

Here are the details of Offsetting Receipts, from E&B0199.pdf, p. 76-78 {100 - 102}:

Offsetting Receipts

Offsetting receipts are income that the government records as negative spending. Those receipts are either intragovernmental (reflecting payments from one part of the federal government to another) or proprietary (reflecting payments from the public in exchange for goods or services).

A decision to collect more (or less) money in the form of offsetting receipts usually requires a change in the laws that generate such collections. Thus, offsetting receipts resemble mandatory spending and revenues -- which are also subject to pay-as-you-go discipline -- rather than discretionary appropriations.

Intragovernmental transfers representing the contributions that federal agencies make to their employees' retirement plans account for more than 40 percent of offsetting receipts -- a share that is expected to remain relatively constant through 2009 (see Table 4-7). Agency contributions are paid primarily to the trust funds for Social Security, Hospital Insurance, Military Retirement, and Civil Service Retirement. Some contribution rates are set by statute; others are determined by actuaries. The contributions that agencies are required to make for their employees are charged against their budgets in the same way as other elements of their employee compensation. Future retirement benefits are an important part of the compensation package for the government's 4.3 million civilian, military, and postal workers. The budget treats those contributions as outlays and handles the deposits made in retirement funds as offsetting receipts. The transfers thus wash out in the budgetary totals, leaving only the funds' disbursements -- for retirement benefits and administrative costs -- reflected in total outlays.

The largest proprietary receipt that the government collects is made up of premiums from the 37 million people enrolled in Supplementary Medical Insurance (SMI, or Part B of Medicare), which primarily covers physicians' and outpatient hospital services. Premium collections from those enrollees are estimated to increase from $22 billion in 1999 to $55 billion in 2009 as the monthly charge climbs from $45.50 to $105.20. Premiums are set to cover one-quarter of the costs of SMI.

Other proprietary receipts come mostly from charges for energy, minerals, and timber and from various fees levied on users of government property or services. Continued auctions by the Federal Communications Commission of rights to use parts of the electromagnetic spectrum are expected to bring in between $1 billion and $4 billion each year through 2001. In 2002, those receipts are projected to rise to $9 billion, after which they will quickly diminish.

[G4.A] Table 4-7 - CBO Projections of Offseting Receipts, 1998 and 2009 (158)

Table T158.1
From Table 4-7. CBO Projections of Offsetting Receipts 
(By fiscal year, in billions of dollars)

                                       Actual 
                                       1998   2009
Employer Share of Employee Retirement 
   Social Security                       -7   -15 
   Military Retirement                  -10   -13 
   Civil Service Retirement and other   -17   -26   
                                       ----  ----
      Subtotal                          -35   -54

Medicare Premiums                       -21   -55

Energy-Related Receipts (a)              -6    -5

Natural Resource-Related Receipts (b)    -3    -3
                            
Electromagnetic Spectrum Auctions        -3     0

Other (d)                               -17   -10

Total                                   -84  -127

a. Includes proceeds from the sale of power, various fees, 
and naval petroleum reserve and Outer Continental Shelf 
receipts.

b. Includes timber and mineral receipts and various fees.

c. Less than $500 million.

d. Includes asset sales.