CRS report for congress95-206_20000921

CRS report for congress95-206_20000921 - Order Code 95-206...

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Congressional Research Service The Library of Congress CRS Report for Congress Received through the CRS Web Order Code 95-206 EPW Updated September 21, 2000 Social Security’s Treatment Under the Federal Budget: A Summary David Stuart Koitz Updated by Dawn Nuschler Domestic Social Policy Division Summary The treatment of Social Security in the federal budget is often confusing. In legislation enacted in 1983, 1985 and 1990, Social Security was excluded from official budget calculations and largely exempted it from congressional procedures for controlling budget revenues and expenditures. However, because Social Security represents more than a fifth of federal revenues and expenditures, it often is included in summaries of the government’s financial flows, or what is referred to as the “unified” budget. It also is confusing because people mistakenly perceive that the program’s removal from budget calculations changed how its funds are handled. It did not. As has been the practice since the government first collected Social Security taxes in 1937, its taxes are deposited in the federal treasury (with appropriate crediting of federal securities to its trust funds), and its expenditures are paid from the treasury. With the President’s urging that the Social Security portion of future unified budget surpluses be reserved until Social Security’s problems are resolved, and his proposals to use a portion of the surpluses or the interest thereon to shore up the system, Social Security’s treatment in the budget has become a major fiscal policy issue. Congressional views about what to do with budget surpluses are diverse — ranging from buying down the outstanding federal debt to cutting taxes to increasing spending. However, support for the proposition of “protecting” Social Security surpluses is substantial. Both the House and Senate agreed to budget resolutions for FY2000 and FY2001 incorporating totals that set aside the Social Security portion of the budget surpluses pending consideration of reform measures. They went on to consider “lock box” proposals that would create obstacles for bills that would use Social Security surpluses for tax cuts or spending increases. Among them are proposals to create new procedural points of order that could be lodged against bills that would dip into the Social Security surpluses, to require new limits on federal debt that would decline by the amount of annual Social Security surpluses, or to amend the Constitution to require a balanced federal budget without counting Social Security. This report will be updated as the issue progresses.
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CRS-2 History Social Security and other federal programs that operate through trust funds were counted officially in the budget beginning in FY1969. This was done administratively by President Johnson. At the time, Congress did not have a budget-making process. In 1974, with passage of the Congressional Budget and Impoundment Control Act (P.L. 93-344), Congress adopted procedures for setting budget goals through passage of annual budget
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CRS report for congress95-206_20000921 - Order Code 95-206...

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