Numbers Hide the Deficit
February 1, 1997
When the federal government takes an end-of-the-year accounting to determine if it will be in the red or the black, budget officials include in their calculations any surplus monies in the federal trust funds - including Social Security and Medicare. That is, although the trust funds are allegedly earmarked for specific spending purposes, the money is made available for accounting purposes. Thus, in the current fiscal year:
- While the Clinton administration is projecting a budget deficit of $125.6 billion, if the trust funds are not counted the deficit rises to $242.2 billion.
- While the administration projects a budget surplus of $17 billion in fiscal year 2002, if the trust funds are removed from the calculation, the actual balance of accounts will stand at -$145.1 billion that year.
Trust funds are legally off limits for general outlays, but the funds in them are used to enable Congress and the president to maintain spending levels without appearing to increase the deficit.
Source: "Budget Deficits Start Downslide - Or Do They?" Tax Features, February 1997, Tax Foundation, 1250 H Street, NW, Suite 750, Washington, DC 20004, (202) 783-2760.
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