Federal Trust Funds: Budgetary and Other Implications

December 1, 1970

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Research Publication No. 25

Foreword Examination into the background and operations of major Federal trust funds is of timely interest if only because these funds involve such huge amounts of revenues and expenditures. There are, however, other significant implications and issues which merit attention.

With the change in budget concept adopted in the fiscal year 1969, trust fund receipts and expenditures became a major element in the new unified budget. The new concept initially received strong support. In certain ways, however, it has introduced new complexities, which have generated increasing criticism from Congressional and other sources.

Expenditures of the trust funds, financed through special or earmarked taxes, or by contributions, largely escape annual review and control by the Congress through the regular appropriation process. Social insurance programs financed through trust funds comprise the largest among a growing array of Federal programs and activities currently classified in the executive budget as “uncontrollable.”

Additionally, trust fund investments in Treasury securities, required by statute, have become an important element in the make-up of the Federal debt. This has raised issues concerning the concept or definition of public debt, as well as the role of the statutory debt limitation.

This study examines these and other aspects of Federal trust fund operations. Maynard H. Waterfield, Manager of the Foundation’s Washington Office, was primarily responsible for the preparation of the study.


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