re: #21 mikiesmoky2

The actual form of the 1983 change was somewhat complex. It provided:1) That the Social Security and Medicare trust funds (and the income and outgo to these funds) be treated as separate budget functions, starting with the 1985 fiscal year and ending with fiscal year 1992. 2) For the initial budget year after enactment (FY 1984) the Congress would be bound to use the new procedures but the executive branch would not (because the FY 1984 President’s budget had already been submitted to Congress under the old rules).3) Starting with fiscal year 1993, Social Security and the Medicare Part A trust funds were not only off-budget, but were exempted from any general budget reductions that might otherwise apply to the entire federal budget (such as an across-the-board cut).

The Part B Medicare trust fund, while also to be shown as a separate budget function, was not protected from general budget limitations.Thus, in this rather complicated fashion, the Social Security program was again off-budget by FY 1985. Perhaps the more important date here, however, was the 1993 date because that date exempted the Social Security program from the potential of generalized budget-cuts.Gramm-Rudman-Hollings

The next important change in Social Security’s budget treatment came in 1985 with the passage that year of the Balanced Budget and Emergency Deficit Control Act of 1985. This law—informally known as Gramm-Rudman-Hollings, or GRH, after its three principal Senate sponsors: Senators Phil Gramm of Texas, Warren Rudman of New Hampshire, and Ernest Hollings of South Carolina—pushed forward from 1993 to 1986 the date by which the Social Security program would be made immune from generalized budget reductions. However, GRH also mandated that the Trust Funds be included in the budget for the purpose of determining if the total budget exceeded the deficit targets in the law. This provision was to be in effect for the entire time that GRH was in effect, which turned out to be 1986-1993. The import of this provision was that when the federal budget exceeded the Gramm-Rudman targets, automatic across-the-board sequestration of spending kicked in.

So including Social Security in the triggering calculations made the sequestration less likely (since the Trust Funds were running surpluses after 1983).

So while the Social Security program was off-budget, and immune from sequestration or other generalized budget cuts, its surpluses were still being used to reduce the size of the budget deficit.So, by 1986, Social Security was technically off-budget, but it was still being used in the deficit calculations.

Absent other legislative change, this would have continued until 1993. However, in the Omnibus Budget Reconciliation Act (OBRA) of 1990 the law was changed to stop the use of the Trust Funds for any function in the unified budget, including calculations of the deficit. One sub-part of OBRA 1990 was called the Budget Enforcement Act (BEA), and it was this sub-part that specified this change in the law.The BEA budget treatment of Social Security basically remains the law to the present day.

Specifically, present law mandates that the two Social Security Trust Funds, and the operations of the Postal Service, are formally considered to be “off-budget” and no longer part of the unified federal budget. (The Medicare Trust Funds, by contrast, are once again part of the unified budget.)

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