FEDERAL FUNDS FINANCING AND CHANGE IN DEBT SUBJECT TO LIMIT Less than $50 million. 1 On March 14, 1975, $825 million of non-interest-bearing notes issued to the International Monetary Fund were redeemed and replaced by a letter of credit of equal value. These notes were included in the debt subject to limit but not in the gross Federal debt. Since the letter of credit is not counted as debt. this transaction reduced debt subject to limit by $825 million. On October 1, 1976, Federal debt held by the public is estimated to increase by $0.3 billion due to a reclassification of Export-Import Bank certificates of beneficial interest from asset sales to debt. 1 Includes allowances for civilian and military pay raises for Department of Defense. 2 Includes allowances for civilian agency pay raises and contingencies. A substantial part of the Federal funds deficit-and, therefore, a substantial part of the growth in debt subject to limit-is associated with transactions between Federal funds and trust funds. These transactions consist primarily of Federal funds payments to trust funds: interest paid on Treasury debt held by trust funds, the employer share of employee retirement, the Federal payment to finance the unfunded liability of the civil service retirement fund, and other payments mainly to social insurance trust funds (such as the Federal Government's contribution for supplementary medical insurance). The trust fund payments to Federal funds are very small.10 From 1966 through 1975, the cumulative Federal funds deficit was $219.6 billion, of which $100.4 billion was attributable to transactions with trust funds and the remaining $119.1 billion was attributable to transactions with the public." A significant Federal funds deficit can occur, as one did in 1969, when there are surpluses in the unified budget and in the transactions of the Federal funds with the public. The relevant figures for 1975 through 1977 are shown in the following table. 10 These transactions are shown in detail in Part 8, table 13. See the section of the table on interfund transactions. 11 See the footnote to the table, Budget Surplus or Deficit by Fund Group, on the next page. 1 BUDGET SURPLUS OR DEFICIT (~) BY FUND GROUP 1 1 For purposes of this analysis, payments from Federal funds to the general revenue sharing trust fund are treated as transactions with the public instead of transactions with a trust fund; and the corresponding payments from the general revenue sharing trust fund to the public are accordingly omitted. This is because the general revenue sharing trust fund has no independent source of funding but serves only as a channel through which a Federal funds payment is made to the public. |