The relationship between spending and revenues is reflected in the surplus or deficit figure. A surplus is an excess of revenues over outlays, while a deficit is an excess of outlays over revenues. Congress controls the enactment of legislation providing budget authority and raising revenues, but not the occurrence of outlays. Because of this, Congress’ efforts to control the level of the surplus or the deficit are less effective over the short run compared to the long run.
The difference between government revenues and outlays in a fiscal year equals the budget deficit or budget surplus. A budget deficit results when outlays exceed revenues; a budget surplus results when revenues exceed outlays. What is counted as government revenues and outlays, however, depends on the presentation of the federal budget. The federal budget typically is presented in the form of the unified budget, reflecting a unified budget deficit or surplus. The unified budget, or consolidated budget, includes the revenues and outlays of all budget accounts, including federal funds and trust funds, regardless of whether they are designated in law as on-budget or off budget. The unified budget represents a comprehensive picture of the federal government’s financial activities.
The federal budget also is presented to distinguish between on-budget and off-budget accounts. That is, the federal budget also presents an on-budget deficit or surplus and an off-budget deficit or surplus. The on-budget deficit or surplus includes all accounts not designated in law as off budget. The off-budget deficit or surplus includes those accounts designated in law as off-budget. Currently, there are three accounts designated in law as off-budget: the Federal Old-Age and Survivors Insurance Trust Fund (Social Security retirement), the Federal Disability Insurance Trust Fund (Social Security disability), and the Postal Service Fund.
To strengthen control over spending and deficit levels, and to promote more efficient legislative action on budgetary issues, Congress and the president enacted the Balanced Budget and Emergency Deficit Control Act of 1985. A key issue confronting the president and Congress in early 2011 was the need to raise the statutory limit on the public debt by a significant amount to accommodate the persistent, high deficits projected by the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The resulting compromise was the the Budget Control Act of 2011.
The Budget Control Act (BCA) of 2011 contains many elements, including a phased increase in the statutory debt limit amounting to $2.1 trillion in total, a requirement that the House and Senate vote on a balanced-budget constitutional amendment by the end of 2011, and various changes in House and Senate budget procedures. The core elements, however, involve the reinstitution of statutory limits on discretionary spending and a process under which a Joint Select Committee on Deficit Reduction (the “Joint Committee”) is required to develop significant deficit-reduction legislation.
As long as the federal government incurs annual deficits and trust funds incur annual surpluses, the public-debt limit must be increased periodically. The frequency of congressional action to raise the debt limit has ranged in the past from several times in one year to once in several years.
Clarke and Dawe – Budgets. A Masterclass.
The Historical Tables in the president’s budget provide data, covering an extended time period, on receipts, budget authority, outlays, deficits and surpluses, federal debt, and other matters.