Summary: Pursuant to a congressional request, GAO provided information on proposed debt and budget legislation, focusing on: (1) updated budget projections; (2) the trust funds' receipts, outlays, and surpluses, and their budgetary effects; and (3) the annual increase in gross debt and interest on it.
GAO found that: (1) 83 percent of fiscal year (FY) 1989 borrowing was needed to finance interest on the gross debt; (2) budget projections for FY 1991 indicated that interest would exceed borrowing by 18 percent; (3) in FY 1989, gross interest totalled $242.7 billion, an increase of $26.9 billion, or 12 percent, from FY 1988; (4) FY 1990 and FY 1991 interest would increase to $256.9 billion and $263 billion, respectively; (5) the FY 1989 operating budget deficit under the proposed legislation was $18.7 billion, a 31-percent decrease from FY 1988, but in 1991 the deficit would be replaced by a $55.7-billion surplus; (6) in FY 1989, total borrowing was $265.4 billion, an increase of $10.2 billion over FY 1988, and borrowing would decrease $59.5 billion, or 22 percent, from FY 1989 through FY 1991; (7) surpluses in other trust funds caused the reported FY 1989 operating budget deficit to be lowered by $14.3 billion; and (8) inclusion of the Medicare Trust Fund in the operating budget would have resulted in a FY 1989 surplus of $3.6 billion, rather than a deficit of $18.7 billion.
