The federal budget consists of four basic fund groups—the general fund, special funds, revolving funds, and trust funds. The first three are often referred to as the federal funds group. Trust funds are an accounting mechanism that records revenues, offsetting receipts, or collections earmarked for the purpose of the specific fund. Trust funds generally share three common features: (1) they are established for programs serving long-term purposes, (2) monies are used for a single purpose, and (3) users are charged to finance the trust fund. About 40% of all federal outlays were through trust funds and about 37% of all federal receipts came to trust funds in fiscal year (FY) 2012. The Office of Management and Budget tracks approximately 120 trust funds and trust fund aggregates. A federal trust fund often represents a long-term commitment to use specific funds for a certain purpose. It has been argued that the creation of a trust fund is one way for Congress to politically "commit" future Congresses to fund a specific program or "to make long-term promises stick." Most trust fund based programs have permanent budget authority and all monies in the trust fund are available for obligation. Some trust funds, however, are authorized to borrow from the general fund. The trust funds surplus (i.e., revenues in excess of outgo) in FY2012 amounted to $89.9 billion. This surplus is mostly invested in government obligations and transferred to the general fund to pay for other spending. By law, all trust funds except the Railroad Retirement fund must invest balances in government obligations. The Railroad Retirement fund is allowed to invest its balance in equities. The government securities held by trust funds are part of federal debt that is subject to the statutory federal debt limit. At the end of FY2012, the trust funds held $4,388.5 billion in government securities. The federal funds deficit for FY2012 was $1,176.8 billion, but because of the trust funds surplus, the unified federal budget deficit (what is widely reported in the press) was $1,087.0 billion. Trust fund receipts come from a variety of sources. Almost all trust funds receive monies from current or future beneficiaries. Most trust funds receive general revenues through direct payments or interest payments. In addition, some trust funds receive payments from other trust funds. Status of Largest Trust Funds

The FY2012 income, outgo, and balances of the 13 largest trust funds are reported in Table 2 . The list represents those trust funds with balances in excess of $10 billion and account for over 99% of the balances of all trust funds. The mixed evidence seems to support the claim that trust fund surpluses reduce the federal government deficit and increase public saving. This becomes important at the time when trust funds need to redeem the Treasury obligations held by the trust fund to cover outgo. The Treasury obligations in the trust fund are claims on the government and the government will have to find real resources (by raising revenue, decreasing spending, or issuing more debt) to cover these claims when the obligations are redeemed.
The federal budget consists of four basic fund groups—the general fund, special funds, revolving funds, and trust funds. The first three are often referred to as the federal funds group. Trust funds are an accounting mechanism that records revenues, offsetting receipts, or collections earmarked for the purpose of the specific fund. Trust funds generally share three common features: (1) they are established for programs serving long-term purposes, (2) monies are used for a single purpose, and (3) users are charged to finance the trust fund. About 40% of all federal outlays were through trust funds and about 37% of all federal receipts came to trust funds in fiscal year (FY) 2012.
A federal trust fund often represents a long-term commitment to use specific funds for a certain purpose. It has been argued that the creation of a trust fund is one way for Congress to "commit" future Congresses to fund a specific program or "to make long-term promises stick." Dedicated revenues are used to fund the program and the revenues usually come from the beneficiaries of the program.
The Office of Management and Budget tracks approximately 120 trust funds and trust fund aggregates. The 13 largest trust funds account for nearly all (over 99%) of the income to, outgo from, and balances of all trust funds.
Trust fund receipts come from a variety of sources. Almost all trust funds receive monies from current or future beneficiaries. Most trust funds receive general revenues in terms of direct payments or interest payments. In addition, some trust funds receive payments from other trust funds. Most trust fund programs have permanent budget authority and all monies in the trust fund are available for obligation. The outgo of a trust fund is comprised of payments made to the public or to another trust fund.
Cumulatively, trust fund surpluses (i.e., revenues in excess of outgo) in FY2012 amounted to $89.9 billion. This surplus is mostly invested in government obligations and transferred to the general fund to pay for other spending. By law, all trust funds except the Railroad Retirement fund must invest balances in government obligations. The Railroad Retirement fund is allowed to invest its balance in equities. The government securities held by trust funds are part of federal debt that is subject to the statutory federal debt limit. At the end of FY2012, the trust funds held $4,388.5 billion in government securities. The federal funds deficit for FY2012 was $1,176.8 billion, but because of the trust fund surplus, the unified federal budget deficit (what is widely reported in the press) was $1,087.0 billion.
Some observers have argued that trust fund programs increase the federal deficit and reduce national saving. There is evidence, however, to support the claim that trust fund surpluses reduce the federal government deficit and increase public saving. This becomes important when a trust fund's revenues are less than its outgo and the Treasury securities held by the trust fund need to be redeemed to cover outgo. The Treasury securities in the trust fund are claims on the government and the government will need to find real resources (by raising revenue, decreasing spending, or issuing more debt) to cover these claims when the obligations are redeemed.