REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 170

United States Government

Required Supplementary Information 

(Unaudited) For the Fiscal Years Ended

September 30, 2023, and 2022

The Sustainability of Fiscal Policy

One of the important purposes of the Financial Report is to help citizens and policymakers assess whether current fiscal 

policy is sustainable and, if it is not, the urgency and magnitude of policy reforms necessary to make fiscal policy 

sustainable. A sustainable policy is defined as one where the ratio of debt held by the public to GDP (the debt-to-GDP ratio) 

is ultimately stable or declining. 

As discussed below, the projections based on this Financial Report’s assumptions indicate that current policy is not 

sustainable. The debt-to-GDP ratio was approximately 97 percent at the end of 2023, which is similar to (but slightly above) 

the debt-to-GDP ratio at the end of FY 2022. If current policy is left unchanged, the projections show the debt-to-GDP ratio 

will be approximately 100 percent in 2024, exceed 200 percent by 2047 and reach 531 percent in 2098. For comparison, 

under the 2022 projections, the debt-to-GDP ratio exceeded 200 percent one year earlier in 2046 and reached 566 percent in 

2097.

These conclusions are rooted in the projected trends in receipts, spending, and deficits in the context of current law and 

policy, although, as described in the following pages, there is considerable uncertainty surrounding these projections. The 

projections are on the basis of policies currently in place and are neither forecasts nor predictions. Changes in policy –

including investments in infrastructure efforts to mitigate the impact of climate change and enhancements to caregiving 

services to build a more resilient and sustainable economy – could have a significant effect on eventual fiscal outcomes.
171 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Current Policy Projections for Primary Deficits

A key determinant of growth in the debt-to-GDP ratio and hence fiscal sustainability is the ratio of the primary deficit to

GDP. The primary deficit is the difference between non-interest spending and receipts, and the primary deficit-to-GDP ratio 

is the primary deficit expressed as a percent of GDP. As shown in Chart 1, the primary deficit-to-GDP ratio spiked during 

2009 through 2012 due to the 2008-09 financial crisis and the ensuing severe recession, and rose again in 2020 due to the 

COVID-19 pandemic. Increased spending and temporary tax reductions enacted to stimulate the economy and support 

recovery contributed to elevated primary deficits, resulting in sharp increases in the ratio of debt to GDP. The debt-to-GDP 

ratio rose from 39 percent at the end of 2008 to 70 percent at the end of 2012 and then from 79 percent at the end of 2019 to 

approximately 100 percent at the end of 2020.

The primary deficit-to-GDP ratio in 2023 was 3.8 percent, increasing by 0.2 percentage points from 2022, partially due 

to lower receipts. The primary deficit-to-GDP ratio is projected to fall to 3.2 percent in 2024, based on the technical 

assumptions in this Financial Report and projected changes in receipts and outlays, including an estimated decrease in 

Medicaid outlays following the expiration of temporary measures related to the COVID-19 pandemic. After 2024, increased 

spending for Social Security and health programs due in part to the continued retirement of the baby boom generation, is 

projected to result in increasing primary deficits that peak at 4.4 percent of GDP in 2043. Primary deficits as a share of GDP 

gradually decrease beyond that point as the aging of the population continues at a slower pace, and reach 2.8 percent in 2098, 

the last year of the projection period. 

Trends in the primary deficit are heavily influenced by tax receipts. The receipt share of GDP was markedly depressed 

in 2009 through 2012 because of the recession and tax reductions enacted as part of the ARRA and the Tax Relief, 

Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The share subsequently increased to nearly 18.0 

percent of GDP by 2015 before falling to 16.3 percent in 2018, after enactment of the TCJA. Receipts reached 19.6 percent of 

GDP in 2022—the highest share of GDP since 2000—then fell to 16.5 percent of GDP in 2023 due to a decrease in 

Individual income tax receipts and lower deposits of earning by the Federal Reserve. Receipts are projected to gradually 

increase and equal 18.1 percent of GDP in 2033 when corporation income tax and other receipts stabilize as a share of GDP. 

After 2033, receipts grow slightly more rapidly than GDP over the projection period as increases in real (i.e., inflationadjusted) incomes cause more taxpayers and a larger share of income to fall into the higher individual income tax brackets. 

Other possible paths for the receipts-to-GDP ratio and the implications for projected debt held by the public are analyzed in 

the “Alternative Scenarios” section. 

On the spending side, the non-interest spending share of GDP was 20.3 percent in 2023, 2.9 percentage points below the 

share of GDP in 2022, which was 23.2 percent. The ratio of non-interest spending to GDP is projected to fall to 20.1 percent 

in 2024 and then rise gradually, reaching 23.3 percent of GDP in 2076. The ratio of non-interest spending to GDP then 

declines to 22.7 percent in 2098, the end of the projection period. These increases are principally due to faster growth in 

Social Security, Medicare, and Medicaid spending (see Chart 1). The aging of the baby boom generation, among other 

factors, is projected to increase the Social Security and Medicare spending shares of GDP by about 0.7 percentage points and 

1.7 percentage points, respectively, from 2024 to 2040. After 2040, the Social Security and Medicare spending shares of 

GDP continue to increase in most years, albeit at a slower rate, due to projected increases in health care costs and population 

aging, before declining toward the end of the projection period.

Current Policy Projections for Debt and Interest Payments

The primary deficit projections in Chart 1, along with projections for interest rates and GDP, determine the projections 

for the debt-to-GDP ratio shown in Chart 2. That ratio was approximately 97 percent at the end of FY 2023, and under 

current policy and based on this Financial Report’s assumptions is projected to reach 531 percent in 2098. The continuous 

rise of the debt-to-GDP ratio indicates that current policy under this Financial Report’s assumptions is unsustainable.
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As a general approximation, the change in debt held by the public from one year to the next is the budget deficit, the 

difference between total receipts and total spending.1 Total spending is non-interest spending plus interest spending. Chart 3 

shows that the rapid rise in total spending and the unified deficit (total receipts less total spending) is almost entirely due to 

projected net interest, which results from the growing debt. As a percent of GDP, interest spending was 2.4 percent in 2023, 

and under current policy is projected to reach 5.3 percent in 2034, 15.0 percent in 2068, and 24.0 percent in 2098. 

1 The change in debt each year is also affected by certain transactions not included in the budget deficit, such as changes in Treasury’s cash balances and the 

non-budgetary activity of federal credit financing accounts. These transactions are assumed to hold constant at about 0.3 percent of GDP each year, with the 

same effect on debt as if the primary deficit was higher by that amount.
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Another way of viewing the change in the financial outlook in this year’s Financial Report relative to previous years’ 

Financial Reports is in terms of the projected debt-to-GDP ratio in 2096, the last year of the 75-year projection period used in 

the FY 2021 Financial Report. This ratio is projected based on this Financial Report’s assumptions to reach 518 percent in 

the FY 2023 projections, which compares with 559 percent projected in the FY 2022 projections and 701 percent projected in 

the FY 2021 projections.2

The Cost of Delay in Closing the 75-Year Fiscal Gap

The longer policy action to close the fiscal gap3 is delayed, the larger the post-reform primary surpluses must be to 

achieve the target debt-to-GDP ratio at the end of the 75-year period. This can be illustrated by varying the years in which 

reforms closing the fiscal gap are initiated while holding the target ratio of debt to GDP in 2098 equal to the 2023 ratio. Three 

timeframes for reforms are considered, each one beginning in a different year, and each one increasing the primary surplus 

relative to current policy by a fixed percent of GDP starting in the reform year. The analysis shows that the longer policy 

action is delayed, the larger the post-reform primary surplus must be to bring the debt-to-GDP ratio in 2098 equal to its level 

in 2023. Future generations are burdened by delays in policy changes because delay necessitates higher primary surpluses 

during their lifetimes, and those higher primary surpluses must be achieved through some combination of lower spending and 

higher revenue.

As previously shown in Chart 1, under current policy, primary deficits occur throughout the projection period. Table 1 

shows primary surplus changes necessary to make the debt-to-GDP ratio in 2098 equal to its level in 2023 under each of the 

2 For additional information on changes from the 2021 projections, see the unaudited RSI in the 2022 Financial Report. 3 The fiscal gap reflects how much the primary surplus (receipts less non-interest spending) must increase to maintain the debt-to-GDP ratio at the 2023

level. See Note 24 for a more complete discussion of the fiscal gap.
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three timeframes. If reform begins in 2024, then it is sufficient to raise the primary surplus share of GDP by 4.5 percentage 

points in every year between 2024 and 2098 in order for the debt-to-GDP ratio in 2098 to equal its level in 2023. This policy 

raises the average 2024-2098 primary surplus-to-GDP ratio from -3.8 percent to +0.6 percent.

In contrast to a reform that begins immediately, if reform begins in 2034 or 2044, then the primary surpluses must be 

raised by 5.3 percent and 6.5 percent of GDP, respectively, in order for the debt-to-GDP ratio in 2098 to equal its level at the 

end of 2023. The difference between the primary surplus increase necessary if reform begins in 2034 or 2044 and the increase 

necessary if reform begins in 2024, an additional 0.8 and 2.0 percentage points, respectively, is a measure of the additional 

burden policy delay would impose on future generations. The costs of delay are due to the additional debt that accumulates 

between the end of 2023 and the year reform is initiated, in comparison to the scenario in which reform begins immediately. 

Alternative Scenarios 

The long-run projections are highly uncertain. This section illustrates this inherent uncertainty by presenting alternative 

scenarios for the growth rate of health care costs, interest rates, discretionary spending, and receipts. (Not considered here are 

the effects of alternative assumptions for long-run trends in birth rates, mortality, and immigration, among other factors.)

The population is aging rapidly and will continue to do so over the next several decades, which puts pressure on 

programs such as Social Security, Medicare, and Medicaid. A shift in projected fertility, mortality, or immigration rates could 

have important effects on the long-run projections. Higher-than-projected immigration, fertility, or mortality rates would 

improve the long-term fiscal outlook. Conversely, lower-than-projected immigration, fertility, or mortality rates would result 

in deterioration in the long-term fiscal outlook. 

Effect of Changes in Health Care Cost Growth

One of the most important assumptions underlying the projections is the future growth of health care costs. These future 

growth rates – both for health care costs in the economy generally and for federal health care programs such as Medicare, 

Medicaid, and PPACA exchange subsidies – are highly uncertain. In particular, PPACA in 2010 and MACRA in 2015 

lowered increases in payment rates for Medicare hospital and physician payments. The Medicare spending projections in the 

long-term fiscal projections are based on the projections in the 2023 Medicare Trustees Report, which assume the PPACA 

and MACRA payment rates will be effective in producing a substantial slowdown in Medicare input cost growth. As 

discussed in Note 25—Social Insurance, the Medicare projections are subject to much uncertainty about the ultimate effects 

of these provisions to reduce health care cost growth. For the long-term fiscal projections, that uncertainty also affects the 

projections for Medicaid and exchange subsidies, because the cost per beneficiary in these programs grows at the same 

reduced rate as Medicare cost growth per beneficiary. 

As an illustration of the dramatic effect of variations in health care cost growth rates, Table 2 shows the effect on the 

size of reforms necessary to close the fiscal gap under per capita health care cost growth rates that are one percentage point 

higher or two percentage points higher than the growth rates in the base projection, as well as the effect of delaying closure of 

the fiscal gap.4 As indicated earlier, if reform is initiated in 2024, eliminating the fiscal gap requires that the 2024-2098

primary surplus increase by an average of 4.5 percent of GDP in the base case. However, that figure increases to 8.0 percent 

of GDP if per capita health cost growth is assumed to be 1.0 percentage point higher, and 14.2 percent of GDP if per capita 

4 The base case health cost growth rates are derived from the projections in the 2023 Medicare Trustees Report. These projections are summarized and 

discussed in Note 25 and the “Medicare Projections” section of the unaudited RSI for the SOSI.
175 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

health cost growth is 2.0 percentage points higher. The cost of delaying reform is also increased if health care cost growth is 

higher because debt accumulates more rapidly during the period of inaction. For example, the lower part of Table 2 shows 

that delaying reform initiation from 2024 to 2034 requires that 2034-2098 primary surpluses be higher by an average of 0.8

percent of GDP in the base case, 1.4 percent of GDP if per capita health cost growth is 1.0 percentage point higher, and 2.6

percent of GDP if per capita health cost growth is 2.0 percentage points higher. The dramatic deterioration of the long-run 

fiscal outlook caused by higher health care cost growth shows the critical importance of managing health care cost growth.

Effects of Changes in Interest Rates

A higher debt-to-GDP ratio is likely to increase the interest rate on government debt, making it costlier for the 

government to service its debt than if the debt-to-GDP ratio were lower. Table 3 displays the effect of several alternative 

scenarios using different nominal interest rates than assumed in the base case on the size of reforms to close the fiscal gap as 

well as the effect of delaying closure of the fiscal gap. If reform is initiated in 2024, eliminating the fiscal gap requires that 

the 2024-2098 primary surplus increase by an average of 4.5 percent of GDP in the base case, 6.1 percent of GDP if the 

interest rate is 2.0 percentage points higher in every year, and 5.3 percent of GDP if the interest rate is 1.0 percentage point 

higher in every year. The required increase in the 2024-2098 primary surplus decreases to an average of 3.6 percent of GDP 

if the interest rate is 1.0 percentage point lower in every year and 2.6 percent of GDP if the interest rate is 2.0 percentage 

points lower in every year. The cost of delaying reform is also increased if interest rates are higher, due to the fact that 

interest paid on debt accumulates more rapidly during the period of inaction. For example, the lower part of Table 3 shows 

that delaying reform initiation from 2024 to 2034 requires that 2034-2098 primary surpluses be higher by an average of 0.8

percent of GDP in the base case, 2.0 percent of GDP if the interest rate is 2.0 percentage points higher in every year, and 1.3

percent of GDP if the interest rate is 1.0 percentage point higher in every year. The required increase in the 2034-2098

primary surplus is higher by an average of 0.5 percent of GDP if the interest rate is 1.0 percentage point lower in every year 

and 0.2 percent of GDP if the interest rate is 2.0 percentage points lower in every year.
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Effects of Changes in Discretionary Spending Growth

The rate of growth of discretionary spending has a large impact on long-term fiscal sustainability. The current base 

projection for discretionary spending assumes that spending stays within statutory caps for 2024 and 2025 under the FRA 

then grows with nominal GDP starting in 2026. Under the base projection, discretionary spending is approximately 6.2 

percent of GDP each year over the projection period. The implications of an alternative scenario are shown in Table 4. In the 

alternative scenario, discretionary spending grows with inflation and population beginning in 2026 so as to hold discretionary 

spending constant on a real per capita basis. (This growth rate assumption is slower than growth with GDP but is still higher

than the standard 10-year budget baseline assumption, which assumes that discretionary spending grows with inflation but 

not with population.) As shown in Table 4, if discretionary spending grows with nominal GDP, eliminating the fiscal gap 

requires that the 2024-2098 primary surplus increase by an average of 4.5 percent of GDP. If discretionary spending grows 

with inflation and population, the fiscal gap is 2.2 percent of GDP. The cost of delaying reform is greater when discretionary 

spending levels are higher. Initiating reforms in 2034 requires that the primary surplus increase by an average of 0.8 percent 

of GDP per year in the base case and by an average of 0.4 percent of GDP if discretionary levels grow with inflation and 

population. If delayed until 2044, the primary surplus must increase by an average of 2.0 percent of GDP in the base case and 

by an average of 1.0 percent of GDP when spending grows with inflation and population.
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Effects of Changes in Individual Income Receipt Growth

The growth rate of receipts, specifically individual income taxes, is another key determinant of long-term sustainability. 

The base projections assume growth in individual income taxes over time to account primarily for the slow shift of 

individuals into higher tax brackets due to real wage growth (“real bracket creep”). This assumption approximates the longterm historical growth in individual income taxes relative to wages and salaries and is consistent with current policy without 

change, as future legislation would be required to prevent real bracket creep. As an illustration of the effect of variations in 

individual income tax growth, Table 5 shows the effect on the size of reforms necessary to close the fiscal gap and the effect 

of delaying closure of the fiscal gap if long-term receipt growth as a share of wages and salaries is 0.1 percentage point 

higher than the base case, as well as 0.1 percentage point lower than the base case. If reform is initiated in 2024, eliminating 

the fiscal gap requires that the 2024-2098 primary surplus increase by an average of 4.5 percent of GDP in the base case, 3.4 

percent of GDP if receipt growth is 0.1 percentage point higher, and 5.6 percent of GDP if receipt growth is 0.1 percentage 

point lower. The cost of delaying reform is also affected if receipt growth assumptions change, much as was the case in the 

previous alternative scenarios. 
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Fiscal Projections in Context

In this Financial Report, a sustainable fiscal policy is defined as one where the federal debt-to-GDP ratio is stable or 

declining over the projection period. However, this definition does not indicate what a sustainable debt-to-GDP ratio might 

be. Any particular debt ratio is not the ultimate goal of fiscal policy. Rather, the goals of fiscal policy are many. They include 

financing public goods, such as infrastructure and government services; promoting a strong and growing economy; and 

managing the debt so that it is not a burden on future generations. These goals are interrelated, and readers should consider 

how policies intended to affect one might depend on or affect another. 

This Financial Report shows that current policy under this Financial Report’s assumptions is not sustainable. In 

evaluating policies that could make policy sustainable, note that debt may play roles in both facilitating and hindering a 

healthy economy. For example, government deficit spending supports demand and allows the economy to emerge from 

recessions more quickly. Debt may also be a cost-effective means of financing capital investment that promotes future 

economic growth, which may in turn make future debt levels more manageable. However, economic theory also suggests that 

high levels of debt may contribute to higher interest rates, leading to lower private investment and a smaller capital stock that

the economy can use to grow. Unfortunately, it is unclear what debt-to-GDP ratio would be sufficiently high to produce these 

negative outcomes, or whether the key concern is the level of debt per se, or a trend that shows debt increasing over time. 

While several empirical studies have attempted to discern a definite relationship between debt and economic growth 

from the past experience of countries, the evidence is mixed. One study suggested that debt-to-GDP ratios in excess of 90 

percent had significant negative consequences for real GDP growth across advanced countries.

5 Real GDP growth is 

generally lower by about 1 percent when the countries’ debt-to-GDP ratios are above 90 percent relative to the times when 

they are below 90 percent.6 However, after removing sample countries with very high indebtedness – those with debt-to-GDP 

ratios of more than 120 percent – and very low indebtedness – those with debt-to-GDP ratios of less than 30 percent – the 

negative relationship between growth and debt is difficult to determine. Another study reports that differences in average 

GDP growth in countries with debt-to-GDP ratios between 30-60 percent, 60-90 percent, and 90-120 percent cannot be 

statistically distinguished.7 Some countries with high debt-to-GDP ratios have been observed to experience lower-thanaverage growth, while other countries with similarly high debt-to-GDP ratios have continued to enjoy robust growth. 

Analogously, low debt-to-GDP ratios are no guarantee of strong economic growth. Moreover, the direction of causality is 

5 Reinhart, Carmen M., Vincent R. Reinhart and Kenneth S. Rogoff. 2012. “Public Debt Overhangs: Advanced-Economy Episodes Since 1800.” Journal of

Economic Perspectives, 26(3):69.86. 6 Errata: “Growth in a Time of Debt,” Carmen M. Reinhart and Kenneth S. Rogoff. Harvard University, 2013.

7 Herndon, Thomas, Michael Ash, and Robert Pollard, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,” 

Cambridge Journal of Economics, 2013.
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unclear. High debt may undermine growth through increased interest rates and lower business confidence, or low growth may 

contribute to high debt by depressing tax revenues and increasing deficit spending on social safety net programs.

Nevertheless, to put the current and projected debt-to-GDP ratios in context, it is instructive to examine how the U.S. 

experience compares with that of other countries. The U.S. government’s debt as a percent of GDP is relatively large 

compared with central government debt of other countries, but far from the largest among developed countries. Based on 

historical data as reported by the IMF for 29 advanced economies, the debt-to-GDP ratio in 2019 ranged from 5.8 percent of 

GDP to 194.8 percent of GDP. 8 The U.S. is not included in this set of statistics, which underscores the difficulty in 

calculating debt ratios under consistent definitions, but the 2023 debt-to-GDP ratio for the U.S. government was 

approximately 97 percent. Despite using consistent definitions where available, these debt measures are not strictly 

comparable due to differences in the share of government debt that is debt of the central government, how government 

responsibilities are shared between central and local governments, how current policies compare with the past policies that 

determine the current level of debt, and how robustly each economy grows. 

The historical experience of the U.S. may also provide some perspective. As Chart 4 shows, the debt-to-GDP ratio was 

highest in the 1940s, following the debt buildup during World War II. In the projections in this Financial Report, the U.S. 

would reach the previous peak debt ratio in 2028. However, the origins of current and future federal debt are quite different

from the wartime debt of the 1940s, which limits the pertinence of past experience.

As the cross-country and historical comparisons suggest, there is a very imperfect relationship between the current level 

of central government debt and the sustainability of overall government policy. Past accrual of debt is certainly important, but 

current policies and their implications for future debt accumulation and future growth are as well.

8 Government Finance Statistics Yearbook, Main Aggregates and Balances, available at https://data.imf.org. Data are for D1 debt liabilities for the central 

government, excluding social security funds, for Advanced Economies. While more current data are available, the recent pandemic has substantially 

distorted debt-to-GDP ratios. Pre-pandemic levels likely provide a better basis of comparison.
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Conclusion

The projections in this Financial Report indicate that if policy remains unchanged, the debt-to-GDP ratio will steadily 

increase throughout the projection period and beyond, which implies current policy under this Financial Report’s

assumptions is not sustainable and must ultimately change. Subject to the important caveat that policy changes are not so 

abrupt that they slow economic growth, the sooner policies are put in place to avert these trends, the smaller are the 

adjustments necessary to return the nation to a sustainable fiscal path, and the lower the burden of the debt will be to future 

generations.
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Social Insurance

The social insurance programs consisting of Social Security, Medicare, Railroad Retirement, Black Lung, and UI were 

developed to provide income security and health care coverage to citizens under specific circumstances as a responsibility of 

the government. Because taxpayers rely on these programs in their long-term planning, social insurance program information 

should indicate whether the current statutory provisions of the programs can be sustained, and more generally what effect 

these provisions likely have on the government’s financial condition. The resources needed to run these programs are raised 

through taxes and fees. Eligibility for benefits depends in part on earnings and time worked by the individuals. Social 

Security benefits are generally redistributed intentionally toward lower-wage workers (i.e., benefits are progressive). In 

addition, each social insurance program has a uniform set of eligibility events and schedules that apply to all participants.

RSI material is generally drawn from the 2023 Annual Reports of the Boards of Trustees, which represents the official 

government evaluation of the financial and actuarial status of the Social Security and Medicare Trust Funds. Unless 

otherwise noted, all data are for calendar years, all projections are based on current law and the Trustees intermediate set of 

assumptions. A significant exception is that the projections disregard benefit payment reductions that would result from the 

projected depletion of the OASDI and HI Trust Funds. Under current law, benefit payments would be reduced to levels that 

could be covered by incoming tax and premium revenues when the trust fund balances have been depleted.

Social Security and Medicare

Social Security

The OASI and DI Trust Funds were established on January 1, 1940 and August 1, 1956 respectively as separate 

accounts in Treasury. The OASI fund pays cash retirement benefits to eligible retirees and their eligible dependents and 

survivors, and the much smaller DI fund pays cash benefits to eligible individuals who are unable to work because of medical 

conditions and certain family members of such eligible individuals. All financial operations of the OASI and DI Programs are 

handled through these respective funds. The two funds are often referred to as the combined OASDI Trust Funds or “Social 

Security.” At the end of calendar year 2022, Social Security benefits were paid to approximately 66 million beneficiaries.

The events that trigger benefit payments are quite different however, both trust funds have the same dedicated financing 

structure: taxes paid by workers, their employers, and individuals with self-employment income, based on work covered by 

the Social Security Program. Currently, employers and employees each pay 6.2 percent of taxable earnings, and the selfemployed pay 12.4 percent of taxable earnings. Payroll taxes are levied on wages and net earnings from self-employment up 

to a specified maximum annual amount, referred to as maximum taxable earnings ($160,200.00 in 2023), that increases each 

year with economy-wide average wages.

Legislation passed in 1984 subjected up to half of Social Security benefits to income tax and allocated the revenue to 

the OASDI Trust Funds. In 1993 legislation increased the potentially taxed portion of benefits to 85.0 percent and allocated 

the additional revenue to the Medicare’s HI Trust Fund.

Medicare

The Medicare Program, created in 1965, has two separate trust funds: the HI Trust Fund (otherwise known as Medicare 

Part A) and the SMI Trust Funds (which consists of the Medicare Part B and Part D9 accounts). HI helps pay for inpatient 

hospital skilled nursing facility, home health, and hospice. SMI helps pay for hospital outpatient services, physician services, 

and assorted other services and products through Part B and for prescription drugs through Part D.

Though the events that trigger benefit payments are similar, HI and SMI have different dedicated financing structures. 

Similar to Social Security, HI is financed primarily by payroll contributions. Currently, employers and employees each pay 

1.45 percent of earnings, while self-employed workers pay 2.9 percent of their net earnings. SMI is financed primarily by 

direct transfers from the General Fund. Additional financing sources include premiums paid by beneficiaries and, for Part D 

state transfers. 

9 Medicare legislation in 2003 created the new Part D account in the Medicare Part B and D Trust Fund to track the finances of a new prescription drug 

benefit that began in 2006. As is the case for Medicare Part B, a little less than three-quarters of revenues to the Part D account will come from future 

transfers from the General Fund. Consequently, the nature of the relationship between the Medicare Part B and D Trust Fund and the Budget described 

below is largely unaffected by the presence of the Part D account though the magnitude will be greater.
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Surplus 

Borrowed

Interest 

Credited

Benefit 

Taxes

Interest 

Credited

Surplus 

Borrowed

E

X

P

E

N

D

I

T

U

R

E

S

General

Government

Expenditures,

Net Interest

SMI Trust

Fund 

Account

Other

Government

Accounts

HI, OASDI

Trust Fund 

Accounts

M

E

A

N

S

O

F

F

I

N

A

N

C

I

N

G

SMI

Premiums and 

State Transfers

Income Taxes,

Benefit Taxes, 

Other Revenues,

Borrowing from

the Public

Payroll Taxes and

HI

Premiums

HI, OASDI, SMI

Benefits

Other 

Government 

Transfers

Social Security, Medicare, and Government-wide Finances

Figure 1—Social Security, Medicare, and Government-wide Finances

• Other Government Transfers: Intra-governmental transfers to the Medicare SMI Trust Fund from other government 

accounts.

• Surplus Borrowed: Program revenue loaned to the General Fund and treated as if it borrowed the money from the 

public.

• Interest Credited: Interest earned when the excess of program revenue over expenses is loaned to the General Fund 

becoming a future obligation to the General Fund.

The current and future financial status of the separate Social Security and Medicare Trust Funds is the focus of the 

Social Security and Medicare Trustees Reports, a focus that may appropriately be referred to as the “trust fund perspective.” 

In contrast, the government primarily uses the budget concept, appropriately referred to as the “budget perspective” or the 

“government-wide perspective” as the framework for budgetary analysis and presentation. It represents a comprehensive 

display of all federal activities, regardless of fund type or on- and off-budget status and has a broader focus than the trust 

fund perspective. Social Security and Medicare are among the largest expenditure categories of the Budget. This section 

describes the important relationship between the trust fund perspective and the government-wide perspective.

Figure 1 is a simplified depiction of the interaction of the Social Security and Medicare Trust Funds with the rest of the 

Budget.

10 The boxes on the left show sources of funding, those in the middle represent the trust funds and other government 

accounts, including the General Fund into which that funding flows, and the boxes on the right show simplified expenditure 

categories. The figure is intended to illustrate how the various sources of program revenue flow through the Budget to 

beneficiaries. The general approach is to group revenues and expenditures that are linked specifically to Social Security 

and/or Medicare separately from those for other government programs.

Each of the trust funds has its own sources and types of revenue. With the exception of General Fund transfers to 

Medicare Parts B and D, each of these revenue sources represents revenue from the public that is dedicated specifically for 

the respective trust fund and cannot be used for other purposes. In contrast, personal and corporate income taxes as well as 

other revenue go into General Fund and are drawn down for any government program for which Congress has approved 

spending.11 The Medicare SMI Trust Fund is shown separately from the Social Security OASDI Trust Funds and the 

Medicare HI Trust Fund to highlight the unique financing of Medicare Parts B and D. Currently, Medicare Parts B and D are

10 The Budget encompasses all government financing and is synonymous with a government-wide perspective. 11 Other programs also have dedicated revenues in the form of taxes and fees (and other forms of receipt) and there are a large number of dedicated trust 

funds in the Budget. 
183 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

the only programs that are funded through transfers from the General Fund. The transfers are automatic and; their size 

depends on program expenses, not on how much revenue comes into Treasury. If General Fund revenues become insufficient 

to cover both the mandated transfer to Medicare Parts B and D and expenditures on other general government programs, 

Treasury needs to borrow to make up the difference. In the longer run, if transfers to Medicare Parts B and D increase beyond

growth in general revenues is as projected, then Congress must either raise taxes, cut other government spending, reduce 

Medicare Parts B and D benefits, or borrow even more.

Intra-governmental transfers (surplus) is a form of “borrowing/lending” between the government accounts. How loans 

from the trust funds to the General Fund and later repayments of those loans affect tax income and expenditures of the 

General Fund is uncertain. Two extreme cases encompass the possibilities. At one extreme, each dollar the trust funds loan to

the General Fund might reduce borrowing from the public by a dollar at the time the loan is extended, in which case the 

General Fund could repay all trust fund loans by borrowing from the public without raising the level of public debt above the

level that would have occurred in the absence of the loans. At the other extreme, the trust fund loans result in additional 

largess (i.e., higher spending and/or lower taxes) in General Fund programs at the time the loans are extended, but ultimately 

that additional largess is financed with additional austerity (i.e., lower spending and/or higher taxes). The actual impact of 

trust fund loans to the General Fund and their repayment on General Fund programs is at one of these two extremes or 

somewhere in between.

Actual dollar amounts roughly corresponding to the flows presented in Figure 1 are shown in the following table for FY 

2023. From the government-wide perspective, only revenues received from the public and state transfers less expenditures 

made to the public are important for the final balance. From the trust fund perspective which is captured in the bottom section 

of each of the three trust fund columns, revenue also includes amounts transferred from the General Fund and interest earned 

from the lending/borrowing activity between the General Fund and the trust funds. Transfers to the SMI Program from the 

General Fund are obligated under current law and therefore, appropriately viewed as revenue from the trust fund perspective. 

Revenues and Expenditures for Medicare and Social Security Trust Funds and the Total Federal

Budget for the Fiscal Year ended September 30, 2023

Trust Funds

(In billions of dollars) HI SMI OASDI Total All Other Total1

Payroll taxes and other public revenues:

Payroll and benefit taxes 397.5 - 1,266.3 1,663.8 - 1,663.8

Premiums 6.1 150.3 - 156.4 - 156.4

Other taxes and fees - 17.9 - 17.9 2,600.9 2,618.8

 Total 403.6 168.2 1,266.3 1,838.1 2,600.9 4,439.0

Total expenditures to the public2 396.3 621.5 1,354.6 2,372.4 3,761.6 6,134.0

Net results for budget perspective3 7.3 (453.3) (88.3) (534.3) (1,160.7) (1,695.0)

Revenues from other government accounts:

Transfers 1.2 439.0 - 440.2 (440.2)

Interest credits 5.3 4.4 66.7 76.4 (76.4)

 Total 6.5 443.4 66.7 516.6 (516.6)

Net results for trust fund perspective3 13.8 (9.9) (21.6) (17.7) N/A N/A

1 This column is the sum of the preceding two columns and shows data for the total Budget. The figure $1,695.0 billion was 

the total federal deficit in FY 2023.

2 The OASDI figure includes $5.6 billion transferred to the RRB for benefit program payments and is therefore an expenditure to the

public.

3 Net results are computed as revenues less expenditures.

Transfers and interest credits received by the trust funds appear as a negative entry under “all other” and the column is offset when

summed for the total Budget.

Note: "N/A" indicates not applicable.

Medicare Part A: From the government-wide perspective, the difference between expenditures made to the public and 

revenues was $7.3 billion. From the trust fund perspective, after revenues from transfers and interest from the General Fund, 

revenues exceeded expenditures by $13.8 billion.
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 184

Medicare Parts B and D: From the government-wide perspective, the difference between expenditures made to the 

public and revenues was $453.3 billion resulting in a net draw on the overall budget balance. From the trust fund perspective, 

after revenues from transfers and interest from the General Fund, revenues exceeded expenditures by $9.9 billion. 

Social Security: From the government-wide perspective, the difference between expenditures made to the public and 

revenues was $88.3 billion. From the trust fund perspective, after revenues from transfers and interest from the General Fund, 

expenditures exceeded revenues by $21.6 billion. 

Cash Flow Projections

Economic and Demographic Assumptions. The Boards of Trustees of the OASDI and Medicare Trust Funds provide in 

their annual reports to Congress short-range (10-year) and long-range (75-year) actuarial estimates of each trust fund. 

Because of their inherent uncertainty in estimating 75 years into the future, the boards use three alternative sets of economic 

and demographic assumptions to show a range of possibilities. The economic and demographic assumptions used for the 

most recent set of intermediate projections for Social Security and Medicare are shown in the demographic and economic 

assumption section of Note 25—Social Insurance. 

Worker-to-Beneficiary Ratio. For the most part, current workers’ pay for current benefits. The relatively smaller number 

of persons born after the baby boom will therefore finance the retirement of the baby boom generation. Chart 1 shows the 

estimated number of covered workers per OASDI beneficiary using the Trustees intermediate assumptions. Covered workers 

are persons having earnings creditable for OASDI purposes based on wages in covered employment or income from covered 

self-employment. The estimated number of workers per beneficiary declines from 2.8 in 2022 to 2.1 in 2097. A similar 

demographic pattern confronts the Medicare Program. In 2022 every HI beneficiary had about 2.9 workers to pay for his or 

her benefit and continues to decline until there are only 2.2 workers per beneficiary by 2097. 

Chart 1—Number of Covered Workers per OASDI Beneficiary

2017-2097

Social Security Projections

Income and Expenditures as a Percent of Taxable Payroll. Chart 2 shows annual non-interest income and expenditures 

expressed as percentages of taxable payroll. Estimated cost continues to exceed income excluding interest in years 2023 

through 2034. Estimated cost increases through about 2078, declines slowly in years 2079-2096, and then increases slightly 

in 2097. The estimated income at the end of the 75-year period is sufficient to cover 74.0 percent of the estimated cost.

In any year, to meet all OASDI cost on a timely basis, the combined OASI and DI Trust Funds will need to redeem 

Treasury securities. This redemption differs from the situation of prior years when the combined OASI and DI Trust Funds 

had been net lenders to the General Fund. Because the program lacks the authority to borrow to continue paying benefits, 

benefit payments would be limited to the available noninterest income.

Solvency could be achieved by: 1) increasing revenue equivalent to an immediate and permanent payroll tax rate 

increase of 3.44 percentage points; or by 2) reducing scheduled benefits by an amount equivalent to an immediate and 

permanent reduction of about 21.3 percent applied to all current and future beneficiaries, or about 25.4 percent if the 
185 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

reductions were applied only to newly entitled beneficiaries. Alternatively, some combination of tax increases and benefit 

reductions could be adopted.

Chart 2—OASDI Income (Excluding Interest) and Expenditures

as a Percent of Taxable Payroll

2017-2097

Income and Expenditures as a Percent of GDP. Chart 3 shows estimated annual non-interest income and expenditures, 

expressed as a percent of GDP. Analyzing these cash flows in terms of percentage of the estimated GDP, which represents 

the total value of goods and services produced in the U.S., provides a measure of the cost of the OASDI program in relation 

to the size of the national economy that must finance it.

In calendar year 2022, OASDI cost was about $1.2 trillion, which was about 4.9 percent of GDP. The cost of the 

program (based on current law) rises to a peak of 6.3 percent of GDP in 2076, then declines to 6.0 percent by 2097. The 

increase from 2022 to 2040 is projected to occur as baby boomers continue to become eligible for OASDI benefits, lower 

birth rates result in fewer workers per beneficiary, and beneficiaries continue to live longer.

Chart 3—OASDI Income (Excluding Interest) and Expenditures

as a Percent of GDP

2017-2097
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 186

Medicare Projections

Medicare Legislation. The projections presented here are based on current law, certain features of which may result in 

some challenges for the Medicare program. In 2010 the PPACA was signed into law and contains the most significant 

changes to health care coverage since the Social Security Act. The PPACA provided funding for the establishment of a Center 

for Medicare and Medicaid Innovation to test innovative payment and service delivery models to reduce program 

expenditures while preserving or enhancing the quality of care furnished to individuals. In addition, the Medicare projections 

have been significantly affected by the enactment of the enactment of the IRA of 2022. This legislation has wide-ranging 

provisions, including those that restrain price growth and negotiate drug prices for certain Part B and Part D drugs and that 

redesign the Part D benefit structure to decrease beneficiary out-of-pocket costs. The law takes several years to implement, 

resulting in very different effects by year. The total effect of the IRA of 2022 is to reduce government expenditures for Part 

B, to increase expenditures for Part D through 2030, and to decrease Part D expenditures beginning in 2031.

Incorporated in these projections is the sequestration of non-salary Medicare expenditures as required by the following 

laws:

• Budget Control Act of 2011 (P.L. 112-25, enacted on August 2, 2011), as amended by the American Taxpayer Relief 

Act of 2012 (P.L. 112-240, enacted on January 2, 2013); 

• Continuing Appropriations Resolution, 2014 (P.L. 113-67, enacted on December 26, 2013); 

• Sections 1 and 3 of P.L. 113-82, enacted on February 15, 2014;

• Protecting Access to Medicare Act of 2014 (P.L. 113-93, enacted on April 1, 2014); 

• BBA of 2015 (P.L. 114-74, enacted on November 2, 2015);

• BBA of 2018 (P.L. 115-123, enacted on February 9, 2018);

• BBA of 2019 (P.L. 116-37, enacted on August 2, 2019);

• The CARES Act (P.L. 116-136, enacted on March 27, 2020);

• The CAA, 2021 (P.L. 116-260, enacted on December 27, 2020);

• An Act to Prevent Across-the-Board Direct Spending Cuts, and for Other Purposes (P.L. 117-7, enacted on April 14, 

2021);

• IIJA (P.L. 117-58, enacted on November 15, 2021);

• The Protecting Medicare and American Farmers from Sequester Cuts Act (P.L. 117-71, enacted on December 10, 

2021); and

• The CAA, 2023 (P.L. 117-328, enacted on December 29, 2022).

The sequestration reduces benefit payments by 2.0 percent from April 1, 2013 through April 30, 2020, by 1.0 percent 

from April 1, 2022 through June 30, 2022, by 2.0 percent from July 1, 2022 through September 30, 2032. Because of 

sequestration, non-salary administrative expenses are reduced by an estimated 5.0 to 7.0 percent from March 1, 2013 through 

September 30, 2032, excluding May 1, 2020 through March 31, 2022 when it was suspended.

The financial projections for the Medicare program reflect substantial, but very uncertain, cost savings deriving from 

current law provisions that lower increases in Medicare payment rates to most categories of health care providers, but such 

adjustments would probably not be viable indefinitely without fundamental change in the current delivery system. In view of 

the factors described above, it is important to note that Medicare’s actual future costs are highly uncertain for reasons apart 

from the inherent challenges in projecting health care cost growth over time. For additional information refer to the 

“Medicare – Illustrative Alternative Scenario” section of Note 25—Social Insurance and HHS’s financial statements.

Changes in Projection Methods. The long-range cost growth rates must be modified to reflect demographic impacts. In 

the 2021 report, these impacts reflected the changing distribution of Medicare enrollment by age and sex, and the 

beneficiary’s proximity to death, which is referred to as a TTD adjustment. The TTD adjustment reflects the fact that the 

closer an individual is to death, the higher his or her health care spending is. 

Total Medicare. Chart 4 shows expenditures and current-law non-interest revenue sources for HI and SMI combined as 

a percent of GDP. Under the PPACA, beginning in 2013 the HI Trust Fund receives an additional 0.9 percent tax on earnings 

in excess of $250,000 for joint tax return filers and $200,000 for individual tax return filers. As a result of this provision, it is 

projected that payroll taxes will grow slightly faster than GDP. Beginning in 2022, HI revenue from income taxes on Social 

Security benefits will gradually increase as a share of GDP as the share of benefits subject to such taxes increase. General 

revenues are projected to gradually increase from 43.0 percent of Medicare financing in 2022 to about 49.0 percent in 2040, 

stabilizing thereafter. SMI premiums will also grow in proportion to general revenue transfers, placing a growing burden on 

beneficiaries. Medicare Part B and D general revenues equal 1.7 percent of GDP in 2022 and will increase to an estimated 3.0

percent in 2097 under current law.
187 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Chart 4—Total Medicare (HI and SMI) Expenditures and Non-interest Income

as a Percent of GDP

2017-2097

Medicare, Part A Income and Expenditures as a Percent of Taxable Payroll. Chart 5 illustrates Medicare Part A income 

(excluding interest) and expenditures as a percentage of taxable payroll. The standard HI payroll tax rate is not scheduled to 

change in the future under current law and payroll tax income as a percentage of taxable payroll is estimated to remain 

constant at 2.9 percent. Income from taxation of Social Security benefits will also increase faster than taxable payroll because 

the income thresholds determining taxable benefits are not indexed for price inflation. Since these income thresholds are not 

indexed, over time an increasing proportion of workers and their earnings will become subject to the additional HI tax rate. 

In 2023 and beyond, as indicated in Chart 5, the cost rate is projected to rise, primarily due to the continued retirements 

of those in the baby boom generation and partly due to an acceleration of health services cost growth. This cost rate increase 

is moderated by the accumulating effect of the productivity adjustments to provider price updates, which are estimated to 

reduce annual HI per capita cost growth by an average of 0.5 percent through 2032 and 1.0 percent thereafter. 

Chart 5—Medicare Part A Income (Excluding Interest) and Expenditures

as a Percent of Taxable Payroll

2017-2097
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 188

Medicare, Part A Income and Expenditures as a Percent of GDP. Chart 6 shows estimated annual Medicare Part A noninterest income and expenditures, expressed as a percent of GDP. This measure provides an idea of the relative financial 

resources that will be necessary to pay for Medicare Part A services. In 2022, the expenditures were $342.7 billion, which 

was 1.3 percent of GDP. This percentage is projected to increase steadily until about 2046 and then remain fairly level 

throughout the rest of the 75-year period, as the accumulated effects of the price update reductions are realized. 

Chart 6—Medicare Part A Income (Excluding Interest) and Expenditures

as a Percent of GDP

2017-2097

Medicare Part B and Part D Premium as well as State Transfer Income and Expenditures as a Percent of GDP. Chart 7 

shows expenditures for the Part B and D Program expressed as a percent of GDP. It is important to examine the projected rise 

in expenditures and the implications for beneficiary premiums and General Fund transfers. 

In 2022, SMI expenditures were $562.4 billion, or about 2.2 percent of GDP. Under current law, they would grow to 

about 3.9 percent of GDP within 25 years and to 4.2 percent by the end of the projection period. To match the faster growth 

rates for SMI expenditures, beneficiary premiums, along with general revenue contributions, would increase more rapidly 

than GDP over time but at a slower rate compared to the last 10 years. Average per beneficiary costs for Part B and Part D 

benefits are projected to increase after 2022 by about 4.2 percent annually. The associated beneficiary premiums—and 

General Fund transfers would increase by approximately the same rate. The special state payments to the Part D account are 

set by law at a declining portion of the states’ forgone Medicaid expenditures attributable to the Medicare drug benefit. 
189 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Chart 7—Medicare Part B and Part D Premium and State Transfer

Income and Expenditures as a Percent of GDP

2017-2097

Social Security and Medicare Sensitivity Analysis

Projections of the future financial status of the Social Insurance programs depend on many demographic and economic 

assumptions. The estimates presented here are based on the assumption that the programs will continue under current law

except that the full amount of Social Security and Medicare HI scheduled benefits are paid after trust fund depletion contrary 

to current law. Income will depend on how these factors affect the size and composition of the working population and the 

level and distribution of wages and earnings. Similarly, the cost will depend on how these factors affect the size and 

composition of the beneficiary population and the general level of benefits.

Because actual experience is likely to differ from the estimated or assumed values of these factors, this section is 

included to illustrate the sensitivity of the long-range projections to changes in assumptions by analyzing key assumptions: 

average annual reduction in death rates for Social Security, average annual growth in health costs for Medicare, total fertility 

rate, real-wage differential, CPI change, net immigration, and real interest rate.

For this analysis, the intermediate assumptions are used as the reference point, and each selected assumption is varied 

individually. The variation used for each individual assumption reflects the levels used for that assumption in the low-cost 

and high-cost projections. For example, when analyzing sensitivity with respect to variation in real wages, income, and 

expenditure projections using the intermediate assumptions are compared to the outcome when projections are done by 

changing only the real wage assumption to either low-cost or high-cost alternatives. 

The following tables show the PV of the estimated excess of Social Security and Medicare cost over income for the 75-

year period, using various assumptions, which are shown in parentheses. The low-cost alternative is characterized by 

assumptions that improve the financial status of the program (relative to the intermediate assumption) such as slower 

improvement in mortality (beneficiaries die younger). In contrast, assumptions under the high-cost alternative worsen the 

financial outlook. All PV are calculated as of January 1, 2023 and are based on estimates of income and cost during the 75-

year projection period 2023-2097. Refer to SSA’s and HHS’s unaudited RSI—Social Insurance section for additional 

information on the Social Insurance programs sensitivity analysis.
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 190

Present Values of Estimated OASDI Expenditures in Excess of Income Under Various Assumptions, 

2023-2097

(Dollar values in trillions; values of assumptions shown in parentheses)

Financing Shortfall Range

Assumption Low Intermediate High

Average annual reduction in death rates1 20.5 25.2 30.9 

(0.3) (0.7) (1.2)

Total fertility rate2 22.9 25.2 28.6 

(2.2) (2.0) (1.7)

Real-wage growth1 20.7 25.2 28.2 

(1.7) (1.1) (0.5)

CPI change 24.6 25.2 25.9 

(3.0) (2.4) (1.8)

Net immigration2 23.6 25.2 26.8 

(1,683)3 (1,245)3 (829)3

Real interest rate 21.5 25.2 30.0 

(2.8) (2.3) (1.8)

1 The amounts shown represent averages from 2032 to 2097 of the 75-year projection period. 

2 The amounts shown represent averages from 2033 to 2097 of the 75-year projection period. 

3 Per thousands of persons. 

Source: SSA

The decrease and increase discussed below represent how much the low and high alternatives differ from the 

intermediate alternative shown in the table above over the 75-year projection period. 

• The average annual reduction in death rates: If people die at younger ages Social Security income relative to cost 

would decrease by $4.7 trillion; if people live longer the shortfall would increase by $5.7 trillion.

• Total fertility rate: Higher rates of fertility increase the ratio of workers to beneficiaries, all else equal. If there are 

more workers compared to beneficiaries Social Security income relative to cost would decrease by $2.3 trillion; if 

there are fewer workers compared to beneficiaries the shortfall would increase by $3.4 trillion. 

• Real-wage growth: Higher real wage growth results in faster income growth relative to expenditure growth; if realwage growth is higher Social Security income relative to cost would decrease by $4.5 trillion; if real-wage growth is 

lower the shortfall would increase by $3.0 trillion. 

• CPI change: If the ultimate annual increase in the CPI percentage is higher Social Security income relative to cost 

would decrease by $0.6 trillion; if the ultimate annual increase in the CPI percentage is lower shortfall would 

increase by $0.7 trillion. 

• Net immigration: If there is a larger increase in immigration levels then Social Security income relative to cost 

would decrease by $1.6 trillion; if there is a smaller increase in immigration levels the shortfall would increase by 

$1.6 trillion.

• Real interest rate: If the ultimate real interest rate is higher, then Social Security income relative to cost would 

decrease by $3.7 trillion; if the ultimate annual real interest rate is lower, then the shortfall would increase by $4.8 

trillion.
191 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Present Values of Estimated Medicare Part A Expenditures in Excess of Income Under Various 

Assumptions, 2023-2097

(Dollar values in trillions; values of assumptions shown in parentheses)

Financing Shortfall Range

Assumption Low Intermediate High

Average annual growth in health costs (5.6)1 4.6 21.0 

(2.7) (3.7) (4.7)

Total fertility rate 3.8 4.6 5.8 

(2.2) (2.0) (1.7)

Real wage growth 0.9 4.6 7.2 

(1.7) (1.1) (0.5)

CPI change 3.4 4.6 6.2 

(3.0) (2.4) (1.8)

Net immigration 4.0 4.6 5.3 

(1,732)2 (1,277)2 (845)2

Real interest rate 4.0 4.6 5.4 

(2.8) (2.3) (1.8)

1

Average annual growth in health cost is projected to be negative for 2023. 2

Per thousands of persons.

Source: Centers for Medicare & Medicaid Services

The decrease and increase discussed below represent how much the low and high alternatives differ from the 

intermediate alternative shown in the table above over the 75-year projection period.

• Average annual growth in health care costs: The financial status of the HI Trust Fund is extremely sensitive to the 

growth rates for health care service costs. Slower growth rates will produce a lower aggregate cost of providing 

covered health care services. If a slower growth rate is attained Medicare Part A income relative to cost would 

decrease by $10.2 trillion; if the growth rate is higher the shortfall would increase by $16.4 trillion.

• Total fertility rate: Higher rates of fertility increase the ratio of workers to beneficiaries, all else equal. If there are 

more workers compared to beneficiaries Medicare Part A income relative to cost would decrease by $0.8 trillion; if 

there are fewer workers compared to beneficiaries, the shortfall would increase by $1.2 trillion.

• Real-wage growth: Faster real-wage growth results in smaller HI cash flow deficits. If real-wage growth is higher 

Medicare Part A income relative to cost would decrease by $3.7 trillion; if real wage growth is lower, the shortfall 

would increase by $2.6 trillion.

• CPI change: If the ultimate annual increase in the CPI percentage is higher Medicare Part A income relative to cost 

would decrease by $1.2 trillion; if the ultimate annual increase in the CPI percentage is lower the shortfall would 

increase by $1.6 trillion.

• Net immigration: If there is a larger increase in immigration levels then Medicare Part A income relative to cost 

would decrease by $0.6 trillion; if there is a smaller increase in immigration levels the shortfall would increase by 

$0.7 trillion.

• Real interest rate: If the ultimate real interest rate is higher, Medicare Part A income relative to cost would decrease 

by $0.6 trillion; if the ultimate real interest rate is lower, then the shortfall would increase by $0.8 trillion.
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 192

Present Values of Estimated Medicare Parts B and D Future Expenditures Less Premium Income

and State Transfers Under Three Health Care Cost Growth Assumptions, 2023-2097

Medicare Program1 Government-wide Resources Needed

Low Intermediate High

(in trillions of dollars) 2.7 3.7 4.7 

Part B 29.1 40.9 59.4

Part D 5.4 7.6 11.1

1 Annual growth rate is the aggregate cost of providing covered health care services to beneficiaries. The low and high scenarios

assume that costs increase 1.0 percent slower or faster, respectively, than the intermediate assumption.

Source: Centers for Medicare & Medicaid Services

The table above shows the effects of various assumptions about the growth in health care costs on the PV of estimated 

Part B and D expenditures in excess of income in the terms of government-wide resources needed due to the financing 

mechanism (General Fund transfers) for Medicare Parts B and D. As with Part A, net Part B and D expenditures are very 

sensitive to the health care cost growth assumption. If a slower growth rate is attained government-wide resources needed for 

Part B would decrease by $11.8 trillion and Part D by $2.2 trillion; if the growth rate is higher, government-wide resources 

needed would increase to $18.5 trillion for Part B and to $3.5 trillion for Part D.

Sustainability of Social Security and Medicare

75-Year Horizon

According to the 2023 Medicare Trustees Report, the HI Trust Fund is projected to remain solvent until 2031 and, 

according to the 2023 Social Security Trustees Report, the OASI Trust Fund is projected to have sufficient reserves to pay 

full benefits on time until 2033 while the DI Trust Fund is not projected to be depleted within the projection period. In each 

case, some trust fund interest income and balances accumulated during prior years are needed to pay benefits. This leads to a

repayment of loans made to the General Fund by the trust funds. The General Fund will pay back the trust funds and then the 

monies will be paid out to beneficiaries. Moreover, under current law, General Fund transfers to the SMI Trust Fund will 

occur into the indefinite future and will continue to grow with the growth in health care expenditures.

The potential magnitude of future financial obligations under these three social insurance programs is, therefore, 

important from a budget perspective as well as for understanding generally the growing resource demands of the programs on 

the economy. From the 75-year budget perspective, the PV of the additional resources that would be necessary to meet 

projected expenditures, for the three programs combined, is $78.4 trillion. To put this figure in perspective, it would represent 

4.4 percent of the PV of projected GDP over the same period ($1,766.0 trillion). These resource needs would be in addition 

to the payroll taxes, benefit taxes, and premium payments. Asset redemptions and Medicare Part B and D general revenue 

transfers represent formal budget commitments, but no provision exists for covering the Medicare Part A and Social Security 

Trust Fund deficits once assets are depleted.

The table below shows the magnitudes of the primary expenditures and sources of financing for the three trust funds 

computed on an open-group basis for the next 75 years and expressed in PV terms. The data are consistent with the SOSI 

included in the principal financial statements. 

From the government-wide perspective, the PV of the total resources needed for the Social Security and Medicare 

Programs over and above current-law funding sources (payroll taxes, benefit taxes, and premium payments from the public) 

is $78.4 trillion. From the trust fund perspective, which counts the trust funds ($3.2 trillion) and the general revenue transfers 

to the SMI Program ($48.5 trillion) as dedicated funding sources, additional resources needed to fund the programs are $26.6 

trillion.
193 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Present Values of Costs Less Revenues of 75-Year Open Group Obligations HI, SMI, and OASDI as of

January 1, 2023

SMI

(In trillions of dollars) HI Part B Part D OASDI Total

Revenues from the public:

 Taxes 30.9 - - 87.4 118.3

 Premiums and state transfers 0.4 15.7 3.0 - 19.1

 Total 31.3 15.7 3.0 87.4 137.4

 Total costs to the public 35.9 56.6 10.6 112.6 215.7

Net results - budget perspective1 4.6 40.9 7.6 25.2 78.3

Revenues from other government accounts - 40.9 7.6 - 48.5

Trust fund balances as of 1/1/2023 0.2 0.2 - 2.8 3.2

Net results - trust fund perspective1 4.4 (0.2) - 22.4 26.6

1 Net results are computed as costs less revenues and trust fund balances. Negative values are indicative of surpluses.

Source: 2023 OASDI Trustees Reports and Centers for Medicare & Medicaid Services

Infinite Horizon

The 75-year horizon is consistent with the primary focus of the Social Security and Medicare Trustees Reports. Experts 

have noted that limiting the projections to 75 years understates the magnitude of the long-range unfunded obligations because 

summary measures (such as the actuarial balance and open-group unfunded obligations) reflect the full amount of taxes paid 

by the next two or three generations of workers, but not the full amount of their benefits. One approach to addressing the 

limitation of 75-year summary measures is to extend the projections horizon indefinitely, so that the overall results reflect the 

projected costs and revenues after the first 75 years. The open-group infinite horizon net obligation is the PV of all expected 

future program outlays less the PV of all expected future program tax and premium revenues. Such a measure is provided in 

the following table for the three trust funds represented above.

From the Budget or government-wide perspective, the values in line 1 plus the values in line 4 are summed in the last 

line of the table and represent the value of resources needed to finance each of the programs into the infinite future. The total 

resources needed for all the programs sums to $175.3 trillion in PV terms. This need can be satisfied only through increased 

borrowing, higher taxes, reduced program spending, or some combination.

The second line shows the value of the trust fund at the beginning of 2023. For the HI and OASDI Programs this 

represents the extent the programs are funded from the trust fund perspective. From that perspective, when the trust fund is 

subtracted, an additional $66.0 trillion is needed to sustain the Social Security program into the infinite future, while the 

Medicare Part A program reflects a projected surplus of $15.3 trillion over the infinite horizon. As described above, from the 

trust fund perspective, the SMI Program is fully funded; from a government-wide basis, the substantial gap that exists 

between premiums, state transfer revenue, and program expenditures in the Part B and D Program ($99.3 trillion and $22.1 

trillion, respectively) represents future general revenue obligations of the Budget.

In comparison to the analogous 75-year number in the table above, extending the calculations beyond 2097, captures the 

full lifetime benefits, plus taxes and premiums of all current and future participants. The shorter horizon understates the total 

financial needs by capturing relatively more of the revenues from current and future workers and not capturing all the 

benefits that are scheduled to be paid to them.
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 194

Present Values of Costs Less Tax, Premium and State Transfer Revenue Through the Infinite Horizon,

HI, SMI, OASDI as of January 1, 2023

SMI

(In trillions of dollars) HI Part B Part D OASDI Total

Present value of future costs less future taxes, 

premiums, and state transfers for current participants 14.6 33.6 5.9 51.3 105.4

Less current trust fund balance 0.2 0.2 - 2.8 3.2

Equals net obligations for past and current participants 14.4 33.4 5.9 48.5 102.2

Plus net obligations for future participants (29.7) 65.9 16.2 17.5 69.9

Equals net obligations through the infinite future for

all participants (15.3) 99.3 22.1 66.0 172.1

Present values of future costs less the present

values of future income over the infinite horizon (15.1) 99.5 22.1 68.8 175.3

Source: 2023 OASDI and Medicare Trustees Reports
195 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Railroad Retirement, Black Lung, and Unemployment Insurance

Railroad Retirement

The RRB was created in the 1930s to establish a retirement benefit program for the nation’s railroad workers. The RRB 

and the SSA share jurisdiction over the payment of retirement and survivor benefits. Railroad retirement pays full retirement

annuities at age 60 to railroad workers with 30 years of service and disability annuities based on total or occupational 

disability. It also pays annuities to certain beneficiaries of deceased railroad workers. 

Payroll taxes paid by railroad employers and their employees provide a primary source of income for the Railroad 

Retirement and Survivors’ Benefit Program. Other sources of program income include: the RRB-SSA-CMS Financial 

Interchanges with the Social Security and Medicare Trust Funds, federal income taxes on railroad retirement benefits, 

appropriations, and earnings on investments. 

Revenues in excess of benefit payments are invested to provide additional trust fund income. Legislation enacted in 

2001 allowed for Railroad Retirement Account funds transferred to the NRRIT to be invested in non-governmental assets, as 

well as in governmental securities. 

Since its inception, NRRIT has received $21.3 billion from RRB and returned $33.2 billion. During FY 2023, the 

NRRIT made net transfers of $1.4 billion to the RRB to pay retirement benefits. Administrative expenses of the trust are paid 

out of trust assets. The balance as of September 30, 2023, and 2022, of non-federal securities and investments of the NRRIT 

are disclosed in Note 7—Investments.

Black Lung

The Federal Coal Mine Health and Safety Act of 1969 created the BLDBP to provide compensation, medical, and 

survivor benefits for eligible coal miners who are totally disabled due to pneumoconiosis (Black Lung Disease) arising out of

their coal mine employment and the BLDTF provides benefit payments when no responsible mine operator can be assigned 

the liability. 

Black lung disability benefit payments are funded by excise taxes from coal mine operators based on the domestic sale 

of coal, as are the program’s administrative costs. These taxes are collected by the IRS and transferred to the BLDTF.

P.L. 110-343, Division B-Energy Improvement and Extension Act of 2008, enacted on October 3, 2008, among other 

things, restructured the BLDTF debt by refinancing the outstanding high interest rate repayable advances with low interest 

rate discounted debt instruments similar in form to zero-coupon bonds, plus a one-time appropriation. This Act also allowed 

that any subsequent debt issued by the BLDTF may be used to make benefit payments, other authorized expenditures, or to 

repay debt and interest from the initial refinancing.

Unemployment Insurance

The UI Program was created in 1935 to provide income assistance to unemployed workers who lose their jobs generally 

through no fault of their own and are unemployed due to a lack of suitable work. The program protects workers during 

temporary periods of unemployment through the provision of unemployment compensation benefits. The program is 

administered through a unique system of federal and state partnerships established in federal law but executed through 

conforming state laws by state officials. The federal government provides broad policy guidance and program direction 

through the oversight of DOL, while program details are established through individual state UI statutes, administered 

through state UI entities.

The UI Program is financed through the collection of federal and state unemployment taxes levied on subject employers 

and deposited in the UTF and federal appropriations. The fund was established to account for the receipt, investment, and 

disbursement of unemployment taxes. Federal unemployment taxes are used to pay for the administrative costs of the UI 

Program, including grants to each state to cover the costs of state UI operations and the federal share of extended UI benefits. 

Federal unemployment taxes are also used to fund an account within the UTF to make advances to state UI accounts when a 

state’s UI account balance has been exhausted and the state is unable to make benefit payments.

Cash Flow Projections

Railroad Retirement Income and Expenditures. Railroad retirement cash flow projections are based on the intermediate 

set of assumptions used in the RRB’s actuarial valuation of the program. Estimated railroad retirement annual revenue 

exceeds annual expenditures in the years 2036 through 2040 and 2043 through 2097. Without investment income, however, 

annual expenditures are greater than annual revenue throughout the entire period.
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 196

Sensitivity Analysis. The projections of the future financial status of the RRP depend on many economic and 

demographic assumptions. For additional information on the sensitivity of the long-range projections of the RRP and how the 

projections are impacted by changes in certain key assumptions, refer to RRB’s financial statements.

Black Lung Projected Cash Inflows and Outflows, in Constant Dollars, for the Open Group. The significant 

assumptions used in the projections show that cash inflows from excise taxes will exceed cash outflows for benefit payments 

and administrative expenses only for the first four years in the projection period. For FYs 2028 through 2040, the cash 

outflows for benefit payments and administrative expenses are projected to exceed cash inflows from excise taxes. 

Sensitivity Analysis. For the projected cash inflows and outflows with sensitivity analysis, in constant dollars for the 

open group, the significant assumption for medical cost inflation was increased while other significant assumptions were left

unchanged. For additional information on the sensitivity of the projections of the BLDBP and how the projections are 

impacted by changes in assumptions, refer to DOL’s financial statements.

Unemployment Insurance Projected Cash Inflows and Outflows, in Constant Dollars, Under Expected Economic 

Conditions. The significant assumptions used in the cash flow projections of the UTF show total cash inflow exceeds total 

cash outflow in all years in the projection period. 

Sensitivity Analysis. The effect on the accumulated UTF assets of projected total cash inflows and cash outflows of the 

UTF, in constant dollars, over the ten-year period ending September 30, 2033, are demonstrated in two sensitivity analyses. 

Each sensitivity analysis uses an open group, which includes current and future participants in the UI Program. Sensitivity 

Analysis I assumes higher rates of unemployment and Sensitivity Analysis II assumes even higher rates of unemployment. In 

Sensitivity Analysis I, there is a net cash inflow in FY 2024, net cash outflows in FYs 2025 and 2026, and then net cash 

inflows again in FYs 2027 through 2033. In Sensitivity Analysis II, net cash outflows are projected in FYs 2024 through 

2028, but inflows exceed outflows in FYs 2029 through 2033; net cash inflows are reestablished in FY 2029 and peak in FY 

2033 with a decrease in unemployment rate in FY 2033. For additional information on the sensitivity of the projections of the 

UI Program, refer to DOL’s financial statements.

Sustainability

Sustainability of Railroad Retirement from a trust fund perspective, when the trust fund balance ($24.9 billion) and the 

financial interchange and transfers ($104.5 billion) are included, the combined balance of the NRRIT, the Railroad 

Retirement Account, and the Social Security Equivalent Benefit Account show a slight surplus ($1.4 billion). For additional 

information related to the sustainability of the RRP, refer to RRB’s financial statements.

On September 30, 2023, total liabilities of the BLDTF exceeded assets by nearly $6.4 billion. This net position deficit 

represents the accumulated shortfall of excise taxes necessary to meet benefit payments, administrative costs, and interest 

expense incurred prior to and subsequent to the debt refinancing pursuant to P.L. 110-343. Prior to the enactment of P.L. 110-

343, this shortfall was funded by repayable advances to the BLDTF, which were repayable with interest. Pursuant to P.L. 

110-343, any shortfall will be financed with debt instruments similar in form to zero-coupon bonds, with a maturity date of 

one year and bear interest at Treasury’s 1-year rate.

The ability of the UI Program to meet a participant’s future benefit payment needs depends on the availability of 

accumulated taxes and earnings within the UTF. The effect of projected benefit payments on the accumulated net assets of 

the UTF is measured, under an open group scenario, which includes current and future participants in the UI Program. As of 

September 30, 2023, total assets within the UTF exceeded total liabilities by nearly $54.4 billion. At the present time there is 

a surplus; any surplus of tax revenues and earnings on these revenues over benefit payment expenses is available to finance 

benefit payments in future periods when tax revenues may be insufficient.

For additional information related to the sustainability of the RRP, BLDBP, and UI refer to RRB’s and DOL’s financial 

statements.

Unemployment Trust Fund Solvency

Each state’s accumulated UTF net assets or reserve balance should provide a defined level of benefit payments over a 

defined period. To be minimally solvent, a state’s reserve balance should provide for one year’s projected benefit payment 

needs based on the highest levels of benefit payments experienced by the state over the last 20 years. A ratio of 1.00 or 

greater indicates that the state UTF account balance is minimally solvent. States below this level are vulnerable to exhausting 

their funds in a recession. States exhausting their reserve balance must borrow funds from either FUA or the private markets 

to make benefit payments. FUA and Extended Unemployment Compensation Account outstanding advances were $23.0 

billion and $8.5 billion, respectively, as of September 30, 2023.

The results of DOL’s state by state analysis indicate 36 state UTF accounts and the accounts of the D.C., Puerto Rico, 

and the Virgin Islands were below the minimal solvency ratio of 1.00 at September 30, 2023. 
197 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Deferred Maintenance and Repairs

DM&R result from maintenance not being performed on a timely basis and is the estimated cost to bring governmentowned PP&E to an acceptable condition. DM&R exclude the cost of expanding the capacity of assets or upgrading them to 

serve needs different from those originally intended. The consequences of not performing regular maintenance and repairs 

could include increased safety hazards, poor service to the public, higher costs in the future, and inefficient operations. 

Estimated DM&R costs are not accrued in the Statements of Net Cost or recognized as a liability on the Balance Sheets.

The amounts presented for DM&R are allowed to be measured using one of the following three methods:

• Condition assessment surveys which are periodic inspections of government-owned property to determine the 

current condition and estimated cost to bring the property to an acceptable condition.

• Life-cycle cost forecast that is an acquisition or procurement technique that considers operation, maintenance, and 

other costs in addition to the acquisition cost of assets.

• Any other method of choice that is similar to the condition assessment survey or life-cycle costing methods.

The table below of DM&R is presented as a single estimate in accordance with SFFAS No. 42, Deferred Maintenance 

and Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32. These amounts were all 

measured using the condition assessment survey method. Please refer to the individual financial statements of DOD, DOI, 

VA, DOE, USDA, NASA, HHS, GSA, DHS, State, and DOT for additional information on DM&R. 

Deferred Maintenance and Repairs as of September 30, 2023, and 2022

(In billions of dollars) 2023 2022

Asset category:

General property, plant, and equipment 250.3 186.8

Heritage assets 32.0 28.1

Stewardship land 1.0 0.8

Total deferred maintenance and repairs 283.3 215.7

Other Claims for Refunds

Other claims for refunds are claims filed for which specific administrative actions such as review by the courts are 

required before payments can be made and unasserted claims for refund by taxpayers or importers that may or may not 

become payable depending upon the resolution of subsequent events. As stated in SFFAS No. 7, Accounting for Revenue and 

Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, unasserted claims for refund 

such as unfiled claims for refunds or drawbacks for which no claim has been filed, are not known, therefore estimates are not

able to be determined, and are not recognized on the Balance Sheet. Claims filed for refunds where required administrative 

actions are not yet complete as of the close of the reporting period may not be known however, the refunds, may be 

reasonably estimable.

Management has estimated amounts that may be paid out as other claims for tax refunds. This estimate represents an 

amount (principal and interest) that may be paid for claims pending judicial review by the federal courts or, internally, by 

appeals. The total estimated payout (including principal and interest) for claims pending judicial review by the federal courts 

is $1.1 billion and $2.1 billion for FYs 2023 and 2022, respectively. For those under appeal, the estimated payout is $1.3 

billion for both FYs 2023 and 2022, respectively. To the extent judgments against the government for these claims prompt 

other similarly situated taxpayers to file similar refund claims, these amounts could become significantly greater.
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 198

Tax Assessments

The government is authorized and required to make inquiries, determinations, and assessments of all taxes that have not 

been duly paid. Unpaid assessments result from taxpayers filing returns without sufficient payment, as well as enforcement 

programs such as examination, under-reporter, substitute for return, and combined annual wage reporting. Under federal 

accounting standards, unpaid assessments are categorized as taxes receivable if taxpayers agree or a court has determined the

assessments are owed. If neither of these conditions are met, the unpaid assessments are categorized as compliance 

assessments. Assessments with little or no future collection potential are called write-offs. Although compliance assessments 

and write-offs are not considered receivables under federal accounting standards, they represent legally enforceable claims of 

the government. There is, however, a significant difference in the collection potential between compliance assessments and 

receivables.

Compliance assessments and pre-assessment work in process are $97.7 billion and $90.9 billion for FYs 2023 and 2022, 

respectively. The amount of allowance for uncollectible amounts pertaining to compliance assessments cannot be reasonably 

estimated, and thus the net realizable value of the pre-assessment work-in-process cannot be determined. The amount of 

assessments that entities have statutory authority to collect at the end of the period but that have been written off and 

excluded from accounts receivable are $76.6 billion and $77.3 billion for FYs 2023 and 2022, respectively.

Federal Oil and Gas Resources

The DOI is responsible for managing the nation’s oil and natural gas resources and the mineral revenues on federal 

lands, both onshore and on the Outer Continental Shelf. This management process can be broken down into six essential 

analysis components: pre-leasing, post-leasing and pre-production, production and post-production, revenue collection, fund 

disbursement, and compliance.

Federal Oil and Gas Resources as of September 30, 2023, and 2022

Offshore Onshore Total

(In billions of dollars) 2023 2022 2023 2022 2023 2022

Oil and lease condensate 33.3 34.7 29.4 29.1 62.7 63.8

Natural gas, wet after lease separation 1.8 2.0 14.2 22.4 16.0 24.4

Total 35.1 36.7 43.6 51.5 78.7 88.2

The above table presents the estimated PV of future federal royalty receipts on estimated proved reserves12 as of 

September 30, 2023, and 2022. The federal government’s estimated petroleum royalties have as their basis the DOE’s EIA 

estimates of proved reserves. The EIA provides such estimates directly for federal offshore areas and they are adjusted to 

extract the federal subset of onshore proved reserves. The federal proved reserves were then further adjusted to correspond 

with the effective date of the actual production for calendar year 2021, the most recently published EIA proved reserves 

report and then are projected, separately for oil and natural gas, over time to simulate a schedule of when the reserves would 

be produced. Future royalties are then calculated from these production streams by applying future price estimates by the 

OMB, production growth estimates from the EIA’s 2023 Annual Energy Outlook, and effective royalty rates. The valuation 

method used for gas captures royalties from three products–dry gas, wet gas, and natural gas liquids–which collectively are 

reported as natural gas, wet after lease separation. The PV of these royalties are then determined by discounting the revenue

12 Per the EIA, lease condensate is a mixture consisting primarily of pentanes and heavier hydrocarbons which is recovered as a liquid from natural gas in 

lease separation facilities. This category excludes natural gas plant liquids, such as butane and propane, which are recovered at downstream natural gas 

processing plants or facilities. Also, per the EIA, natural gas, wet after lease separation, is the volume of natural gas remaining after removal of lease 

condensate in lease and/or field separation facilities, if any, and after exclusion of nonhydrocarbon gases where they occur in sufficient quantity to render the 

gas unmarketable. Natural gas liquids may be recovered from volume of natural gas, wet after lease separation, and at natural gas processing plants 

(https://www.eia.gov/dnav/ng/TblDefs/ng_prod_deep_tbldef2.asp).
199 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

stream back to the effective date at a public discount rate assumed to be equal to the OMB’s estimates of future 30-year 

Treasury bill rates for offshore, and a weighted average of the U.S. Treasury yield curve from trading dates for the most 

recently completed fiscal year for onshore. The 30-year rate was chosen because this maturity life most closely approximates 

the productive lives of the proved reserves estimates. 

Estimated Federal Oil and Gas Petroleum Royalties (Proved Reserves) 

as of September 30, 2023, and 2022

Average Purchase Average Royalty

Quantity (In millions) Price ($) Rate (%)

Petroleum Category 2023 2022 2023 2022 2023 2022

Oil and lease condensate (Bbl):

Offshore 4,434.0 4,142.4 78.52 92.74 13.45 13.29 

Onshore 4,645.3 2,946.7 78.40 93.43 12.33 12.38 

Total 9,079.3 7,089.1

Natural gas, wet after lease separation 

(Mcf):

Offshore 4,203.1 3,911.4 5.16 6.92 11.19 12.41 

Onshore 43,543.2 37,663.1 5.70 6.96 11.00 11.22 

Total 47,746.3 41,574.5

Bbl = barrels

Mcf = 1,000 cubic feet

The table above provides the estimated quantity, a weighted average purchase price, and a weighted average royalty rate 

by category of estimated federal petroleum royalties at the end of FYs 2023 and 2022.13 The estimated quantities, average 

purchase prices and royalty rates vary by region; the above table reflects an overall weighted average purchase price and 

royalty rate, and is not presented on a regional basis, but is instead calculated based on regional averages. The prices and 

royalty rates are based upon historical (or estimated) averages, excluding prior-period adjustments, if any, and are affected by 

such factors as accounting adjustments and transportation allowances, resulting in effective average prices and royalty rates. 

Prices are valued at the lease rather than at the market center and differ from those used to compute the asset estimated PV,

which are forecasted and discounted based upon OMB economic assumptions. For additional details on federal oil and gas 

resources, refer to the financial statements of DOI. In addition to the oil and gas resources discussed above, the federal 

government also owns oil and gas resources that are not currently under lease. 

13 Gulf of Mexico proved reserves are royalty-bearing volumes. In the Gulf of Mexico, an additional 503.5 million Bbl for FY 2023 and 522.5 million Bbl 

for FY 2022 of proved oil reserves, and 426.2 million Mcf for FY 2023 and 412 million Mcf for FY 2022 of proved gas reserves are not reflected in these 

totals as they are estimated to be producible royalty-free under various royalty relief provisions. The NPV of the royalty value of the royalty-free proved 

reserves volumes in the Gulf of Mexico is estimated to be $3.8 billion for FY 2023 and $4.6 billion for FY 2022.
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 200

Federal Natural Resources Other than Oil and Gas

Federal Natural Resources Other than Oil and Gas as of September 30, 2023, and 2022

(In billions of dollars) 2023 2022

Coal royalties 8.5 9.5

Total 8.5 9.5

The ONRR within DOI is responsible for the management and collection of revenues associated with federal coal leases 

which are managed by the BLM within DOI. The ONRR achieves optimal value by ensuring that all natural resource 

revenues are efficiently and accurately collected as well as disbursed to recipients in a timely manner by performing audit and 

revenue compliance activities.

The Mineral Leasing Act of 1920, as amended, and the Mineral Leasing Act for Acquired Lands of 1947, as amended, 

gives DOI the responsibility for coal leasing on approximately 700 million acres of federal mineral estate which includes 570 

million of acres where coal development is allowed. The surface estate of these lands may be under the control of BLM, the 

U.S. Forest Service (within USDA), private or state landowners, or other federal entities. 

Public lands are available for coal leasing after the lands have been evaluated through a multiple-use planning process. 

DOI receives coal leasing revenues from a bonus paid at the time of the lease, an annual rent payment of $3.0 per acre, and 

royalties paid on the value of the coal after it has been mined. The royalty rate for surface-mining methods is 12.5 percent 

and is 8.0 percent for underground mining, and the BLM can approve reduced royalty rates based on maximum economic 

recovery. Regulations that govern BLM’s coal leasing program are contained in Title 43, Groups 3000 and 3400 of the CFR.

The above table presents the estimated PV of future federal coal royalty receipts on estimated recoverable reserves as of 

September 30, 2023, and 2022. The federal government’s estimated coal royalties have as their basis the DOI’s BLM 

estimates of recoverable reserves. The federal recoverable reserves are then further adjusted to correspond with the effective 

date of the analysis and then are projected over time to simulate a schedule of when the reserves would be produced. Future 

royalties are then calculated by applying future price estimates and effective royalty rates, adjusted for transportation 

allowances and other allowable deductions. The PV of these royalties are then determined by discounting the revenue stream 

back to the effective date at a public discount rate assumed to be equal to the OMB’s estimates of future 30-year Treasury bill 

rates. The 30-year rate was chosen because this maturity life most closely approximates the productive lives of the 

recoverable reserves estimates. 

In addition to the coal resources discussed above, the federal government has other natural resources under lease 

contract whereby the lessee is required to pay royalties on the sale of the natural resource. These natural resources include

soda ash, potash (including muriates of potash and langbeinite phosphate), lead concentrate, copper concentrate, and zinc 

concentrate. Soda ash and potash have the largest estimated PV of future royalties. The federal government also owns coal 

resources and certain other natural resources that are not currently under lease. For additional details on federal natural 

resources-other than oil and gas, refer to the financial statements of DOI. 
201 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

Land and Permanent Land Rights

Estimated Acreage by Predominant Use as of September 30, 2023, and 2022

Property, Property,

Plant, & Plant, &

Equipment Stewardship Total Land1 Equipment Stewardship Total Land1

(In thousands of acres) 2023 2022

Commercial Use 205 192,406 192,611 55 192,810 192,865

Conservation and Preservation2 291 1,082,998 1,083,289 263 1,081,832 1,082,095

Operational 30,299 20,608 50,907 36,414 12,886 49,300

Total 30,795 1,296,012 1,326,807 36,732 1,287,528 1,324,260

Acreage held for disposal or 

exchange 8 12

1Estimated acreage includes land and permanent land rights. Acreage of temporary land rights (those for a specified period of time or a

limited duration) are not included pursuant to SFFAS No. 59, paragraphs 4 and 5.

2Department of Interior's U.S. Fish and Wildlife Service manages 670,980 thousand acres of submerged lands in marine national

monuments primarily for the benefit of fish and wildlife.

SFFAS No. 59, Accounting and Reporting of Government Land requires that the estimated acres of land and permanent 

land rights of general PP&E land and stewardship land be presented as unaudited RSI for FYs 2022 through 2025. The 

estimated acreage will transition to note disclosures in FY 2026.

As defined in SFFAS No. 59, general PP&E land is land used within the ordinary course of business to support the 

mission of the federal government and includes land acquired for or in connection with other general PP&E. General PP&E 

land excludes withdrawn public lands or land restricted for conservation, preservation, historical, or other like restrictions. 

Such land is categorized as stewardship land. Stewardship land includes both public domain and acquired land and land 

rights owned by the federal government intended to be held indefinitely and the majority was acquired by the government 

during the first century of the nation’s existence. Land rights are interests and privileges held by the entity in land owned by 

others, such as leaseholds, easements, water and waterpower rights, diversion rights, submersion rights, rights-of-way, 

mineral rights, and other like interests in land. General PP&E land rights and stewardship land rights that are for an 

unspecified period of time or unlimited duration are considered permanent land rights and are included in the estimated 

acreage table above. Land rights that are only for a specified period of time or a limited duration are considered temporary 

land rights. All temporary land rights will continue to be recorded under general PP&E and depreciated over their time period 

after SFFAS No. 59 implementation.

All land and permanent land rights are reported in estimated acres using three predominant use categories including 

commercial use, conservation and preservation, and operational. The reporting of estimated acres of land held for disposal or 

exchange is also required. Commercial use land includes land or land rights that are predominantly used to generate inflows 

of resources from non-federal third parties, usually through special use permits, right-of-way grants, and leases. Examples of 

commercial use land are concession arrangements, grants for specific projects, and sales or land exchanges. Conservation and 

preservation land includes land or land rights that are predominantly used for the conservation of natural resources and 

preservation of buildings, objects, and landscapes. Examples of conservation and preservation land are national parks, 

geological resource sites, and wildlife and plant life refuges. Within the conservation and preservation reported acres, DOI’s 

U.S. Fish and Wildlife Service manages 670,980 thousand acres of submerged lands in marine national monuments primarily 

for the benefit of fish and wildlife. Operational land includes land or land rights predominantly used for general or 

administrative purposes. Examples of operational land include land used for military, scientific, and nuclear functions.

Additional information concerning the estimated acres of land and permanent land rights can be obtained from the 

financial statements of DOD, DOI, and USDA. Please refer to Note 6—General Property, Plant, and Equipment, Net and 
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 202

Note 26—Stewardship Property, Plant, and Equipment for additional information concerning general PP&E land and

stewardship land.