[Congressional Record Volume 158, Number 20 (Tuesday, February 7, 2012)]
[House]
[Pages H534-H549]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BUDGET AND ACCOUNTING TRANSPARENCY ACT OF 2012

  Mr. RYAN of Wisconsin. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days in which to revise and extend their 
remarks on H.R. 3581.
  The SPEAKER pro tempore (Mr. Hurt). Is there objection to the request 
of the gentleman from Wisconsin?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to House Resolution 539 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 3581.

                              {time}  1449


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 3581) to amend the Balanced Budget and Emergency Deficit Control 
Act of 1985 to increase transparency in Federal budgeting, and for 
other purposes, with Mrs. Miller of Michigan in the chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  The gentleman from Wisconsin (Mr. Ryan) and the gentleman from 
Maryland (Mr. Van Hollen) each will control 30 minutes.
  The Chair recognizes the gentleman from Wisconsin.

                              {time}  1450

  Mr. RYAN of Wisconsin. Madam Chair, I yield myself such time as I may 
consume.
  I want to begin by thanking my colleagues who helped pass the Pro-
Growth Budgeting Act and the Baseline Reform Act in the House last 
week. Today, we are here to continue that work, focused on changing 
Washington's culture of spending and ensuring policymakers serve as 
responsible stewards of hardworking American tax dollars.
  I stand in strong support of the Budget and Accounting Transparency 
Act offered by the vice chairman of the Budget Committee, Congressman 
Scott Garrett of New Jersey.
  While it's well known that Washington has a spending problem, it is 
less well known that Washington isn't being fully honest about how much 
it is spending. This bill would increase transparency and accuracy in 
budgeting for Federal credit programs, the housing-related government-
sponsored enterprises Fannie Mae and Freddie Mac, and the publication 
of budget justification materials.
  First, it would require fair-value accounting, which recognizes the 
market risks that the government is incurring by issuing a loan or a 
loan guarantee for all Federal programs that make loan or loan 
guarantees. Market risk is already accounted for in several government 
programs like TARP and GSEs, and it's a very common practice in the 
private sector.
  Second, this bill would bring Fannie Mae and Freddie Mac on budget. 
These enterprises rack up billions in liabilities hidden from the 
public income tax payers. Last June, the CBO testified that it puts the 
total cost of the mortgage commitments made by these two entities at 
$291 billion and that that cost would ultimately rise even higher.
  Third, this bill increases transparency for information contained in 
agency budget requests by requiring that they be made public on the 
Internet at the same time as they are provided to Congress. Government 
agencies have an obligation to taxpayers to justify every dollar spent 
in Washington.

[[Page H535]]

  Madam Chair, no budget process reform can substitute for political 
will when it comes to tackling our greatest fiscal and economic 
challenges. Getting America back on track will require a Senate and a 
President willing to get serious about the structural drivers of the 
debt and the continued impediments we have to economic growth. But 
being honest about the size and scope of our challenges, as this reform 
calls for, offers us a concrete step in the right direction.
  At this time, Madam Chair, I would like to yield the remainder of our 
time for the purposes of managing the bill to the author of this bill, 
Mr. Garrett, the vice chairman of the Budget Committee.
  With that, we will reserve the balance of our time.
  The CHAIR. The gentleman from New Jersey will be recognized.
  Mr. VAN HOLLEN. Madam Chair, I yield myself such time as I may 
consume.
  Here we are on the floor of the House, another day when we haven't 
taken up the President's jobs bill that he presented right here before 
a joint session of Congress last September. We have had some good news 
in the economy, some numbers that show that we have a fragile recovery 
going on. It would be a huge mistake not to do everything we can to 
nurture that recovery. So I hope we will finally take up the 
President's proposal, and I hope that the ongoing conference committee 
on the payroll tax cut will complete its work in an expeditious manner.
  Now, with respect to this particular bill that is before us, it 
raises some very serious and very complicated issues regarding budget 
accounting for credit programs, and I want to commend Mr. Garrett from 
New Jersey. I want to commend him for raising some legitimate issues as 
part of this conversation, issues that deserve our attention. But it is 
totally premature to bring this bill to the floor without having more 
hearings and more review.
  In the Budget Committee, we've not had a single hearing on the 
comprehensive question of how we deal with all the credit programs and 
how to account for them. We had one hearing with respect to whether we 
apply this to the FHA, the Federal Housing Administration; but this 
bill goes way beyond that and would direct CBO to change its method of 
accounting for credit programs like student loan programs and for other 
programs throughout the U.S. Government.
  It has very far-reaching consequences. This is a matter on which 
people who've spent their lives looking at the budget disagree, and so 
the Budget Committee at the very least could spend a few hours on a 
hearing to understand fully the consequences of doing this.
  I just want to read from a letter that was sent to us from the former 
head of the nonpartisan, independent Congressional Budget Office, 
Robert Reischauer. He says, I strongly oppose this change. He goes on 
to say: ``The accounting convention used since the enactment of the 
Credit Reform Act of 1990 already reflects the risk that borrowers will 
default on their loan or loan guarantees.'' He goes on to say: ``H.R. 
3581 proposes to place an additional budgetary cost on top of the 
actual cash flows.'' And he goes on to explain what is a very 
complicated issue, a very complicated matter.
  I would say to my colleagues, not that this isn't an appropriate 
question for the Budget Committee to take up, but it's totally 
inappropriate for the Congress to direct the Congressional Budget 
Office to take up a different accounting measure which is not ready for 
prime time and for which we have not had the time to fully review all 
of its consequences.
  With that, I reserve the balance of my time.


                                         Robert D. Reischauer,

                                   Bethesda, MD, January 23, 2012.
     Hon. Chris Van Hollen,
     Longworth H.O.B.,
     Washington, DC.
       Dear Representative Van Hollen, I am writing in response to 
     your request for my views on the desirability of adopting 
     ``fair value accounting'' of federal direct loan and loan 
     guarantee costs in the budget as proposed in H.R. 3581. I 
     strongly oppose such a change.
       The accounting convention used since enactment of the 
     Credit Reform Act of 1990 already reflects the risk that 
     borrowers will default on their loans or loan guarantees. 
     Under Credit Reform, costs already are based on the expected 
     actual cash flows from the direct loans and guarantees (with 
     an adjustment to account for the timing of the cash flows). 
     H.R. 3581 proposes to place an additional budgetary cost on 
     top of the actual cash flows. This additional cost is 
     supposed to reflect a cost to society that stems from the 
     fact that, even if the cash flows turn out to be exactly as 
     estimated, the possibility that the credit programs would 
     cost more (or less) than estimated imposes a cost on a risk-
     averse public. Under the proposal, this extra cost would be 
     the difference between the currently estimated cost of direct 
     loans and loan guarantees to the federal government and the 
     cost of those loans and loan guarantees if the private market 
     were providing them.
       A society's aversion to risk may be an appropriate factor 
     for policymakers to take into account in a cost-benefit 
     assessment of any spending or tax proposal but adding a cost 
     to the budget does not make sense. Nor is clear that the cost 
     of societal risk aversion should be based on individual or 
     institutional risk which is what the private market reflects. 
     Inclusion of a risk aversion cost for credit programs would 
     be inconsistent with the treatment of other programs in the 
     budget (many of which have costs that are at least as 
     uncertain as the costs of credit programs--for instance, many 
     agriculture programs and Medicare--and would add a cost 
     element from a traditional cost-benefit analysis without 
     adding anything based on the corresponding benefit side of 
     such an analysis. It would also make budget accounting less 
     straightforward and transparent.
       H.R. 3581 represents a misguided attempt to mold budget 
     accounting to facilitate a cost-benefit analysis, with the 
     result that neither the budget nor the cost-benefit analysis 
     would serve their intended purposes well.
       I would be glad to discuss these issues in more detail if 
     you would like.
           With best wishes.
                                             Robert D. Reischauer.

  Mr. GARRETT. Madam Chair, I yield myself such time as I may consume.
  At the start, I would like to thank Chairman Ryan and the Budget 
Committee staff for their hard work with regard to H.R. 3581, the 
Budget and Accounting Transparency Act. Unless you've been living 
someplace else other than here for the last several years, you will not 
be surprised to hear that this country is broke. And it should not 
surprise you that the true extent of our country's debt crisis is a lot 
worse than anyone in Washington is letting on to. How much worse? Well, 
that's something that people really don't know, and we'll never know 
unless we reform the broken budget process here in Washington, D.C. 
Many have talked before about the fact that our process is broken. 
Simply put, we need to make the budget process more transparent and 
accountable.
  Fortunately, today we are taking a step in the right direction with 
this bill. The bill before us today, the Budget and Accounting 
Transparency Act, is, as I say, a commonsense approach to introduce 
more sunshine and common sense into the budget-making process.
  So what would the bill do? First of all, specifically, the bill 
recognizes the budgetary impact of the GSEs, Fannie and Freddie, by 
bringing back onto budget and closes that black hole that's out there 
and brings them out of the shadow and into the light.
  This bill also requires that the Federal Government apply the very 
same credit accounting standards as the private sector is doing right 
now when guaranteeing loans.
  You know, back in September of 2008 as the country was reeling from 
the fallout of the financial collapse, the GSEs, Fannie and Freddie, 
were placed into conservatorship by the FHA. Under this agreement, FHA 
took control of the two companies and the Treasury Department risked 
literally hundreds of billions of dollars, taxpayer dollars, to bail 
them out. Today, the American taxpayer has sunk over $183 billion and 
counting into those failed institutions. As if this weren't enough, 
they've added $1.2 trillion in debt and $5.3 trillion in mortgage-
backed securities.
  Because Fannie and Freddie have become the explicit financial 
responsibility of all of us via the Federal Government, it only makes 
sense, don't you think, that we treat them the same way that we'd treat 
any other obligation of the Federal Government, by formally bringing 
them onto the budget. The CBO even says this. They took a step several 
years ago by the Office of Management and Budget, but they resisted the 
change, preferring to obscure the total Federal exposure of Fannie and 
Freddie. It's time that the Obama administration does the same thing.

[[Page H536]]

  So bringing Fannie and Freddie exposes some of the ugly--and maybe 
we'll call them inconvenient--truths; but I know that the American 
people did not send us here to play a shell game, but did send us here 
to bring out the facts.
  The combined debt obligation of Fannie and Freddie isn't the only 
black cloud hanging over us. There's inaccuracies and lack of 
transparency in budgeting for Federal credit programs across the field. 
We can talk about the Solyndra situation that makes the news. That 
fiasco was an example of a loan guarantee gone sour. Federal loan 
guarantees are contractual obligations between the taxpayer, the 
private creditor, and the borrower. In that case, it went south. But, 
unfortunately, under current law when the government issues a loan 
guarantee, the inherent risk is not reflected in the loan or loan 
guarantee cost. In fact, the CBO estimates that our current Federal 
obligations under these accounting rules today understate the cost of 
credit programs by some $55 billion a year.

                              {time}  1500

  Because the rules do not account for market risk, that is why we need 
to change it. And with that, Madam Chair, I reserve the balance of my 
time only to say that this does three important things: provides the 
clarity, the transparency, and the accountability that we are looking 
for in these and other aspects of the Federal Government programs.
  Mr. VAN HOLLEN. I yield 3 minutes to the gentleman from New Jersey, a 
member of the Budget Committee, Mr. Pascrell.
  Mr. PASCRELL. Madam Chair, with regard to the title of this 
legislation, the Budget and Accounting Transparency Act, maybe they 
should have stopped there, Madam Chair, because the rest of the bill is 
not transparency at all. We still want to deal in the mist, we still 
want to believe that if we don't pay our bills and if we don't pay the 
bills that we have, the Federal Government, that everything is going to 
be all right. The bond rating agencies don't think so, nor does anyone 
else. So when you put the country in jeopardy of not paying its own 
bills, here is who you hurt: you hurt the middle class, you hurt the 
working poor, and you hurt the poor.
  This bill is nothing more than a backdoor method to politicize and 
eliminate important Federal investments. They've been trying to do 
that, Madam Chair, for 4 years. It hurts the middle class, hurts the 
working folks, and it hurts the economy.
  The use of the fair value accounting is the ax that these extreme 
methods will take to spending on our education, our small businesses, 
and the next generation of clean technology. This bill that we are 
discussing right now requires that certain programs that make loans, 
whether they be student loans, Small Business Administration loans, or 
Department of Energy loans for clean energy projects, be scored to cost 
more than the government actually spends. And you don't even deny it.
  In short, fair value accounting doesn't call a nickel a nickel, it 
calls it 10 cents. Artificially inflating spending levels in loan 
payments, in loan programs, puts the squeeze on important Federal 
programs that families rely on, particularly in difficult times.
  You can laugh all you want, Madam Chair, but this is the truth. 
Families are being squeezed out there. And I know that you know--you 
know--Madam Chair, that this is important to the daily living of folks 
that you represent and I represent. And I'm not getting personal. I'm 
saying that we, as representatives, have got to represent the people in 
our district whether they're hurting or not. And I understand that 
we've had many bills on the floor of this House in the past 3 years to 
squeeze the economy. And what has it resulted in? You squeezed the 
States, you squeezed the municipalities--
  The CHAIR. The time of the gentleman has expired.
  Mr. VAN HOLLEN. I yield the gentleman 1 additional minute.
  Mr. PASCRELL. You squeezed them so they lay off police officers, they 
lay off teachers, and they lay off firefighters, and you're telling 
America, Madam Chair, don't worry about it, this will all be over, this 
is simply that we all have to have shared pain. Yeah, sure, shared.
  This bill will jeopardize our economic recovery by putting the brakes 
on the housing market. It would bring us closer to another debt ceiling 
debate. Madam Chair, I think that's where we want to head, some of us: 
let's have another debate over the debt ceiling, let's have another 
debate as to whether we should pay our bills so we can shut down the 
place.
  For you to preside over and get folks to believe that if you shut the 
government down, maybe that wouldn't be so bad either, not paying our 
debts wouldn't be so bad, I don't know what planet we're living on. 
This country needs pro-growth economic policies. We need to take 
action, and the action we should take is to vote down this transparency 
act.
  Mr. GARRETT. Madam Chair, just as we recognize that the American 
taxpayer has already been squeezed by such expenditures as $527 million 
for the failed loans to Solyndra, we recognize that they must put these 
on the record so we understand what they truly cost. And the gentleman 
who has been a leader in this regard from the very beginning in his 
time in Congress, a leader in the area of budget transparency and in 
fixing the American budget and here in Congress, is the gentleman from 
Texas (Mr. Hensarling). I yield 2 minutes to the gentleman from Texas.
  Mr. HENSARLING. I thank the gentleman for yielding. I appreciate his 
leadership, and certainly his leadership as one of the foremost budget 
hawks in the entire United States Congress.
  Madam Chair, we just learned that the President will not be a day 
late and a dollar short with his budget. Instead, he will be a week 
late and a trillion dollars short on his budget. We also learned from 
the Congressional Budget Office this will not be his first year, his 
second year, his third year, but his fourth year to be a trillion 
dollars short on his budget.
  Now, Madam Chair, we received a little good news last month: 200,000 
of our fellow citizens were able to find work. Unfortunately, 13 
million--almost 13 million--remain unemployed, more people are on food 
stamps than ever before, and half of all Americans are either low-
income or in poverty under the policies of this President. It is clear 
that this President's policies have failed. They have made our economy 
worse. And because he cannot run on his record, he has regrettably 
turned to the politics of division and envy.
  To help the economy, to help create more jobs, Madam Chair, number 
one, we've got to quit spending money we don't have. And second of all, 
the American people and job creators have to be able to know that they 
have a fact-based budget, one that is as honest as the American people 
themselves.
  We need fair value accounting. If you're a small business in the 
Fifth District of Texas and you don't have fair value accounting, 
you'll probably go broke. Well, the Federal Government doesn't use fair 
value accounting, and guess what? The Federal Government is broke. 
That's why we must pass the gentleman from New Jersey's bill, the 
Budget and Accounting Transparency Act. No more Fannie and Freddies, no 
more Solyndras. Let's ensure that we account for these costs as part of 
the Republican plan for America's job creators to give our job creators 
the confidence they need to hire and grow this economy.
  Mr. VAN HOLLEN. Madam Chair, it's unfortunate that some of our 
Republican colleagues can't take just a moment away from politics to 
celebrate the fact that we did have some good economic news over the 
last month. Over 250,000 private sector jobs were created. That's good 
news. Is it enough? Of course not. Of course, we need to do more, which 
is why we'd like to see our Republican colleagues bring the President's 
jobs bill to the floor of the House. It's still sitting somewhere 
around here.
  It includes a proposal to invest in our infrastructure, in our roads, 
in our bridges and broadband so that we can make sure that we have an 
economy that can compete and win with respect to our global 
competitors. So it would be great if we could take up that bill. In the 
past, investment in infrastructure has always been a bipartisan 
initiative, but the President's proposal is still languishing.

[[Page H537]]

  With that, I yield 2 minutes to the gentlelady from Wisconsin, a 
member of the Budget Committee, Ms. Moore.
  Ms. MOORE. I thank the gentleman for yielding.
  Madam Chair, I rise today to join my fellow Democratic members of the 
House Budget Committee to express my confusion and disbelief over our 
colleagues' decision to make a spectacle out of the so-called budget 
process reform bills rather than using our time to wisely address 
serious economic policy and make long-term, overdue process 
improvements.
  I admire my Republican colleagues for raising the issue of the need 
to have a better budgeting process. But these are just spectacles. This 
so-called Budget and Accounting Transparency Act is an example of that.
  H.R. 3581 would change the way we budget for government loans by 
requiring that estimates for these loans--examples are student loans, 
energy loans, housing, small business loans--be done on the so-called 
fair value basis.

                              {time}  1510

  These estimates account for so-called ``market-based'' risk.
  Now, experts argue that so-called fair-value estimates overstate the 
true cost of government credit programs because the estimates include a 
risk premium that never materializes in the government's cash flow.
  It's also critical to note that in every single discussion of H.R. 
3581 and fair-value estimates, that if we applied this policy not just 
to credit products, but government-wide--like to Medicare or to ag 
programs, or some of the other favored programs of the majority--it 
would increase estimated subsidy costs to the government for all loan 
programs by more than $50 billion. But you know what, that may in fact 
be consistent with what the authors and proponents of this bill want to 
see.
  We heard, Madam Chair, our good friend, Mr. Garrett, start his 
opening speech with how the country is broke. We heard Mr. Hensarling 
talk about the food stamp President.
  The CHAIR. The time of the gentlewoman has expired.
  Mr. VAN HOLLEN. I yield the gentlelady an additional minute.
  Ms. MOORE. I've got to talk about the food stamp President a little 
bit--and talking about how we ought to stop spending. Well, this in 
fact accomplishes that purpose. By overstating the budget risk, the 
accounting risk that's already accounted for in the Credit Reform Act 
of 1990, by overstating the cost of these programs, it in effect 
reduces the base for our budgets. And if that is their mission, it will 
be accomplished with passage of these bills.
  It doesn't make any sense, Madam Chair, to try to put Freddie and 
Fannie on budget when right now in the Financial Services Committee, on 
which some of these Members sit, we are trying to make a major overhaul 
of Freddie and Fannie, and their fate has not been determined yet.
  The OMB, the CBO, both of the institutions that we rely upon for 
budgeting, are not prepared to bring this online. This is not ready for 
prime time, and I would urge the body to reject these proposals that 
have not been vetted.
  Mr. GARRETT. Madam Chair, I yield myself such time as I may consume.
  I thank the lady for commending us for raising these issues. But 
actually, we're doing something more than just simply raising the 
issue. We're addressing it and solving this problem as well.
  I appreciate the fact that the gentlelady raises the fact about a 
list of experts who have questions about this. Well, I have experts 
too, but I actually have the name. A former CBO Director, Doug Holtz-
Eakin, now with American Action Forum, writes us here to express 
support of H.R. 3581.
  The gentlelady may also know, since she serves on the committee, when 
it comes to this issue that we had this issue up in committee recently, 
and we asked the current CBO Director does he support with regard to 
moving towards fair value. And he said that is the more appropriate 
basis of evaluating the obligations of the Federal Government. So we 
have the experts.

                                        American Action Forum,

                                                 January 30, 2012.
     Hon. Paul Ryan,
     Longworth House Office Building,
     Washington, DC.
       Dear Chairman Ryan: I am writing to express my support for 
     H.R. 3581, ``The Budget and Accounting Transparency Act of 
     2011,'' in particular those provisions that would incorporate 
     fair value accounting (FVA) into the federal budget process. 
     As you are well aware, a core objective in federal budgeting 
     is to accurately display the scale and timing of the 
     expenditure of taxpayer resources. Since sovereign tax and 
     borrowing powers should always be used judiciously, there is 
     a premium on doing so as accurately as possible.
       In some cases this is straightforward. Consider, for 
     example, a discretionary appropriation. The scale of the 
     overall commitment is clear and in some cases it is 
     straightforward to budget the timing of the ultimate outlays 
     as well. Federal credit programs, however, present particular 
     difficulties. The timing of budgetary cash flows differs 
     dramatically between direct loans and federal loan 
     guarantees--even in cases when the ultimate economic impact 
     is identical. The Federal Credit Reform Act of 1990 (FCRA) 
     took an important step forward by equalizing the timing of 
     their budgetary treatment Direct loans and loan guarantees 
     are both recorded in the budget during the year in which the 
     commitment is incurred, regardless of the duration and timing 
     of the federal assistance.
       This was an important step in the right direction. However, 
     estimating the scale of required taxpayer resources remains 
     problematic. In particular, the ability of loan recipients to 
     make timely and complete repayments will be influenced by 
     future individual, household, and economy-wide economic 
     conditions. In the same way, the obligation of the federal 
     government to undertake guarantee payments will be driven by 
     similar forces.
       While such future individual and economic conditions are 
     uncertain, reliable techniques exist to estimate the likely 
     size of the taxpayer obligation. Unfortunately, FCRA 
     needlessly restricts the analyses to credit risk--the 
     probability of failure to fully repay--while ignoring the 
     fact that the timing of those failures matters enormously. As 
     the past few years have starkly reminded every American, the 
     need to tax, borrow and otherwise deprive the private sector 
     of another dollar has far greater implications during the 
     depths of economic distress than during periods of robust 
     economic growth. Adoption Of FVA would rectify this oversight
       I recognize that significant reform to budget procedures 
     should not be undertaken lightly. However, my views are 
     informed by the fact that during my tenure as director, the 
     Congressional Budget Office undertook a number of studies of 
     the implications of accounting fully for economic risks in 
     the budgetary treatment of financial commitments like credit 
     programs. In example after example (pension guarantees; 
     deposit insurance; flood insurance; student loans; and 
     assistance for Chrysler and America West Airlines), it 
     becomes clear that an incomplete assessment of risks leads to 
     misleading budget presentations and may engender poor policy 
     decisions. FVA would be a significant step toward improving 
     this informational deficit.
       My views are echoed by a wide array of budget experts. In 
     March 2010, CBO issued a new report recommending the use of 
     FVA for federal student loan programs on the grounds that 
     budget rules do ``not include the costs to taxpayers that 
     stem from certain risks involved in lending.'' In addition, 
     the Pew-Peterson Commission on Budget Reform proposed ``fair-
     value accounting'' for credit programs and the President's 
     National Commission on Fiscal Responsibility and Reform 
     advocated for reform of budget concepts that would more 
     accurately reflect costs.
       In addition to these research views, there is a track 
     record of success. FVA has already been used successfully for 
     the budgetary treatment of the Temporary Asset Relief Program 
     of 2008 (TARP) and the federal assistance to Fannie Mae and 
     Freddie Mac.
       Last but not least H.R. 3581 would also fix another 
     shortcoming of FCRA; namely that the administrative costs 
     associated with federal operations are not included in the 
     budget cost and must be provided for elsewhere. H.R. 3581 
     would require that administrative costs (called ``essential 
     preservation services'') to be accounted for up-front, 
     thereby balancing the playing field.
       In sum, I believe that the Congress should adopt fair value 
     accounting and, in particular, pass H.R. 3581 in a timely 
     fashion. I would be happy to discuss any aspect of this issue 
     in greater detail.
           Sincerely,
                                              Douglas Holtz-Eakin.

  With that, I yield 1 minute to the gentleman from California (Mr. 
McClintock).
  Mr. McCLINTOCK. I thank the gentleman for yielding.
  Madam Chair, a family that excludes from its family budget the 
mortgage payments it knows it must make is deluding itself and it's 
sabotaging its finances. That's precisely what the Federal Government 
is doing right now with respect to billions of dollars of liabilities 
that arise from its ill-fated sponsorship of Fannie Mae and Freddie 
Mac.
  This bill takes a small step toward restoring honest and accurate 
accounting to our government's finances by requiring that the enormous 
liabilities

[[Page H538]]

incurred by Fannie and Freddie be accounted for in the Federal budget 
process, using exactly the same accounting standards for loans that we 
already insist upon with mortgage lenders.
  I wish this bill abolished Fannie and Freddie outright. I wish it 
restored the days when banks and borrowers who made bad decisions took 
responsibility for them and didn't demand that their neighbors pay for 
their mistakes. But can't we at least agree that the public has a right 
to expect that the cost of this folly is honestly accounted for in our 
Nation's budget?
  Mr. VAN HOLLEN. Madam Chair, I reserve the balance of my time.
  Mr. GARRETT. I yield 2 minutes to the gentleman from Oklahoma (Mr. 
Lankford).
  Mr. LANKFORD. Madam Chair, I'm grateful that we're getting a chance 
to shine some light into the area of the credit costs and the credit 
issues. If you went to any bank in America, any community bank, any 
other bank you wanted to go to and talked to them about fair value, 
they would know exactly what we're talking about because we as the 
Federal Government require that of them. Now, this is another one of 
those instances that the Federal Government has exempted themselves 
from the rules that everyone else has to live under.
  Fair value is not some radical, different proposal. It takes into 
effect the real risks that are sitting out there on the horizon and 
says those need to be taken into account. It's what we evaluate every 
single bank on dealing with their safety and soundness.
  This bill addresses three real issues. Let me try to address those 
three. The real cost, that's number one. The real cost in Washington is 
incredibly difficult to find nowadays. You have all these different 
estimates, all these things that move around. If we want to know what 
is the real cost with the risk involved, this is the only way to be 
able to get it is in this fair-value estimate.
  The second real--the real issue in the past couple of years is Fannie 
and Freddie. We all know it, we're all aware of it, and for the first 
time we're getting to the real issue and starting to deal with how do 
we handle Fannie and Freddie, where do we go from here.
  So we're getting the real costs. We're beginning to deal with the 
real issue, which is Fannie and Freddie.
  And, finally, we're finally getting real transparency. We should let 
every American see what's in our budget and how we're handling it and 
the costs that are out there. This puts it online and gets out there 
for every single American to be able to take a look at it and say, 
okay, what are the proposals? What is out there? What's the real cost? 
How are we going to handle this in real ways? And how do we get real 
transparencies?
  Mr. VAN HOLLEN. Madam Chair, I yield myself such time as I may 
consume.
  Look, if this legislation only dealt with Fannie and Freddie, that's 
something that I certainly would support. In fact, the Congressional 
Budget Office already puts Fannie and Freddie online. I know it's an 
easy catch phrase, but the reality is, behind the discussion of Fannie 
and Freddie is a whole other discussion about whether we want to apply 
these rules to things like student loans. And the reality is that if 
you apply this methodology to student loans, you will systematically 
overestimate the cost in the budget in terms of outlays.
  I would just like, Madam Chair, to refer the body to a report that 
was written by two of the prime advocates for this. It's called 
``Reforming Credit Reform.'' Deborah Lucas was one of the coauthors. 
This was in ``Public Budgeting & Finance,'' winter of 2008. Just let me 
read a portion because it says: Including a risk premium in subsidy 
cost produces a cost estimate that on average exceeds outlays for 
realized losses. That discrepancy between cash flows and subsidy costs 
must be reconciled in the budget so that over the life of a credit 
cohort, actual cash flows match budget costs in expectation.
  Now, as I said, this is a complicated issue, and that sounds like a 
lot of complicated budgety gobbledygook. Bottom line is, what this bill 
does is systematically overestimate the costs in the budget on a cash-
flow basis. And it's important that everybody understand this.
  Right now, when the Federal Government budgets for credit risk, we 
take into account the default rate. In other words, whether it's 
student loans, whether it's clean energy loans, whether it's Fannie and 
Freddie, people make an assessment about what the likely default rate 
is. That is taken into account and then discounted for present value 
when you put together your budget.
  Now, even the advocates of this legislation concede that. That's not 
a question; we already do that. And even the advocates of this 
legislation concede that it will, again, systematically, in the budget, 
have a higher cost number associated with outlays than reality will 
dictate.
  What do I mean by that? It will say that student loans are actually 
more expensive on a cash basis than they really are. Let me repeat 
that. If you direct that the Congressional Budget Office move to this 
kind of accounting, the numbers that will appear in the budget on a 
cash basis will systematically exaggerate, inflate the costs of the 
credit program. What that means is if you're a Member of Congress and 
you're looking at a proposed student loan program and you're looking at 
the numbers that are forecast, you're going to think that it's more 
expensive in cash terms to the taxpayer than it really is, on average, 
over time. Therefore, you're going to be less likely to make that 
investment, potentially.

                              {time}  1520

  So I think it's important as we look at this that we recognize that 
in place of something that, as I said, the former head of CBO, Bob 
Reischauer, has said provides an accurate picture of the costs on a 
cash basis to replace that with something that systematically gives us 
a different picture, and one that systematically exaggerates the costs 
would be a mistake.
  And again, I just end this portion here by saying we just don't think 
this is ready for prime time. We don't think that we've fully 
understood all the impacts. There are experts on both sides of this 
issue, but it seems to me the Budget Committee could at least devote 
one hearing to this general topic. Again, we had one hearing on 
applying this to FHA. If you want to apply it to Fannie Mae and Freddie 
Mac, CBO already does that, no problem. But this leaps from that to 
applying it throughout the budget, including student loan programs, and 
I don't think we've begun to understand what impact that would have on 
the affordability of going to college and the other impacts throughout 
the budget.
  I reserve the balance of my time.
  Mr. GARRETT. Madam Chairman, I yield myself such time as I may 
consume.
  The gentleman from Maryland speaks of the report of Marvin Phaup from 
2008, I guess that was, and also speaks in reference to the Center on 
Budget and Policy Priorities. In front of me, and I'll ask, under 
general leave to enter this into the Record as well. Just recently, 
just this week, I guess, he has now issued the final report, and this 
report says as follows:
  ``This comment responds to a recent release from the''--as the 
gentleman's referring to--``from the Center on Budget and Policy 
Priorities (CBPP).''
  And what does he say?
  ``My view is that the CBPP misrepresents our work''--that you were 
referring to. They misrepresent his work--``and more fundamentally 
incorrectly characterizes the purposes and consequences of moving to a 
fair value approach to credit valuation in the budget.''
  One of his main points is the legislation before us would do what? It 
``would remove `phantom' gains to the government from the budgetary 
treatment of direct lending and loan guarantee programs. These illusory 
gains mislead public policymakers about the costs of their policy 
decisions.''
  What does that mean? What that means is, in the numbers that the 
gentleman from Maryland was talking about that are actually making more 
and, over time, exceeds outlay, Marvin Phaup is here saying, no, just 
the opposite, that this bill would address that. It would remove those 
gains and show it for the reality of what it is.

[[Page H539]]

   Fair Market Values and the Budgetary Treatment of Federal Credit: 
                 Comment on CBPP's Release on H.R. 3581

                           (By Marvin Phaup)

       This Comment responds to a recent release from the Center 
     on Budget and Policy Priorities (CBPP). The release asserts 
     that the federal budget currently measures the cost of direct 
     loans and loan guarantees comprehensively and that as a 
     result the costs of cash and credit programs are directly 
     comparable. CBPP asserts further that enacting H.R. 3581, 
     which would require the use of fair market values in 
     calculating the budget cost of federal loans and guarantees, 
     would add a cost of risk that the government does not incur. 
     Consequently, it claims, this would overstate federal costs 
     and the budget deficit and create a bias against the use of 
     credit programs. CBPP also refers critically to my earlier 
     work with Deborah Lucas, showing that government credit 
     activities are subject to the same market risk as private 
     credit and exploring the implications of this finding for 
     budgeting. My view is that CBPP misrepresents our work and 
     more fundamentally incorrectly characterizes the purposes and 
     consequences of moving to a fair value approach to credit 
     valuation in the budget.
       In this note, I make the following points:
       H.R. 3581 would remove ``phantom'' gains to the government 
     from the budgetary treatment of direct lending and loan 
     guarantee programs. Those illusory gains mislead policy 
     makers about the costs of their policy decisions.
       Illusory gains on federal credit also encourage budget 
     gimmickry. For example, FCRA would permit the government to 
     balance its budget immediately on paper by issuing large 
     amounts of Treasury debt and using the proceeds to invest in 
     an equally large portfolio of risky loans. This result would 
     be absurd because in issuing a dollar of debt and buying a 
     dollar of risky loans at market prices, the government's net 
     financial position is unchanged.
       If the current practice of using the prices of Treasury 
     securities to value risky loans rather than the market value 
     of the risky securities themselves were extended to other 
     assets, then the government could--with the same logic--
     direct the Treasury to buy a ton of lead, value it at the 
     price of gold, and record the gain as deficit reduction.
       The cost of market risk should be a budget cost because it 
     is a cost to government stakeholders and its absorption by 
     some yields an unrecognized subsidy to others. CBPP would 
     include this cost in cost-benefit analyses where the purpose 
     is to decide if a federal activity produces a net gain but 
     not in the budget. Budgeting without an evaluation function, 
     however, is little more than a redundant projection of 
     Treasury's borrowing requirements.
       The cost of market risk should not be excluded from the 
     budget on grounds that the money isn't paid out by the 
     government. Both the Universal Service Fund and the United 
     Mine Workers of America Benefit Funds are included in the 
     budget, even though the money is untouched by federal hands.


        Purposes of Budgeting, Fair Value, and Cost Comparisons

       Budgetary costs serve several purposes, but arguably the 
     primary one is to measure the value of public resources 
     devoted to an activity by the government. For many 
     activities, such as the purchase of goods and services, this 
     purpose is well-served by a cash measurement focus and basis 
     of accounting. The cash costs that appear in the budget for 
     these activities are fair value costs because they are based 
     on the market prices of the goods and services purchased 
     (directly, or indirectly through the use of grants and 
     transfers) by the government. When the government buys a 
     fleet of trucks, the budgetary cost is based on the market 
     price of the trucks.
       Accounting for the cost of credit on a fair value basis 
     would similarly identify the budgetary cost of credit with 
     its market price, thereby putting credit and non-credit 
     activities on a conceptually level playing field.
       Under the Federal Credit Reform Act of 1990 (FCRA), the 
     budget records the cost of direct loans and loan guarantees 
     on an accrual basis. FCRA mandates that the budget record the 
     estimated lifetime cost of a direct loan or loan guarantee 
     when the loan is disbursed as the government's loss on the 
     transaction. FCRA requires that for a direct loan, the 
     government's loss is the difference between the value of the 
     cash disbursed and the loan asset acquired, where the latter 
     is valued as the present value of expected repayments of 
     principal, interest and fees discounted at low-risk 
     (Treasury) rates rather than rates applied in the market to 
     risky cash flows. The loss on loan guarantees is calculated 
     similarly in that the government's expected net payments to 
     honor its commitment are also discounted as though they were 
     Treasury bonds.
       The use of Treasury interest rates to value risky future 
     cash flows means that a risky loan is assigned an FCRA budget 
     value greater than its market value. Thus the FCRA budget 
     cost of a federal loan or guarantee is less than the cost 
     incurred by private lenders or guarantors. This is because 
     people are risk-averse and require compensation--in the 
     form of higher expected investment returns--on investments 
     that expose them to risks that cannot be avoided by 
     holding a diversified portfolio or buying insurance. In 
     particular, they are averse to ``market risk,'' which is 
     the risk that low investment returns will coincide with 
     periods during which the overall economy is weak, and 
     resources are the most valuable. The government 
     effectively transfers to the public the market risk 
     associated with its activities through the tax and 
     transfer system. The CBPP example involving a coin toss 
     does not illustrate this line of reasoning because it 
     involves a risk that is easily diversifiable by both 
     individuals and the government.
       Market risk also affects the price of non-financial assets 
     purchased by the government, and those costs are reflected in 
     the budget. For example, the cash price of a navy ship 
     includes a return to the capital used in its production. The 
     expected return built into the ship's price depends on the 
     risk premium associated with ship-building. From that 
     perspective, the CBPP characterization that the proposal will 
     ``add a further amount to reflect private-sector risk 
     aversion'' is misleading. It is more accurate to say that 
     incorporating a market risk premium into FCRA estimates would 
     make them more comparable to cash estimates, which already 
     reflect the full market price of the associated risk.
       Fair value estimates of the value of federal direct loans 
     and guarantees include the cost of market risk. Effectively, 
     they use the same estimates of uncertain future cash flows as 
     FCRA estimates (assuming those projections are as accurate as 
     possible), but they use market discount rates (or ``risk-
     adjusted'' discount rates) in place of Treasury rates for 
     discounting. Risk-adjusted discount rates can be represented 
     as the sum of a Treasury rate and a risk premium.
       One implication of the meaning of fair value is that, 
     contrary to CBPP's view, discounting expected cash flows (net 
     of expected default losses) does not double count those 
     losses. If the expected net losses are certain, then the 
     expected cash flows are certain and the fair market value is 
     obtained by discounting at risk-free rates. This is rare. 
     Otherwise, net expected cash flows must be discounted at 
     rates appropriate to the market risk of the cash flows to 
     obtain fair market values.


                  ``Flaws'' of the Fair Value Approach

       CBPP gives a list of reasons why the fair value proposal is 
     thought to be flawed. The first is that government may be 
     less risk averse than individuals. The authors offer several 
     reasons why that might be the case, and point to the 
     government's ability to borrow at low Treasury rates. Those 
     arguments have several shortcomings:
       The idea that low Treasury borrowing rates are a reason for 
     the government to be less concerned about risk neglects that 
     Treasury rates are only low because bondholders are protected 
     from risk by taxpayers, who must absorb the market risk 
     associated with the government's activities. For example, 
     when a risky loan has insufficient returns to repay the 
     Treasury debt that notionally is used to fund it, taxes must 
     be raised or other spending cut. Under FCRA accounting, that 
     risk to taxpayers is treated as being free to the government.
       In fact, the government could be more risk averse than 
     individuals rather than less risk averse. For example, the 
     government may be more concerned about the risks of global 
     warming than is reflected in market prices because it puts 
     more weight on the welfare of future generations.
       In practice, adjusting budgetary costs based on conjectures 
     about the government's preferences would undermine the 
     discipline and transparency of the budget process.
       The second alleged flaw is that risk aversion is not a 
     budgetary cost. As discussed already, a consistent basis for 
     measuring budgetary cost is to use market prices, which are 
     affected by risk aversion and by the preferences of people 
     generally. Further, as noted, that government does not write 
     checks for the market risk of direct loans and guarantees is 
     not dispositive of the appropriate treatment of an activity.
       A further criticism is that the proposal does not treat all 
     programs the same. Specifically, it raises the concern that 
     the change would make credit programs appear more expensive 
     to Treasury than other programs. The opposite is generally 
     true: cash basis estimates incorporate the price of the 
     associated market risk because they are accounted for at 
     market prices, whereas FCRA estimates are relatively downward 
     biased. In any case, the examples given suggest a 
     misunderstanding of the type of risks that would be 
     incorporated into fair value estimates. For instance, the 
     paper notes the uncertainty associated with the future costs 
     of many programs, including Medicare, and points out that no 
     adjustment is made for the cost of that uncertainty. However, 
     the same type of uncertainty exists for credit programs, and 
     the risk adjustment associated with a fair value approach 
     does not address those sources of uncertainty:
       First, future Medicare costs do not affect the current year 
     budget deficit because those programs are budgeted for on a 
     cash basis, not on an accrual basis. The budget enables 
     policymakers to compare the cost of current-year spending on 
     Medicare with the estimated lifetime cost of new current-year 
     credit assistance. Measuring the cost of new current-year 
     credit assistance on a fair value basis makes it more 
     comparable to current-year Medicare expenditures, which 
     reflect the market prices of doctor salaries, hospitals, and 
     medical equipment.

[[Page H540]]

       Just as with future Medicare expenditures, the volume and 
     cost of new future-year credit assistance from ongoing 
     programs is uncertain. However, that dimension of uncertainty 
     does not figure into fair value calculations (or into FCRA 
     estimates).
       To the contrary, a problem with FCRA accounting is that it 
     treats different credit programs as too much the same. That 
     is, some credit programs expose taxpayers to much more market 
     risk than others, but FCRA accounting does not recognize 
     those differential costs between credit programs.
       CBPP both endorses FCRA accrual accounting and criticizes 
     an accounting practice necessitated by the uses of accruals 
     in a mostly cash-basis budget, described in the release as 
     ``phantom offsets.'' Under FCRA, direct loans cause the 
     government's cash shortfall (and hence its need to issue 
     additional debt) to be higher initially than the reported 
     deficit in the year the loan is made. That is because the 
     loan principal paid out (not included in the deficit) is 
     generally much larger than the recorded subsidy cost 
     (included in the deficit). Similarly recognizing the time 
     value of money in federal credit transactions requires 
     adjustments to the cash deficit. Loan guarantees also 
     necessitate ``phantom offsets'' to reconcile the cash deficit 
     with the expected cost of loan defaults which are included in 
     the deficit when guaranteed loans are disbursed. Furthermore, 
     accruals involve uncertain future cash flows, and subsequent 
     adjustments (FCRA refers to them as ``re-estimates'') are 
     always needed to reconcile accrual projections with cash 
     realizations. However, there are multiple account structures 
     that would achieve the comprehensive up front recognition of 
     the lifetime cost of new credit assistance and reconcile 
     those costs with Treasury's cash borrowing requirements.
       In conclusion, there appears to be general agreement that 
     the primary purposes of budgeting are better served if the 
     budget is supported by an accounting process that measures 
     the public resources devoted to an activity comprehensively, 
     comparably across programs, and up-front at the time of 
     decision. By that standard, the use of fair values for direct 
     loans and loan guarantees in the budget would unambiguously 
     improve federal budgetary accounting.

  With that, I yield 2 minutes to the gentleman from Kansas (Mr. 
Huelskamp).
  Mr. HUELSKAMP. Madam Chairman, today I rise in support of H.R. 3581, 
the Budget and Accounting Transparency Act.
  The first step in treating an addiction is admitting you have a 
problem. An addict has to be honest with himself before he can overcome 
his dependence. In that same vein, Washington needs to be honest about 
its addiction to overspending, and this bill will force Washington to 
do just that. It will force Washington to be honest, not only with 
itself but, more importantly, with the American people.
  By bringing Fannie and Freddie on budget, Washington will be honest 
that these expensive programs have become the financial responsibility 
of the Federal Government. By requiring risk to be assessed and 
accounted for in loans or loan guarantees, Washington will be honest 
about the gains or losses taxpayers can anticipate. And by requiring 
every agency to post their budget requests online, Washington will have 
to be honest with the American taxpayers about where their money goes.
  A lot of honesty is needed now, Madam Chairman, but a little bit will 
go a long way in restoring the trust of the American people and the 
fiscal discipline of Washington.
  Can we restore the trust of the American people? Yes, we can. Can we 
restore fiscal discipline in Washington? Yes, we can. Yes, we will, 
with passage of this bill.
  Mr. VAN HOLLEN. Madam Chair, I yield myself such time as I may 
consume.
  I was actually reading from the original document, ``Reforming Credit 
Reform,'' by Marvin Phaup and Deborah Lucas, where they say straight-
out here that including a risk premium in subsidy costs produces a cost 
estimate that, on average, exceeds outlays for realized losses.
  Now, we can argue whether that's an appropriate methodology or not. 
But the reality is it will, as a budgetary matter, systematically 
inflate the cash outlays for different credit programs going forward.
  I reserve the balance of my time.
  Mr. GARRETT. I would advise my colleague from Maryland that we have 
no further speakers.
  Mr. VAN HOLLEN. Madam Chair, again, I wish we were here debating the 
President's jobs plan. I wish we were focused on bringing to the floor 
the conference committee report so that we could provide relief to 160 
million Americans through the payroll tax cut.
  With respect to the budget bill before us, as I indicated, it's just 
not ready for prime time. You would think that before undertaking a 
change which seems small, is very complicated, and could have lots of 
unintended consequences, especially with respect to things like student 
loans--as I've said, if we were confining this debate and this bill to 
things like Fannie Mae and Freddie Mac, I have no problem. In fact, the 
Congressional Budget Office already applies this methodology to Fannie 
Mae and Freddie Mac. But the scope of this is much, much broader than 
that. It goes, as I said, to all credit programs, including student 
loan programs, and will, as a matter of accounting, show in the budget 
greater dollar outlays than will actually reflect the ongoing costs of 
things like student loans, again, in a systematic way.
  The last point I want to make, Madam Chair, is one that was raised by 
one of my colleagues, which is: Where do you actually draw the line 
when it comes to moving in the direction of this other kind of 
accounting?
  Now, this bill applies to all credit programs, but there are other 
programs funded by the Federal Government where the costs rise and fall 
based on what's happening in the market, based on what's happening in 
the economy. There are lots of ag programs that rise and fall based on 
what's happening in the economy. Medicaid is a program whose costs rise 
and fall based on the economy. And in talking to lots of people, it's 
not clear where you draw a bright line, and I certainly don't know 
where the argument ends with respect to moving toward this kind of 
accounting. Before we begin to move even further in this direction, I 
think we should have a debate on what exactly that would mean for our 
budget and for the American people.
  Again, I commend the gentleman for raising an issue, especially as 
it's been in the context of Fannie Mae and Freddie Mac. I think this 
deserves a lot more attention before you expand it throughout all the 
credit programs of the United States Government. I'm particularly 
concerned the impact it would have on the affordability of going to 
college and student loans. And then, as I said, there's no clear 
demarcation between credit programs and the argument that's being 
applied here and to some of the other programs where the risk to the 
taxpayer also fluctuates based on market risk and the performance of 
the economy.
  Madam Chair, I would urge my colleagues to oppose this legislation.
  I yield back the balance of my time.
  Mr. GARRETT. I yield myself such time as I may consume.
  And again, I'll say to the gentleman as well, as your colleague did 
as well, commended us for raising this important issue, and I do agree 
that it is an important issue. But I think the American public is tired 
of Washington simply raising important issues and discussing important 
issues and having committee hearings on important issues. I think the 
American public is looking for Washington, once and for all, to take 
some decisive action in the name of the American public, in the name of 
the hardworking taxpayers whose money it is that is on the line. It is 
the people's money that we are talking about in all of these bills. It 
is the people's money that has been put on the line when the Federal 
Government issues loans and loan guarantees.
  And I want to remind the gentleman from Maryland of how much money 
we've been talking about in all these things. When we talk about all 
the bailouts that the American public stood and railed against, 
rightfully so, as did I, whether it was the oil bailouts or the bank 
bailouts or the Wall Street bailouts, they all pale in comparison to 
the bailouts that we're talking about here with the GSEs, $186 billion 
and counting. The gentleman, Mr. Ryan, raised the issue before that, I 
believe, it was going to go up to $280, $290 billion and counting.
  That's not Washington's money or the government's money or the 
gentleman from Maryland's money. That's the hardworking American 
taxpayers' money that was initially put at risk without any idea what 
the real risk was going to be for all these other loan programs and now 
is going out as outlays.

                              {time}  1530

  Now it is going out without any prospect whatsoever of being repaid. 
The

[[Page H541]]

gentleman says these exceed these estimates of fair value accounting, 
and they exceed outlays. Well, they exceed it until they don't. They 
exceed it until the loan fails. They exceed it until you're talking 
about a Solyndra situation where you guarantee over $500 million, and 
then the company goes bust. That's what we're trying to address here, 
to make sure that you're actually properly grading and accounting for 
this. We're not asking for something extraordinary.
  I know the gentleman from New Jersey came to the floor and he said 
this is extreme, what we are asking for here. Extreme? Why do we ask 
the private sector to use this same sort of accounting? Why do we ask 
the mom-and-pop shops, the big Wall Street firms, and everything in 
between to use this sort of accounting when they do so? When you ask 
for a student loan, a car loan, a house loan, whatever, we ask local 
banks to use this same form of accounting. If it is good enough for the 
rest of society, if it is good enough for all of my constituents and 
your constituents, if it is good enough for all of the businesses back 
at home, I think it's good enough for the Federal Government to play by 
the same rules. That's all we're asking for here.
  He says, how far should we go? I think we should go as far as to say 
that the Federal Government should have to do the exact same thing, 
play by the exact same rules that our businesses back at home have to 
do. That's all this bill does. It shines the light of day on what we're 
spending, and if we are spending too much, then we have to do what we 
are elected to do: set priorities, decide where we want to spend it on 
this program or that program, or maybe cut back on this program and 
expand someplace else. But we can't make those decisions until we 
actually have the information before us. We can't say this one is 
working and this one is not working, this one is worthwhile and this 
one is not worthwhile until we actually have that information before 
us. That's the long and short of it. That's all this bill does. It 
gives both sides of the aisle and the American public that information.
  With that, I would call for support of this legislation of sunshine 
and accountability and transparency in the way the Federal Government 
runs their business.
  I yield back the balance of my time.
  Mr. GARRETT. Madam Chair, I would first like to thank Chairman Ryan 
and the Budget Committee staff for their hard work on H.R. 3581, the 
Budget and Accounting Transparency Act.
  Unless you've been living on Mars the last year, it should not come 
as a surprise to hear that our country is broke. However, what should 
surprise you is that the true extent of our country's debt crisis is a 
lot worse than anyone in Washington is letting on.
  How much worse? That's the thing, nobody knows; and we won't ever 
know until we reform the broken budget process in Washington, DC.
  As many have talked about before, our budget process is broken. 
Simply put, we need to make the budget process more transparent.
  Fortunately, today we are taking a step in the right direction with 
H.R. 3581, the Budget and Accounting Transparency Act of 2011. I 
introduced this bill in December, along with Chairman Ryan, as part of 
a comprehensive set of reforms to overhaul Washington's broken budget 
process.
  The bill before the House today--the Budget and Accounting 
Transparency Act--is a common-sense attempt to introduce more 
``sunshine'' and ``common sense'' into our budget process.
  What would this legislation do?
  Specifically, this bill recognizes the budgetary impact of 
government-sponsored enterprises Fannie Mae and Freddie Mac by bringing 
these black holes of debt out from the shadows into the sunshine and 
on-budget.
  This bill also requires that the federal government apply the same 
credit accounting standards as the private sector when making or 
guaranteeing loans.
  In September 2008, as the country was reeling from the fallout from 
the financial collapse, Fannie and Freddie were placed into 
conservatorship by the Federal Housing Finance Agency (FHFA).
  Under this agreement, FHFA took control of the two companies and the 
Treasury Department risked hundreds of billions of taxpayer dollars to 
bail out the government-backed mortgage twins.
  To date, the American taxpayers have sunk over $183 billion and 
counting into these failed institutions. As if this weren't enough, 
Fannie and Freddie have also issued more than $1.2 trillion in debt and 
hold or guarantee about $5.3 trillion in mortgage-backed securities 
(MBS).
  Because Fannie and Freddie have become the explicit financial 
responsibility of the federal government, it only makes sense that we 
treat them the same as we would any other obligation of the federal 
government by formally bringing them on-budget.
  The non-partisan Congressional Budget Office took this step several 
years ago, but the Office of Management and Budget has resisted the 
change preferring to obscure the total federal exposure to Fannie Mae 
and Freddie Mac.
  It's time the Obama administration did the same.
  Bringing Fannie and Freddie on-budget exposes some ugly and 
inconvenient truths. But I know the American people did not send us 
here to play a shell game with taxpayer dollars.
  The combined debt obligation of Fannie and Freddie isn't the only 
black cloud hanging over us; inaccuracies and a lack of transparency in 
budgeting for federal credit programs also loom large.
  Take the case of Solyndra, for example--the poster child of 
government loans gone bad. As we saw with the Obama administration's 
$527 million ``investment'' into the solar energy company, when 
Washington makes a bad bet, it's the American taxpayers left holding 
the bag.
  Federal loan loan guarantees are contractual obligations between the 
taxpayer, private creditors and a borrower such as Solyndra.
  Loan guarantees are a promise by the American taxpayer that they will 
cover the borrower's loan in the event that the borrower defaults. If 
the American taxpayer is on the hook for default, shouldn't we have a 
better idea of the cost of the loan in the first place?
  Unfortunately, under current law, when the government issues a loan 
or loan guarantee, the inherent riskiness of that loan is not reflected 
in the loan or loan guarantee's cost.
  In fact, the non-partisan Congressional Budget Office estimates that 
our current federal accounting rules understate the cost of credit 
programs by some $55 billion a year, because the rules do not account 
for market risk.
  Why shouldn't Washington play by the same rules that every American 
family and business must play by when taking out a loan?
  The Budget and Accounting Transparency Act fixes this shortcoming by 
requiring market risk to be explicitly included in estimates of federal 
credit programs, bringing federal budgeting practices in line with 
what's long been standard practice in the private sector.
  Specifically, it requires the executive branch and Congress to use 
``fair value'' accounting in calculating the costs of federal credit 
programs that consider not only the borrowing costs of the federal 
government, but also the costs of the market risk the federal 
government is incurring by issuing a loan or loan guarantee.
  Accounting for market risk is the key--your local banker does it 
every time you apply for a home or auto loan. The federal government 
should be doing the same.
  In fact, during the House Budget Committee's consideration of this 
legislation, the director of the non-partisan Congressional Budget 
Office stated:
  ``We believe that the fair-value method of accounting for federal 
credit transactions provides a more comprehensive measure of a 
[program's] true cost.''
  While the Budget and Accounting Transparency Act won't prevent future 
presidents from making similarly risky bets, at least it will force 
them to be honest with the American people about the true upfront cost 
of their boondoggles.
  Lastly, the legislation before us today increases the amount and 
timeliness of information on agency budget requests, requiring that 
these budget justifications be provided to the public when they are 
sent to Congress.
  It's the people's money and they ought to know what agencies are 
planning to do with it.
  These provisions would go a long way to fixing our broken budget 
process and bring much-needed transparency to the way Congress 
functions.
  For too many years, Washington has played by a ``special'' set of 
rules.
  With mounting debt and lackluster job growth, it's time to force 
government to play by the same economic rules as every American family 
and business.
  For too long, we have not been honest with the American people about 
the cost of government. If we truly are committed to reversing our 
country's race towards bankruptcy, as we say we are, we need to be 
honest with ourselves and the American people about the true cost of 
government.
  Today, I say we put our words to action by bringing sunlight and 
transparency back into our budgeting process.
  Mr. DUNCAN of South Carolina. Madam Chair, I rise today to support 
H.R. 3581, which will bring better accountability and transparency to 
our budget process.

[[Page H542]]

  I would also note, Madam Chair, that many loan programs that are 
impacted by this legislation have an excellent history of loan 
repayment, most notably the Rural Utilities Service loans that electric 
co-ops like the ones in my district have used for years. Some of these 
loan programs have provided a positive return on the taxpayers 
investments, making more for the taxpayers than was at risk while 
allowing rural co-ops the ability to expand services in underserved 
areas. I hope that while we achieve much greater accountability and 
transparency for taxpayers as a result of this legislation, especially 
as it relates to Freddie and Fannie, we ensure that we don't throw the 
baby out with the bath water and hurt our rural utilities and their 
customers.
  The CHAIR. All time for general debate has expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule.
  In lieu of the amendment in the nature of a substitute recommended by 
the Committee on the Budget, printed in the bill, it shall be in order 
to consider as an original bill for the purpose of amendment under the 
5-minute rule an amendment in the nature of a substitute consisting of 
the text of the Rules Committee print 112-13. That amendment in the 
nature of a substitute shall be considered read.
  The text of the amendment in the nature of a substitute is as 
follows:

                               H.R. 3581

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Budget and Accounting 
     Transparency Act of 2012''.

                     TITLE I--FAIR VALUE ESTIMATES

     SEC. 101. CREDIT REFORM.

       (a) In General.--Title V of the Congressional Budget Act of 
     1974 is amended to read as follows:

                         ``TITLE V--FAIR VALUE

     ``SEC. 501. PURPOSES.

       ``The purposes of this title are to--
       ``(1) measure more accurately the costs of Federal credit 
     programs by accounting for them on a fair value basis;
       ``(2) place the cost of credit programs on a budgetary 
     basis equivalent to other Federal spending;
       ``(3) encourage the delivery of benefits in the form most 
     appropriate to the needs of beneficiaries; and
       ``(4) improve the allocation of resources among Federal 
     programs.

     ``SEC. 502. DEFINITIONS.

       ``For purposes of this title:
       ``(1) The term `direct loan' means a disbursement of funds 
     by the Government to a non-Federal borrower under a contract 
     that requires the repayment of such funds with or without 
     interest. The term includes the purchase of, or participation 
     in, a loan made by another lender and financing arrangements 
     that defer payment for more than 90 days, including the sale 
     of a Government asset on credit terms. The term does not 
     include the acquisition of a federally guaranteed loan in 
     satisfaction of default claims or the price support loans of 
     the Commodity Credit Corporation.
       ``(2) The term `direct loan obligation' means a binding 
     agreement by a Federal agency to make a direct loan when 
     specified conditions are fulfilled by the borrower.
       ``(3) The term `loan guarantee' means any guarantee, 
     insurance, or other pledge with respect to the payment of all 
     or a part of the principal or interest on any debt obligation 
     of a non-Federal borrower to a non-Federal lender, but does 
     not include the insurance of deposits, shares, or other 
     withdrawable accounts in financial institutions.
       ``(4) The term `loan guarantee commitment' means a binding 
     agreement by a Federal agency to make a loan guarantee when 
     specified conditions are fulfilled by the borrower, the 
     lender, or any other party to the guarantee agreement.
       ``(5)(A) The term `cost' means the sum of the Treasury 
     discounting component and the risk component of a direct loan 
     or loan guarantee, or a modification thereof.
       ``(B) The Treasury discounting component shall be the 
     estimated long-term cost to the Government of a direct loan 
     or loan guarantee, or modification thereof, calculated on a 
     net present value basis, excluding administrative costs and 
     any incidental effects on governmental receipts or outlays.
       ``(C) The risk component shall be an amount equal to the 
     difference between--
       ``(i) the estimated long-term cost to the Government of a 
     direct loan or loan guarantee, or modification thereof, 
     estimated on a fair value basis, applying the guidelines set 
     forth by the Financial Accounting Standards Board in 
     Financial Accounting Standards #157, or a successor thereto, 
     excluding administrative costs and any incidental effects on 
     governmental receipts or outlays; and
       ``(ii) the Treasury discounting component of such direct 
     loan or loan guarantee, or modification thereof.
       ``(D) The Treasury discounting component of a direct loan 
     shall be the net present value, at the time when the direct 
     loan is disbursed, of the following estimated cash flows:
       ``(i) Loan disbursements.
       ``(ii) Repayments of principal.
       ``(iii) Essential preservation expenses, payments of 
     interest and other payments by or to the Government over the 
     life of the loan after adjusting for estimated defaults, 
     prepayments, fees, penalties, and other recoveries, including 
     the effects of changes in loan terms resulting from the 
     exercise by the borrower of an option included in the loan 
     contract.
       ``(E) The Treasury discounting component of a loan 
     guarantee shall be the net present value, at the time when 
     the guaranteed loan is disbursed, of the following estimated 
     cash flows:
       ``(i) Payments by the Government to cover defaults and 
     delinquencies, interest subsidies, essential preservation 
     expenses, or other payments.
       ``(ii) Payments to the Government including origination and 
     other fees, penalties, and recoveries, including the effects 
     of changes in loan terms resulting from the exercise by the 
     guaranteed lender of an option included in the loan guarantee 
     contract, or by the borrower of an option included in the 
     guaranteed loan contract.
       ``(F) The cost of a modification is the sum of--
       ``(i) the difference between the current estimate of the 
     Treasury discounting component of the remaining cash flows 
     under the terms of a direct loan or loan guarantee and the 
     current estimate of the Treasury discounting component of the 
     remaining cash flows under the terms of the contract, as 
     modified; and
       ``(ii) the difference between the current estimate of the 
     risk component of the remaining cash flows under the terms of 
     a direct loan or loan guarantee and the current estimate of 
     the risk component of the remaining cash flows under the 
     terms of the contract as modified.
       ``(G) In estimating Treasury discounting components, the 
     discount rate shall be the average interest rate on 
     marketable Treasury securities of similar duration to the 
     cash flows of the direct loan or loan guarantee for which the 
     estimate is being made.
       ``(H) When funds are obligated for a direct loan or loan 
     guarantee, the estimated cost shall be based on the current 
     assumptions, adjusted to incorporate the terms of the loan 
     contract, for the fiscal year in which the funds are 
     obligated.
       ``(6) The term `program account' means the budget account 
     into which an appropriation to cover the cost of a direct 
     loan or loan guarantee program is made and from which such 
     cost is disbursed to the financing account.
       ``(7) The term `financing account' means the nonbudget 
     account or accounts associated with each program account 
     which holds balances, receives the cost payment from the 
     program account, and also includes all other cash flows to 
     and from the Government resulting from direct loan 
     obligations or loan guarantee commitments made on or after 
     October 1, 1991.
       ``(8) The term `liquidating account' means the budget 
     account that includes all cash flows to and from the 
     Government resulting from direct loan obligations or loan 
     guarantee commitments made prior to October 1, 1991. These 
     accounts shall be shown in the budget on a cash basis.
       ``(9) The term `modification' means any Government action 
     that alters the estimated cost of an outstanding direct loan 
     (or direct loan obligation) or an outstanding loan guarantee 
     (or loan guarantee commitment) from the current estimate of 
     cash flows. This includes the sale of loan assets, with or 
     without recourse, and the purchase of guaranteed loans (or 
     direct loan obligations) or loan guarantees (or loan 
     guarantee commitments) such as a change in collection 
     procedures.
       ``(10) The term `current' has the same meaning as in 
     section 250(c)(9) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985.
       ``(11) The term `Director' means the Director of the Office 
     of Management and Budget.
       ``(12) The term `administrative costs' means costs related 
     to program management activities, but does not include 
     essential preservation expenses.
       ``(13) The term `essential preservation expenses' means 
     servicing and other costs that are essential to preserve the 
     value of loan assets or collateral.

     ``SEC. 503. OMB AND CBO ANALYSIS, COORDINATION, AND REVIEW.

       ``(a) In General.--For the executive branch, the Director 
     shall be responsible for coordinating the estimates required 
     by this title. The Director shall consult with the agencies 
     that administer direct loan or loan guarantee programs.
       ``(b) Delegation.--The Director may delegate to agencies 
     authority to make estimates of costs. The delegation of 
     authority shall be based upon written guidelines, 
     regulations, or criteria consistent with the definitions in 
     this title.
       ``(c) Coordination With the Congressional Budget Office.--
     In developing estimation guidelines, regulations, or criteria 
     to be used by Federal agencies, the Director shall consult 
     with the Director of the Congressional Budget Office.
       ``(d) Improving Cost Estimates.--The Director and the 
     Director of the Congressional Budget Office shall coordinate 
     the development of more accurate data on historical 
     performance and prospective risk of direct loan and loan 
     guarantee programs. They shall annually review the 
     performance of outstanding direct loans and loan guarantees 
     to improve estimates of costs. The Office of Management and 
     Budget and the Congressional Budget Office shall have access 
     to all agency data that may facilitate the development and 
     improvement of estimates of costs.
       ``(e) Historical Credit Programs Costs.--The Director shall 
     review, to the extent possible, historical data and develop 
     the best possible estimates of adjustments that would convert 
     aggregate historical budget data to credit reform accounting.

     ``SEC. 504. BUDGETARY TREATMENT.

       ``(a) President's Budget.--Beginning with fiscal year 1992, 
     the President's budget shall reflect the Treasury discounting 
     component of direct loan and loan guarantee programs. 
     Beginning with fiscal year 2015, the President's budget shall 
     reflect the costs of direct loan and loan

[[Page H543]]

     guarantee programs. The budget shall also include the planned 
     level of new direct loan obligations or loan guarantee 
     commitments associated with each appropriations request.
       ``(b) Appropriations Required.--Notwithstanding any other 
     provision of law, new direct loan obligations may be incurred 
     and new loan guarantee commitments may be made for fiscal 
     year 1992 and thereafter only to the extent that--
       ``(1) new budget authority to cover their costs is provided 
     in advance in an appropriation Act;
       ``(2) a limitation on the use of funds otherwise available 
     for the cost of a direct loan or loan guarantee program has 
     been provided in advance in an appropriation Act; or
       ``(3) authority is otherwise provided in appropriation 
     Acts.
       ``(c) Exemption for Direct Spending Programs.--Subsections 
     (b) and (e) shall not apply to--
       ``(1) any direct loan or loan guarantee program that 
     constitutes an entitlement (such as the guaranteed student 
     loan program or the veteran's home loan guaranty program);
       ``(2) the credit programs of the Commodity Credit 
     Corporation existing on the date of enactment of this title; 
     or
       ``(3) any direct loan (or direct loan obligation) or loan 
     guarantee (or loan guarantee commitment) made by the Federal 
     National Mortgage Association or the Federal Home Loan 
     Mortgage Corporation.
       ``(d) Budget Accounting.--
       ``(1) The authority to incur new direct loan obligations, 
     make new loan guarantee commitments, or modify outstanding 
     direct loans (or direct loan obligations) or loan guarantees 
     (or loan guarantee commitments) shall constitute new budget 
     authority in an amount equal to the cost of the direct loan 
     or loan guarantee in the fiscal year in which definite 
     authority becomes available or indefinite authority is used. 
     Such budget authority shall constitute an obligation of the 
     program account to pay to the financing account.
       ``(2) The outlays resulting from new budget authority for 
     the cost of direct loans or loan guarantees described in 
     paragraph (1) shall be paid from the program account into the 
     financing account and recorded in the fiscal year in which 
     the direct loan or the guaranteed loan is disbursed or its 
     costs altered.
       ``(3) All collections and payments of the financing 
     accounts shall be a means of financing.
       ``(e) Modifications.--An outstanding direct loan (or direct 
     loan obligation) or loan guarantee (or loan guarantee 
     commitment) shall not be modified in a manner that increases 
     its costs unless budget authority for the additional cost has 
     been provided in advance in an appropriation Act.
       ``(f) Reestimates.--When the estimated cost for a group of 
     direct loans or loan guarantees for a given program made in a 
     single fiscal year is re-estimated in a subsequent year, the 
     difference between the reestimated cost and the previous cost 
     estimate shall be displayed as a distinct and separately 
     identified subaccount in the program account as a change in 
     program costs and a change in net interest. There is hereby 
     provided permanent indefinite authority for these re-
     estimates.
       ``(g) Administrative Expenses.--All funding for an agency's 
     administrative costs associated with a direct loan or loan 
     guarantee program shall be displayed as distinct and 
     separately identified subaccounts within the same budget 
     account as the program's cost.

     ``SEC. 505. AUTHORIZATIONS.

       ``(a) Authorization for Financing Accounts.--In order to 
     implement the accounting required by this title, the 
     President is authorized to establish such non-budgetary 
     accounts as may be appropriate.
       ``(b) Treasury Transactions With the Financing Accounts.--
       ``(1) In general.--The Secretary of the Treasury shall 
     borrow from, receive from, lend to, or pay to the financing 
     accounts such amounts as may be appropriate. The Secretary of 
     the Treasury may prescribe forms and denominations, 
     maturities, and terms and conditions for the transactions 
     described in the preceding sentence, except that the rate of 
     interest charged by the Secretary on lending to financing 
     accounts (including amounts treated as lending to financing 
     accounts by the Federal Financing Bank (hereinafter in this 
     subsection referred to as the `Bank') pursuant to section 
     405(b)) and the rate of interest paid to financing accounts 
     on uninvested balances in financing accounts shall be the 
     same as the rate determined pursuant to section 502(5)(G).
       ``(2) Loans.--For guaranteed loans financed by the Bank and 
     treated as direct loans by a Federal agency pursuant to 
     section 406(b)(1), any fee or interest surcharge (the amount 
     by which the interest rate charged exceeds the rate 
     determined pursuant to section 502(5)(G) that the Bank 
     charges to a private borrower pursuant to section 6(c) of the 
     Federal Financing Bank Act of 1973 shall be considered a cash 
     flow to the Government for the purposes of determining the 
     cost of the direct loan pursuant to section 502(5). All such 
     amounts shall be credited to the appropriate financing 
     account.
       ``(3) Reimbursement.--The Bank is authorized to require 
     reimbursement from a Federal agency to cover the 
     administrative expenses of the Bank that are attributable to 
     the direct loans financed for that agency. All such payments 
     by an agency shall be considered administrative expenses 
     subject to section 504(g). This subsection shall apply to 
     transactions related to direct loan obligations or loan 
     guarantee commitments made on or after October 1, 1991.
       ``(4) Authority.--The authorities provided in this 
     subsection shall not be construed to supersede or override 
     the authority of the head of a Federal agency to administer 
     and operate a direct loan or loan guarantee program.
       ``(5) Title 31.--All of the transactions provided in the 
     subsection shall be subject to the provisions of subchapter 
     II of chapter 15 of title 31, United States Code.
       ``(6) Treatment of cash balances.--Cash balances of the 
     financing accounts in excess of current requirements shall be 
     maintained in a form of uninvested funds and the Secretary of 
     the Treasury shall pay interest on these funds. The Secretary 
     of the Treasury shall charge (or pay if the amount is 
     negative) financing accounts an amount equal to the risk 
     component for a direct loan or loan guarantee, or 
     modification thereof. Such amount received by the Secretary 
     of the Treasury shall be a means of financing and shall not 
     be considered a cash flow of the Government for the purposes 
     of section 502(5).
       ``(c) Authorization for Liquidating Accounts.--(1) Amounts 
     in liquidating accounts shall be available only for payments 
     resulting from direct loan obligations or loan guarantee 
     commitments made prior to October 1, 1991, for--
       ``(A) interest payments and principal repayments to the 
     Treasury or the Federal Financing Bank for amounts borrowed;
       ``(B) disbursements of loans;
       ``(C) default and other guarantee claim payments;
       ``(D) interest supplement payments;
       ``(E) payments for the costs of foreclosing, managing, and 
     selling collateral that are capitalized or routinely deducted 
     from the proceeds of sales;
       ``(F) payments to financing accounts when required for 
     modifications;
       ``(G) administrative costs and essential preservation 
     expenses, if--
       ``(i) amounts credited to the liquidating account would 
     have been available for administrative costs and essential 
     preservation expenses under a provision of law in effect 
     prior to October 1, 1991; and
       ``(ii) no direct loan obligation or loan guarantee 
     commitment has been made, or any modification of a direct 
     loan or loan guarantee has been made, since September 30, 
     1991; or
       ``(H) such other payments as are necessary for the 
     liquidation of such direct loan obligations and loan 
     guarantee commitments.
       ``(2) Amounts credited to liquidating accounts in any year 
     shall be available only for payments required in that year. 
     Any unobligated balances in liquidating accounts at the end 
     of a fiscal year shall be transferred to miscellaneous 
     receipts as soon as practicable after the end of the fiscal 
     year.
       ``(3) If funds in liquidating accounts are insufficient to 
     satisfy obligations and commitments of such accounts, there 
     is hereby provided permanent, indefinite authority to make 
     any payments required to be made on such obligations and 
     commitments.
       ``(d) Reinsurance.--Nothing in this title shall be 
     construed as authorizing or requiring the purchase of 
     insurance or reinsurance on a direct loan or loan guarantee 
     from private insurers. If any such reinsurance for a direct 
     loan or loan guarantee is authorized, the cost of such 
     insurance and any recoveries to the Government shall be 
     included in the calculation of the cost.
       ``(e) Eligibility and Assistance.--Nothing in this title 
     shall be construed to change the authority or the 
     responsibility of a Federal agency to determine the terms and 
     conditions of eligibility for, or the amount of assistance 
     provided by a direct loan or a loan guarantee.

     ``SEC. 506. TREATMENT OF DEPOSIT INSURANCE AND AGENCIES AND 
                   OTHER INSURANCE PROGRAMS.

       ``This title shall not apply to the credit or insurance 
     activities of the Federal Deposit Insurance Corporation, 
     National Credit Union Administration, Resolution Trust 
     Corporation, Pension Benefit Guaranty Corporation, National 
     Flood Insurance, National Insurance Development Fund, Crop 
     Insurance, or Tennessee Valley Authority.

     ``SEC. 507. EFFECT ON OTHER LAWS.

       ``(a) Effect on Other Laws.--This title shall supersede, 
     modify, or repeal any provision of law enacted prior to the 
     date of enactment of this title to the extent such provision 
     is inconsistent with this title. Nothing in this title shall 
     be construed to establish a credit limitation on any Federal 
     loan or loan guarantee program.
       ``(b) Crediting of Collections.--Collections resulting from 
     direct loans obligated or loan guarantees committed prior to 
     October 1, 1991, shall be credited to the liquidating 
     accounts of Federal agencies. Amounts so credited shall be 
     available, to the same extent that they were available prior 
     to the date of enactment of this title, to liquidate 
     obligations arising from such direct loans obligated or loan 
     guarantees committed prior to October 1, 1991, including 
     repayment of any obligations held by the Secretary of the 
     Treasury or the Federal Financing Bank. The unobligated 
     balances of such accounts that are in excess of current needs 
     shall be transferred to the general fund of the Treasury. 
     Such transfers shall be made from time to time but, at least 
     once each year.''.
       (b) Conforming Amendment.--The table of contents set forth 
     in section 1(b) of the Congressional Budget and Impoundment 
     Control Act of 1974 is amended by striking the items relating 
     to title V and inserting the following:

                         ``TITLE V--FAIR VALUE

``Sec. 501. Purposes. 
``Sec. 502. Definitions. 
``Sec. 503. OMB and CBO analysis, coordination, and review.
``Sec. 504. Budgetary treatment.
``Sec. 505. Authorizations. 
``Sec. 506. Treatment of deposit insurance and agencies and other 
              insurance programs.
``Sec. 507. Effect on other laws.''.

     SEC. 102. EFFECTIVE DATE.

       The amendment made by section 101 shall take effect 
     beginning with fiscal year 2014.

[[Page H544]]

     SEC. 103. BUDGETARY ADJUSTMENT.

       (a) In General.--Section 251(b)(1) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 is amended by 
     adding at the end the following new sentence: ``A change in 
     discretionary spending solely as a result of the amendment to 
     title V of the Congressional Budget Act of 1974 made by the 
     Budget and Accounting Transparency Act of 2012 shall be 
     treated as a change of concept under this paragraph.''.
       (b) Report.--Before adjusting the discretionary caps 
     pursuant to the authority provided in subsection (a), the 
     Office of Management and Budget shall report to the 
     Committees on the Budget of the House of Representatives and 
     the Senate on the amount of that adjustment, the methodology 
     used in determining the size of that adjustment, and a 
     program-by-program itemization of the components of that 
     adjustment.
       (c) Schedule.--The Office of Management and Budget shall 
     not make an adjustment pursuant to the authority provided in 
     subsection (a) sooner than 60 days after providing the report 
     required in subsection (b).

                     TITLE II--BUDGETARY TREATMENT

     SEC. 201. CBO AND OMB STUDIES RESPECTING BUDGETING FOR COSTS 
                   OF FEDERAL INSURANCE PROGRAMS.

       Not later than one year after the date of enactment of this 
     Act, the Directors of the Congressional Budget Office and of 
     the Office of Management and Budget shall each prepare a 
     study and make recommendations to the Committees on the 
     Budget of the House of Representatives and the Senate as to 
     the feasability of applying fair value concepts to budgeting 
     for the costs of Federal insurance programs.

     SEC. 202. ON-BUDGET STATUS OF FANNIE MAE AND FREDDIE MAC.

       Notwithstanding any other provision of law, the receipts 
     and disbursements, including the administrative expenses, of 
     the Federal National Mortgage Association and the Federal 
     Home Loan Mortgage Corporation shall be counted as new budget 
     authority, outlays, receipts, or deficit or surplus for 
     purposes of--
       (1) the budget of the United States Government as submitted 
     by the President;
       (2) the congressional budget; and
       (3) the Balanced Budget and Emergency Deficit Control Act 
     of 1985.

     SEC. 203. EFFECTIVE DATE.

       Section 202 shall not apply with respect to an enterprise 
     (as such term is defined in section 1303 of the Federal 
     Housing Enterprises Financial Safety and Soundness Act of 
     1992 (12 U.S.C. 4502)) after the date that all of the 
     following have occurred:
       (1) The conservatorship for such enterprise under section 
     1367 of such Act (12 U.S.C. 4617) has been terminated.
       (2) The Director of the Federal Housing Finance Agency has 
     certified in writing that such enterprise has repaid to the 
     Federal Government the maximum amount consistent with 
     minimizing total cost to the Federal Government of the 
     financial assistance provided to the enterprise by the 
     Federal Government pursuant to the amendments made by section 
     1117 of the Housing and Economic Recovery Act of 2008 (Public 
     Law 110-289; 122 Stat. 2683) or otherwise.
       (3) The charter for the enterprise has been revoked, 
     annulled, or terminated and the authorizing statute (as such 
     term is defined in such section 1303) with respect to the 
     enterprise has been repealed.

                 TITLE III--BUDGET REVIEW AND ANALYSIS

     SEC. 301. CBO AND OMB REVIEW AND RECOMMENDATIONS RESPECTING 
                   RECEIPTS AND COLLECTIONS.

       Not later than one year after the date of enactment of this 
     Act, the Director of the Office of Management and Budget 
     shall prepare a study of the history of offsetting 
     collections against expenditures and the amount of receipts 
     collected annually, the historical application of the 
     budgetary terms ``revenue'', ``offsetting collections'', and 
     ``offsetting receipts'', and review the application of those 
     terms and make recommendations to the Committees on the 
     Budget of the House of Representatives and the Senate of 
     whether such usage should be continued or modified. The 
     Director of the Congressional Budget Office shall review the 
     history and recommendations prepared by the Director of the 
     Office of Management and Budget and shall submit comments and 
     recommendations to such Committees.

     SEC. 302. AGENCY BUDGET JUSTIFICATIONS.

       Section 1108 of title 31, United States Code, is amended by 
     inserting at the end the following new subsection:
       ``(h)(1) Whenever any agency prepares and submits written 
     budget justification materials for any committee of the House 
     of Representatives or the Senate, such agency shall post such 
     budget justification on the same day of such submission on 
     the `open' page of the public website of the agency, and the 
     Office of Management and Budget shall post such budget 
     justification in a centralized location on its website, in 
     the format developed under paragraph (2).
       ``(2) The Office of Management and Budget, in consultation 
     with the Congressional Budget Office and the Government 
     Accountability Office, shall develop and notify each agency 
     of the format in which to post a budget justification under 
     paragraph (1). Such format shall be designed to ensure that 
     posted budget justifications for all agencies--
       ``(A) are searchable, sortable, and downloadable by the 
     public;
       ``(B) are consistent with generally accepted standards and 
     practices for machine-discoverability;
       ``(C) are organized uniformly, in a logical manner that 
     makes clear the contents of a budget justification and 
     relationships between data elements within the budget 
     justification and among similar documents; and
       ``(D) use uniform identifiers, including for agencies, 
     bureaus, programs, and projects.''.

  The CHAIR. All points of order against that amendment in the nature 
of a substitute are waived. No amendment to that amendment in the 
nature of a substitute shall be in order except those printed in House 
Report 112-388. Each such amendment may be offered only in the order 
printed in the report, may be offered only by a Member designated in 
the report, shall be considered as read, shall be debatable for the 
time specified in the report equally divided and controlled by the 
proponent and an opponent, shall not be subject to amendment, and shall 
not be subject to a demand for division of the question.
  The Chair understands that amendment No. 1 will not be offered.


                  Amendment No. 2 Offered by Mr. Dold

  The CHAIR. It is now in order to consider amendment No. 2 printed in 
House Report 112-388.
  Mr. DOLD. Madam Chairman, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       At the end of the bill, add the following new title:

                TITLE IV--PRESIDENT'S BUDGET SUBMISSION

     SEC. 401. PREPARATION OF THE BUDGET.

       (a) The President.--Section 1105(a) of title 31, United 
     States Code, is amended--
       (1) by redesignating the second paragraph (37) as paragraph 
     (39); and
       (2) by adding at the end the following new paragraph:
       ``(40) A summary of how the use of accrual accounting 
     procedures would affect the estimated expenditures, 
     appropriations, and receipts of the Government in the fiscal 
     year for which the budget is submitted.''.
       (b) Office of Management and Budget.--The Director of the 
     Office of Management and Budget shall prepare all of the 
     budgets submitted to the President according to both accrual 
     accounting procedures and the cash basis accounting method.

  The CHAIR. Pursuant to House Resolution 539, the gentleman from 
Illinois (Mr. Dold) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Illinois.
  Mr. DOLD. Madam Chair, this is a bipartisan amendment, one that my 
colleague from Illinois (Mr. Quigley) and I believe strongly about.
  As part of this Congress' effort to increase transparency and promote 
sound accounting practices in the Federal Government, this amendment 
would reform accounting practices at the Office of Management and 
Budget. Specifically, it would require the OMB Director to prepare all 
budgets submitted to the President using accrual-based accounting 
standards, in addition to the currently used cash-basis GAAP accounting 
standards.
  Americans have a right to expect accountability, honesty, and 
transparency from their government, and right now, the mistrust of 
Congress, I believe, is at an all-time high. The use of accrual-based 
accounting at the Office of Management and Budget would provide a more 
accurate reflection of our Nation's true fiscal state. For too long, 
the Federal Government has relied on unsound budgeting practices that 
understate the reality and distort important costs and liabilities held 
by the government.
  As a small business owner, I know essentially how honest accounting 
is critical to financial decisionmaking, and in that respect, we should 
strive to make the Federal Government's practices more like what we 
demand of the private sector. In fact, the government itself, Madam 
Chairman, demands that publicly traded companies use the accrual-based 
accounting method because the accrual-based accounting method gives a 
more accurate depiction of the true liabilities that are out there. In 
the cash basis, you're able to distort reality and be able to 
manipulate things to make them look a little bit rosier.
  The American people are looking for a fact-based budget, and they 
deserve no less. They deserve to know the truth about what our true 
liabilities are, and the truth is that the current practice of using 
only cash-basis accounting at the Office of Management and Budget

[[Page H545]]

paints an incomplete picture of our Nation's future long-term 
liabilities. For example, the promise of Social Security and Medicare 
only shows up as a cost to the American taxpayer when money is actually 
paid out. Accrual accounting more accurately reflects our Nation's 
obligations so that a promise today is immediately recognized and 
accounted for, whether or not any money has been disbursed at that 
point in time.
  Madam Chairman, I am confident that the House Budget Committee 
recognizes the importance of honest accounting, of honest accounting 
practices that accurately reflect the true fiscal state of this 
country. As a small business owner, I understand that it's absolutely 
critical when making decisions that impact not only the business but 
the people that I work with that we have a more accurate reflection of 
our liabilities. The government should be no different.
  With that, I would like to yield to the gentleman from New Jersey.
  Mr. GARRETT. First of all, let me just begin by saying I appreciate 
the gentleman's effort with regard to this legislation. I appreciate 
also the bipartisan nature and intentions behind the amendment as well. 
There are unquestionably circumstances where accrual accounting is the 
best way, the most appropriate way to display the Federal Government's 
budgetary costs and obligations.
  Now, as you know, the underlying bill does focus on one such area 
where accrual accounting has long been in use, and what it does then is 
to try to build upon those years of experience and try to study the 
application of that as applied to Federal credit programs.
  The underlying bill, I should say as an aside, also includes a study 
of another area--because I know there's a question of how far are we 
going in these things--where it might be appropriate to extend this, 
and this is with regard to the Federal insurance programs. Why is that? 
Well, it's because we don't have as many studies on that.
  I might just add to the point of the gentleman from Maryland before, 
there have been a number of references on an area that we're looking 
to. CBO has done some with regard to student loans, with regard to 
housing, with regard to SBA and energy. CBO has issued a number of 
reports with fair value accounting included, and that is why we 
included it in this bill.
  Again, I appreciate the gentleman's work on this amendment. I oppose 
it as it stands now, however.
  Mr. DOLD. Reclaiming my time, if the chairman would work with me to 
try to make sure we have a fact-based, more accurate, and honest 
accounting, I would be happy to withdraw the amendment.
  Mr. GARRETT of New Jersey. Not only will I work with you, I believe 
the chairman of the full committee will be intentioned to work with you 
on this as well. The goal is the same by all of us here, and I think by 
the other side as well, to try to get as much information that is able 
to get out to come out, and we will be glad to work with you on this.
  Mr. DOLD. With that, Madam Chairman, I ask unanimous consent to 
withdraw my bipartisan amendment in hopes that we can have some more 
accurate accounting in the future.
  The CHAIR. Without objection, the amendment is withdrawn.
  There was no objection.

                              {time}  1540


                  Amendment No. 3 Offered by Mr. Tonko

  The CHAIR. It is now in order to consider amendment No. 3 printed in 
House Report 112-388.
  Mr. TONKO. Madam Chair, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:
       At the end of the bill, add the following new title:

         TITLE IV--EFFECTIVE DATE; ESTABLISHMENT OF COMMISSION

     SEC. 401. EFFECTIVE DATE; ESTABLISHMENT OF COMMISSION.

       (a) Effective Date; Establishment.--The provisions of this 
     Act are delayed until and may be superseded by the majority 
     recommendations of a six member commission consisting of the 
     Director of the Congressional Budget Office, the Director of 
     the Office of Management and Budget, and four additional non-
     congressional members each appointed by the Speaker and 
     Minority Leader of the House and the Majority and Minority 
     leaders of the Senate. Such additional four Members shall 
     have expertise in budgeting and accounting.
       (b) Recommendations.--The recommendations of the commission 
     shall reflect the best measure to accurately account for the 
     costs of Federal credit programs, including an analysis of 
     the fair value, market-based risk estimates, and the discount 
     rates mandated by the Federal Credit Reform Act of 1990.
       (c) Congressional Vote Required.--Such recommendations 
     shall take effect upon their enactment into law. Congress 
     shall vote on the recommendations set forth in subsection (b) 
     not later than 45 days after the date of submission of such 
     recommendations to the Congress.

  The CHAIR. Pursuant to House Resolution 539, the gentleman from New 
York (Mr. Tonko) and a Member opposed each will control 5 minutes.
  The Chair recognizes gentleman from New York.
  Mr. TONKO. Madam Chair, I rise today to offer an amendment to H.R. 
3581, the Budget and Accounting Transparency Act.
  My amendment restores a critical step that was skipped by my 
Republican colleagues. You see, we never once had a hearing in the 
Budget Committee devoted specifically to exploring the main proposal 
contained in this bill--the use of fair value estimates to determine 
the cost of Federal loans. If I could change that, I would, but my 
Republican colleagues have pushed this bill to the floor.
  When so many at home look at Congress and shake their heads at the 
political gamesmanship that has come to dominate this institution, my 
amendment simply asks that we take a moment to be objectively smart 
rather than just politically savvy about a policy decision with major 
repercussions.
  If this legislation took effect this year, CBO estimates that we 
would see the Federal deficit jump by $55 billion. This is a bill that 
would impact things like housing loans, student loans, small business 
loans, and even our mortgage guarantee programs for vets. It would 
create the appearance that these loans and loan guarantees cost more 
with an accounting method that is relatively new and certainly under 
debate.
  For a bill with ``transparency'' in its title, we're talking about 
using some pretty mirky math. My Republican colleagues will say that we 
need CBO estimates on loans to reflect the risk involved in Federal 
lending. That makes sense, which is why we already do it. The approach 
under current law already reflects the risk that borrowers will default 
on their loans or guarantees.
  The real difference here is whether we think estimates of Federal 
loans should be based on how the government borrows and lends or, 
alternately, on how the private sector borrows and lends. I understand 
my colleagues have a great esteem for private sector business 
practices, and as a former small business owner myself, I share that 
admiration; but we have to understand that the Federal Government of 
the most powerful country on Earth isn't a private actor.
  No private lender is in the same position as the Federal Government 
with its ability to borrow at Treasury rates and its ability to spread 
risk across such a broad portfolio. So, understandably, there is 
significant debate as to whether and how fair value estimates could be 
applied to government loans. The bottom line is that it would involve a 
lot of guesswork.
  At a time when our housing market has been devastated, when our 
workforce is struggling to attain the knowledge and skill set it needs 
in a difficult job market, when small businesses are fighting their way 
out of the worst recession since our Great Depression, and when our 
vets are facing a higher jobless rate than the rest of the country, why 
on Earth would we make a change of this magnitude without consulting 
with the best budget and accounting minds in our country? The impact of 
this legislation is too big to be treated more like an election year 
talking point than a major policy change with very real impacts on the 
people that we are here to represent.
  That is why I am offering this modest proposal. My amendment simply 
proposes that we convene a commission of budget and accounting experts 
to provide recommendations to Congress regarding the best measure to 
accurately account for the costs of Federal credit programs. Congress 
will then

[[Page H546]]

have the opportunity to vote on the commission's recommendations, and 
if changes are deemed wise, we can move forward with the smartest 
course of action and with a policy that brings our Federal loan and 
loan guarantee estimates into uniformity. After all, as we heard on 
this very floor, it's the people's money we're dealing with.
  I urge my colleagues to look before we jump on this one, and I urge 
support of my amendment.
  With that, I yield back the balance of my time.
  Mr. GARRETT. I rise in opposition to the amendment.
  The CHAIR. The gentleman from New Jersey is recognized for 5 minutes.
  Mr. GARRETT. Madam Chair, in essence, the amendment has the effect, 
as so many amendments often do that come to the floor, of basically 
gutting the entire bill.
  The core reform made by this bill is to--what?--adopt for all Federal 
credit programs fair value accounting. Now, this is not a precipitous 
or rash decision that we're going to make here. The Budget Committee, 
both with the Republican and Democrat leadership, has, over time, 
studied and worked on the implications of moving to a fair value 
accounting for Federal credit programs.
  The CBO, which we reference all the time, is an independent arbiter 
of what is right here and has studied these things, and other academics 
have conducted studies going back as far as the 1990s, if not earlier, 
on this question as well. In fact, there was a commission, a commission 
featuring 36 experts, including six former CBO Directors.
  What did they recommend? They recommended moving to a fair value 
accounting in 2010.
  Indeed, it was back in 2009 that this House, under Democrat 
leadership, voted to require the use of fair value accounting with 
respect to U.S. commitments made to the IMF, the International Monetary 
Fund. Additionally, the CBO has conducted analyses of dozens of Federal 
credit programs on a fair value basis.
  So this bill is not precipitous. This bill is not rash. This bill is 
not extreme. This bill takes a cautious approach and applies fair value 
budgeting in those areas where we have the most experience while 
calling for a further study of those areas in which it makes sense to 
do study--Federal insurance programs.
  So I urge my colleagues to oppose this amendment and to support the 
judicious and experience-based approach of the underlying bill.
  I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the gentleman 
from New York (Mr. Tonko).
  The question was taken; and the Chair announced that the noes 
appeared to have it.
  Mr. TONKO. Madam Chair, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 187, 
noes 238, not voting 8, as follows:

                             [Roll No. 40]

                               AYES--187

     Ackerman
     Altmire
     Andrews
     Baca
     Baldwin
     Bass (CA)
     Becerra
     Berkley
     Berman
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Bonamici
     Boren
     Boswell
     Brady (PA)
     Braley (IA)
     Brown (FL)
     Butterfield
     Capps
     Capuano
     Cardoza
     Carnahan
     Carney
     Carson (IN)
     Castor (FL)
     Chandler
     Chu
     Cicilline
     Clarke (MI)
     Clarke (NY)
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly (VA)
     Conyers
     Cooper
     Costa
     Costello
     Courtney
     Critz
     Crowley
     Cuellar
     Cummings
     Davis (CA)
     Davis (IL)
     DeFazio
     DeGette
     DeLauro
     Deutch
     Dicks
     Dingell
     Doggett
     Donnelly (IN)
     Doyle
     Engel
     Eshoo
     Farr
     Fattah
     Filner
     Frank (MA)
     Fudge
     Garamendi
     Gibson
     Gonzalez
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hanabusa
     Hastings (FL)
     Heinrich
     Higgins
     Himes
     Hinchey
     Hinojosa
     Hirono
     Hochul
     Holden
     Holt
     Honda
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson Lee (TX)
     Johnson (GA)
     Johnson, E. B.
     Kaptur
     Keating
     Kildee
     Kind
     Kissell
     Kucinich
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lewis (GA)
     Lipinski
     Loebsack
     Lofgren, Zoe
     Lowey
     Lujan
     Lynch
     Maloney
     Markey
     Matheson
     Matsui
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     Meeks
     Michaud
     Miller (NC)
     Miller, George
     Moore
     Moran
     Murphy (CT)
     Nadler
     Napolitano
     Neal
     Owens
     Pallone
     Pascrell
     Pastor (AZ)
     Pelosi
     Perlmutter
     Peters
     Petri
     Pingree (ME)
     Polis
     Price (NC)
     Quigley
     Rahall
     Rangel
     Reyes
     Richardson
     Richmond
     Ross (AR)
     Rothman (NJ)
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schrader
     Schwartz
     Scott (VA)
     Scott, David
     Serrano
     Sewell
     Sherman
     Shuler
     Sires
     Slaughter
     Smith (WA)
     Speier
     Stark
     Sutton
     Thompson (CA)
     Thompson (MS)
     Tierney
     Tonko
     Towns
     Tsongas
     Van Hollen
     Velazquez
     Visclosky
     Walz (MN)
     Wasserman Schultz
     Waters
     Watt
     Waxman
     Welch
     Wilson (FL)
     Woolsey
     Yarmuth

                               NOES--238

     Adams
     Aderholt
     Akin
     Alexander
     Amash
     Amodei
     Austria
     Bachmann
     Bachus
     Barletta
     Barrow
     Bartlett
     Barton (TX)
     Bass (NH)
     Benishek
     Berg
     Biggert
     Bilbray
     Bilirakis
     Bishop (UT)
     Black
     Blackburn
     Bonner
     Bono Mack
     Boustany
     Brady (TX)
     Brooks
     Broun (GA)
     Buchanan
     Bucshon
     Buerkle
     Burgess
     Burton (IN)
     Calvert
     Camp
     Campbell
     Canseco
     Cantor
     Capito
     Carter
     Cassidy
     Chabot
     Chaffetz
     Coble
     Coffman (CO)
     Cole
     Conaway
     Cravaack
     Crawford
     Crenshaw
     Culberson
     Davis (KY)
     Denham
     Dent
     DesJarlais
     Diaz-Balart
     Dold
     Dreier
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers
     Emerson
     Farenthold
     Fincher
     Fitzpatrick
     Flake
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gingrey (GA)
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (MO)
     Griffin (AR)
     Griffith (VA)
     Grimm
     Guinta
     Guthrie
     Hall
     Hanna
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Hayworth
     Heck
     Hensarling
     Herger
     Herrera Beutler
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Issa
     Jenkins
     Johnson (IL)
     Johnson (OH)
     Johnson, Sam
     Jones
     Jordan
     Kelly
     King (IA)
     King (NY)
     Kingston
     Kinzinger (IL)
     Kline
     Labrador
     Lamborn
     Lance
     Landry
     Lankford
     Latham
     Latta
     Lewis (CA)
     LoBiondo
     Long
     Lucas
     Luetkemeyer
     Lummis
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     Marino
     McCarthy (CA)
     McCaul
     McClintock
     McCotter
     McHenry
     McKeon
     McKinley
     McMorris Rodgers
     Meehan
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Murphy (PA)
     Myrick
     Neugebauer
     Noem
     Nugent
     Nunes
     Nunnelee
     Olson
     Palazzo
     Paulsen
     Pearce
     Pence
     Peterson
     Pitts
     Platts
     Poe (TX)
     Pompeo
     Posey
     Price (GA)
     Quayle
     Reed
     Rehberg
     Reichert
     Renacci
     Ribble
     Rigell
     Rivera
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross (FL)
     Royce
     Runyan
     Ryan (WI)
     Scalise
     Schilling
     Schmidt
     Schock
     Schweikert
     Scott (SC)
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stearns
     Stivers
     Stutzman
     Sullivan
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner (NY)
     Turner (OH)
     Upton
     Walberg
     Walden
     Walsh (IL)
     Webster
     West
     Westmoreland
     Whitfield
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Young (AK)
     Young (FL)
     Young (IN)

                             NOT VOTING--8

     Edwards
     Ellison
     LaTourette
     McNerney
     Mulvaney
     Olver
     Paul
     Payne

                              {time}  1612

  Mr. GARY G. MILLER of California changed his vote from ``aye'' to 
``no.''
  Messrs. ALTMIRE, PETRI, COHEN and HINOJOSA changed their vote from 
``no'' to ``aye.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.
  The Acting CHAIR (Mr. Kline). The question is on the amendment in the 
nature of a substitute.
  The amendment was agreed to.
  The Acting CHAIR. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Dold) having assumed the chair, Mr. Kline, Acting Chair of the 
Committee of the Whole House on the state of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 3581) to 
amend the Balanced Budget and Emergency Deficit Control Act of 1985 to 
increase transparency in Federal budgeting, and for other purposes and, 
pursuant to House Resolution 539, reported the bill back to the House 
with an amendment adopted in the Committee of the Whole.

[[Page H547]]

  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  The question is on the amendment in the nature of a substitute.
  The amendment was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Mr. WALZ of Minnesota. I have a motion at the desk, Mr. Speaker.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. WALZ of Minnesota. In its current form, I am, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Walz of Minnesota moves to recommit the bill H.R. 3581 
     to the Committee on the Budget with instructions to report 
     the same back to the House forthwith with the following 
     amendment:
       Page 3, line 21, insert ``(i)'' after ``(C)''.
       Page 3, line 23, strike ``(i)'' and insert ``(I)''.
       Page 4, line 7, strike ``(ii)'' and insert ``(II)''.
       Page 4, after line 9, insert the following:
       ``(ii) For loans to students or veterans, the risk 
     component is zero.''.

  Mr. WALZ of Minnesota (during the reading). Mr. Speaker, I ask 
unanimous consent to dispense with the reading.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Minnesota?
  There was no objection.
  The SPEAKER pro tempore. The gentleman from Minnesota is recognized 
for 5 minutes.
  Mr. WALZ of Minnesota. Mr. Speaker, I would like to say that the 
goals of this legislation that the gentleman and his supporters have 
put before us are noble. The supporters have stressed it is to improve 
accuracy in how we account for loan programs. That's, indeed, a 
laudable goal. As stewards of the taxpayer dollars, we all believe it's 
our responsibility to keep a careful eye on every dollar spent. This 
includes using the most accurate accounting measures possible. 
Unfortunately, we have no assurances.
  Mr. Speaker, the intentions of this bill are laudable. The problem we 
have is there's no assurance that the piece of legislation we're doing 
today will encode that into law. Instead, what we have are half-
finished ideas whose merit is disputed by nonpartisan budgeting experts 
and whose effects are still unknown.
  We've heard concerns today that enactment of this bill could result 
in us systematically overestimating the cost of Federal loan programs. 
This will not just be inaccurate accounting; it could cause significant 
harm to millions of Americans who depend on these loans. As a school 
teacher and a 24-year veteran of the National Guard, I know that the 
two groups that depend on these loans more than any other are students 
and our veterans. That's why I have this motion at the desk to amend 
the bill to ensure that, at the very least, as this experiment plays 
out, we hold harmless students and veterans.
  This amendment does not kill the bill, and it changes nothing in it. 
It simply ensures that until we know how this policy is going to work 
out, we won't insist that we make it any harder for an Iraq or 
Afghanistan veteran to get a home loan. At the same time, when economic 
hardships and rising tuition costs are making it harder for our best 
and brightest, those very students that we depend on to make this 
Nation profitable, we need to make sure that they're not harmed by this 
process.
  My amendment would ensure that we hold them, the veterans and the 
students, harmless until we know how this unvetted, untested piece of 
legislation will work. I simply encourage my colleagues to join me. 
Protect the students and the veterans in this. Go ahead and pass the 
bill, if that's what you want to do; but let's make sure there's a 
firewall between those that can least afford to have this go bad.
  With that, I yield back the balance of my time, Mr. Speaker.
  Mr. GARRETT. I rise in opposition to the motion.
  The SPEAKER pro tempore. The gentleman from New Jersey is recognized 
for 5 minutes.
  Mr. GARRETT. Mr. Speaker, the prior amendment that this House just 
overwhelmingly voted down would have gutted the underlying bill 
entirely. This motion to recommit will now try to gut the bill by 
approximately one-third. I commend the other side of the aisle for at 
least going in the right direction. But, Mr. Speaker, I remind us all 
of the words of the President of the United States when he stood in 
that same position where he speaks of fairness and the agenda that he 
proposes, and he speaks of fairness to the American public.
  Well, Mr. Speaker, we know that the budget process in this country is 
broken. We know that there is no fairness in that. This amendment will 
undercut the legislation before us, and the underlying bill will try to 
restore it.
  We need fairness to the hardworking American taxpayer who, at the end 
of the day, will be the one who will have to foot the bill when the 
loans go sour like we saw in the situation with Solyndra. We need to 
bring fairness to the small business owner who is already compelled to 
comply with the exact same requirements that we have in this bill. Mr. 
Speaker, we need to bring fairness to the American public who simply 
wants to know where their hardworking tax dollar is going.
  Mr. Speaker, in conclusion, let me just say this: as we here in 
Washington travel through that great twilight which is that murky area 
of obscure accounting rules, let us commit ourselves to one thing--that 
we will bring clarity, that we will bring transparency, that we will 
bring sunshine, and, most importantly, that we will bring fairness to 
the American public as to the spending of their tax dollars.
  I recommend that we vote ``no'' on this motion to recommit.
  I yield back the balance of my time.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. WALZ of Minnesota. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage.
  The vote was taken by electronic device, and there were--yeas 190, 
nays 238, not voting 5, as follows:

                             [Roll No. 41]

                               YEAS--190

     Ackerman
     Altmire
     Andrews
     Baca
     Baldwin
     Barrow
     Bass (CA)
     Becerra
     Berkley
     Berman
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Bonamici
     Boren
     Boswell
     Brady (PA)
     Braley (IA)
     Brown (FL)
     Butterfield
     Capps
     Capuano
     Cardoza
     Carnahan
     Carney
     Carson (IN)
     Castor (FL)
     Chandler
     Chu
     Cicilline
     Clarke (MI)
     Clarke (NY)
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly (VA)
     Conyers
     Cooper
     Costa
     Costello
     Courtney
     Critz
     Crowley
     Cuellar
     Cummings
     Davis (CA)
     Davis (IL)
     DeFazio
     DeGette
     DeLauro
     Deutch
     Dicks
     Dingell
     Doggett
     Donnelly (IN)
     Doyle
     Engel
     Eshoo
     Farr
     Fattah
     Filner
     Frank (MA)
     Fudge
     Garamendi
     Gonzalez
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hanabusa
     Hastings (FL)
     Heinrich
     Higgins
     Himes
     Hinchey
     Hinojosa
     Hirono
     Hochul
     Holden
     Holt
     Honda
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson Lee (TX)
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Keating
     Kildee
     Kind
     Kissell
     Kucinich
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lewis (GA)
     Lipinski
     Loebsack
     Lofgren, Zoe
     Lowey
     Lujan
     Lynch
     Maloney
     Markey
     Matheson
     Matsui
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McNerney
     Meeks
     Michaud
     Miller (NC)
     Miller, George
     Moore
     Moran
     Murphy (CT)
     Nadler
     Napolitano
     Neal
     Olver
     Owens
     Pallone
     Pascrell
     Pastor (AZ)
     Pelosi
     Perlmutter
     Peters
     Peterson
     Pingree (ME)
     Polis
     Price (NC)
     Quigley
     Rahall
     Rangel
     Reyes
     Richardson
     Richmond
     Ross (AR)
     Rothman (NJ)
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schrader
     Schwartz
     Scott (VA)
     Scott, David
     Serrano
     Sewell
     Sherman
     Shuler
     Sires
     Slaughter
     Smith (WA)
     Speier
     Stark
     Sutton
     Thompson (CA)
     Thompson (MS)
     Tierney

[[Page H548]]


     Tonko
     Towns
     Tsongas
     Van Hollen
     Velazquez
     Visclosky
     Walz (MN)
     Wasserman Schultz
     Waters
     Watt
     Waxman
     Welch
     Wilson (FL)
     Woolsey
     Yarmuth

                               NAYS--238

     Adams
     Aderholt
     Akin
     Amash
     Amodei
     Austria
     Bachmann
     Bachus
     Barletta
     Bartlett
     Barton (TX)
     Bass (NH)
     Benishek
     Berg
     Biggert
     Bilbray
     Bilirakis
     Bishop (UT)
     Black
     Blackburn
     Bonner
     Bono Mack
     Boustany
     Brady (TX)
     Brooks
     Broun (GA)
     Buchanan
     Bucshon
     Buerkle
     Burgess
     Burton (IN)
     Calvert
     Camp
     Campbell
     Canseco
     Cantor
     Capito
     Carter
     Cassidy
     Chabot
     Chaffetz
     Coble
     Coffman (CO)
     Cole
     Conaway
     Cravaack
     Crawford
     Crenshaw
     Culberson
     Davis (KY)
     Denham
     Dent
     DesJarlais
     Diaz-Balart
     Dold
     Dreier
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers
     Emerson
     Farenthold
     Fincher
     Fitzpatrick
     Flake
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gibson
     Gingrey (GA)
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (MO)
     Griffin (AR)
     Griffith (VA)
     Grimm
     Guinta
     Guthrie
     Hall
     Hanna
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Hayworth
     Heck
     Hensarling
     Herger
     Herrera Beutler
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Issa
     Jenkins
     Johnson (IL)
     Johnson (OH)
     Johnson, Sam
     Jordan
     Kelly
     King (IA)
     King (NY)
     Kingston
     Kinzinger (IL)
     Kline
     Labrador
     Lamborn
     Lance
     Landry
     Lankford
     Latham
     LaTourette
     Latta
     Lewis (CA)
     LoBiondo
     Long
     Lucas
     Luetkemeyer
     Lummis
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     Marino
     McCarthy (CA)
     McCaul
     McClintock
     McCotter
     McHenry
     McKeon
     McKinley
     McMorris Rodgers
     Meehan
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Mulvaney
     Murphy (PA)
     Myrick
     Neugebauer
     Noem
     Nugent
     Nunes
     Nunnelee
     Olson
     Palazzo
     Paulsen
     Pearce
     Pence
     Petri
     Pitts
     Platts
     Poe (TX)
     Pompeo
     Posey
     Price (GA)
     Quayle
     Reed
     Rehberg
     Reichert
     Renacci
     Ribble
     Rigell
     Rivera
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross (FL)
     Royce
     Runyan
     Ryan (WI)
     Scalise
     Schilling
     Schmidt
     Schock
     Schweikert
     Scott (SC)
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stearns
     Stivers
     Stutzman
     Sullivan
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner (NY)
     Turner (OH)
     Upton
     Walberg
     Walden
     Walsh (IL)
     Webster
     West
     Westmoreland
     Whitfield
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Young (AK)
     Young (FL)
     Young (IN)

                             NOT VOTING--5

     Alexander
     Edwards
     Ellison
     Paul
     Payne


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). There are 2 minutes 
remaining.

                              {time}  1637

  Mr. McNERNEY changed his vote from ``no'' to ``aye.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. VAN HOLLEN. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 245, 
noes 180, not voting 8, as follows:

                             [Roll No. 42]

                               AYES--245

     Adams
     Aderholt
     Akin
     Alexander
     Amash
     Amodei
     Austria
     Bachmann
     Bachus
     Barletta
     Barrow
     Bartlett
     Barton (TX)
     Bass (NH)
     Benishek
     Berg
     Biggert
     Bilbray
     Bilirakis
     Bishop (UT)
     Black
     Blackburn
     Bonner
     Bono Mack
     Boustany
     Brady (TX)
     Brooks
     Broun (GA)
     Buchanan
     Bucshon
     Buerkle
     Burgess
     Burton (IN)
     Calvert
     Camp
     Campbell
     Canseco
     Cantor
     Capito
     Carter
     Cassidy
     Chabot
     Chaffetz
     Coffman (CO)
     Cole
     Conaway
     Cooper
     Cravaack
     Crawford
     Crenshaw
     Cuellar
     Culberson
     Davis (KY)
     DeFazio
     Denham
     Dent
     DesJarlais
     Diaz-Balart
     Dold
     Dreier
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers
     Emerson
     Farenthold
     Fincher
     Fitzpatrick
     Flake
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gibson
     Gingrey (GA)
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (MO)
     Griffin (AR)
     Griffith (VA)
     Grimm
     Guinta
     Guthrie
     Hall
     Hanna
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Hayworth
     Heck
     Hensarling
     Herger
     Herrera Beutler
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Issa
     Jenkins
     Johnson (IL)
     Johnson (OH)
     Johnson, Sam
     Jones
     Jordan
     Kelly
     King (IA)
     King (NY)
     Kingston
     Kinzinger (IL)
     Kissell
     Kline
     Labrador
     Lamborn
     Lance
     Landry
     Lankford
     Latham
     LaTourette
     Latta
     Lewis (CA)
     LoBiondo
     Long
     Lucas
     Luetkemeyer
     Lummis
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     Marino
     McCarthy (CA)
     McCaul
     McClintock
     McCotter
     McHenry
     McKeon
     McKinley
     McMorris Rodgers
     Meehan
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Mulvaney
     Murphy (PA)
     Myrick
     Neugebauer
     Noem
     Nunes
     Nunnelee
     Olson
     Owens
     Palazzo
     Paulsen
     Pearce
     Pence
     Petri
     Pitts
     Platts
     Poe (TX)
     Pompeo
     Posey
     Price (GA)
     Quayle
     Quigley
     Reed
     Rehberg
     Reichert
     Renacci
     Ribble
     Rigell
     Rivera
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross (FL)
     Royce
     Runyan
     Ryan (WI)
     Scalise
     Schilling
     Schmidt
     Schock
     Schweikert
     Scott (SC)
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stearns
     Stivers
     Stutzman
     Sullivan
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner (NY)
     Turner (OH)
     Upton
     Walberg
     Walden
     Walsh (IL)
     Webster
     West
     Westmoreland
     Whitfield
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Young (AK)
     Young (FL)
     Young (IN)

                               NOES--180

     Ackerman
     Altmire
     Andrews
     Baca
     Baldwin
     Bass (CA)
     Becerra
     Berkley
     Berman
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Bonamici
     Boren
     Boswell
     Brady (PA)
     Braley (IA)
     Brown (FL)
     Butterfield
     Capps
     Capuano
     Cardoza
     Carnahan
     Carney
     Carson (IN)
     Castor (FL)
     Chandler
     Chu
     Cicilline
     Clarke (MI)
     Clarke (NY)
     Clay
     Cleaver
     Clyburn
     Coble
     Cohen
     Connolly (VA)
     Conyers
     Costa
     Costello
     Courtney
     Critz
     Crowley
     Cummings
     Davis (CA)
     Davis (IL)
     DeGette
     DeLauro
     Deutch
     Dicks
     Dingell
     Doggett
     Donnelly (IN)
     Doyle
     Engel
     Eshoo
     Farr
     Fattah
     Filner
     Frank (MA)
     Fudge
     Garamendi
     Gonzalez
     Green, Al
     Green, Gene
     Grijalva
     Hahn
     Hanabusa
     Hastings (FL)
     Heinrich
     Higgins
     Himes
     Hinchey
     Hinojosa
     Hirono
     Hochul
     Holden
     Holt
     Honda
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson Lee (TX)
     Johnson (GA)
     Johnson, E. B.
     Kaptur
     Keating
     Kildee
     Kind
     Kucinich
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lewis (GA)
     Lipinski
     Loebsack
     Lofgren, Zoe
     Lowey
     Lujan
     Lynch
     Maloney
     Markey
     Matheson
     Matsui
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McNerney
     Meeks
     Michaud
     Miller (NC)
     Miller, George
     Moore
     Moran
     Murphy (CT)
     Nadler
     Napolitano
     Neal
     Nugent
     Olver
     Pallone
     Pascrell
     Pastor (AZ)
     Pelosi
     Perlmutter
     Peters
     Peterson
     Pingree (ME)
     Polis
     Price (NC)
     Rahall
     Rangel
     Reyes
     Richardson
     Richmond
     Ross (AR)
     Rothman (NJ)
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schrader
     Schwartz
     Scott (VA)
     Scott, David
     Serrano
     Sewell
     Sherman
     Shuler
     Sires
     Slaughter
     Smith (WA)
     Speier
     Stark
     Sutton
     Thompson (CA)
     Tonko
     Towns
     Tsongas
     Van Hollen
     Velazquez
     Visclosky
     Walz (MN)
     Wasserman Schultz
     Waters
     Watt
     Waxman
     Welch
     Woolsey
     Yarmuth

                             NOT VOTING--8

     Edwards
     Ellison
     Gutierrez
     Paul
     Payne
     Thompson (MS)
     Tierney
     Wilson (FL)

                              {time}  1644

  Ms. JACKSON LEE of Texas changed her vote from ``aye'' to ``no.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.


                          Personal Explanation

  Mr. ELLISON. Mr. Speaker, on February 7, 2012, I missed rollcall 
votes Nos. 36-42 due to commitments in my district. Had I been

[[Page H549]]

present I would have voted ``yes'' on rollcall Votes 36, 37, 40, and 41 
and ``no'' on rollcall Votes 38, 39, and 42.

                          ____________________