[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.
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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.
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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.
____________________