[Congressional Record (Bound Edition), Volume 160 (2014), Part 4]
[House]
[Pages 5693-5701]
[From the U.S. Government Publishing Office, www.gpo.gov]




             BUDGET AND ACCOUNTING TRANSPARENCY ACT OF 2014


                             General Leave

  Mr. GARRETT. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
on this bill, which is H.R. 1872, which is the Budget and Accounting 
Transparency Act of 2014.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New Jersey?
  There was no objection.
  Mr. GARRETT. Mr. Speaker, pursuant to House Resolution 539, I call up 
the bill (H.R. 1872) to amend the Balanced Budget and Emergency Deficit 
Control Act of 1985 to increase transparency in Federal budgeting, and 
for other purposes, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 539, the 
amendment in the nature of a substitute recommended by the Committee on 
the Budget, printed in the bill is adopted. The bill, as amended, is 
considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 1872

       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 2014''.

                     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. 500. SHORT TITLE.

       ``This title may be cited as the `Fair Value Accounting Act 
     of 2014'.

     ``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

[[Page 5694]]

     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 2017, 
     the President's budget shall reflect the costs of direct loan 
     and loan guarantee programs. The budget shall also include 
     the planned level of new direct loan obligations or loan 
     guarantee commitments associated with each appropriations 
     request. For each fiscal year within the five-fiscal year 
     period beginning with fiscal year 2017, such budget shall 
     include, on an agency-by-agency basis, subsidy estimates and 
     costs of direct loan and loan guarantee programs with and 
     without the risk component.
       ``(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 2017 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

[[Page 5695]]

     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. 500. Short title.
``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. 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 2014 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).

     SEC. 103. EFFECTIVE DATE.

       The amendments made by section 101 shall take effect 
     beginning with fiscal year 2017.

                     TITLE II--BUDGETARY TREATMENT

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

       Not later than 1 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 1 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.

[[Page 5696]]



     SEC. 302. AGENCY BUDGET JUSTIFICATIONS.

       Section 1108 of title 31, United States Code, is amended by 
     inserting at the end the following new subsections:
       ``(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). Each agency shall 
     include with its written budget justification the process and 
     methodology the agency is using to comply with the Fair Value 
     Accounting Act of 2014.
       ``(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.
       ``(i)(1) Not later than the day that the Office of 
     Management and Budget issues guidelines, regulations, or 
     criteria to agencies on how to calculate the risk component 
     under the Fair Value Accounting Act of 2014, it shall submit 
     a written report to the Committees on the Budget of the House 
     of Representatives and the Senate containing all such 
     guidelines, regulations, or criteria.
       ``(2) For fiscal year 2017 and each of the next four fiscal 
     years thereafter, the Comptroller General shall submit an 
     annual report to the Committees on the Budget of the House of 
     Representatives and the Senate reviewing and evaluating the 
     progress of agencies in the implementation of the Fair Value 
     Accounting Act of 2014.
       ``(3) Such guidelines, regulations, or criteria shall be 
     deemed to be a rule for purposes of section 553 of title 5 
     and shall be issued after notice and opportunity for public 
     comment in accordance with the procedures under such 
     section.''.

  The SPEAKER pro tempore. The gentleman from New Jersey (Mr. Garrett) 
and the gentleman from Maryland (Mr. Van Hollen) each will control 30 
minutes.
  The Chair recognizes the gentleman from New Jersey.
  Mr. GARRETT. I yield myself such time as I may consume.
  Mr. Speaker, let me begin by thanking the chairman of the Budget 
Committee, Chairman Paul Ryan, and the Budget Committee staff as well 
for their hard work on H.R. 1872, the Budget and Accounting 
Transparency Act.
  As many have talked about before, our budget process in this country 
is broken. Simply put, we need to make the budget process more 
transparent. So the bill before the House today, the Budget and 
Accounting Transparency Act, is, as we like to say, a commonsense 
attempt to introduce more sunshine and common sense into our budget 
process. So what would this legislation do?
  Most importantly, the bill will require that the Federal Government 
apply something called fair value accounting. Now, that is the same 
credit accounting standards as the private sector uses when making or 
guaranteeing loans. So fair value accounting provides a more robust or 
more complete picture of the cost to the taxpayer of government loan 
programs or government lending programs. So fair value accounting 
accomplishes this how? By accounting for an additional market-risk 
premium.
  Also, the bill recognizes the budgetary impact of government-
sponsored enterprises of Fannie Mae and Freddie Mac. So this bill would 
then bring these wards of the taxpayer from out of the shadows and onto 
the budget.
  So why exactly do we need this specific piece of legislation here 
today? Well, without getting into the weeds too much, the simplest 
explanation is that there is no such thing in this country or in the 
world as a free lunch when it comes to a government program. The costs 
are always borne by someone, and in this case, it is borne by the 
American people.
  The facts indicate that not only is government costly, but also 
government costs more than we all initially expected. So the burden of 
government rarely comes in under budget. Nowhere does this ring truer 
than the Federal Housing Administration program, also called FHA, and 
their mortgage insurance. See, it defies common sense FHA, according to 
administration's Federal accounting rules, that they actually make 
money, they say, for the government.
  How do they do so? Well, it is only through the alchemy of government 
accounting can you transform a mortgage portfolio of figurative lead 
into gold and still remain true to the law.
  So this free money comes courtesy of what? It comes courtesy of the 
Federal Credit Reform Act of 1990. This is the Federal accounting 
program and the standard that we operate today.
  Under FCRA's cooked accounting rules, the cost of Federal mortgage 
insurance is determined on the basis of a subsidy cost, including the 
risk that the borrowers default on a mortgage; and by using the 
Treasury rate, it does not account for market risk or overall systemic 
risk.
  So, what does that mean? Unlike fair value accounting, which 
appropriately incorporates a premium for market risk, the current law 
fails to reflect the true cost to the American taxpayer of these FHA 
mortgage-backed insurance.
  Let me give you an example. In the 2011 report, the nonpartisan CBO, 
the Congressional Budget Office, compared the cost of the current 
system of FHA of a single-family mortgage insurance on both the current 
law and what we have here, which is fair value basis.
  What did CBO find? Well, CBO estimated that, under the current 
accounting, FHA would actually raise--raise--$4.4 billion for the 
government in 2012. Sounds pretty good. But if you actually dug into 
the numbers and use fair value basis--which, as I said before, is what 
the private sector would be forced to do--with an appropriate 
accounting of market risk--and of course, market risk is there--then 
what did CBO find? CBO then estimated that FHA would not gain $4.4 
billion, but that FHA would actually lose $3.5 billion over the exact 
same period.
  Why is this? Because CBO believes that fair value provides a fuller 
picture of a program's budgetary impact. So it now employs fair value 
basis accounting as a standard procedure for Federal loan programs and 
Federal loan guarantee programs such as FHA.
  However, where is the problem? The problem is the Obama 
administration has strongly resisted the move to fair value accounting, 
and instead, they cling to the current program instead.
  Let me give you another example. In 2010, President Obama effectively 
nationalized the Federal student lending program. The President then 
immediately spent the savings, if you will--remember, I talked about 
some of these before--on his signature health care law.
  What is the problem? The problem is that there is a growing gap now 
between how much money was borrowed and backed by the U.S. taxpayer--
that means you and I--and how much money is actually being repaid by 
the graduates.
  Let me give you some numbers. Based on the Department of Education 
data, there is a $99 billion gap between what has been borrowed and 
what has been paid back since only 2010. Remember, the President said 
these loans would actually make money for the Federal Government. 
Instead, the actual numbers are coming in that it is costing a $99 
billion gap.
  So, the bill before us today, the Budget and Accounting Transparency 
Act, fixes these shortcomings by requiring that market risk to be 
explicitly included in estimates of Federal credit programs. What will 
that do? That will bring Federal budget practice in line with what has 
long been standard practice in the private sector.
  Specifically, it requires the executive branch and Congress to use 
fair value accounting in calculating the cost of Federal credit 
programs that consider not only the borrowing cost of the Federal 
Government, but also the cost of the market risk of the Federal 
Government in incurring or issuing any of these loans or loan guarantee 
programs.
  And so, with mounting debt and a lackluster job growth, it is time to

[[Page 5697]]

force the government to play by the same economic rules as every single 
American family and business has to. It is not fair to keep putting the 
American taxpayer on the hook.
  I reserve the balance of my time.
  Mr. VAN HOLLEN. Mr. Speaker, I yield myself as much time as I may 
consume.
  Let me say at the outset that we welcome any proposals to improve the 
budget process, but it is a mistake to suggest that simply tinkering 
with the budget process will somehow solve our problems.
  The bigger issue in the Congress has been an unwillingness of many 
people to compromise, and at the end of the day, in order to make 
budgets work, you have to have give-and-take. So, for example, the 
reason we saw our government shut down last October had nothing to do 
with the budget process. It had to do with the fact that our Republican 
colleagues said they were going to shut down the government as a means 
to try and shut down the Affordable Care Act, to shut down ObamaCare.
  It was clear that that was not going to work. We are not about to 
strip millions of Americans from the new insurance protections they 
have. Despite that, our colleagues pursued that strategy, and we saw 16 
days of unnecessary and unproductive government shutdown. That was not 
a problem of process; it was a problem of politics.
  Now, with respect to this bill, I would say to the gentleman from New 
Jersey that, if your bill were limited to bringing Fannie and Freddie 
on budget, we would join you. We would welcome you in that. But, as you 
know, this bill does much more than that. In fact, it fundamentally 
changes the way we account for credit programs, Federal credit 
programs, including things like the student loan programs.
  Now, the gentleman from New Jersey mentioned the impact on the FHA. A 
couple years ago--I think it was 3 years ago--on the Budget Committee 
we actually had a hearing on this subject. This bill was then on the 
floor in 2012. At that time, many of us said that, before we consider 
the other changes that this bill proposes, at least we should have a 
hearing in the Budget Committee to determine what the impact will be on 
student loan programs, Small Business Administration programs, veterans 
loan programs, at least we should have that information. Yet 3 years 
have gone by. We are now back with the same bill on the floor with no 
hearings to try and judge what impact it would have on student loan 
programs.
  I want to mention the student loan programs in particular.
  The gentleman said that the President had ``nationalized'' the 
student loan program. Let me just translate what that means. It had 
been that the big banks were essentially a conduit for all of our 
student loan programs. They were taking very little risk, but they were 
pocketing big profits just as a middle man, a middle man without risks 
but taking the profits. So Democrats proposed that we go to a direct 
loan program to try and make sure the taxpayer dollar actually did what 
we hoped it would do, which was provide more students with loans to 
help more of them afford college. So, yes, we got rid of the middle man 
and we used the savings to try to increase--and in fact, did increase--
the amount of funds available so more students could afford to go to 
college.
  Now, this bill comes along, and it would actually change the way we 
account for student loans, to artificially make those student loans 
look more expensive on the budget than they would otherwise be from a 
budget perspective.
  Now, maybe this isn't surprising. After all, just last week in the 
House Budget Committee, we debated the House Republican budget. In 
fact, that Republican budget is going to be here and debated on the 
floor of the House tomorrow. We will start debate on that budget. That 
budget significantly cuts the student loan program. So one of the 
things it does is it charges students interest on their loans while 
they are still in college.

                              {time}  1615

  That is about $41 billion of additional interest costs they put onto 
students. At the same time, in their budget, they protect special 
interest tax breaks for hedge fund owners, big oil companies and the 
like. So that is what their budget does.
  Now, this piece of legislation would address that from a different 
direction. It actually would artificially increase the cost on the 
budget books of student loans going forward.
  Let me just read from a letter from a Dr. Reischauer, who was the 
former head of the Congressional Budget Office. He writes:

       The accounting convention used since enactment of the 
     Credit Reform Act of 1990 already reflects the risks that 
     borrowers will default on their loans or loan guarantees. 
     Under Credit Reform, costs are already based on the expected 
     actual cash flow from the direct loans and guarantees. This 
     bill proposes to place an additional budgetary cost on top of 
     the actual cash flows.

  Then he goes on to point out that that may be something that Members 
want to consider during debate, but to actually put that artificial 
inflation in the budget actually is potentially misleading to people 
who are looking at the budget.
  So, like so many bills around here that are misnamed, this one, named 
the Budget Transparency and Accountability Act, actually reduces budget 
transparency by putting in the budget a cost for student loans that is 
actually artificially increased.
  I would suggest to my colleagues that we reject this particular 
proposal.
  Again, if the gentleman had brought to the floor a bill that simply 
put Freddie and Fannie on budget that would be fine. But this bill 
actually is a vehicle to inflate the actual costs of things like 
student loans, at the same time where we have a Republican budget 
coming to the floor that actually cuts those student loans.
  At this point, Mr. Speaker, I ask unanimous consent that the balance 
of my time be controlled by the gentleman from Kentucky (Mr. Yarmuth).
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Maryland?
  There was no objection.
  Mr. YARMUTH. Mr. Speaker, I reserve the balance of my time.
  Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume, 
and if I can catch him before he leaves, the ranking member of the 
Budget Committee, I appreciate all of your comments. I won't touch on 
all of them, but I will touch on one or two.
  In a sign of bipartisanship, I would like to extend to you, not 
knowing where this bill may end up in the future of things here in the 
House and the Senate, but extend to you an invitation to cosponsor with 
me what you said twice during your remarks that you seemed to be on the 
same page as I am and as I have been for a long time with regard to the 
GSEs and have fair value accounting applied to them and on budget.
  I would extend that invitation to you.
  Mr. VAN HOLLEN. Will the gentleman yield?
  Mr. GARRETT. I yield to the gentleman from Maryland.
  Mr. VAN HOLLEN. Mr. Garrett, what I said was I support the part of 
your amendment that puts them on budget.
  Mr. GARRETT. Right.
  Mr. VAN HOLLEN. So, to the extent that that is your question on the 
budget, I am happy to join with you on that. I wish you would join with 
us now in reconsidering your proposals to change the student loan 
calculations, but we may be asking too much at this point.
  Mr. GARRETT. So, as I say, my staff will talk to your staff on that, 
and thank you for your other comments.
  Mr. Speaker, I will insert into the Record a letter dated January 30 
from the American Action Forum, which is an organization run by former 
CBO Director Douglas Holtz-Eakin--and I won't go into detail--but he 
basically wrote to express his complete support of H.R. 3581, the 
Budget and Accounting Transparency Act of 2014, for the very reasons 
that we have set forth here already.
  Mr. Speaker, I am not seeing any other speakers at this time. I do 
see

[[Page 5698]]

there are several other speakers on the other side, so I reserve the 
balance of my time.

                                        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.

  Mr. YARMUTH. Mr. Speaker, I yield 3 minutes to the gentleman from New 
Jersey (Mr. Pascrell).
  Mr. PASCRELL. Mr. Speaker, I rise in strong opposition to this 
legislation. This is an illusion, another one.
  The NCAA Men's Basketball National Championship game is tonight. I 
know that many of my colleagues are looking forward to watching some 
high-level competition from these two great squads. However, at some 
point, you can be assured, you will see one team's coach yelling at the 
referees. Guaranteed. They will be screaming in their faces, convinced 
that they are calling too many fouls and that they are being biased 
against their team. You can be assured that the coach yelling at the 
refs the most will be the one whose team is losing.
  This is basically the same thing that is happening here on the floor 
today, Mr. Speaker, on this bill, and all the other so-called budget 
process. You can't get away from process. You don't want to talk about 
results. You are always talking about process, process, and process, 
trying to work the refs because you are losing this argument.
  The ref in this case is the nonpartisan Congressional Budget Office. 
You referred to that many, many times, nonpartisan Congressional Budget 
Office.
  The bill before us today, offered by my colleague from New Jersey, 
would require the Congressional Budget Office to score Federal loan 
guarantee programs in a way that makes them appear more expensive than 
they actually are. That is what you are all about.
  I have served on this Budget Committee for the last 4 years. We can't 
do our job right if we don't have accurate estimates of what Federal 
programs really cost.
  This bill will absolutely make our job harder by making us work with 
inaccurate data. In fact, all in all, the Congressional Budget Office 
estimates that this bill, your bill, would have increased the estimated 
cost of Federal credit programs in 2014, would have increased them by 
$50 million, all by waving your magic wand.
  Now, this isn't really about finding the best technical way to 
measure the costs of each program. That is what you say. It is working 
the refs in a way that would make even Coach K proud.
  It is nothing but a dishonest attempt to make worthy government 
programs appear more costly, so that those who are ideologically 
opposed to government and government spending can more easily undermine 
those very programs. That is what this is all about.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. YARMUTH. I yield the gentleman an additional minute.
  Mr. PASCRELL. My colleagues on the other side of the aisle don't like 
the Federal loan guarantee programs that help first-time homebuyers, 
that help less fortunate Americans pay for their education. They are 
willing to cook the books in order to make a better case for their 
elimination.
  Mr. Speaker, we could do better than this. We can argue about these 
programs on their merits instead of resorting to budgeting sleight-of-
hand, process.
  I am strongly opposed to the bill. We could be voting to raise the 
minimum wage and give a raise to 27.8 million Americans to $10.10 per 
hour. That is what we should be debating on this floor.
  We could finally consider the immigration reform legislation that the 
Senate passed nearly a year ago. We should be debating the UI--
unemployment insurance--rates to restore unemployment benefits to more 
than 2 million Americans, including 125,000 in our own State of New 
Jersey.
  But, instead, we are here today considering a bill that does nothing 
except enable the majority's fringe ideology, pave the way for even 
more cuts to the most vulnerable in the future.
  Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.
  Just two couple of points. Process is important. I guess you could be 
opposed to process--the gentleman from New Jersey referenced the NCAA. 
If there were no rules and all the players could just go out and do 
anything they wanted to, I guess we could say we could rack up a lot of 
points and scores and do very well.
  But there is a reason and there is a method to the game, and that is 
why you do have rules. And that is actually why you do have the refs. 
Yeah, the

[[Page 5699]]

coaches on both sides will complain, but the refs, at the end of the 
day, are the ones that say, hey, these are what the rules are, and 
let's play within the confines of them.
  Now the second point I was going to make is, I understand this issue 
is pretty difficult and pretty complicated. The bill is not that long. 
But the gentleman from New Jersey has it completely backwards when he 
says, look, Mr. Garrett, you want to go by the CBO, don't you? You want 
to apply this to the CBO, and that is what your bill is going to do.
  No, that is not what I said. I do agree with the CBO. The CBO already 
does this. It is the CBO that is calling for this. It was the past 
chairman, the past director of the CBO who says what I just entered 
into the Record--that we should be doing this. This is already done 
that way, I inform my colleague from New Jersey.
  What we are saying is, if he and I agree that the CBO is, as he just 
said, this nonpartisan entity which has the right way of handling it, 
they are handling it the right way.
  We are now simply saying, administration, you should be doing what 
the gentleman from New Jersey and I both say should be done here, what 
the CBO is saying should be done here, and apply it to OMB and how the 
administration does it.
  So the gentleman has it completely reversed as to what the bill 
actually says.
  Mr. PASCRELL. Will the gentleman yield?
  Mr. GARRETT. I yield to the gentleman from New Jersey.
  Mr. PASCRELL. Thank you very much to my colleague from New Jersey.
  First of all, no one on this side of the aisle ever suggested that we 
need no rules.
  See, what you are trying to do is put everyone at extremes, and that 
is where we are many times because you are the majority and we are the 
minority. And I respect that.
  But don't say we don't want the rules. We fought for rules.
  Mr. GARRETT. Reclaiming my time, what I was just pointing out is you 
are saying that both sides' coaches were going to be yelling at the 
refs and they wanted their side, win or lose.
  If you want to use your analogy, in a game there has to be rules, and 
we are saying that the rules that should apply are the rules that--you 
indicated the CBO is a nonpartisan entity, that they are doing it the 
right way, and we are saying, exactly.
  The CBO is nonpartisan. They are calling for this type of application 
of the rules. And if we agree on that point, and if you dig into the 
bill and realize that we are saying it is not to make sure that CBO 
does it, but that the administration does it.
  So reread the bill. You will understand what we are trying to do. And 
I think, at the end of the day, you and I may actually agree.
  Mr. Speaker, I reserve the balance of my time.
  Mr. YARMUTH. Mr. Speaker, may I inquire how much time we have?
  The SPEAKER pro tempore. The gentleman from Kentucky has 19\1/2\ 
minutes remaining. The gentleman from New Jersey has 18\1/2\ minutes 
remaining.
  Mr. YARMUTH. Mr. Speaker, I yield an additional 1\1/2\ minutes to the 
gentleman from New Jersey (Mr. Pascrell).
  Mr. PASCRELL. I thank the gentleman.
  Mr. Speaker, this isn't as complicated as one would pretend it to be. 
First of all, the CBO says, if this was the law of the land, in other 
words, if this bill would have been passed by both the House and the 
Senate when it first came up, it would have cost us $50 billion more in 
the 2014 budget.
  Now, I find that hard to believe that you would accept that, when you 
practically, the gentleman that I am speaking to right now, through the 
Chair, has voted ``no'' on everything under the Sun. So I find that 
difficult to believe.
  There need to be rules, particularly in all financial matters. Those 
rules have a purpose.
  I am telling you, this is a process question and this does not, in 
any manner, shape, or form enhance the passage of a budget that we can 
live with, we Americans.
  Mr. YARMUTH. Mr. Speaker, I yield myself as much time as I may 
consume.
  One of the interesting elements of this debate is, and I think it is 
pretty clear that we have not a total disagreement of opinion on the 
two sides, we both want the same objective, which is a fair and honest 
accounting of what programs cost the taxpayer or how they may benefit 
the taxpayer.
  We do know that it is pretty generally agreed that by moving toward 
the fair accounting method, the fair value method, that we would be 
creating a higher cost, or at least the budget would indicate a higher 
cost for many of the loan programs that we have been talking about. But 
we don't know exactly what the ultimate impact would be and which 
method would be more accurate.

                              {time}  1630

  But we don't know exactly what the ultimate impact would be and which 
method would be more accurate.
  OMB does not support this proposal. OMB says it has a hard time 
figuring out how it could assess market-based value, so we don't have 
total disagreement here.
  We are in search of the same objective; but there is another element 
of this that I think we have to consider, in that, when we compare loan 
programs in the private sector to loan programs from the government, we 
are not always comparing apples and apples. We are comparing two very 
different motivations.
  In the private sector, when a financial institution makes a loan, its 
entire objective is to create return for its investors and 
stockholders. The loan is essentially isolated in purpose. You advance 
funds, you expect a return, and that is the ultimate objective.
  When the government creates a loan program, it is not just to make 
money for the government. In fact, that is often not even considered. 
What we are trying to do in many cases is to create an additional 
outcome--an ancillary outcome that is the primary objective of the 
program.
  For instance, with student loans, we are trying to create more 
college graduates throughout this country. Understanding that the more 
college graduates we have, from a strictly financial standpoint, the 
Treasury will benefit because people will be earning higher incomes and 
paying higher tax rates.
  When we are talking about housing programs, we are looking at things 
like the VA--the VA housing program. We are trying to find a way to 
help veterans, many of whom come back from deployments disoriented, 
dislocated, and without any way to find housing. We are trying to 
create programs that will help repay our obligations to our veterans.
  There are many other areas. We have an advanced vehicle manufacturing 
loan program. I know about this program very well because it was part 
of that loan program that resulted in a $600 million investment in the 
Louisville assembly plant in my district in Kentucky and now has added 
more than 3,000 new employees in my district.
  So the objective there was not necessarily--as a matter of fact, it 
wasn't at all to make money for the government. It was to help 
stimulate the production of energy-efficient appliances and to promote 
advanced technologies throughout our vehicle sector.
  So, again, just to say because there is an associated risk that is 
recognized in the private sector by financial institutions does not 
imply that we should necessarily say that that same risk is equally 
important in the Federal budgeting process because, again, we have 
essentially ulterior motives in virtually every loan program that we 
have.
  So we understand, again, as the ranking member Mr. Van Hollen of 
Maryland said: We do want transparency; we want to make sure that the 
American people know exactly what the programs cost.
  Probably, more importantly, internally, we need to know what these 
programs cost because we have to make

[[Page 5700]]

policy decisions as to whether they are benefiting the country as a 
whole, benefiting the taxpayers, and benefiting the Treasury.
  The question is, without the kind of analysis that the ranking member 
suggested, what we actually determined through hearings and 
discussions, what the cost of the student loan program would be, how 
many students we potentially are cutting out of the student loan 
program, what we might be doing in the energy sector by imposing higher 
costs through the budgeting process and, therefore, a lower 
participation rate through the actual program, whether we are actually 
damaging the economy and the budget in different ways, not just on the 
direct costs versus benefits of the actual loan program; so these are 
some of the considerations.
  This is why we say this is a bill that is not ready for prime time, 
and we think that we could be spending a better time in this body on 
more important measures to help the American people.
  With that, I reserve the balance of my time.
  Mr. GARRETT. I yield myself such time as I may consume.
  Mr. Speaker, before I yield to the chairman of the full committee, I 
want to go back to the gentleman from New Jersey who made the point as 
to which side of this issue is OMB and CBO on, and it is a process 
issue.
  But it is important that, during an appearance before the House 
Budget Committee, where we considered this legislation, the director of 
the--and I will stress this point again--the nonpartisan CBO, 
Congressional Budget Office, stated, ``We believe that the fair value 
method of accounting''--which is what is in this bill--``for Federal 
credit transaction programs provides a more comprehensive measure of a 
program's true cost.''
  This is exactly why we bring this bill to the floor. I know the 
gentleman indicated that a partisan OMB takes a different view, but the 
nonpartisan CBO takes the view of this legislation, that we should make 
sure that there is complete transparency.
  Then all the points that the gentleman makes, as far as making the 
decision as to how many students we should be able to have in these 
programs, how large is the housing program, and so on and so forth, 
then we can more accurately make those final determinations once we 
have the actual numbers accurately before us, and that is all this 
legislation really does.
  With that, I yield such time as he may consume to the gentleman from 
Wisconsin (Mr. Ryan), who was able to get a budget out of the Budget 
Committee in record time the other night, the chairman of the Budget 
Committee.
  Mr. RYAN of Wisconsin. I thank the gentleman from New Jersey (Mr. 
Garrett) for yielding, and I also want to thank him for his hard work 
on this issue and for bringing this to our attention.
  Look, it is really simple, Mr. Speaker. When Washington makes or 
guarantees a loan, it is putting taxpayers at risk. Our budget rules 
don't account for all of that risk.
  We understate the cost of Federal credit programs by about $50 
billion a year. That is what the current accounting rules do. Current 
accounting rules make it look like the government is making all this 
money from all these loans when, in reality, we are consistently 
overstating their profitability.
  Let me give you one example. Our current rules led to the projections 
that the FHA--those loans made between 1992 and 2012 would save us $45 
billion. It sounded like a great deal, a $45 billion boon to the 
Federal Government.
  In reality, those loans cost us $15 billion of hard-working taxpayer 
dollars. That is a swing of $60 billion. It is not about imposing 
costs. This bill is about recognizing the actual costs of what this 
government does. That is really what this is all about.
  CBO has reviewed this time and again. The gentleman from New Jersey 
just mentioned this, and they have very much concluded, like the 
private sector, that budgeting Federal credit programs should use fair 
value accounting as the most accurate method for these programs.
  Washington needs to be up front with taxpayers about the true cost of 
its decisions because the taxpayers themselves are the ones who are on 
the hook, but that is what the Garrett bill would do.
  We can't also forget that the Office of Management and Budget--which 
is a more political office under the service of the President--they are 
ignoring the cost of Fannie Mae and Freddie Mac. In fact, OMB shows 
them as saving money when they are huge liabilities.
  Since 2008, Fannie and Freddie have been wards of the State. They are 
wholly-owned subsidiaries of the Federal Government, and in 2013, the 
GSEs accounted for 60 percent of first lien mortgage originations. 
Taxpayers are exposed to over $5 trillion of outstanding liabilities. 
OMB keeps it off budget.
  Despite the fact that, if they ever go under, if anything happens 
again, like it did recently, guess who gets stuck with the tab--the 
taxpayers. We cannot look at our budget through rose-colored glasses. 
We have to be as clear-eyed as possible. We need transparency. We need 
real accounting. We owe it to our taxpayers.
  So this bill would require the government to use fair value 
accounting. It would require OMB to be more honest about Fannie and 
Freddie's true costs, and it would build on the best practices in the 
private sector, so that we, in Congress, can make better-informed 
decisions about the hard-working taxpayers and what we are committing 
for them on their behalf.
  That is all this is. It doesn't impose a cost on anybody. It simply 
recognizes the actual costs that are occurring.
  Mr. YARMUTH. I yield myself such time as I may consume.
  Mr. Speaker, I certainly appreciate Chairman Ryan's comments and 
agree with many of them.
  I think one of the points that is important to consider here though 
is, while he mentions one case involving FHA, there are a number of 
loan programs throughout the government which don't necessarily fall 
into that same category; and many of them are very, very critical to 
our Nation.
  If you talk about water supply loans, water system loans, there are 
many loan programs that affect rural America. In addition to the 
student loans, we have, again, the Advanced Technology Vehicle 
Manufacturing Loan Program.
  There are many across the board, and what this legislation would do 
would essentially treat them all as exactly the same, and we know that 
that is not necessarily necessary.
  Under the TARP program--TARP was actually accounted for in the budget 
using the fair value standard that is proposed in this legislation, so 
we actually have a history of treating some loan programs differently 
than others.
  What we would say is: Why don't we take the time to have hearings on 
this proposal to actually consider the impact of an across-the-board 
standard on a variety of different kinds of loan programs? This is why 
we keep saying this is a bill that is not ready for prime time.
  There may be a considerable amount of merit in applying this 
accounting standard to some of the loan programs in the Federal 
portfolio, but that doesn't mean it is appropriate or helpful in 
assessing the impact on every loan program.
  Furthermore, what we do know about virtually every analysis is that 
using the market-based risk analysis that Mr. Garrett's bill proposes 
would, under our budgeting rules, do two things.
  One, it would add to the cost of virtually every loan program. There 
certainly is no instance in which his analysis would say a loan program 
would cost any less, and what that would also do is create a misleading 
picture of how much that loan program actually ends up costing the 
taxpayers on a cash basis.
  Just because there is an intangible risk factor attached to a loan 
program in the budget does not mean that that will ultimately be 
realized, and, in fact, we may never understand if it is realized by 
the taxpayers.

[[Page 5701]]

  So for all of these reasons, again, we would oppose the legislation 
and not because we think it is a horrible idea. We just think it is an 
idea that has not been vetted nearly sufficiently enough and could have 
a serious detrimental impact on many very, very important loan programs 
that benefit the American people.
  With that, I reserve the balance of my time.
  Mr. GARRETT. I yield myself such time as I may consume
  Just one point to that. I have sat through that committee now for a 
number of years, and since this is an issue that I have been somewhat 
following for that period of time, I knew that your statement saying 
that we haven't had the time and haven't spent the time on hearings and 
what have you just did not ring true.
  So I dug through it, and the fact of the matter is that we have 
actually had two hearings and two related markups on this legislation, 
and I think that gives us the information we need now to go forward.
  Secondly, to the point that you make that the various programs are 
unique in their nature, absolutely, and that is why this legislation 
allows fair value accounting to be applied individually and evaluate 
each program accordingly.
  We do all that in this legislation. It comes about through the 
multiple hearings and markups that we have had, and I think now is the 
time to go forward and give the American public the transparency that 
they are asking for.
  With that, I reserve the balance of my time.
  Mr. YARMUTH. I yield myself the balance of my time.
  Mr. Speaker, the gentleman is correct, but not in a totally accurate 
way. We have had a hearing about budget processes in which this was 
discussed. We have not had a hearing dedicated solely to this 
legislation in which we could actually flesh out the impact on these 
various loan programs that I mentioned.
  So in conclusion, I think, to kind of summarize where we are, this 
proposal may be a perfectly appropriate proposal. We wish that we could 
have more time and more analysis to determine whether we do more damage 
than good.
  We both seek to have the most accurate budgeting process and the most 
accurate process for assessing the value of important government loan 
programs. That is a shared goal of both Republicans and Democrats.
  We think that this bill is not effectively and sufficiently fleshed 
out to make that kind of determination at this point. We think there 
are far more important things that this body ought to be dealing with, 
including raising the minimum wage, extending unemployment benefits, 
working on developing infrastructure for this country, as we all know 
is critically needed, all of those things that would help stimulate the 
economy and create jobs.

                              {time}  1645

  For all of these reasons that I have mentioned and my ranking member, 
Mr. Van Hollen, mentioned, we oppose this legislation and urge a vote 
``no.''
  With that, I yield back the balance of my time.
  Mr. GARRETT. Mr. Speaker, I will be brief, and I yield myself such 
time as I may consume.
  Just to set the record straight, actually, we did have hearings on 
this, and we did have markup hearings on this back in June of 2011. We 
dug into it at that period of time. The legislation, essentially the 
same, just in a different cycle, is, in essence, what we have before us 
today, so we have had that opportunity.
  But I will say this. If we see this legislation continue on the floor 
today and if we see this bill actually pass today, I extend to the 
gentleman and the members of the committee--or anyone on the other side 
of the aisle--that my door is open to try to make changes to it that 
you see appropriate, to make it have the flexibility that you think is 
not in the bill, which I think is in this bill, and so on and so forth. 
So I stand ready to continue to work with you on it. But I think that 
after the hearings we have had and the importance of this legislation, 
now is the time to move forward.
  One last point on this, and I think the chairman of the committee 
made the point, but let me just reiterate this. At the end of the day, 
it does not add any additional costs to the American taxpayer. What 
this bill does is just make transparent the cost that is already there. 
I am trying to come up with a simple analogy, but fair value accounting 
is not necessarily one of the simplest things you can find an analogy 
for, but I guess it might be like this:
  You would not go to the store and just go through with your credit 
card swiping it along, buying the things that you need or think that 
you need not knowing what they actually cost as you leave the store, 
just putting them on your bill, knowing that at the end of the day, at 
the end of the month, you may get a statement. Knowing that you are 
going to have to pay for that bill, you wouldn't go to the store and do 
that any more than you should right now with the American public, put 
them, by using the taxpayers' credit card for all these programs, 
worthwhile as they may, necessary as they may be, you shouldn't just be 
swiping that credit card not knowing exactly what the bottom line is, 
not knowing what the actual cost to the American taxpayer is.
  That is all this bill does is just give us that information. And with 
that information in hand, then we can come together, Republican and 
Democrat alike, on those areas that we all agree on are necessary for 
this country and necessary that we expend funds on, with that 
information in hand, and do it in a more prudent, efficient, and 
effective manner than we have been in the past where we have done 
without the information.
  With that, then, I urge a ``yes'' vote on this bill, and I yield back 
the balance of my time.
  Mrs. WALORSKI. Mr. Speaker, I rise today to address H.R. 1872, the 
Budget Accounting Transparency Act. While the current accounting 
methodology for federal credit programs does not fully capture the 
financial risk assumed by the Federal Government, I am concerned that 
the fair-value estimates required by this legislation could over 
calculate the risk of default, potentially resulting in an 
overestimation of the costs associated with certain federal credit 
programs. I will be following this legislation and any methodological 
transition to fair-value estimates closely.
  The SPEAKER pro tempore (Mr. Poe of Texas). All time for debate has 
expired.
  Pursuant to House Resolution 539, the previous question is ordered on 
the bill, as amended.
  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.
  The SPEAKER pro tempore. Pursuant to clause 1(c) of rule XIX, further 
consideration of H.R. 1872 is postponed.

                          ____________________