Budget and Accounting Transparency Act of 2014

Content sourced from Wikipedia, licensed under CC BY-SA 3.0.

Budget and Accounting Transparency Act of 2014: A simple overview

What it is
- A proposed U.S. law (H.R. 1872) aimed at changing how the federal government accounts for federal credit programs and certain government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac.
- The goal is to make the budget reflect the true long-term costs of loan programs and to increase transparency in budgeting.

What it would do
- Change accounting rules to fair-value accounting for direct loans and loan guarantees, rather than the current accrual method.
- Require the President’s budget to include the Treasury discounting component (the estimated long-term cost of loan programs) and to provide budget authority in advance for new loan commitments.
- Bring the budget treatment of Fannie Mae and Freddie Mac onto the federal budget, so their receipts, disbursements, and debt are counted like other federal programs.
- Reform how GSEs are treated in budget documents, while not changing the programs themselves.
- Repeal the general authorization of appropriations for the cost of direct loan obligations and loan guarantees.

Key provisions and effects
- Amends the Federal Credit Reform Act of 1990 to recognize direct loan and loan guarantee costs on a fair-value basis starting in the budget.
- Requires budgeting rules for new direct loans and loan guarantees; requires advance budget authority for new commitments.
- Exempts certain entitlements, CCC programs, and GSEs from some new requirements, while still counting their budget effects in the overall budget under specific conditions.
- Reorganizes Treasury accounting for financing accounts and limits some liquidation-payments.
- Modifies how changes in discretionary spending are treated under Gramm-Rudman-Hollings (the budget control law) and requires OMB to report on these adjustments.
- Directs the OMB and CBO to study the fair-value budgeting of federal insurance programs and to post budget justifications online in a centralized format.

Background
- The bill was introduced in the 113th Congress, around the same time as two other budget reform bills (Pro-Growth Budgeting Act of 2013 and Baseline Reform Act of 2013), as a package of budget reform ideas.
- It followed ongoing concerns about how Fannie Mae and Freddie Mac were accounted for in the budget after their 2008 conservatorship during the financial crisis.

Congressional Budget Office (CBO) view
- CBO estimated that adopting fair-value budgeting would raise the reported cost of new credit activity, increasing the deficit by about $50 billion in 2014 (under the bill’s concepts).
- The bill would increase federal agencies’ administrative costs to implement the changes (estimated around $16 million over 2014–2019, subject to appropriation).
- The changes would not affect revenues and would not create new intergovernmental or private-sector mandates.

Procedural history
- Introduced May 8, 2013, by Rep. Scott Garrett (R-NJ).
- Referred to the House Budget Committee and the House Oversight and Government Reform Committee.
- Reported (amended) as House Report 113-381 part 1 on March 18, 2014.

Debate and discussion
- Supporters argued the bill would improve Congress’s ability to balance the federal budget and increase fiscal discipline by making budget figures more accurate.
- Critics argued that it would make some federal loan programs appear more expensive and could prompt calls for higher taxes or cuts to other programs.

In brief
The Budget and Accounting Transparency Act of 2014 seeks to overhaul how the federal government accounts for loan programs and Fannie Mae/Freddie Mac, using fair-value budgeting to reveal true costs and bring these programs onto the federal books. It aims to enhance transparency but would also raise the measured cost of some programs and require new administrative and reporting steps.