>House Passes Garrett Budget Process Reform Legislation
Budget and Accounting Transparency Act would put GSEs on budget and require fair value accounting for federal credit programs
Feb 7, 2012
WASHINGTON, DC – Rep. Scott Garrett (R-NJ), Vice Chairman of the House Budget Committee, today applauded House passage of H.R. 3581, the Budget and Accounting Transparency Act. Introduced by Garrett in December as part of a comprehensive set of budget process reform measures, H.R. 3581would bring government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac on-budget and require fair value accounting for federal credit programs.
“If we truly are committed to balancing the budget and paying down our debt, we need to fully disclose all of our existing liabilities. Otherwise, any attempt to correct our country’s spiraling debt crisis will be nothing but a desert mirage,” said Garrett after the bill passed the House. “The American people are tired of Washington’s parlor games; they want to see their leaders be open and honest about the true extent of our debt crisis. This bill not only gets us to a point where we can fully understand the severity of our country’s financial troubles, but provides the transparency we so desperately need to prevent runaway spending in the future.”
The Budget and Accounting Transparency Act would do the following:
Requires fair value accounting for federal credit programs. The executive branch and Congress would be required 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. This reform would bring federal budgeting in line with private sector cost-estimating practices.
Requires the Congressional Budget Office (CBO) and Office of Management and Budget (OMB) to conduct a study on extending this fair value methodology to federal insurance programs, which are currently accounted for on a cash-flow basis.
Brings Fannie Mae and Freddie Mac on-budget to recognize the budgetary impact of these housing-related government-sponsored enterprises (GSEs). Since the financial crisis these enterprises have become the explicit financial responsibility of the federal government and these reforms would ensure that the budgetary implications of that fact are reflected in the federal budget.
Requires the CBO and OMB to conduct a study on the use of budgetary terms related to money collected by the federal government, which has become jumbled and inconsistent over the decades.
Requires that agencies make public the budgetary justification materials prepared in support of their request for use of taxpayer dollars.