I

103D CONGRESS

2D SESSION H. R. 4178

To amend the Federal Credit Reform Act of 1990 to include administrative

costs in the estimated long-term costs to the Government of direct

loans and loan guarantees and to systematically reduce the Federal

credit subsidy rate, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 12, 1994

Mr. SMITH of Texas (for himself, Mr. KASICH, Mr. COX, and Mr. FRANKS

of New Jersey) introduced the following bill; which was referred jointly

to the Committees on Government Operations and Rules

A BILL

To amend the Federal Credit Reform Act of 1990 to include

administrative costs in the estimated long-term costs to

the Government of direct loans and loan guarantees and

to systematically reduce the Federal credit subsidy rate,

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Federal Credit Cost

5 Reduction Act of 1994’’.
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1 SEC. 2. TREATMENT OF ADMINISTRATIVE COSTS REGARD2 ING DIRECT AND GUARANTEED LOANS.

3 Paragraph (5)(A) of section 502 of the Federal Cred4 it Reform Act of 1990 (2 U.S.C. 661a(5)(A)) is amended

5 by striking ‘‘excluding’’ and inserting ‘‘including’’.

6 SEC. 3. TREATMENT OF ADMINISTRATIVE COSTS IN THE

7 PRESIDENT’S ANNUAL BUDGET SUBMISSION.

8 Section 1105(a) of title 31, United States Code, is

9 amended by adding at the end the following new para10 graphs:

11 ‘‘(29) a separate listing of administrative costs

12 for direct loans and loan guarantees computed on a

13 cash accounting basis for any such loans and guar14 antees originating before enactment of this para15 graph.

16 ‘‘(30) an appendix setting forth on a cash ac17 counting basis the administrative costs of all loans

18 and loan guarantees by program, by agency, and for

19 the Government.’’.

20 SEC. 4. FEDERAL CREDIT SUBSIDY RATES.

21 (a) DEFINITION OF SUBSIDY RATE.—Section 502 of

22 the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)

23 is amended by adding at the end the following new para24 graph:

25 ‘‘(10) The term ‘subsidy rate’ for a fiscal year

26 means—
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1 ‘‘(A) in the case of a direct loan, the cost

2 of all loans made for a covered program during

3 that year divided by the total direct loan obliga4 tions for that same covered program; and

5 ‘‘(B) in the case of a loan guarantee com6 mitment, the cost of all loan guarantees in7 curred for a covered program during that year

8 divided by the total amount of the loan guaran9 tee commitments for that same covered pro10 gram.’’.

11 (b) MAXIMUM SUBSIDY RATES.—(1) The Federal

12 Credit Reform Act of 1990 is amended by adding at the

13 end the following new section:

14 ‘‘SEC. 508. MAXIMUM FEDERAL CREDIT SUBSIDY RATES.

15 ‘‘(a) MAXIMUM SUBSIDY RATES.—The maximum

16 permissible subsidy rate for each covered program for a

17 fiscal year is the following: 40 percent for fiscal year 1995,

18 30 percent for fiscal year 1996, 20 percent for fiscal year

19 1997, 10 percent for fiscal year 1998, and 5 percent for

20 fiscal year 1999.

21 ‘‘(b) COVERED PROGRAMS.—The covered programs

22 to which subsection (a) applies are the credit reform pro23 gram accounts covered by the Federal Credit Reform Act

24 of 1990.
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1 ‘‘(c) ESTIMATES.—The subsidy rates for a fiscal year

2 shall be determined on the basis of estimates made by the

3 Director of the Congressional Budget Office.’’.

4 (2) Section 1(b) of the Congressional Budget and Im5 poundment Control Act of 1974 is amended by inserting

6 after the item relating to section 507 the following new

7 item:

‘‘Sec. 508. Maximum Federal credit subsidy rates.’’.

8 (c) POINT OF ORDER.—Section 301 of the Congres9 sional Budget Act of 1974 is amended by adding at the

10 end the following new subsection:

11 ‘‘(j) It shall not be in order in the House of Rep12 resentatives or the Senate to consider any concurrent reso13 lution on the budget for any fiscal year that would allow

14 the maximum permissible subsidy rate (as set forth in sec15 tion 508) for any covered program for that fiscal year to

16 be breached.’’.

17 (d) ALLOCATIONS.—(1) Section 602(a)(1)(A) of the

18 Congressional Budget Act of 1974 is amended by striking

19 ‘‘and’’ at the end of clause (ii), by striking the comma

20 and inserting ‘‘; and’’ at the end of clause (iii), and by

21 inserting after clause (iii) the following new clause:

22 ‘‘(iv) total credit authority (that does

23 not cause the maximum permissible sub24 sidy rate (as set forth in section 508) for

25 any covered program to be breached);’’.
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1 (2) Section 602(a)(2) of the Congressional Budget

2 Act of 1974 is amended by striking ‘‘and’’ at the end of

3 subparagraph (B), by inserting ‘‘and’’ at the end of sub4 paragraph (C), and by inserting after subparagraph (C)

5 the following new subparagraph:

6 ‘‘(D) total credit authority (that does not

7 cause the maximum permissible subsidy rate

8 (as set forth in section 508) for any program

9 to be breached);’’.

10 (e) CONTENTS OF BUDGET RESOLUTIONS.—Section

11 301(a) of the Congressional Budget Act of 1974 is amend12 ed by striking ‘‘and’’ at the end of paragraph (6), by strik13 ing the period and inserting ‘‘; and’’ at the end of para14 graph (7), and by inserting after paragraph (7) the follow15 ing new paragraph:

16 ‘‘(8) for purposes of enforcement of section

17 508, the total credit authority for each covered pro18 gram, but which total shall not cause the maximum

19 permissible subsidy rate (as set forth in that section)

20 for that program to be breached.’’.

21 SEC. 5. EFFECTIVE DATE.

22 This Act and the amendments made by it shall apply

23 with respect to fiscal years beginning after the date of en24 actment of this Act.

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