IB 
Union Calendar No. 284 
113TH CONGRESS 
2D SESSION 
H. R. 1872 
[Report No. 113–381, Part I] 
To amend the Balanced Budget and Emergency Deficit Control Act of 1985 
to increase transparency in Federal budgeting, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 8, 2013 
Mr. GARRETT (for himself, Mr. RYAN of Wisconsin, Mr. DUNCAN of South 
Carolina, Mr. FLORES, Mr. MULVANEY, Mr. WESTMORELAND, Mr. 
AMASH, and Mr. HENSARLING) introduced the following bill; which was 
referred to the Committee on the Budget, and in addition to the Com-
mittee on Oversight and Government Reform, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
MARCH 18, 2014 
Reported from the Committee on the Budget with an amendment 
[Strike out all after the enacting clause and insert the part printed in italic] 
MARCH 18, 2014 
The Committee on Oversight and Government Reform discharged; committed 
to the Committee of the Whole House on the State of the Union and or-
dered to be printed 
[For text of introduced bill, see copy of bill as introduced on May 8, 2013] 
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A BILL 
To amend the Balanced Budget and Emergency Deficit Con-
trol Act of 1985 to increase transparency in Federal 
budgeting, and for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives 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 Fed-
eral credit programs by accounting for them on a fair 
value basis; 
‘‘(2) place the cost of credit programs on a budg-
etary 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. 
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‘‘SEC. 502. DEFINITIONS. 
‘‘For purposes of this title: 
‘‘(1) The term ‘direct loan’ means a disburse-
ment of funds by the Government to a non-Federal 
borrower under a contract that requires the repay-
ment 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 Cor-
poration. 
‘‘(2) The term ‘direct loan obligation’ means a 
binding agreement by a Federal agency to make a di-
rect loan when specified conditions are fulfilled by the 
borrower. 
‘‘(3) The term ‘loan guarantee’ means any guar-
antee, 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 insur-
ance of deposits, shares, or other withdrawable ac-
counts in financial institutions. 
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‘‘(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 compo-
nent of a direct loan or loan guarantee, or a modi-
fication 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, ex-
cluding administrative costs and any incidental ef-
fects 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 Gov-
ernment of a direct loan or loan guarantee, or 
modification thereof, estimated on a fair value 
basis, applying the guidelines set forth by the Fi-
nancial Accounting Standards Board in Finan-
cial Accounting Standards #157, or a successor 
thereto, excluding administrative costs and any 
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‘‘(G) In estimating Treasury discounting compo-
nents, the discount rate shall be the average interest 
rate on marketable Treasury securities of similar du-
ration 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 in-
cludes all other cash flows to and from the Govern-
ment 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 
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from the Government resulting from direct loan obli-
gations 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 Govern-
ment action that alters the estimated cost of an out-
standing direct loan (or direct loan obligation) or an 
outstanding loan guarantee (or loan guarantee com-
mitment) 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 di-
rect loan obligations) or loan guarantees (or loan 
guarantee commitments) such as a change in collec-
tion 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. 
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‘‘SEC. 503. OMB AND CBO ANALYSIS, COORDINATION, AND 
REVIEW. 
‘‘(a) IN GENERAL.—For the executive branch, the Di-
rector shall be responsible for coordinating the estimates re-
quired by this title. The Director shall consult with the 
agencies that administer direct loan or loan guarantee pro-
grams. 
‘‘(b) DELEGATION.—The Director may delegate to 
agencies authority to make estimates of costs. The delegation 
of authority shall be based upon written guidelines, regula-
tions, 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 coordi-
nate the development of more accurate data on historical 
performance and prospective risk of direct loan and loan 
guarantee programs. They shall annually review the per-
formance 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 ac-
cess to all agency data that may facilitate the development 
and improvement of estimates of costs. 
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‘‘(e) HISTORICAL CREDIT PROGRAMS COSTS.—The Di-
rector 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 re-
form 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 appro-
priations 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 esti-
mates 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 guar-
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antee program has been provided in advance in an 
appropriation Act; or 
‘‘(3) authority is otherwise provided in appro-
priation Acts. 
‘‘(c) EXEMPTION
FOR
DIRECT
SPENDING
PRO-
GRAMS.—Subsections (b) and (e) shall not apply to— 
‘‘(1) any direct loan or loan guarantee program 
that constitutes an entitlement (such as the guaran-
teed student loan program or the veteran’s home loan 
guaranty program); 
‘‘(2) the credit programs of the Commodity Cred-
it 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 obli-
gations, make new loan guarantee commitments, or 
modify outstanding direct loans (or direct loan obli-
gations) or loan guarantees (or loan guarantee com-
mitments) 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 author-
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ity becomes available or indefinite authority is used. 
Such budget authority shall constitute an obligation 
of the program account to pay to the financing ac-
count. 
‘‘(2) The outlays resulting from new budget au-
thority 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 re-
corded 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 financ-
ing 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 in-
creases 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 pro-
gram made in a single fiscal year is re-estimated in a subse-
quent 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 ac-
count as a change in program costs and a change in net 
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