I 
113TH CONGRESS 
1ST SESSION 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. 
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 
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. 
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 Account-
ing Transparency Act of 2013’’. 
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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. 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 
budgetary basis equivalent to other Federal spend-
ing; 
‘‘(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 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 
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term includes the purchase of, or participation in, a 
loan made by another lender and financing arrange-
ments that defer payment for more than 90 days, in-
cluding 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 inter-
est on any debt obligation of a non-Federal borrower 
to a non-Federal lender, but does not include the in-
surance 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. 
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‘‘(5)(A) The term ‘cost’ means the sum of the 
Treasury discounting component and the risk com-
ponent 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 
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 govern-
mental receipts or outlays; and 
‘‘(ii) the Treasury discounting component 
of such direct loan or loan guarantee, or modi-
fication thereof. 
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‘‘(D) The Treasury discounting component of a 
direct loan shall be the net present value, at 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, pay-
ments 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 pay-
ments. 
‘‘(ii) Payments to the Government includ-
ing origination and other fees, penalties, and re-
coveries, including the effects of changes in loan 
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terms resulting from the exercise by the guar-
anteed 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 es-
timate 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 es-
timate 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 com-
ponents, the discount rate shall be the average inter-
est 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 
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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 Gov-
ernment resulting from direct loan obligations or 
loan guarantee commitments made on or after Octo-
ber 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 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 Gov-
ernment action that alters the estimated cost of an 
outstanding direct loan (or direct loan obligation) or 
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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 ex-
penses’ means servicing and other costs that are es-
sential to preserve the value of loan assets or collat-
eral. 
‘‘SEC. 503. OMB AND CBO ANALYSIS, COORDINATION, AND 
REVIEW. 
‘‘(a) IN GENERAL.—For the executive branch, the 
Director shall be responsible for coordinating the esti-
mates required by this title. The Director shall consult 
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with the agencies that administer direct loan or loan guar-
antee programs. 
‘‘(b) DELEGATION.—The Director may delegate to 
agencies authority to make estimates of costs. The delega-
tion 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 Congres-
sional 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 his-
torical performance and prospective risk of direct loan and 
loan guarantee programs. They shall annually review the 
performance of outstanding direct loans and loan guaran-
tees to improve estimates of costs. The Office of Manage-
ment 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 
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that would convert aggregate historical budget data to 
credit reform accounting. 
‘‘SEC. 504. BUDGETARY TREATMENT. 
‘‘(a) PRESIDENT’S BUDGET.—Beginning with fiscal 
year 1992, the President’s budget shall reflect the Treas-
ury discounting component of direct loan and loan guar-
antee programs. Beginning with fiscal year 2015, 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 appropria-
tions request. 
‘‘(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 1992 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-
antee program has been provided in advance in an 
appropriation Act; or 
‘‘(3) authority is otherwise provided in appro-
priation Acts. 
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‘‘(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 
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 ob-
ligations, 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 
authority becomes available or indefinite authority is 
used. Such budget authority shall constitute an obli-
gation of the program account to pay to the financ-
ing account. 
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‘‘(2) The outlays resulting from new budget au-
thority for the cost of direct loans or loan guaran-
tees 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 al-
tered. 
‘‘(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 guar-
antee commitment) shall not be modified in a manner that 
increases its costs unless budget authority for the addi-
tional cost has been provided in advance in an appropria-
tion 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 sub-
sequent year, the difference between the reestimated cost 
and the previous cost estimate shall be displayed as a dis-
tinct 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 indefi-
nite authority for these re-estimates. 
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‘‘(g) ADMINISTRATIVE EXPENSES.—All funding for 
an agency’s administrative costs associated with a direct 
loan or loan guarantee program shall be displayed as dis-
tinct 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 FINANC-
ING 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 in-
terest charged by the Secretary on lending to financ-
ing 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 
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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 Fed-
eral agency pursuant to section 406(b)(1), any fee 
or interest surcharge (the amount by which the in-
terest rate charged exceeds the rate determined pur-
suant 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 con-
sidered a cash flow to the Government for the pur-
poses of determining the cost of the direct loan pur-
suant to section 502(5). All such amounts shall be 
credited to the appropriate financing account. 
‘‘(3) REIMBURSEMENT.—The Bank is author-
ized to require reimbursement from a Federal agen-
cy 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 sec-
tion 504(g). This subsection shall apply to trans-
actions related to direct loan obligations or loan 
guarantee commitments made on or after October 1, 
1991. 
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