Fair-Value Accounting and Budget Act
- Bill Number
- H.R. 1388
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Economics and Public Finance
- Status
- Introduced
- Latest Action
- 2025-02-14: Referred to the Committee on the Budget, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2025-05-07T14:39:06Z
AI-Generated Summary
Purpose
The Fair-Value Accounting and Budget Act (H.R. 1388) aims to improve the accuracy and transparency of federal budgeting for loan and loan guarantee programs by requiring the use of "fair-value" estimates. This approach accounts for market risks and expected cash flows in a way that reflects real-world economic conditions, rather than relying solely on traditional methods that may underestimate long-term costs.
Key Provisions
- Fair-Value Estimates by CBO: The Congressional Budget Office (CBO) must prepare fair-value estimates for any congressional bill or measure that creates or changes federal loan or loan guarantee programs. Fair-value is defined as a method from the Government Accounting Standards Board's (GASB) 2015 publication, which calculates the present value of expected future cash flows, including risks like defaults or interest rate changes.
- Inclusion in Baseline Reports: CBO must incorporate both fair-value and traditional "credit reform" estimates (which focus on expected cash flows without full risk adjustments) into its annual "Budget and Economic Outlook" report, as feasible.
- Budget Enforcement: Budget committee chairs in the House and Senate must use these fair-value estimates to check compliance with budget rules under the Congressional Budget and Impoundment Control Act of 1974.
- Annual OMB Reports: Starting in 2026, the Office of Management and Budget (OMB) must submit a yearly report to congressional budget committees, within 90 days of the President's budget submission, detailing fair-value costs for all federal credit programs (loans and guarantees provided by the government).
- Clerical Update: Adds a new section (Sec. 407) to the 1974 Act and updates the table of contents accordingly.
Significant Changes to Existing Law
- Amends Part A of Title IV of the Congressional Budget and Impoundment Control Act of 1974 by introducing fair-value accounting for credit programs, which is not currently required. Previously, federal budgeting for loans and guarantees primarily used credit reform accounting, a method established in 1990 that treats these programs as having zero upfront cost if expected repayments equal disbursements, potentially understating risks and long-term fiscal impacts.
- Shifts enforcement mechanisms to prioritize fair-value data, making it a standard tool for evaluating budget compliance and deficit projections.
Potential Impacts
- Government Agencies: CBO and OMB will face new requirements to develop and report fair-value estimates, which may increase workload and require updated methodologies or data sources. Federal agencies running credit programs (e.g., those offering student loans, small business loans, or housing guarantees) could see more realistic cost projections, potentially affecting program funding and design.
- Citizens: Could lead to more transparent federal budgeting, helping taxpayers understand the true fiscal burden of government-backed loans and guarantees. This might influence policy decisions on program expansion, as costs appear higher under fair-value, possibly reducing deficits but limiting access to credit for some individuals or businesses.
- International Relations: No direct impacts, as the bill focuses on domestic budgeting processes.
Main Stakeholders Affected
- Congressional Budget Committees: Responsible for using fair-value estimates in enforcement and oversight.
- CBO and OMB: Directly tasked with producing estimates and reports, altering their analytical roles.
- Federal Agencies with Credit Programs: Entities like the Department of Education (student loans), Small Business Administration (business loans), and Department of Housing and Urban Development (housing guarantees) will have their programs' costs reassessed.
- Lawmakers and Fiscal Policy Experts: Sponsors (e.g., Reps. Norman, Grothman, Weber, and Self) and others focused on budget reform, who may use this for advocating fiscal discipline.
- Borrowers and Lenders: Indirectly affected through potential changes in program availability or terms based on revised cost estimates.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens the 1974 Act's framework for budget scoring without altering core enforcement mechanisms, ensuring consistency with existing congressional authority over spending. No apparent conflicts with constitutional provisions on federal budgeting (e.g., Article I's appropriations power).
- Constitutional: Aligns with Congress's role in controlling the purse strings, promoting informed legislative decisions without encroaching on executive functions.
- Political: Introduces a more conservative budgeting approach that could highlight hidden costs in credit programs, appealing to deficit hawks but potentially complicating bipartisan support for popular initiatives like student aid or disaster relief. May spark debates on accounting standards, as fair-value could inflate projected deficits compared to current methods.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (4)
Rep. Grothman, Glenn [R-WI-6], Rep. Weber, Randy K. Sr. [R-TX-14], Rep. Self, Keith [R-TX-3], Rep. Edwards, Chuck [R-NC-11]
Recent Actions
- 2025-02-14: Referred to the Committee on the Budget, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-02-14: Referred to the Committee on the Budget, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-02-14: Introduced in House
- 2025-02-14: Introduced in House
Bill Versions
- Fair-Value Accounting and Budget Act — issued 2025-02-14 — PDF (3 pages)