H.R. 1872: Budget and Accounting Transparency Act of 2014

H.R. 1872

Budget and Accounting Transparency Act of 2014


April 7, 2014 (113th Congress, 2nd Session)

Staff Contact

Floor Situation

On Monday, April 7, 2014, the House will consider H.R. 1872, the Budget and Accounting Transparency Act of 2014, under a closed rule. H.R. 1872 was introduced by Representative Scott Garrett (R-NJ) on May 8, 2013 and has 7 cosponsors. H.R. 1872 was marked up by the Committee on the Budget on February 11, 2014 and reported the bill by a vote of 17-8.[1]

[1] See http://beta.congress.gov/113/crpt/hrpt381/CRPT-113hrpt381-pt1.pdf.

Bill Summary

H.R. 1872 “increases the transparency of federal budgeting by bringing off-budget entities on-budget, reforms the accounting methodology used for federal credit programs to reflect best practices from the private sector, and requires agencies to promptly make public the budget justification materials they submit to Congress in support of their requests for public funds. It also commissions two studies in furtherance of the Budget Committees’ ongoing review of potential improvements to the congressional budget process.”[1]

[1] See id, p. 8.


According to the Committee on the Budget, “[T]he Federal Credit Reform Act of 1990 (FCRA) reformed the budgetary treatment of Federal direct loans and loan guarantees to account for the cost of these programs on an accrual basis. Under the 1990 bill, the cost of these programs is developed by producing a net present value of cash flows using a discount rate based on the Federal Government’s borrowing costs. Over time, CBO has concluded that the Treasury discount rate does not fully capture the cost of credit programs: ‘Fair-value estimates differ from estimates produced using the FCRA methodology in an important way: By incorporating a market-based risk premium, fair value estimates recognize that the financial risk that the government assumes when issuing credit guarantees is more costly to taxpayers than FCRA-based estimates suggest.’”[1]

“The bill [also] requires that the receipts and disbursements of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) be counted as new budget authority, outlays, receipts, deficits or surpluses for purposes of the President’s budget request, the congressional budget resolution, and the Balanced Budget and Emergency Deficit Control Act of 1985. While the Congressional Budget Office (CBO) and Congress have already adopted this approach the Administration has not. Section 202 rectifies this disparity by bringing Fannie Mae and Freddie Mac (the GSEs) on-budget and consistent with CBO’s current practice.”[2]

“The bill requires Federal agencies to publish their budget justification materials on their official websites on the same day those materials are provided to Congress. OMB currently requires agencies to post these materials to their websites within two weeks of transmittal to Congress. As under current practice, materials should not be released if the materials are so classified in order to protect the national security.”[3]

Finally, the bill directs CBO and OMB to “independently conduct studies and provide recommendations to the Budget Committees on the feasibility of applying fair value concepts (or some similar accrual methodology) to budgeting for the costs of Federal insurance programs, such as pension insurance and political risk insurance. These programs are currently budgeted for on a cash-flow basis, meaning that a program’s cost is the net cash spent in a fiscal year. Income is recorded in the budget when received, and expenses are recorded when paid, regardless of when the income is earned or the expense incurred.”

It also directs OMB to prepare a study, with CBO review, on the historical use of various terms relating to the collection of monies by the federal government collected from the private sector and how this money is spent. “The 1967 President’s Commission on Budget Concepts continues to provide the foundation for determining the treatment of transactions in the Federal budget. Generally, Federal collections resulting from the exercise of the Federal Government’s sovereign power are classified as revenues (or ‘‘receipts’’). Those collections resulting from business-like activity performed by the Federal Government are recorded as negative spending (or ‘‘offsetting collections’’). Over the years, however, these terms have become jumbled as programs have evolved and as statutes have dictated the budgetary treatment of Federal collections. Increasingly, collections that result from the government’s sovereign power are being classified as offsetting collections (negative spending). The study should review the theoretical bases of these terms, the evolution of the classification of collections, the current classification of Federal collections, and provide recommendations on the future application of such terms.”[4]

[1] See id, p. 12.

[2] See id.

[3] See id.

[4] See id, p. 11.


According to CBO, “H.R. 1872 would result in an estimated authorization level of $16 million over the 2014-2019 time period.”

Additional Information

For questions or further information contact the GOP Conference at 5-5107.