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Budget and Accounting Transparency Act of 2012

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. GARRETT. Madam Chair, I yield myself such time as I may consume.

At the start, I would like to thank Chairman Ryan and the Budget Committee staff for their hard work with regard to H.R. 3581, the Budget and Accounting Transparency Act. Unless you've been living someplace else other than here for the last several years, you will not be surprised to hear that this country is broke. And it should not surprise you that the true extent of our country's debt crisis is a lot worse than anyone in Washington is letting on to. How much worse? Well, that's something that people really don't know, and we'll never know unless we reform the broken budget process here in Washington, D.C. Many have talked before about the fact that our process is broken. Simply put, we need to make the budget process more transparent and accountable.

Fortunately, today we are taking a step in the right direction with this bill. The bill before us today, the Budget and Accounting Transparency Act, is, as I say, a commonsense approach to introduce more sunshine and common sense into the budget-making process.

So what would the bill do? First of all, specifically, the bill recognizes the budgetary impact of the GSEs, Fannie and Freddie, by bringing back onto budget and closes that black hole that's out there and brings them out of the shadow and into the light.

This bill also requires that the Federal Government apply the very same credit accounting standards as the private sector is doing right now when guaranteeing loans.

You know, back in September of 2008 as the country was reeling from the fallout of the financial collapse, the GSEs, Fannie and Freddie, were placed into conservatorship by the FHA. Under this agreement, FHA took control of the two companies and the Treasury Department risked literally hundreds of billions of dollars, taxpayer dollars, to bail them out. Today, the American taxpayer has sunk over $183 billion and counting into those failed institutions. As if this weren't enough, they've added $1.2 trillion in debt and $5.3 trillion in mortgage-backed securities.

Because Fannie and Freddie have become the explicit financial responsibility of all of us via the Federal Government, it only makes sense, don't you think, that we treat them the same way that we'd treat any other obligation of the Federal Government, by formally bringing them onto the budget. The CBO even says this. They took a step several years ago by the Office of Management and Budget, but they resisted the change, preferring to obscure the total Federal exposure of Fannie and Freddie. It's time that the Obama administration does the same thing.

So bringing Fannie and Freddie exposes some of the ugly--and maybe we'll call them inconvenient--truths; but I know that the American people did not send us here to play a shell game, but did send us here to bring out the facts.

The combined debt obligation of Fannie and Freddie isn't the only black cloud hanging over us. There's inaccuracies and lack of transparency in budgeting for Federal credit programs across the field. We can talk about the Solyndra situation that makes the news. That fiasco was an example of a loan guarantee gone sour. Federal loan guarantees are contractual obligations between the taxpayer, the private creditor, and the borrower. In that case, it went south. But, unfortunately, under current law when the government issues a loan guarantee, the inherent risk is not reflected in the loan or loan guarantee cost. In fact, the CBO estimates that our current Federal obligations under these accounting rules today understate the cost of credit programs by some $55 billion a year.

Because the rules do not account for market risk, that is why we need to change it. And with that, Madam Chair, I reserve the balance of my time only to say that this does three important things: provides the clarity, the transparency, and the accountability that we are looking for in these and other aspects of the Federal Government programs.

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