Budget and Accounting Transparency Act of 2014

Floor Speech

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Mr. Speaker, I yield myself as much time as I may consume.

One of the interesting elements of this debate is, and I think it is pretty clear that we have not a total disagreement of opinion on the two sides, we both want the same objective, which is a fair and honest accounting of what programs cost the taxpayer or how they may benefit the taxpayer.

We do know that it is pretty generally agreed that by moving toward the fair accounting method, the fair value method, that we would be creating a higher cost, or at least the budget would indicate a higher cost for many of the loan programs that we have been talking about. But we don't know exactly what the ultimate impact would be and which method would be more accurate.

But we don't know exactly what the ultimate impact would be and which method would be more accurate.

OMB does not support this proposal. OMB says it has a hard time figuring out how it could assess market-based value, so we don't have total disagreement here.

We are in search of the same objective; but there is another element of this that I think we have to consider, in that, when we compare loan programs in the private sector to loan programs from the government, we are not always comparing apples and apples. We are comparing two very different motivations.

In the private sector, when a financial institution makes a loan, its entire objective is to create return for its investors and stockholders. The loan is essentially isolated in purpose. You advance funds, you expect a return, and that is the ultimate objective.

When the government creates a loan program, it is not just to make money for the government. In fact, that is often not even considered. What we are trying to do in many cases is to create an additional outcome--an ancillary outcome that is the primary objective of the program.

For instance, with student loans, we are trying to create more college graduates throughout this country. Understanding that the more college graduates we have, from a strictly financial standpoint, the Treasury will benefit because people will be earning higher incomes and paying higher tax rates.

When we are talking about housing programs, we are looking at things like the VA--the VA housing program. We are trying to find a way to help veterans, many of whom come back from deployments disoriented, dislocated, and without any way to find housing. We are trying to create programs that will help repay our obligations to our veterans.

There are many other areas. We have an advanced vehicle manufacturing loan program. I know about this program very well because it was part of that loan program that resulted in a $600 million investment in the Louisville assembly plant in my district in Kentucky and now has added more than 3,000 new employees in my district.

So the objective there was not necessarily--as a matter of fact, it wasn't at all to make money for the government. It was to help stimulate the production of energy-efficient appliances and to promote advanced technologies throughout our vehicle sector.

So, again, just to say because there is an associated risk that is recognized in the private sector by financial institutions does not imply that we should necessarily say that that same risk is equally important in the Federal budgeting process because, again, we have essentially ulterior motives in virtually every loan program that we have.

So we understand, again, as the ranking member Mr. Van Hollen of Maryland said: We do want transparency; we want to make sure that the American people know exactly what the programs cost.

Probably, more importantly, internally, we need to know what these programs cost because we have to make policy decisions as to whether they are benefiting the country as a whole, benefiting the taxpayers, and benefiting the Treasury.

The question is, without the kind of analysis that the ranking member suggested, what we actually determined through hearings and discussions, what the cost of the student loan program would be, how many students we potentially are cutting out of the student loan program, what we might be doing in the energy sector by imposing higher costs through the budgeting process and, therefore, a lower participation rate through the actual program, whether we are actually damaging the economy and the budget in different ways, not just on the direct costs versus benefits of the actual loan program; so these are some of the considerations.

This is why we say this is a bill that is not ready for prime time, and we think that we could be spending a better time in this body on more important measures to help the American people.

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I yield myself such time as I may consume.

Mr. Speaker, I certainly appreciate Chairman Ryan's comments and agree with many of them.

I think one of the points that is important to consider here though is, while he mentions one case involving FHA, there are a number of loan programs throughout the government which don't necessarily fall into that same category; and many of them are very, very critical to our Nation.

If you talk about water supply loans, water system loans, there are many loan programs that affect rural America. In addition to the student loans, we have, again, the Advanced Technology Vehicle Manufacturing Loan Program.

There are many across the board, and what this legislation would do would essentially treat them all as exactly the same, and we know that that is not necessarily necessary.

Under the TARP program--TARP was actually accounted for in the budget using the fair value standard that is proposed in this legislation, so we actually have a history of treating some loan programs differently than others.

What we would say is: Why don't we take the time to have hearings on this proposal to actually consider the impact of an across-the-board standard on a variety of different kinds of loan programs? This is why we keep saying this is a bill that is not ready for prime time.

There may be a considerable amount of merit in applying this accounting standard to some of the loan programs in the Federal portfolio, but that doesn't mean it is appropriate or helpful in assessing the impact on every loan program.

Furthermore, what we do know about virtually every analysis is that using the market-based risk analysis that Mr. Garrett's bill proposes would, under our budgeting rules, do two things.

One, it would add to the cost of virtually every loan program. There certainly is no instance in which his analysis would say a loan program would cost any less, and what that would also do is create a misleading picture of how much that loan program actually ends up costing the taxpayers on a cash basis.

Just because there is an intangible risk factor attached to a loan program in the budget does not mean that that will ultimately be realized, and, in fact, we may never understand if it is realized by the taxpayers.

So for all of these reasons, again, we would oppose the legislation and not because we think it is a horrible idea. We just think it is an idea that has not been vetted nearly sufficiently enough and could have a serious detrimental impact on many very, very important loan programs that benefit the American people.

With that, I reserve the balance of my time.

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I yield myself the balance of my time.

Mr. Speaker, the gentleman is correct, but not in a totally accurate way. We have had a hearing about budget processes in which this was discussed. We have not had a hearing dedicated solely to this legislation in which we could actually flesh out the impact on these various loan programs that I mentioned.

So in conclusion, I think, to kind of summarize where we are, this proposal may be a perfectly appropriate proposal. We wish that we could have more time and more analysis to determine whether we do more damage than good.

We both seek to have the most accurate budgeting process and the most accurate process for assessing the value of important government loan programs. That is a shared goal of both Republicans and Democrats.

We think that this bill is not effectively and sufficiently fleshed out to make that kind of determination at this point. We think there are far more important things that this body ought to be dealing with, including raising the minimum wage, extending unemployment benefits, working on developing infrastructure for this country, as we all know is critically needed, all of those things that would help stimulate the economy and create jobs.

For all of these reasons that I have mentioned and my ranking member, Mr. Van Hollen, mentioned, we oppose this legislation and urge a vote ``no.''

With that, I yield back the balance of my time.

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