Budget and Accounting Transparency Act of 2012

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.

Madam Chair, just as we recognize that the American taxpayer has already been squeezed by such expenditures as $527 million for the failed loans to Solyndra, we recognize that they must put these on the record so we understand what they truly cost. And the gentleman who has been a leader in this regard from the very beginning in his time in Congress, a leader in the area of budget transparency and in fixing the American budget and here in Congress, is the gentleman from Texas (Mr. Hensarling). I yield 2 minutes to the gentleman from Texas.

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

I thank the lady for commending us for raising these issues. But actually, we're doing something more than just simply raising the issue. We're addressing it and solving this problem as well.

I appreciate the fact that the gentlelady raises the fact about a list of experts who have questions about this. Well, I have experts too, but I actually have the name. A former CBO Director, Doug Holtz- Eakin, now with American Action Forum, writes us here to express support of H.R. 3581.

The gentlelady may also know, since she serves on the committee, when it comes to this issue that we had this issue up in committee recently, and we asked the current CBO Director does he support with regard to moving towards fair value. And he said that is the more appropriate basis of evaluating the obligations of the Federal Government. So we have the experts.

American Action Forum,

January 30, 2012.

Hon. Paul Ryan,

Longworth House Office Building,

Washington, DC.

Dear Chairman Ryan: I am writing to express my support for

H.R. 3581, ``The Budget and Accounting Transparency Act of

2011,'' in particular those provisions that would incorporate

fair value accounting (FVA) into the federal budget process.

As you are well aware, a core objective in federal budgeting

is to accurately display the scale and timing of the

expenditure of taxpayer resources. Since sovereign tax and

borrowing powers should always be used judiciously, there is

a premium on doing so as accurately as possible.

In some cases this is straightforward. Consider, for

example, a discretionary appropriation. The scale of the

overall commitment is clear and in some cases it is

straightforward to budget the timing of the ultimate outlays

as well. Federal credit programs, however, present particular

difficulties. The timing of budgetary cash flows differs

dramatically between direct loans and federal loan

guarantees--even in cases when the ultimate economic impact

is identical. The Federal Credit Reform Act of 1990 (FCRA)

took an important step forward by equalizing the timing of

their budgetary treatment Direct loans and loan guarantees

are both recorded in the budget during the year in which the

commitment is incurred, regardless of the duration and timing

of the federal assistance.

This was an important step in the right direction. However,

estimating the scale of required taxpayer resources remains

problematic. In particular, the ability of loan recipients to

make timely and complete repayments will be influenced by

future individual, household, and economy-wide economic

conditions. In the same way, the obligation of the federal

government to undertake guarantee payments will be driven by

similar forces.

While such future individual and economic conditions are

uncertain, reliable techniques exist to estimate the likely

size of the taxpayer obligation. Unfortunately, FCRA

needlessly restricts the analyses to credit risk--the

probability of failure to fully repay--while ignoring the

fact that the timing of those failures matters enormously. As

the past few years have starkly reminded every American, the

need to tax, borrow and otherwise deprive the private sector

of another dollar has far greater implications during the

depths of economic distress than during periods of robust

economic growth. Adoption Of FVA would rectify this oversight

I recognize that significant reform to budget procedures

should not be undertaken lightly. However, my views are

informed by the fact that during my tenure as director, the

Congressional Budget Office undertook a number of studies of

the implications of accounting fully for economic risks in

the budgetary treatment of financial commitments like credit

programs. In example after example (pension guarantees;

deposit insurance; flood insurance; student loans; and

assistance for Chrysler and America West Airlines), it

becomes clear that an incomplete assessment of risks leads to

misleading budget presentations and may engender poor policy

decisions. FVA would be a significant step toward improving

this informational deficit.

My views are echoed by a wide array of budget experts. In

March 2010, CBO issued a new report recommending the use of

FVA for federal student loan programs on the grounds that

budget rules do ``not include the costs to taxpayers that

stem from certain risks involved in lending.'' In addition,

the Pew-Peterson Commission on Budget Reform proposed ``fair-

value accounting'' for credit programs and the President's

National Commission on Fiscal Responsibility and Reform

advocated for reform of budget concepts that would more

accurately reflect costs.

In addition to these research views, there is a track

record of success. FVA has already been used successfully for

the budgetary treatment of the Temporary Asset Relief Program

of 2008 (TARP) and the federal assistance to Fannie Mae and

Freddie Mac.

Last but not least H.R. 3581 would also fix another

shortcoming of FCRA; namely that the administrative costs

associated with federal operations are not included in the

budget cost and must be provided for elsewhere. H.R. 3581

would require that administrative costs (called ``essential

preservation services'') to be accounted for up-front,

thereby balancing the playing field.

In sum, I believe that the Congress should adopt fair value

accounting and, in particular, pass H.R. 3581 in a timely

fashion. I would be happy to discuss any aspect of this issue

in greater detail.

Sincerely,

Douglas Holtz-Eakin.

With that, I yield 1 minute to the gentleman from California (Mr. McClintock).

I yield 2 minutes to the gentleman from Oklahoma (Mr. Lankford).

Madam Chairman, I yield myself such time as I may consume.

The gentleman from Maryland speaks of the report of Marvin Phaup from 2008, I guess that was, and also speaks in reference to the Center on Budget and Policy Priorities. In front of me, and I'll ask, under general leave to enter this into the Record as well. Just recently, just this week, I guess, he has now issued the final report, and this report says as follows:

``This comment responds to a recent release from the''--as the gentleman's referring to--``from the Center on Budget and Policy Priorities (CBPP).''

And what does he say?

``My view is that the CBPP misrepresents our work''--that you were referring to. They misrepresent his work--``and more fundamentally incorrectly characterizes the purposes and consequences of moving to a fair value approach to credit valuation in the budget.''

One of his main points is the legislation before us would do what? It ``would remove `phantom' gains to the government from the budgetary treatment of direct lending and loan guarantee programs. These illusory gains mislead public policymakers about the costs of their policy decisions.''

What does that mean? What that means is, in the numbers that the gentleman from Maryland was talking about that are actually making more and, over time, exceeds outlay, Marvin Phaup is here saying, no, just the opposite, that this bill would address that. It would remove those gains and show it for the reality of what it is.

Fair Market Values and the Budgetary Treatment of Federal Credit:

Comment on CBPP's Release on H.R. 3581

(By Marvin Phaup)

This Comment responds to a recent release from the Center

on Budget and Policy Priorities (CBPP). The release asserts

that the federal budget currently measures the cost of direct

loans and loan guarantees comprehensively and that as a

result the costs of cash and credit programs are directly

comparable. CBPP asserts further that enacting H.R. 3581,

which would require the use of fair market values in

calculating the budget cost of federal loans and guarantees,

would add a cost of risk that the government does not incur.

Consequently, it claims, this would overstate federal costs

and the budget deficit and create a bias against the use of

credit programs. CBPP also refers critically to my earlier

work with Deborah Lucas, showing that government credit

activities are subject to the same market risk as private

credit and exploring the implications of this finding for

budgeting. My view is that CBPP misrepresents our work and

more fundamentally incorrectly characterizes the purposes and

consequences of moving to a fair value approach to credit

valuation in the budget.

In this note, I make the following points:

H.R. 3581 would remove ``phantom'' gains to the government

from the budgetary treatment of direct lending and loan

guarantee programs. Those illusory gains mislead policy

makers about the costs of their policy decisions.

Illusory gains on federal credit also encourage budget

gimmickry. For example, FCRA would permit the government to

balance its budget immediately on paper by issuing large

amounts of Treasury debt and using the proceeds to invest in

an equally large portfolio of risky loans. This result would

be absurd because in issuing a dollar of debt and buying a

dollar of risky loans at market prices, the government's net

financial position is unchanged.

If the current practice of using the prices of Treasury

securities to value risky loans rather than the market value

of the risky securities themselves were extended to other

assets, then the government could--with the same logic--

direct the Treasury to buy a ton of lead, value it at the

price of gold, and record the gain as deficit reduction.

The cost of market risk should be a budget cost because it

is a cost to government stakeholders and its absorption by

some yields an unrecognized subsidy to others. CBPP would

include this cost in cost-benefit analyses where the purpose

is to decide if a federal activity produces a net gain but

not in the budget. Budgeting without an evaluation function,

however, is little more than a redundant projection of

Treasury's borrowing requirements.

The cost of market risk should not be excluded from the

budget on grounds that the money isn't paid out by the

government. Both the Universal Service Fund and the United

Mine Workers of America Benefit Funds are included in the

budget, even though the money is untouched by federal hands.

Purposes of Budgeting, Fair Value, and Cost Comparisons

Budgetary costs serve several purposes, but arguably the

primary one is to measure the value of public resources

devoted to an activity by the government. For many

activities, such as the purchase of goods and services, this

purpose is well-served by a cash measurement focus and basis

of accounting. The cash costs that appear in the budget for

these activities are fair value costs because they are based

on the market prices of the goods and services purchased

(directly, or indirectly through the use of grants and

transfers) by the government. When the government buys a

fleet of trucks, the budgetary cost is based on the market

price of the trucks.

Accounting for the cost of credit on a fair value basis

would similarly identify the budgetary cost of credit with

its market price, thereby putting credit and non-credit

activities on a conceptually level playing field.

Under the Federal Credit Reform Act of 1990 (FCRA), the

budget records the cost of direct loans and loan guarantees

on an accrual basis. FCRA mandates that the budget record the

estimated lifetime cost of a direct loan or loan guarantee

when the loan is disbursed as the government's loss on the

transaction. FCRA requires that for a direct loan, the

government's loss is the difference between the value of the

cash disbursed and the loan asset acquired, where the latter

is valued as the present value of expected repayments of

principal, interest and fees discounted at low-risk

(Treasury) rates rather than rates applied in the market to

risky cash flows. The loss on loan guarantees is calculated

similarly in that the government's expected net payments to

honor its commitment are also discounted as though they were

Treasury bonds.

The use of Treasury interest rates to value risky future

cash flows means that a risky loan is assigned an FCRA budget

value greater than its market value. Thus the FCRA budget

cost of a federal loan or guarantee is less than the cost

incurred by private lenders or guarantors. This is because

people are risk-averse and require compensation--in the

form of higher expected investment returns--on investments

that expose them to risks that cannot be avoided by

holding a diversified portfolio or buying insurance. In

particular, they are averse to ``market risk,'' which is

the risk that low investment returns will coincide with

periods during which the overall economy is weak, and

resources are the most valuable. The government

effectively transfers to the public the market risk

associated with its activities through the tax and

transfer system. The CBPP example involving a coin toss

does not illustrate this line of reasoning because it

involves a risk that is easily diversifiable by both

individuals and the government.

Market risk also affects the price of non-financial assets

purchased by the government, and those costs are reflected in

the budget. For example, the cash price of a navy ship

includes a return to the capital used in its production. The

expected return built into the ship's price depends on the

risk premium associated with ship-building. From that

perspective, the CBPP characterization that the proposal will

``add a further amount to reflect private-sector risk

aversion'' is misleading. It is more accurate to say that

incorporating a market risk premium into FCRA estimates would

make them more comparable to cash estimates, which already

reflect the full market price of the associated risk.

Fair value estimates of the value of federal direct loans

and guarantees include the cost of market risk. Effectively,

they use the same estimates of uncertain future cash flows as

FCRA estimates (assuming those projections are as accurate as

possible), but they use market discount rates (or ``risk-

adjusted'' discount rates) in place of Treasury rates for

discounting. Risk-adjusted discount rates can be represented

as the sum of a Treasury rate and a risk premium.

One implication of the meaning of fair value is that,

contrary to CBPP's view, discounting expected cash flows (net

of expected default losses) does not double count those

losses. If the expected net losses are certain, then the

expected cash flows are certain and the fair market value is

obtained by discounting at risk-free rates. This is rare.

Otherwise, net expected cash flows must be discounted at

rates appropriate to the market risk of the cash flows to

obtain fair market values.

``Flaws'' of the Fair Value Approach

CBPP gives a list of reasons why the fair value proposal is

thought to be flawed. The first is that government may be

less risk averse than individuals. The authors offer several

reasons why that might be the case, and point to the

government's ability to borrow at low Treasury rates. Those

arguments have several shortcomings:

The idea that low Treasury borrowing rates are a reason for

the government to be less concerned about risk neglects that

Treasury rates are only low because bondholders are protected

from risk by taxpayers, who must absorb the market risk

associated with the government's activities. For example,

when a risky loan has insufficient returns to repay the

Treasury debt that notionally is used to fund it, taxes must

be raised or other spending cut. Under FCRA accounting, that

risk to taxpayers is treated as being free to the government.

In fact, the government could be more risk averse than

individuals rather than less risk averse. For example, the

government may be more concerned about the risks of global

warming than is reflected in market prices because it puts

more weight on the welfare of future generations.

In practice, adjusting budgetary costs based on conjectures

about the government's preferences would undermine the

discipline and transparency of the budget process.

The second alleged flaw is that risk aversion is not a

budgetary cost. As discussed already, a consistent basis for

measuring budgetary cost is to use market prices, which are

affected by risk aversion and by the preferences of people

generally. Further, as noted, that government does not write

checks for the market risk of direct loans and guarantees is

not dispositive of the appropriate treatment of an activity.

A further criticism is that the proposal does not treat all

programs the same. Specifically, it raises the concern that

the change would make credit programs appear more expensive

to Treasury than other programs. The opposite is generally

true: cash basis estimates incorporate the price of the

associated market risk because they are accounted for at

market prices, whereas FCRA estimates are relatively downward

biased. In any case, the examples given suggest a

misunderstanding of the type of risks that would be

incorporated into fair value estimates. For instance, the

paper notes the uncertainty associated with the future costs

of many programs, including Medicare, and points out that no

adjustment is made for the cost of that uncertainty. However,

the same type of uncertainty exists for credit programs, and

the risk adjustment associated with a fair value approach

does not address those sources of uncertainty:

First, future Medicare costs do not affect the current year

budget deficit because those programs are budgeted for on a

cash basis, not on an accrual basis. The budget enables

policymakers to compare the cost of current-year spending on

Medicare with the estimated lifetime cost of new current-year

credit assistance. Measuring the cost of new current-year

credit assistance on a fair value basis makes it more

comparable to current-year Medicare expenditures, which

reflect the market prices of doctor salaries, hospitals, and

medical equipment.

Just as with future Medicare expenditures, the volume and

cost of new future-year credit assistance from ongoing

programs is uncertain. However, that dimension of uncertainty

does not figure into fair value calculations (or into FCRA

estimates).

To the contrary, a problem with FCRA accounting is that it

treats different credit programs as too much the same. That

is, some credit programs expose taxpayers to much more market

risk than others, but FCRA accounting does not recognize

those differential costs between credit programs.

CBPP both endorses FCRA accrual accounting and criticizes

an accounting practice necessitated by the uses of accruals

in a mostly cash-basis budget, described in the release as

``phantom offsets.'' Under FCRA, direct loans cause the

government's cash shortfall (and hence its need to issue

additional debt) to be higher initially than the reported

deficit in the year the loan is made. That is because the

loan principal paid out (not included in the deficit) is

generally much larger than the recorded subsidy cost

(included in the deficit). Similarly recognizing the time

value of money in federal credit transactions requires

adjustments to the cash deficit. Loan guarantees also

necessitate ``phantom offsets'' to reconcile the cash deficit

with the expected cost of loan defaults which are included in

the deficit when guaranteed loans are disbursed. Furthermore,

accruals involve uncertain future cash flows, and subsequent

adjustments (FCRA refers to them as ``re-estimates'') are

always needed to reconcile accrual projections with cash

realizations. However, there are multiple account structures

that would achieve the comprehensive up front recognition of

the lifetime cost of new credit assistance and reconcile

those costs with Treasury's cash borrowing requirements.

In conclusion, there appears to be general agreement that

the primary purposes of budgeting are better served if the

budget is supported by an accounting process that measures

the public resources devoted to an activity comprehensively,

comparably across programs, and up-front at the time of

decision. By that standard, the use of fair values for direct

loans and loan guarantees in the budget would unambiguously

improve federal budgetary accounting.

With that, I yield 2 minutes to the gentleman from Kansas (Mr. Huelskamp).

I would advise my colleague from Maryland that we have no further speakers.

I yield myself such time as I may consume.

And again, I'll say to the gentleman as well, as your colleague did as well, commended us for raising this important issue, and I do agree that it is an important issue. But I think the American public is tired of Washington simply raising important issues and discussing important issues and having committee hearings on important issues. I think the American public is looking for Washington, once and for all, to take some decisive action in the name of the American public, in the name of the hardworking taxpayers whose money it is that is on the line. It is the people's money that we are talking about in all of these bills. It is the people's money that has been put on the line when the Federal Government issues loans and loan guarantees.

And I want to remind the gentleman from Maryland of how much money we've been talking about in all these things. When we talk about all the bailouts that the American public stood and railed against, rightfully so, as did I, whether it was the oil bailouts or the bank bailouts or the Wall Street bailouts, they all pale in comparison to the bailouts that we're talking about here with the GSEs, $186 billion and counting. The gentleman, Mr. Ryan, raised the issue before that, I believe, it was going to go up to $280, $290 billion and counting.

That's not Washington's money or the government's money or the gentleman from Maryland's money. That's the hardworking American taxpayers' money that was initially put at risk without any idea what the real risk was going to be for all these other loan programs and now is going out as outlays.

Now it is going out without any prospect whatsoever of being repaid. The

gentleman says these exceed these estimates of fair value accounting, and they exceed outlays. Well, they exceed it until they don't. They exceed it until the loan fails. They exceed it until you're talking about a Solyndra situation where you guarantee over $500 million, and then the company goes bust. That's what we're trying to address here, to make sure that you're actually properly grading and accounting for this. We're not asking for something extraordinary.

I know the gentleman from New Jersey came to the floor and he said this is extreme, what we are asking for here. Extreme? Why do we ask the private sector to use this same sort of accounting? Why do we ask the mom-and-pop shops, the big Wall Street firms, and everything in between to use this sort of accounting when they do so? When you ask for a student loan, a car loan, a house loan, whatever, we ask local banks to use this same form of accounting. If it is good enough for the rest of society, if it is good enough for all of my constituents and your constituents, if it is good enough for all of the businesses back at home, I think it's good enough for the Federal Government to play by the same rules. That's all we're asking for here.

He says, how far should we go? I think we should go as far as to say that the Federal Government should have to do the exact same thing, play by the exact same rules that our businesses back at home have to do. That's all this bill does. It shines the light of day on what we're spending, and if we are spending too much, then we have to do what we are elected to do: set priorities, decide where we want to spend it on this program or that program, or maybe cut back on this program and expand someplace else. But we can't make those decisions until we actually have the information before us. We can't say this one is working and this one is not working, this one is worthwhile and this one is not worthwhile until we actually have that information before us. That's the long and short of it. That's all this bill does. It gives both sides of the aisle and the American public that information.

With that, I would call for support of this legislation of sunshine and accountability and transparency in the way the Federal Government runs their business.

I yield back the balance of my time.

Madam Chair, I would first like to thank Chairman Ryan and the Budget Committee staff for their hard work on H.R. 3581, the Budget and Accounting Transparency Act.

Unless you've been living on Mars the last year, it should not come as a surprise to hear that our country is broke. However, what should surprise you is that the true extent of our country's debt crisis is a lot worse than anyone in Washington is letting on.

How much worse? That's the thing, nobody knows; and we won't ever know until we reform the broken budget process in Washington, DC.

As many have talked about before, our budget process is broken. Simply put, we need to make the budget process more transparent.

Fortunately, today we are taking a step in the right direction with H.R. 3581, the Budget and Accounting Transparency Act of 2011. I introduced this bill in December, along with Chairman Ryan, as part of a comprehensive set of reforms to overhaul Washington's broken budget process.

The bill before the House today--the Budget and Accounting Transparency Act--is a common-sense attempt to introduce more ``sunshine'' and ``common sense'' into our budget process.

What would this legislation do?

Specifically, this bill recognizes the budgetary impact of government-sponsored enterprises Fannie Mae and Freddie Mac by bringing these black holes of debt out from the shadows into the sunshine and on-budget.

This bill also requires that the federal government apply the same credit accounting standards as the private sector when making or guaranteeing loans.

In September 2008, as the country was reeling from the fallout from the financial collapse, Fannie and Freddie were placed into conservatorship by the Federal Housing Finance Agency (FHFA).

Under this agreement, FHFA took control of the two companies and the Treasury Department risked hundreds of billions of taxpayer dollars to bail out the government-backed mortgage twins.

To date, the American taxpayers have sunk over $183 billion and counting into these failed institutions. As if this weren't enough, Fannie and Freddie have also issued more than $1.2 trillion in debt and hold or guarantee about $5.3 trillion in mortgage-backed securities (MBS).

Because Fannie and Freddie have become the explicit financial responsibility of the federal government, it only makes sense that we treat them the same as we would any other obligation of the federal government by formally bringing them on-budget.

The non-partisan Congressional Budget Office took this step several years ago, but the Office of Management and Budget has resisted the change preferring to obscure the total federal exposure to Fannie Mae and Freddie Mac.

It's time the Obama administration did the same.

Bringing Fannie and Freddie on-budget exposes some ugly and inconvenient truths. But I know the American people did not send us here to play a shell game with taxpayer dollars.

The combined debt obligation of Fannie and Freddie isn't the only black cloud hanging over us; inaccuracies and a lack of transparency in budgeting for federal credit programs also loom large.

Take the case of Solyndra, for example--the poster child of government loans gone bad. As we saw with the Obama administration's $527 million ``investment'' into the solar energy company, when Washington makes a bad bet, it's the American taxpayers left holding the bag.

Federal loan loan guarantees are contractual obligations between the taxpayer, private creditors and a borrower such as Solyndra.

Loan guarantees are a promise by the American taxpayer that they will cover the borrower's loan in the event that the borrower defaults. If the American taxpayer is on the hook for default, shouldn't we have a better idea of the cost of the loan in the first place?

Unfortunately, under current law, when the government issues a loan or loan guarantee, the inherent riskiness of that loan is not reflected in the loan or loan guarantee's cost.

In fact, the non-partisan Congressional Budget Office estimates that our current federal accounting rules understate the cost of credit programs by some $55 billion a year, because the rules do not account for market risk.

Why shouldn't Washington play by the same rules that every American family and business must play by when taking out a loan?

The Budget and Accounting Transparency Act fixes this shortcoming by requiring market risk to be explicitly included in estimates of federal credit programs, bringing federal budgeting practices in line with what's long been standard practice in the private sector.

Specifically, it requires the executive branch and Congress to use ``fair value'' accounting in calculating the costs of federal credit programs that consider not only the borrowing costs of the federal government, but also the costs of the market risk the federal government is incurring by issuing a loan or loan guarantee.

Accounting for market risk is the key--your local banker does it every time you apply for a home or auto loan. The federal government should be doing the same.

In fact, during the House Budget Committee's consideration of this legislation, the director of the non-partisan Congressional Budget Office stated:

``We believe that the fair-value method of accounting for federal credit transactions provides a more comprehensive measure of a [program's] true cost.''

While the Budget and Accounting Transparency Act won't prevent future presidents from making similarly risky bets, at least it will force them to be honest with the American people about the true upfront cost of their boondoggles.

Lastly, the legislation before us today increases the amount and timeliness of information on agency budget requests, requiring that these budget justifications be provided to the public when they are sent to Congress.

It's the people's money and they ought to know what agencies are planning to do with it.

These provisions would go a long way to fixing our broken budget process and bring much-needed transparency to the way Congress functions.

For too many years, Washington has played by a ``special'' set of rules.

With mounting debt and lackluster job growth, it's time to force government to play by the same economic rules as every American family and business.

For too long, we have not been honest with the American people about the cost of government. If we truly are committed to reversing our country's race towards bankruptcy, as we say we are, we need to be honest with ourselves and the American people about the true cost of government.

Today, I say we put our words to action by bringing sunlight and transparency back into our budgeting process.

First of all, let me just begin by saying I appreciate the gentleman's effort with regard to this legislation. I appreciate also the bipartisan nature and intentions behind the amendment as well. There are unquestionably circumstances where accrual accounting is the best way, the most appropriate way to display the Federal Government's budgetary costs and obligations.

Now, as you know, the underlying bill does focus on one such area where accrual accounting has long been in use, and what it does then is to try to build upon those years of experience and try to study the application of that as applied to Federal credit programs.

The underlying bill, I should say as an aside, also includes a study of another area--because I know there's a question of how far are we going in these things--where it might be appropriate to extend this, and this is with regard to the Federal insurance programs. Why is that? Well, it's because we don't have as many studies on that.

I might just add to the point of the gentleman from Maryland before, there have been a number of references on an area that we're looking to. CBO has done some with regard to student loans, with regard to housing, with regard to SBA and energy. CBO has issued a number of reports with fair value accounting included, and that is why we included it in this bill.

Again, I appreciate the gentleman's work on this amendment. I oppose it as it stands now, however.

Not only will I work with you, I believe the chairman of the full committee will be intentioned to work with you on this as well. The goal is the same by all of us here, and I think by the other side as well, to try to get as much information that is able to get out to come out, and we will be glad to work with you on this.

I rise in opposition to the amendment.

Madam Chair, in essence, the amendment has the effect, as so many amendments often do that come to the floor, of basically gutting the entire bill.

The core reform made by this bill is to--what?--adopt for all Federal credit programs fair value accounting. Now, this is not a precipitous or rash decision that we're going to make here. The Budget Committee, both with the Republican and Democrat leadership, has, over time, studied and worked on the implications of moving to a fair value accounting for Federal credit programs.

The CBO, which we reference all the time, is an independent arbiter of what is right here and has studied these things, and other academics have conducted studies going back as far as the 1990s, if not earlier, on this question as well. In fact, there was a commission, a commission featuring 36 experts, including six former CBO Directors.

What did they recommend? They recommended moving to a fair value accounting in 2010.

Indeed, it was back in 2009 that this House, under Democrat leadership, voted to require the use of fair value accounting with respect to U.S. commitments made to the IMF, the International Monetary Fund. Additionally, the CBO has conducted analyses of dozens of Federal credit programs on a fair value basis.

So this bill is not precipitous. This bill is not rash. This bill is not extreme. This bill takes a cautious approach and applies fair value budgeting in those areas where we have the most experience while calling for a further study of those areas in which it makes sense to do study--Federal insurance programs.

So I urge my colleagues to oppose this amendment and to support the judicious and experience-based approach of the underlying bill.

I yield back the balance of my time.

I rise in opposition to the motion.

Mr. Speaker, the prior amendment that this House just overwhelmingly voted down would have gutted the underlying bill entirely. This motion to recommit will now try to gut the bill by approximately one-third. I commend the other side of the aisle for at least going in the right direction. But, Mr. Speaker, I remind us all of the words of the President of the United States when he stood in that same position where he speaks of fairness and the agenda that he proposes, and he speaks of fairness to the American public.

Well, Mr. Speaker, we know that the budget process in this country is broken. We know that there is no fairness in that. This amendment will undercut the legislation before us, and the underlying bill will try to restore it.

We need fairness to the hardworking American taxpayer who, at the end of the day, will be the one who will have to foot the bill when the loans go sour like we saw in the situation with Solyndra. We need to bring fairness to the small business owner who is already compelled to comply with the exact same requirements that we have in this bill. Mr. Speaker, we need to bring fairness to the American public who simply wants to know where their hardworking tax dollar is going.

Mr. Speaker, in conclusion, let me just say this: as we here in Washington travel through that great twilight which is that murky area of obscure accounting rules, let us commit ourselves to one thing--that we will bring clarity, that we will bring transparency, that we will bring sunshine, and, most importantly, that we will bring fairness to the American public as to the spending of their tax dollars.

I recommend that we vote ``no'' on this motion to recommit.

I yield back the balance of my time.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 539 and ask for its immediate consideration.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks.

Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to my friend from Massachusetts (Mr. McGovern) pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.

House Resolution 539 provides a structured rule for the consideration of H.R. 3581, the Budget and Accounting Transparency Act. This is another bill in a series of 10 bills that the Budget Committee is sending forward, Mr. Speaker, to try to align the kind of accounting and budgeting that we do in Washington with the kind of accounting and budgeting that happens in the real world. We know transparency and sound accounting matter. We know that it matters on Wall Street; we know that it matters on Main Street; and it matters right here between Independence and Constitution Avenues, Mr. Speaker.

This bill has three primary provisions:

Number one, it provides transparency by bringing off-budget items on- budget. Now, for folks who don't follow this as closely as you and I do, Mr. Speaker, you know that when things are off-budget, their degree of scrutiny is changed. When things are off-budget, the impact they have on the American taxpayer is not always reflected. When we take those things from off-budget and bring them on-budget, we begin to show the American taxpayer the real cost of their risk and responsibility.

Number two, it reforms the accounting method that we use to calculate how at risk American taxpayers are under Federal credit programs, again, to bring us closer to private sector models. Mr. Speaker, as you well know, when a dollar goes out the door from this United States Capitol, when a dollar goes out the door from the United States Treasury, if it is a loan program, there is no guarantee that dollar comes back. Are most folks faithful payers? Yes, they are. But does every dollar come back? No, it doesn't. Do we need to look further than Fannie and Freddie to see that model? For the first time, we'll begin to account for that risk so that the American taxpayer understands when the their American government guarantees a loan what potential impact that has on their pocketbook at home.

Finally, Mr. Speaker, it requires all Federal agencies to post their budget justifications online in a timely manner. Now, you saw last week, Mr. Speaker, we were able to pass the Baseline Reform Act, which said no longer will we just assume every agency is

going to spend more. For the first time, we say that every agency needs to justify any increases that they receive in their budget. What this provision does is go one step further to say, when you are producing that budget, post your justifications online. Let the American people in. Mr. Speaker, if we have nothing to hide in this institution, then continuing to publish more and more information so that the American people can come into this discussion process is only going to lead us in the right direction.

Taken together, these three reforms bring the kind of attention that we need to a budget process that has been long broken. We cannot make America's future brighter and more secure if we continue to escalate the debt that we pass on to our children and their grandchildren. Clearly, this body has struggled in years past to contain that debt on both sides of the aisle. Clearly, folks occupying 1600 Pennsylvania Avenue have struggled to contain that debt on both sides of the aisle.

Mr. Speaker, the folks who see these issues with clarity live back home in my Seventh District of Georgia. They understand what it means to do budgeting around the family dinner table. I know my colleague from Massachusetts has those same folks living in his district facing those same challenges in his district; and if we can bring those people into the discussion, Mr. Speaker, if we can just be honest with our constituents back home about the magnitude of the problem, we will have their support and their involvement to turn this page for America's financial future.

Mr. Speaker, we can't stick our heads in the sand. Next week, we're expecting the budget from the White House to arrive here on Capitol Hill. We were expecting it this week, and they've delayed it to next week. I'm excited about it. I say to my colleague from Massachusetts, Mr. Speaker, I believe we're going to have a serious budget discussion with the White House for the first time in the 3 years of this administration. We're going to have a serious budget dropped on our doorstep, and then the Budget Committee is going to be involved in a serious discussion about how to bring the White House's priorities and the House's priorities in line with the American people's priorities. That process does not happen in a vacuum. That process happens in the sunshine, the bright daylight that is this U.S. House Chamber, Mr. Speaker. And with this reform combined with the other nine reforms coming out of the Budget Committee, we are taking steps forward to change forever the way this town does its budgeting business.

I'm very proud to sit on both the Rules Committee and the Budget Committee, to have had a hand both in the underlying legislation and this resolution today. I urge all of my colleagues to support this resolution, Mr. Speaker, so that we can bring up the underlying bill.

Yesterday, the Rules Committee filed House Report 112-388, a report to accompany House Resolution 539, a resolution providing for consideration of H.R 3581, the Budget and Accounting Transparency Act of 2011. The report inadvertently excluded an explanation of the waiver of all points of order contained in the resolution against the amendments printed in the report. The Committee on Rules is not aware of any points of order against any of the amendments printed in the Rules Committee report. The waiver of all points of order against the amendments printed in the report is prophylactic in nature.

With that, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume to say to my colleague from Massachusetts, I always look for those areas of agreement because I know that we have some. I had a tough time finding those areas of agreement in that particular presentation, but when you got to your discussion about the theater that takes place on this House floor, I began to feel that personal bond, Mr. Speaker, because this feels like theater to me.

This is a rule that my friend is urging a ``no'' vote on that does one thing and one thing only: it brings to the floor a budget-changing provision that will shine more of a spotlight on what it is this Congress does when it comes to spending the American people's money. It does one thing and one thing only, and that is to give the American taxpayer more insight into what it is that my colleagues and I are doing with the money that we have taken from them.

Now, you might say, Mr. Speaker, well, what if I oppose that sunshine? What if I don't want daylight in the process? What if I have some things up here that I don't want folks to know I'm doing with their money? Fair enough. You can vote ``no'' on the underlying bill. But this rule, Mr. Speaker, this rule, which governs the debate on the House floor, has made in order every single Democratic amendment that was germane to the underlying legislation. Hear that. Hear that.

For folks who don't like the way the bill was crafted--of course we had a full hearing and markup in the Budget Committee--but for folks who don't like the way that bill came out, sometimes Congresses in the past would just shove a bill to the floor and say take it or leave it. But this bill, Mr. Speaker, is coming to the floor with a rule that said, tell me, colleagues, Republicans and Democrats, tell me how it is that we can make this bill better, and every single idea and suggestion that was germane to the underlying bill this rule makes in order.

So I ask you, Mr. Speaker, why vote ``no'' on this rule? If you don't like the underlying legislation, vote ``no'' on the underlying legislation. But this rule is a rule that this entire House can be proud of, and I'm proud to be able to carry it for the Rules Committee today.

I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume to say I agree with the gentleman. I agree with the gentleman that we must move jobs legislation out of this U.S. House of Representatives, on to the United States Senate and on to the White House.

This is a budget reform bill that, as the gentleman accurately stated, is a serious bill to address a serious problem. We didn't do this in January of last year, our very first term in office. Then we were working on repealing the President's health care bill, which remains a national priority.

We didn't do this last April when we were focused on presenting the first serious budget that dealt seriously with the underlying debt drivers, those entitlement programs, for the first time since 1965. We didn't deal with these issues while we were trying to continue to fund this government through a regular appropriations process, a process that hadn't taken place in over three years.

We have brought this bill to the floor today. What were we doing in the intervening time, Mr. Speaker? We were working on jobs. We were working on jobs, because I agree with the gentleman, that is something we must focus on.

Reducing regulatory burdens sits with the Senate. Energy Tax Prevention Act sits with the Senate. Consumer Financial Protection and Soundness Improvement Act sits with the Senate. Small Company Capital Formation Act sits with the Senate. I could go on and on and on consuming all of our, time because the gentleman is right. Jobs are the priority. And this House and this leadership and this Congress has made it a priority. But to what end, Mr. Speaker? To what end?

Will we stop focusing on this national priority? Absolutely not. Will we continue bringing bill after bill after bill to this floor that speaks to the needs of American families? You'd better believe it.

But will we abdicate our responsibility? Mr. Speaker, I've got cards aplenty in my pocket. One of them's the United States Constitution. Do you know where the responsibility to budget comes from, Mr. Speaker?

This wasn't a power grab, like so many things that go on in this House where we're removing power from the American people. This is a constitutionally delineated responsibility of this House. And I will not apologize for being down here focusing on those things that the Constitution requires us to focus on.

Now, that said, it's a fair question to say, but Rob, this is a small bill. This is a small bill. You know what? A lot of folks might take that as an insult, Mr. Speaker. I'm flattered by it because, as I have watched this process, we have seen too many giant resolutions, 1,000-, 2,000-, 3,000-, 4,000-page resolutions come to this floor.

Is that practice gone forever? I suspect we'll see another monstrosity come our way. I hope not, but I suspect we will. But in the interim, we can do better.

On the Budget Committee, Mr. Speaker, we actually had that discussion. This is 10 separate pieces of legislation. My colleague from New Jersey earlier was saying we want up-or-down votes on this floor. We want yes-or-no votes on this floor. I share his passion, and that's what we've done.

Instead of bringing a giant, omnibus budget reform bill that had lots of different things tied into it, Mr. Speaker, we've decided to bring one idea at a time, just one, one idea at a time, and allow this House, the people's House, to have that yes-or-no vote on whether or not this is an idea that has merit.

I appreciate my colleague's statement that this is a serious bill to confront a serious issue. And I will tell you, and it has developed more meaning to me, Mr. Speaker, since I have been a Member in this House for the last 12 months--it was Edmund Burke, he was a colleague of ours on the other side of the pond in the House of Commons, and a huge supporter of the American Revolution. And he said this: No one made a greater mistake than he who did nothing because he could only do a little. No one made a greater mistake than he who did nothing because he could only do a little.

I confess, Mr. Speaker, I was a little naive when I showed up here as a freshman last January. I thought I was going to be able to fix it. I thought my colleagues and I, you and I, my colleagues on the other side of the aisle and I, working together, I thought we were going to be able to fix it. It's taken a little longer than I thought. Those big bites at the apple have not been as successful as I hoped.

Have we passed them here? Yes. Has the Senate moved on them and sent them to the President? No.

So we changed gears, bringing the little ideas to the floor, those little ideas that, as my colleague from New Jersey mentioned, are serious reform proposals.

I'll say it again, Mr. Speaker. I'm proud of these underlying proposals, and I'm proud of this rule that makes them in order. To be clear, it's a little unheard of in this House, and it's happened on both sides of the aisle. Republicans and Democrats alike have used this floor for their own devices.

This rule makes in order every single idea and suggestion that's germane to the underlying bill that was brought by either Republicans or Democrats. What's better than that? What's fairer than that? What is more American than that?

I understand, I know the Rules Committee has some tough decisions to make up there, and occasionally a closed rule comes to this floor. I'm generally grimacing as much as anybody when that happens. I believe in the openness of this process.

But to say, send me all of your ideas and suggestions, Mr. Speaker, send them all to the Rules Committee, and for the Rules Committee to say, anything that's germane, we've made in order today, Mr. Speaker-- this is not a resolution to vote ``no'' on. This is the rule, not just a rule, this is the rule to come to the House floor and cast a proud ``yes'' vote for today.

With that, I reserve the balance of my time.

We have no speakers remaining.

Mr. Speaker, I yield myself such time as I may consume to end where I began, and that is in agreement with my colleague. He says we should be the wind at the back of small business. Nothing could be truer. Nothing could be more true.

I don't believe that presiding over the largest regulatory expansion in the history of America is fulfilling the promise of being the wind at the back. That is wind in the face of American small businesses.

I don't believe that presiding over the largest tax increase in American history counts as being the wind at the back of U.S. small business. I think that's a wind in the face of those small businesses.

I do not believe that a new health care mandate is the wind at the back of small businesses. I believe that's a wind in the face of small businesses.

But I take great comfort in knowing that while there may be all of those issues that divide us, there are principles that unite us. We should, in fact, be the wind at the back of small businesses.

Mr. Speaker, this rule that makes in order every single idea to improve the underlying legislation, this budget reform rule is honest with the American people for the first time in my lifetime.

You know, we hear so much talk about the payroll tax, Mr. Speaker. I know you're familiar with the way that accounting works. When folks pay--and for those of us in Congress, for everybody back home, it's 15.3 percent of your paycheck. 15.3 percent out of every paycheck- receiving American's pocket goes to the payroll tax, which goes to fund Social Security and Medicare.

Under the clever accounting rules that the Congress and the President have so eloquently crafted, when I pay my 15.3 percent out of my paycheck every month, when every American worker, Mr. Speaker, pays their 15.3 percent, with the expectation that Medicare will be there for them when they retire, with the expectation that Social Security will be there for them when they retire, when we all contribute, the clever accounting rules here on Capitol Hill call that a credit. That's a credit to the United States Government's Treasury. It does not account for it as a debit because now folks have promised to have Social Security and Medicare there for me when I turn 67. It counts as a credit, Mr. Speaker.

When we hire a new Federal employee, every new Federal employee we hire, Mr. Speaker, when they pay out of their monthly check to the Federal Employees Retirement System, that pension that's available to every Federal Government employee, that payment that they make into the pension program is counted as a credit. It's as if the more Federal employees we hire, the more money we'll make for America. No, because with every year of payment into that system, they get something very large out.

This is not news to any business owner in America, Mr. Speaker. This is not news to any business owner in America. They have to do this accounting every day. You want to talk about the crooks on Wall Street; if Wall Street accounted the way the Federal Government does its accounting, they would in fact be crooks and they would in fact all be in jail. It's unconscionable.

The wool that we pull--and we're all complicit in it, have been for years. The wool that we pull over the eyes of the American taxpayer-- and kudos to this Budget Committee and, candidly, to this budget chairman. Chairman Paul Ryan and the chairman of the Rules Committee, Chairman David Dreier, have been working on fundamental budget reform for a decade. And

why it is that neither party has had the courage to bring this forward until now I do not know, but I stand here with pride to be associated with it today.

Mr. Speaker, if you want to create jobs, call your Senator. Call your Senator from your home State, Mr. Speaker, and share with them the importance of moving the pro jobs agenda that is sitting on their doorstep. I understand, Mr. Speaker, and I wouldn't hold it against you if you can't remember all of the jobs bills we've passed, there have been so many, but you can see them. It's on the Web, jobs.gop.gov. You can see it there, every single one, and you can see their status. Now, in fairness to the Senate, of the more than 30 bills we've passed, they've done a handful, and I mean literally a handful, but dozens more sit there waiting.

I want to say to you, Mr. Speaker, if the pitch from my colleague that we are abdicating our responsibility to focus on jobs took any root with you at all, let me say emphatically: Not true, not true. Our focus has always been on jobs. Our focus will continue to be on jobs. Our focus has always been the economy. Our focus will continue to be the economy.

But there is a trust deficit in this town. Everyone hears it when they head home. Everybody hears it from their constituencies: I don't believe you when you say it out of Washington, D.C.

I get it. I come up here. I read these budgets, Mr. Speaker. Some of them are hard to understand. We've got a whole team of staff here to help us sort through those numbers. I rely on that staff. I'll go and talk to them, and we'll go through it all line by line. It's hard to understand, and it doesn't need to be. It doesn't need to be D.C. doublespeak. It can be Georgia common sense that we bring to the budgeting process, and that is what the underlying resolution does today.

In 2001, when President Bush took office, the CBO projected a surplus of $889 billion by 2011. That turned into a $1.3 trillion deficit under two Presidents--from $889 billion in surplus to $1.3 trillion in deficits. I'll tell you that every single spending bill that left this body over those years--and I was not in this body, serving, but I saw it day in and day out--was done with the very best of intentions. Yet where does that leave our children and our grandchildren? It leaves them $15 trillion in debt.

You talk about being the wind at the backs of small businesses, Mr. Speaker. I tried to get my mind around what $15 trillion--on its way to $16 trillion--in debt means. Do you know, if you're a small business owner in America and if you'd started a business on the day that Jesus Christ was born and if you'd been so bad at it that you'd lost $1 million a day, every day, 7 days a week, Mr. Speaker, from the day Jesus was born until today, you would have to continue to lose $1 million a day every day, 7 days a week, for another 700 years to lose your first $1 trillion?

As stewards of the American people's money, we've lost $15 trillion, much of that just in the last 4 years. Anything that we can do--no matter how big or small--that incorporates the American people into this budget discussion, that gives them the best information that they can have, that provides to us the best information that we can have and that does away with the funny math that has almost become a punch line across this country is a step in the right direction. There is a trust deficit in this country, and the underlying legislation today takes a very strong step towards correcting it.

Mr. Speaker, I want to say again how much I appreciate Chairman Paul Ryan and his work in leading the Budget Committee as well as how much I appreciate Chairman David Dreier and his work in leading the Rules Committee. These two gentlemen have been champions of honesty in the budget process. What we have today, both in the rule and in the underlying bill, is the realization of their tireless efforts.

I encourage my colleagues to vote ``yes'' on this rule. Vote ``yes'' on this rule that allows every single idea to improve the underlying legislation, and that's germane, to come to this House floor, and then vote your consciences. Vote your consciences on those amendments, and vote your consciences on the underlying bill. I wager, if this body votes its conscience on this underlying bill, it's going to pass this body and head to the United States Senate.

Mr. Speaker, with that, I yield back the balance of my time, and I move the previous question on the resolution.

The previous question was ordered.

Mr. Speaker, for the purpose of inquiring about the schedule for the week to come, I am pleased to yield to my friend from Virginia (Mr. Cantor), the majority leader.

I thank the gentleman for his information and would ask him on the timing.

The conference committee has met twice on the payroll tax cut, the unemployment insurance, and the so-called ``doc fix,'' or to ensure the fact that doctors are compensated and will be available for Medicare patients. The conference committee, Mr. Leader, has met twice since December 23. We adopted a motion to instruct, overwhelmingly, through the House to make sure that they reported back by February 17.

I think you may have read my comments in the press that if we do not do it by the 17th, then we're off for a week and we will be back the 27th, 28th, and 29th, come back the night of the 27th, and we'll be jammed at the end on Wednesday, the 29th. We only have 6 full days left before the February break. Now, that does not include our 6:30 start times.

House Democrats, Mr. Leader, stand ready to, frankly, I think, work through the weekend if that were necessary. But I'm very concerned that something that we all want to get done--and I've made the suggestion to my Democratic conferees, and they were equally amused as you are. I understand that.

I will tell you that I have great concerns that we're going to get to the 27th, 28th, and 29th and be in the same kind of confrontation and debacle that we found ourselves in in December. That's not good for your party. In my opinion, it's not good for our party. It's not good for the House and Senate; but it is certainly not good for the 160 million people who are going to be concerned about whether or not, in fact, their tax cut is going to continue, or the Medicare people who are going to be concerned about whether their doc is going to be available, or the unemployed who are going to be concerned.

Now, of course, for the unemployed, we had some very good news. You didn't mention it in your opening comments, but I'm sure you were as excited as I was about the 257,000 new private sector jobs that were created last month; showed real progress.

But I will tell you that I'm very concerned about the timing and would be delighted to hear the gentleman's thoughts on the success and the progress of the conference committee.

I thank the gentleman for his comments.

Of course we have long been a supporter of small business. We believe small business is the engine of our economy. We believe we need to grow entrepreneurs. We need to expand, frankly, small business and the middle class.

It was interesting what the gentleman referred to in response to my question. Yes, we understand that cutting the pay of average working Americans--who happen to be Federal employees, but they're average working Americans--is the way you want to pay for what we do. We, of course, want to pay for it with some of the wealthiest people in our country just contributing a little bit more as opposed to average working people who are struggling by. And, by the way, the sponsor of that piece of legislation to which you referred indicated he was having a tough time getting by supporting his family on the salary that he makes here in Congress.

Now, frankly, we offered, as you know, to have a vote on freezing Members of Congress' salary straight up--not hidden in another bill, but straight up--which I would have supported and my side would have supported overwhelmingly, I presume your side would have supported overwhelmingly. We, of course, didn't get that opportunity because, frankly, our priorities do, in fact, differ.

Average working people as opposed to the best off in America, that's the choice in this conference committee, apparently; because you want to pay for it with average working people taking a hit, and we want to pay for it by just asking just a little more from the wealthiest in America to help us through this tough patch that we're in.

Things are getting better. The gentleman--I haven't seen his release, but I will certainly look at his release. He says we ought to do better. I will tell the gentleman we're doing a lot better.

The gentleman knows that during the last 5 months of the Bush administration, we lost 3,192,000 jobs. The gentleman smiles because, oh, that's history. Well, it is history, and we ought to learn from it because we were following the economic policies the gentleman still continues to press upon the American people. We lost 3,192,000 jobs in 5 months. In the last 5 months, however, we have gained now over 1 million jobs. That's progress. In fact, over the last 22 months, we've gained over 3 million jobs so that we are making significant progress. Not enough. We dug a very, very deep hole and we're trying to get out of it, but the fact of the matter is losing 3 million jobs in 5 months and gaining 1 million jobs in 5 months is about a 4 million job difference.

So I tell my friend both in terms of who ought to pay for the investments that we have agreed we need to make. We don't want to raise taxes on these folks as the economy is still coming back, obviously showing great progress, but we don't want to pay for it with average working people having to pay the price.

I will tell my friend, I was disappointed that we didn't have a separate vote so that Members of Congress could vote straight up on their being frozen. And I will tell my friend that I will work with him, perhaps towards that end.

Now having said that, I am sure the gentleman has been in conversations with the gentleman from Michigan (Mr. Camp). Is the gentleman expecting a relatively early report back from the conference committee, hopefully prior to the 18th of February when we might be voting on this?

I yield, certainly.

I thank the gentleman. And we all look forward to working together in a bipartisan way. We sure have found great difficulty doing it, however, because we have trouble having a meeting of the minds.

I will tell my friend that what I advocate over and over and over again is paying for what we buy. That's what I advocate. And if you don't want it, don't buy it.

You controlled this town for 8 years from an economic-policy standpoint. I know we were in charge of the Congress for the last 2 years. We couldn't pass anything over George Bush's veto. You and I both know that. So for 8 years, we didn't pay for what we bought; and we went from surplus to deficit. We went from a debt of $5.6 trillion to a debt of almost $11 trillion.

Have we added to the debt? Yes, we did. Why? Because we went into the deepest depression, starting in '07, that this country has been in in your lifetime and my lifetime; and I'm a lot older than you. So that's what I advocate: paying for what we buy and having the courage to make decisions on doing exactly that. And very frankly, on your side of the aisle, when you go and say, look, we need to pay for elections, who do you go to? You go to your Members, and you go to people who have some resources that they can contribute to an effort you think is very important.

I think America's efforts are very important. And I think those of us who have done better ought to pay a little more than those who are struggling, as the gentleman refers to. Yes, that's the difference. I believe it's the difference, and I will continue to advocate paying for what we buy. That's why I was for statutory PAYGO, which George Bush abandoned and which essentially is not being followed today, as I think all of us should do.

So I will tell my friend that I think we ought to do better. I agree with him. And we did do better. We did do better under policies that I supported. We grew 22 million jobs in the nineties. We lost jobs in the 2000s. We went backwards. And the stock market went up 216 percent in the nineties. Under George Bush, it went down 26 percent. Yes, I think we can do better, and we ought to do better. And we ought to do better by investing.

Let me talk a little bit about the bill that the Speaker's talked about, you've talked about, it's been in the news: infrastructure and jobs. The Transportation and Infrastructure Committee marked up a controversial highway bill--the gentleman says we want to work together. I agree with that. He and I try to do that. We don't always succeed, but we try to do it. They marked up the bill yesterday for 17 hours and finished around 3 a.m.

I don't know whether the gentleman knows this, but at the start of that debate, the gentleman from West Virginia (Mr. Rahall), the ranking member, asked all the members of the Transportation Committee, when the bill was put on, to raise their hand if they had read the bill. You know how many people raised their hand--that's a rhetorical question because I think the gentleman probably hasn't inquired of this--none. On an 800-page bill, not one person raised their hand that they had read the bill. There was a lot of discussion about reading the bill.

There was, of course, as you know, a bipartisan ``no'' vote. One of the senior members voted against it. This is in stark contrast to the unanimous vote that occurred in the United States Senate on the bill.

The Committee on Natural Resources also completed a controversial markup on opening ANWR to drilling--as I understand it, you are going to put that in the infrastructure bill--with the clear knowledge that that is a very controversial item that will not pass the United States Senate. You may have the votes here. That is similar to what happened on the payroll tax cut just last December.

If you are going to work on a bipartisan basis, we ought to understand that we are going to have to not try to push on one party or the other things that are unacceptable and won't pass and don't have the votes.

The reason that George Bush signed so many bills that we passed in the Congress in '07 and '08 was because we worked with the administration, and we worked with the Senate. The Senate and the House were controlled by Democrats; President Bush was in office. He signed more than twice as many bills that we passed. Why? Because we worked with him. We would urge you to do the same.

Is the gentleman planning to bring up the infrastructure bill to the floor

soon? And can he tell the Members if it will be considered under an open process? Furthermore, is the majority leader expecting there to be bipartisan cooperation on the infrastructure package so that we do not have to go up against another deadline? As the gentleman knows, on March 31 the highway authorization bill ends. We temporarily included it.

And let me end with this before you answer your question, because Ray LaHood was a leader in this Congress. Ray LaHood was a leader on your side of the aisle. Ray LaHood and I served together for a long time. I don't know whether you've seen his quote, but I think it bears consideration by your side of the aisle of a Republican from middle America--Peoria, Illinois--who your minority leader, Bob Michel, had as his chief of staff.

Here is what he said about the infrastructure bill that was marked up: ``This is the most partisan transportation bill that I have ever seen, and it is also the most anti-safety bill I have ever seen.'' This is a direct quote from Ray LaHood, Republican, former Member of this House for many years, and former chief of staff to the minority leader Bob Michel. ``It hollows out our number one priority, which is safety; and frankly, it hollows out the guts of the transportation efforts that we've been about for the last 3 years. It's the worst transportation bill I've ever seen during 35 years in public service,'' Ray LaHood, Politico, February 3. That's today. He said it today, in realtime. This is real breaking news from the Transportation Secretary: the worst transportation bill he has seen in 35 years.

That does not, I tell my friend, bode well for bipartisan cooperation on a piece of legislation that nobody in the committee had read. So I'd ask my friend, do we expect to bring that bill up under those conditions in the near term?

I thank the gentleman.

Wonderful, wonderful logic. A Republican leader in this House is appointed to include bipartisan--and the Secretary of Transportation, who was a leader in this House, and the chief of staff of the minority leader of this House, says that the bill you have drafted, that your Members didn't read before they passed it out of committee--and the public, I'm sure, is glad that at least we're going to read it before we pass it. I hope that's the case. I've heard a lot of talk about reading the bills. Nobody read it before they passed it out of committee. And the Republican Secretary of Transportation, former chief of staff of the minority leader, says, my friend, it's the most partisan bill he has ever seen in 35 years.

And then you say, well, I know we passed the most partisan bill in 35 years, but, gee, the administration won't work with us. You don't accept that premise. I understand that. But it's ironic that you say the administration won't work with you.

You and I both know Ray LaHood happens to be one of the more bipartisan people with whom you and I have served. I've worked frequently with Congressman LaHood when he represented Peoria, as a Republican in the House of Representatives. He and I worked together on a lot of issues. Why? Because he wanted to get things done. He wasn't just simply interested in making political points.

Now, you bring up ANWR in terms of pay-for. I'm for paying this. You didn't hear me say anything about offshore drilling, this and that. I did about ANWR because you and I both know, in a bipartisan way, many of your Members have voted against opening up ANWR, and we have, as the gentleman knows, millions of acres, millions of acres currently available for drilling in Alaska right now as we speak.

So we want to have a bipartisan--but putting an 800-page bill on the table, no chance to read it, passing it in a 17-hour marathon session, and then having clearly no--having not worked at all with Ray LaHood, and if you're telling me that Ray LaHood won't work with Republicans, I simply do not accept that premise. I think that's a disservice to Ray LaHood if that's what you are saying. He is the Secretary of Transportation. And there is no doubt in my mind, none, zero, that if Mr. Mica wants to work with Ray LaHood on a bipartisan bill, Ray LaHood will be here as many hours, days, and weeks as Mr. Mica needs him here, and I think you would, hopefully, agree with that proposition.

Ray LaHood is a Republican, but he is a bipartisan American who wants to get things done for our country and create those jobs of which you speak, which all of us want to do.

We have a jobs bill, by the way, that you have not brought to the floor. What's one of the aspects of that jobs bill? Infrastructure, investing in infrastructure. That bill has languished for 5 months now, not brought to the floor by the majority leader, who has the authority to bring it to the floor, and I've, of course, been urging him to do so.

Now, if he'd like to comment--I have another point, but if he wants to comment on what I have said, I yield.

The gentleman knows that a number of those proposals had bipartisan support in this House, I think have bipartisan support over in the Senate. But they need to be paid for, and that's where the contention comes, as the gentleman knows.

Let me ask you, on another subject, if I might, the STOCK Act.

Yet, before I do that, I appreciate the gentleman's observation with respect to those bills that the President has suggested we do that we have done.

The individual bills. You're right.

We could make some progress if, frankly, the majority leader could get 60 votes to enact the legislation and transact business on the floor of the Senate. Unfortunately, as the gentleman very well knows, the majority leader, Harry Reid, has had very great difficulty getting 60 votes to proceed with business on the floor of the House of the United States Senate. I think that's unfortunate.

But let me move on because the gentleman went from an infrastructure bill, which, as Secretary LaHood said, was the most partisan bill he's seen in 35 years, and shifted to the jobs, on which we agree. The fact of the matter is that I want to talk about another piece of legislation that the Senate has worked on. We have a bill here. We've asked that it be taken from the floor, from the desk and put on the floor, and that's the STOCK Act. The gentleman has expressed support for the STOCK Act. I'm hopeful that we can pass a House bill and then go to conference with the Senate on a bill in the near future.

Would the gentleman comment on that.

I thank the gentleman for his response, and he says the earliest day possible. I tell my friend that Tim Walz of Minnesota has had a bill, as the gentleman probably knows, of the STOCK Act--also, Louise Slaughter, ranking member of the Rules Committee, has worked on for literally a decade or more--so we have legislation which is available to take, frankly, from the desk, pass that, and go immediately to conference with the Senate.

The gentleman indicates he wants to change the Senate bill. I think that that may be appropriate; but if he does, we're going to have to go to conference in any event. So my suggestion is you take Tim Walz's bill, act on that, a House bill, and we go to conference on that bill. That seems to me that's the most expeditious way to accomplish what the gentleman says he wants to accomplish in a very quick fashion.

I think Tim Walz of Minnesota would be happy to hear that and available to work towards that end, along with Louise Slaughter.

Mr. Speaker, I think that all of us, hopefully, agree with what the leader has just said. We clearly want to make sure the American public has confidence and trust in the actions we take in that they are not driven by personal interests but by public interests, by a concern for the welfare of the people we represent in our country.

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

Mr. Speaker, I thank the gentleman from Georgia for yielding me the customary 30 minutes, and I yield myself such time as I may consume.

(Mr. McGOVERN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, let me begin by urging a ``no'' vote on this rule, which is not open, and a ``no'' vote on the underlying bill. The bill before us does nothing to improve the quality of life for any American. It doesn't create a single job. Not one job is created by this bill we're talking about today. This bill is going nowhere in the United States Senate. I don't believe this is a serious effort and, in short, we're wasting our time.

Mr. Speaker, I cannot stress this enough. Congress must keep our focus on the most important priority facing the American people, and that is jobs--jobs, jobs, jobs. Democrats may sound like a broken record, but that's because we know that the core issue of our time is the economy and jobs. We need to do more to make sure that America's businesses get back on track and that the American people are in a position to succeed when these businesses start to hire.

Now, we had some good news last week. The unemployment rate decreased for the fifth month in a row, falling to 8.3 percent.

At the same time, we've had 5 straight months of job creation, and we're in the 23rd consecutive month of private sector growth.

The economy looks like it's rebounding; and if this trend holds, that's a good thing. But while private sector employers added 257,000 jobs in January, there was a loss of 14,000 government jobs, including 11,000 local government jobs. Now, the reason for that, Mr. Speaker, quite frankly, is because the Federal Government is cutting away and State governments are cutting away and these so-called ``government jobs'' are being eliminated--the jobs that my friends on the other side of the aisle like to demonize. But what are these local government jobs? Mr. Speaker, these are cops, firefighters, teachers, librarians, and trash collectors. They're not faceless bureaucrats. They are people who make our lives safer, better, and cleaner every day. And they're our neighbors and our friends and our family members.

So despite the relatively good news about the improving economy, we are clearly not where we need to be. Payroll employment is still 5.6 million jobs short of where it was at the beginning of the Great Recession of December of 2007. There are four jobless workers for every job opening and long-term unemployment is still at historic high levels.

It is clear that this rebound, as slow and painstaking as it is, is taking place in spite of House Republicans and in spite of their policies, not because of them. In fact, I believe actions taken and policies voted on by this House have slowed down this economic recovery, have slowed down this economy, and have prevented a faster and more robust recovery.

For example, congressional Republicans should be doing all they can to prevent a tax increase on middle class Americans. Congressional Republicans should be doing all they can to extend unemployment insurance for people who are unemployed through no fault of their own. Yet, Mr. Speaker, they have continued to drag their feet on this legislation and, in fact, continue to bicker among themselves about the need to extend these programs. This should be a no-brainer. This should be something that both sides should come together and be able to improve immediately. Yet it has become this theater, this drama that plays out; and nobody quite knows how it's going to end.

Mr. Speaker, we're one week into February, more than 1 month into the new year, more than 13 months into this new Republican-controlled Congress; and we have yet to see one meaningful jobs bill. No wonder Congress' approval rating is at historic lows. And instead of bringing legislation to the floor that would help the economy--like a clean extension of the payroll tax and unemployment insurance--the GOP would rather bring up misguided budget bills that simply attempt to rig the budget rules so they can score cheap political points.

House Republicans are simply trying to change the rules of the game to benefit their own point of view. This bill today, the so-called Budget and Accounting Transparency Act, is another sham bill in the Republican leadership's quest to change the rules of budgeting. This may seem like inside baseball to some, but it really is something quite extraordinary.

Simply, the Republicans, with this bill, are attempting to artificially inflate the cost of Federal credit programs. They do so by changing the way government credit programs are calculated. The Federal budget is supposed to count the amount of money that is spent and the revenue received. If there is more money coming in than going out, it's a surplus. The opposite is a deficit. What the Republican leadership is trying to do with this bill is

to recalculate the way these credit programs are scored, or counted, in the budget process, automatically making them more expensive. They do so by treating government credit programs in a similar way to private credit programs, even though they are treated differently by the markets.

Now, on top of changing the way these credit programs are scored, it's important to point out that this bill doesn't apply to all Federal programs. In other words, we would have one set of scoring rules for one set of Federal programs and another one just for the Federal credit programs. That doesn't make any sense to me.

If some of these recent budget bills are any indication, the House Republican leadership cares more about rigging the budget process just to dismantle the Federal safety net instead of actually working to reduce the deficit and at the same time spur job creation.

Mr. Speaker, we should be talking about jobs. We should be acting on the President's jobs plan. Our committee work should be focused on how do we get this economy running again. What should be on the floor today is not a bill that's going nowhere, but a bill that will help put people back to work. You know, if we put more people back to work and this economy begins to recover more, then we can grow out of this deficit.

I would just, again, urge the Republican leadership to stop bringing stuff to the floor that really, I believe, is a waste of our time. Bring things to the floor that are meaningful, that will make a difference in the lives of the American people, that will improve the quality of lives for people in this country.

I urge my colleagues to vote ``no'' on this rule and on the underlying bill and to put our focus back where it belongs, creating a stronger economy for the American people.

I reserve the balance of my time.

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

The reason why people should vote ``no'' on this rule is because it's not an open rule, number one. The other reason why people should vote ``no'' on this rule is because it enables bad behavior, and the bad behavior is bringing up bills that are going nowhere that aren't very serious.

What we should be bringing to the floor right now is a clean extension of the payroll tax cut for middle class Americans and the extension of unemployment insurance. That's what we should be talking about. That's what should be on the floor right now. Instead, that measure, which would actually help people, is bogged down in conference because of ideological battles that my right-wing friends choose to wage. What we should be doing on this floor is putting the American people back to work and helping grow this economy through creating more jobs.

The bill before us does nothing to address the critical challenges facing America's families. It doesn't create a single job. It does nothing to address our serious budgetary challenges. This bill does not increase revenues or reduce spending. It does nothing to cut this deficit. We are sitting here talking about something that really, again, is going nowhere and that really doesn't matter in the scheme of things. We should be talking about jobs and how we get this economy moving again.

With that, Mr. Speaker, it is my privilege to yield 4 minutes to the gentleman from New Jersey (Mr. Andrews).

(Mr. ANDREWS asked and was given permission to revise and extend his remarks.)

May I inquire of the gentleman how many more speakers he has?

Then I will close for our side.

Mr. Speaker, I yield myself the balance of my time.

I will agree with my colleague on the Rules Committee that what is before us today is a small idea. The fact is that we have some big problems in this country and they require big and bold solutions, like extending the payroll tax cut for middle class Americans.

Mark Zandi, a Republican economist who worked for John McCain, said that if we don't extend the payroll tax cut it might cost as many as 500,000 jobs in this country.

It is a little bit puzzling to me--and I think to the American people who are observing this--that rather than bringing that bill to the floor or rather than bringing bills to the floor that will help enact the President's jobs program or any kind of bill that will help put people back to work, we are dealing with this, which my friend on the other side of the aisle said is a small thing, a small idea.

I think we can do better. I think the American people are expecting us to do much better. We should be having a debate on our manufacturing agenda. We need to get a tax structure in place that encourages manufacturing investment here in this country. We should be eliminating tax incentives and loopholes that encourage financial speculation-- rather than investment--and outsourcing and offshoring their production and enact tax incentives for companies that produce domestically. That is the kind of bill we should be having on the floor right now, a recommitment to investing in our infrastructure.

I was hoping that we would have a transportation bill that would be worth supporting; but by all accounts, the transportation bill has become such a monstrosity that people on both sides of the aisle are opposed to it.

The LA Times did an editorial saying that the House Republican leadership unveiled its version of the 5-year transportation bill. It isn't just that this bill is so thoroughly partisan that it has no chance of being approved by the Democrat controlled Senate; it is that it is less a serious policy document than a wish list for oil lobbyists, and its funding proposals are so radical that they have been decried even by such conservative watchdogs as the Reason Foundation, the Competitive Enterprise Institute, and the Taxpayers for Common Sense. I guess next week and the week after we're going to be bringing that bill to the floor.

Again, I don't think anybody here thinks that that is going to see the light of day, which means that it's not going to create jobs; it's not going to put people back to work.

Mr. Speaker, I would like to insert in the Record the LA Times editorial and two editorials from The New York Times.

[From the Los Angeles Times, Feb. 3, 2012]

In the House, a Transportation Train Wreck

After Congress pushed the nation to the verge of

catastrophe last year by delaying a deal to raise the debt

ceiling until the eleventh hour, our capacity to be surprised

by that body's irresponsible gamesmanship was somewhat

diminished. And yet, we still can't help but be awe-struck by

the mess the House of Representatives is preparing to make of

the federal transportation bill, a key legislative priority

for both parties.

On Tuesday, the House Republican leadership unveiled its

version of the five-year bill. It isn't just that this bill

is so thoroughly partisan that it has no chance of being

approved by the Democratic-controlled Senate; it's that it is

less a serious policy document than a wish list for oil

lobbyists, and its funding proposals are so radical that they

have been decried even by such conservative watchdogs as the

Reason Foundation, the Competitive Enterprise Institute and

Taxpayers for Common Sense.

What's so bad about it? The bill slashes funding for

inexpensive but worthwhile programs to improve biking and

walking safety, cuts funding for Amtrak by 25% and runs

roughshod over federal regulations aimed at protecting

communities and the environment from the negative effects of

transportation projects. But what's far worse is the GOP

scheme for helping to fund the bill's $260 billion worth of

infrastructure improvements over the next five years: opening

up vast swaths of currently protected land to oil drilling.

Logically and politically, this makes no sense. On the

logic front, it can't work. Three bills under consideration

in the House that are intended to fund the transportation

bill would open the Arctic National Wildlife Refuge to

drilling, mandate oil shale leasing on federal lands and

expand offshore drilling in sensitive areas. Yet even if

drilling were allowed in these places, it would be many years

before significant revenues started rolling in to the

government, and it's difficult to predict how much money

would be generated, making advance construction planning

impossible. Moreover, oil shale development is an unproven

technology that may never generate a dime. And politically,

drilling in such places as the Alaskan refuge is rightly a

nonstarter.

If it weren't already abundantly clear that this bill is

intended simply to pander to the GOP base during an election

year, Speaker John A. Boehner (R-Ohio) seasoned the red meat

by promising to attach a rider mandating approval of the

controversial Keystone XL pipeline, the biggest political

football this side of the Super Bowl and an issue utterly

unrelated to the purposes of the transportation bill.

If this is how congressional Republicans think they're

going to win the November elections, they might want to check

their approval ratings. Americans are thoroughly sick of a

Congress that would rather play political games than solve

our country's problems.

Mr. Speaker, on that I demand the yeas and nays.

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

Here we are on the floor of the House, another day when we haven't taken up the President's jobs bill that he presented right here before a joint session of Congress last September. We have had some good news in the economy, some numbers that show that we have a fragile recovery going on. It would be a huge mistake not to do everything we can to nurture that recovery. So I hope we will finally take up the President's proposal, and I hope that the ongoing conference committee on the payroll tax cut will complete its work in an expeditious manner.

Now, with respect to this particular bill that is before us, it raises some very serious and very complicated issues regarding budget accounting for credit programs, and I want to commend Mr. Garrett from New Jersey. I want to commend him for raising some legitimate issues as part of this conversation, issues that deserve our attention. But it is totally premature to bring this bill to the floor without having more hearings and more review.

In the Budget Committee, we've not had a single hearing on the comprehensive question of how we deal with all the credit programs and how to account for them. We had one hearing with respect to whether we apply this to the FHA, the Federal Housing Administration; but this bill goes way beyond that and would direct CBO to change its method of accounting for credit programs like student loan programs and for other programs throughout the U.S. Government.

It has very far-reaching consequences. This is a matter on which people who've spent their lives looking at the budget disagree, and so the Budget Committee at the very least could spend a few hours on a hearing to understand fully the consequences of doing this.

I just want to read from a letter that was sent to us from the former head of the nonpartisan, independent Congressional Budget Office, Robert Reischauer. He says, I strongly oppose this change. He goes on to say: ``The accounting convention used since the enactment of the Credit Reform Act of 1990 already reflects the risk that borrowers will default on their loan or loan guarantees.'' He goes on to say: ``H.R. 3581 proposes to place an additional budgetary cost on top of the actual cash flows.'' And he goes on to explain what is a very complicated issue, a very complicated matter.

I would say to my colleagues, not that this isn't an appropriate question for the Budget Committee to take up, but it's totally inappropriate for the Congress to direct the Congressional Budget Office to take up a different accounting measure which is not ready for prime time and for which we have not had the time to fully review all of its consequences.

With that, I reserve the balance of my time.

Robert D. Reischauer,

Bethesda, MD, January 23, 2012.

Hon. Chris Van Hollen,

Longworth H.O.B.,

Washington, DC.

Dear Representative Van Hollen, I am writing in response to

your request for my views on the desirability of adopting

``fair value accounting'' of federal direct loan and loan

guarantee costs in the budget as proposed in H.R. 3581. I

strongly oppose such a change.

The accounting convention used since enactment of the

Credit Reform Act of 1990 already reflects the risk that

borrowers will default on their loans or loan guarantees.

Under Credit Reform, costs already are based on the expected

actual cash flows from the direct loans and guarantees (with

an adjustment to account for the timing of the cash flows).

H.R. 3581 proposes to place an additional budgetary cost on

top of the actual cash flows. This additional cost is

supposed to reflect a cost to society that stems from the

fact that, even if the cash flows turn out to be exactly as

estimated, the possibility that the credit programs would

cost more (or less) than estimated imposes a cost on a risk-

averse public. Under the proposal, this extra cost would be

the difference between the currently estimated cost of direct

loans and loan guarantees to the federal government and the

cost of those loans and loan guarantees if the private market

were providing them.

A society's aversion to risk may be an appropriate factor

for policymakers to take into account in a cost-benefit

assessment of any spending or tax proposal but adding a cost

to the budget does not make sense. Nor is clear that the cost

of societal risk aversion should be based on individual or

institutional risk which is what the private market reflects.

Inclusion of a risk aversion cost for credit programs would

be inconsistent with the treatment of other programs in the

budget (many of which have costs that are at least as

uncertain as the costs of credit programs--for instance, many

agriculture programs and Medicare--and would add a cost

element from a traditional cost-benefit analysis without

adding anything based on the corresponding benefit side of

such an analysis. It would also make budget accounting less

straightforward and transparent.

H.R. 3581 represents a misguided attempt to mold budget

accounting to facilitate a cost-benefit analysis, with the

result that neither the budget nor the cost-benefit analysis

would serve their intended purposes well.

I would be glad to discuss these issues in more detail if

you would like.

With best wishes.

Robert D. Reischauer.

I yield 3 minutes to the gentleman from New Jersey, a member of the Budget Committee, Mr. Pascrell.

I yield the gentleman 1 additional minute.

Madam Chair, it's unfortunate that some of our Republican colleagues can't take just a moment away from politics to celebrate the fact that we did have some good economic news over the last month. Over 250,000 private sector jobs were created. That's good news. Is it enough? Of course not. Of course, we need to do more, which is why we'd like to see our Republican colleagues bring the President's jobs bill to the floor of the House. It's still sitting somewhere around here.

It includes a proposal to invest in our infrastructure, in our roads, in our bridges and broadband so that we can make sure that we have an economy that can compete and win with respect to our global competitors. So it would be great if we could take up that bill. In the past, investment in infrastructure has always been a bipartisan initiative, but the President's proposal is still languishing.

With that, I yield 2 minutes to the gentlelady from Wisconsin, a member of the Budget Committee, Ms. Moore.

I yield the gentlelady an additional minute.

Madam Chair, I reserve the balance of my time.

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

Look, if this legislation only dealt with Fannie and Freddie, that's something that I certainly would support. In fact, the Congressional Budget Office already puts Fannie and Freddie online. I know it's an easy catch phrase, but the reality is, behind the discussion of Fannie and Freddie is a whole other discussion about whether we want to apply these rules to things like student loans. And the reality is that if you apply this methodology to student loans, you will systematically overestimate the cost in the budget in terms of outlays.

I would just like, Madam Chair, to refer the body to a report that was written by two of the prime advocates for this. It's called ``Reforming Credit Reform.'' Deborah Lucas was one of the coauthors. This was in ``Public Budgeting & Finance,'' winter of 2008. Just let me read a portion because it says: Including a risk premium in subsidy cost produces a cost estimate that on average exceeds outlays for realized losses. That discrepancy between cash flows and subsidy costs must be reconciled in the budget so that over the life of a credit cohort, actual cash flows match budget costs in expectation.

Now, as I said, this is a complicated issue, and that sounds like a lot of complicated budgety gobbledygook. Bottom line is, what this bill does is systematically overestimate the costs in the budget on a cash- flow basis. And it's important that everybody understand this.

Right now, when the Federal Government budgets for credit risk, we take into account the default rate. In other words, whether it's student loans, whether it's clean energy loans, whether it's Fannie and Freddie, people make an assessment about what the likely default rate is. That is taken into account and then discounted for present value when you put together your budget.

Now, even the advocates of this legislation concede that. That's not a question; we already do that. And even the advocates of this legislation concede that it will, again, systematically, in the budget, have a higher cost number associated with outlays than reality will dictate.

What do I mean by that? It will say that student loans are actually more expensive on a cash basis than they really are. Let me repeat that. If you direct that the Congressional Budget Office move to this kind of accounting, the numbers that will appear in the budget on a cash basis will systematically exaggerate, inflate the costs of the credit program. What that means is if you're a Member of Congress and you're looking at a proposed student loan program and you're looking at the numbers that are forecast, you're going to think that it's more expensive in cash terms to the taxpayer than it really is, on average, over time. Therefore, you're going to be less likely to make that investment, potentially.

So I think it's important as we look at this that we recognize that in place of something that, as I said, the former head of CBO, Bob Reischauer, has said provides an accurate picture of the costs on a cash basis to replace that with something that systematically gives us a different picture, and one that systematically exaggerates the costs would be a mistake.

And again, I just end this portion here by saying we just don't think this is ready for prime time. We don't think that we've fully understood all the impacts. There are experts on both sides of this issue, but it seems to me the Budget Committee could at least devote one hearing to this general topic. Again, we had one hearing on applying this to FHA. If you want to apply it to Fannie Mae and Freddie Mac, CBO already does that, no problem. But this leaps from that to applying it throughout the budget, including student loan programs, and I don't think we've begun to understand what impact that would have on the affordability of going to college and the other impacts throughout the budget.

I reserve the balance of my time.

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

I was actually reading from the original document, ``Reforming Credit Reform,'' by Marvin Phaup and Deborah Lucas, where they say straight- out here that including a risk premium in subsidy costs produces a cost estimate that, on average, exceeds outlays for realized losses.

Now, we can argue whether that's an appropriate methodology or not. But the reality is it will, as a budgetary matter, systematically inflate the cash outlays for different credit programs going forward.

I reserve the balance of my time.

Madam Chair, again, I wish we were here debating the President's jobs plan. I wish we were focused on bringing to the floor the conference committee report so that we could provide relief to 160 million Americans through the payroll tax cut.

With respect to the budget bill before us, as I indicated, it's just not ready for prime time. You would think that before undertaking a change which seems small, is very complicated, and could have lots of unintended consequences, especially with respect to things like student loans--as I've said, if we were confining this debate and this bill to things like Fannie Mae and Freddie Mac, I have no problem. In fact, the Congressional Budget Office already applies this methodology to Fannie Mae and Freddie Mac. But the scope of this is much, much broader than that. It goes, as I said, to all credit programs, including student loan programs, and will, as a matter of accounting, show in the budget greater dollar outlays than will actually reflect the ongoing costs of things like student loans, again, in a systematic way.

The last point I want to make, Madam Chair, is one that was raised by one of my colleagues, which is: Where do you actually draw the line when it comes to moving in the direction of this other kind of accounting?

Now, this bill applies to all credit programs, but there are other programs funded by the Federal Government where the costs rise and fall based on what's happening in the market, based on what's happening in the economy. There are lots of ag programs that rise and fall based on what's happening in the economy. Medicaid is a program whose costs rise and fall based on the economy. And in talking to lots of people, it's not clear where you draw a bright line, and I certainly don't know where the argument ends with respect to moving toward this kind of accounting. Before we begin to move even further in this direction, I think we should have a debate on what exactly that would mean for our budget and for the American people.

Again, I commend the gentleman for raising an issue, especially as it's been in the context of Fannie Mae and Freddie Mac. I think this deserves a lot more attention before you expand it throughout all the credit programs of the United States Government. I'm particularly concerned the impact it would have on the affordability of going to college and student loans. And then, as I said, there's no clear demarcation between credit programs and the argument that's being applied here and to some of the other programs where the risk to the taxpayer also fluctuates based on market risk and the performance of the economy.

Madam Chair, I would urge my colleagues to oppose this legislation.

I yield back the balance of my time.

Mr. Speaker, I demand a recorded vote.