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House Budget Committee Advances Common-Sense Budget Process Reforms

Chairman Ryan applauds effort to bring greater transparency and accountability to the budget process

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WASHINGTON – The House Budget Committee advanced three legislative reforms today to address the broken budget process. The reforms focused on bringing greater accountability and transparency, and stronger protections for hardworking Americans’ tax dollars. While the House Budget Committee works to advance solutions, today marks 1,000 days without any budget from the U.S. Senate.

House Budget Committee Chairman Paul Ryan issued the following statement after passage of the three reforms:

At the very least, Americans expect Washington to spend and account for their hard-earned tax dollars carefully. When a broken budget process enables Washington to lurch from budget crisis to budget crisis, taxpayer dollars are wasted and the largest drivers of our national debt go unreformed. Taxpayers, families and businesses large and small deserve much better.

“This morning, the committed team of reformers at the House Budget Committee advanced three common-sense reforms out of committee to help fix the broken budget process. Congressmen Tom Price (R-GA), Rob Woodall (R-GA) and Scott Garrett (R-NJ) each authored reforms that create new tools for lawmakers to address the bias towards ever-higher spending in Washington and increase transparency and accountability in order to show taxpayers the true costs of government loans and bailouts.

“It is fitting, but disappointing, that today’s progress towards fixing Washington’s broken budget process occurred on the 1,000th day since the Democratic Majority in the Senate passed a budget. The refusal by the President and his party’s leaders to advance credible budget plans commits America to a future of debt, doubt and decline. In spite of this lack of leadership, House Republicans will continue to advance bold solutions to put our budget on the path to balance and our economy back on the path to prosperity.”

To learn more about the House Budget Committee’s efforts to repair the broken budget process: http://budget.house.gov/BudgetProcessReform/

Summaries of the legislative proposals advanced by the House Budget Committee:

H.R. 3582 – The Pro-Growth Budgeting Act of 2012

This bill would require that for major legislation that CBO prepare an analysis of the effect that the legislation would have on the U.S. economy.  This macroeconomic impact analysis would be supplemental information in addition to the official congressional cost estimate of the legislation.   

  • Requires committee reports to include a CBO analysis of major legislation that must include an estimate of the legislation’s impact on gross domestic product (GDP), business investment, the economy’s capital stock, employment, and labor supply.  This analysis must also include an estimate of the legislation’s potential fiscal impact, including any changes in tax revenues resulting from changes in GDP. 

  • Requires CBO to submit a statement identifying critical assumptions and sources of data underlying the estimate. 

  • Defines major legislation as any legislation (other than those reported from the Committee on Appropriations) estimated by CBO to have a budgetary effect of at least 0.25 percent of annual GDP (approximately $39 billion in 2012) in any year within the ten-year budget window. (A preliminary staff review has identified six bills that would have triggered the analysis requirement during the 1st Session of the 112th Congress.

  • Requires these analyses to cover the 10-year budget window and the subsequent thirty-year period.

H.R. 3578 – The Baseline Reform Act of 2012

Under current law the baseline assumes ever higher spending as discretionary accounts are annually increased by inflation and for a number of other factors.  This legislation levels the playing field and removes this pro-spending bias.

  • Reforms the baseline against which legislation is considered by removing the assumption that discretionary spending will increase by inflation in each year of the baseline.  This assumption added approximately $1.4 trillion in outlays (over 10 years) to the discretionary baseline last year.

  • Removes exceptions to this general inflationary rule by establishing special increases in the baseline for expiring housing contracts, social insurance administrative expenses, and annualization of federal employee pay.  In total these provisions added approximately $7 billion (over 10 years) to the discretionary baseline.

  • Requires that CBO prepare an alternative projection of the baseline assuming the extension of current tax policies together with its March baseline. This will provide the Budget Committees a timely official estimate of the fiscal situation assuming the extension of current tax policy.

  • Codifies the current practice of CBO providing a long-term budget outlook no later than July 1 of each year.

  • Does not change the way the mandatory or revenue baselines are calculated.

H.R. 3581 – The Budget and Accounting Transparency Act of 2012

This bill increases transparency in federal budgeting by reforming the way certain costs are calculated and requiring that certain costs incurred by the Federal government are included in the budget.

  • Requires fair value accounting for federal credit programs.  The executive branch and Congress would be required 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. This reform would bring federal budgeting in line with private sector cost-estimating practices. 

  • Requires the CBO and OMB to conduct a study on extending this fair value methodology to federal insurance programs, which are currently accounted for on a cash-flow basis.

  • Brings Fannie Mae and Freddie Mac on-budget to recognize the budgetary impact of these housing-related government-sponsored enterprises.  Since the financial crisis these enterprises have become the explicit financial responsibility of the federal government and these reforms would ensure that the budgetary implications of that fact are reflected in the federal budget. 

  • Requires CBO and OMB to conduct a study on the use of budgetary terms related to money collected by the Federal government, which has become jumbled and inconsistent over the decades.

  • Requires that agencies make public the budgetary justification materials prepared in support of their request for use of taxpayer dollars.

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