Credit Subsidy Cost in the United States
Credit Subsidy Cost in the Federal Budget Process
Meaning of Credit Subsidy Cost in the congressional and executive budget processes (GAO source): The estimated long-term cost to the government of a direct loan or loan guarantee, calculated on a net present value basis and excluding administrative costs.
In estimating the net present value, for loans made, guaranteed, or modified in fiscal year 2001 and after, the cash flow estimated for each year (or other time period) is discounted using the interest rate on a marketable zero-coupon Treasury security with the same maturity from the date of disbursement as that cash flow. For loans made or guaranteed prior to fiscal year 2001, the discount rate is the average interest rate on marketable Treasury securities of similar maturity to the direct loan or loan guarantee for which the estimate is being made. The rate at which interest will be paid on the amounts borrowed or held as an uninvested balance by a financing account for a particular cohort is the same as the financial discount rate for a cohort, the disbursement-weighted average discount rate (for cohorts before 2001) or a single effective rate (for cohorts 2001 and after) derived from this collection of interest rates. (See also Credit Reform, Direct Loan, and Guaranteed Loan under Federal Credit; Present Value; Subsidy.)
Guide to U.S. Federal Credit Subsidy Cost (Budget Process)
- Credit Subsidy Cost
- Direct Loan Subsidy Cost
- Guaranteed Loan Subsidy Cost
Resources
See Also
- Federal Appropriations
- Entries about the United States Budget Process in the Encyclopedia (including Credit Subsidy Cost)
- Public Debt
Further Reading
- Legislatures and the budget process: the myth of fiscal control
(J Wehner, 2010)
- Reconcilable Differences?: Congress, the Budget Process, and the Deficit (JB Gilmour, 1990)
- Fiscal institutions and fiscal performance
(JM Poterba, J von Hagen, 2008)