Credit Reestimates

Credit Reestimates in the United States

Credit Reestimates in the Federal Budget Process

Meaning of Credit Reestimates in the congressional and executive budget processes (GAO source): Recalculation of the estimated cost to the government of a group of direct loans or loan guarantees. After new direct loans or loan guarantees are made, the Federal Credit Reform Act of 1990 (FCRA) requires periodic revisions of the subsidy cost estimate of a cohort (or risk category) based on information about the actual performance, estimated changes in future cash flows of the cohort, or both. Reestimates must generally be made annually (with an associated recalculation of applicable cumulative interest), as long as any loans in the cohort are outstanding. These reestimates represent additional costs or savings to the government and are recorded in the budget. An upward reestimate indicates that insufficient funds had been paid to the financing account, so the increase (plus interest on reestimates) is paid from the program account to the financing account to make it whole. Permanent indefinite budget authority is available for this purpose. A downward reestimate indicates that too much subsidy had been paid to the financing account. The excess identified in a downward reestimate (plus interest) may be credited directly to the program account as offsetting collections for programs classified as mandatory or to a downward reestimate receipt account for programs classified as discretionary.

Resources

See Also

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)


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