Present Value

Present Value in the United States

Present Value (Economics Term) in the Federal Budget Process

Meaning of Present Value in the congressional and executive budget processes (GAO source): The worth of a future stream of returns or costs in terms of money paid immediately (or at some designated date). (Differs from Net Present Value.) A dollar available at some date in the future is worth less than a dollar available today because the latter could be invested at interest in the interim. In calculating present value, prevailing interest rates provide the basis for converting future amounts into their “money now” equivalents.

Legal Materials

There are two kinds of present value calculations — one where you figure the present value of money held in the past and one where you project what the present value of money held now will be in the future.

Money held in the past: To figure the present value of money held in the past, you need a measure of inflation, usually the Consumer Price Index (CPI). To get the U.S. CPI for past years, see “Consumer Price Index.” To do the calculations, use the What’s a Dollar Worth? calculator posted by the home page of the Federal Reserve Bank of Minneapolis or the BLS’s CPI Inflation Calculator. For directions on how to do the calculations by hand, see Understanding What A Dollar Is Worth and/or the What is a Dollar Worth page by the Minneapolis Fed.

See also “Cost of Living.”

Money held in the future: To figure the present value of money in the future, you have to posit an interest rate. If you can do that, use the Present Value calculator posted by the University of Illinois at Chicago to find out how much money in the future is worth now. (This is useful if, for example, you want to know how much you have to invest in 8% bonds if you want to get $1 million in 2025).

For more calculators and calculations (e.g., loans), try the MegaConverter,Measuringworth.com and/or the Inflation/Cost-of-Living section of Mardindale’s Calculators Online Center.

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)

Present Value: Open and Free Legal Research of US Law

Federal Primary Materials

The U.S. federal government system consists of executive, legislative, and judicial branches, each of which creates information that can be the subject of legal research about Present Value. This part provides references, in relation to Present Value, to the legislative process, the federal judiciary, and the primary sources of federal law (cases, statutes, and regulations).

Federal primary materials about Present Value by content types:

Laws and Regulations

US Constitution
Federal Statutory Codes and Legislation

Federal Case Law and Court Materials

U.S. Courts of Appeals
United States courts of appeals, inclouding bankruptcy courts and bankcruptcy appellate panels:

Federal Administrative Materials and Resources

Presidential Materials

Materials that emanate from the President’s lawmaking function include executive orders for officers in departments and agencies and proclamations for announcing ceremonial or commemorative policies. Presidential materials available include:

Executive Materials

Federal Legislative History Materials

Legislative history traces the legislative process of a particular bill (about Present Value and other subjects) for the main purpose of determining the legislators’ intent behind the enactment of a law to explain or clarify ambiguities in the language or the perceived meaning of that law (about Present Value or other topics), or locating the current status of a bill and monitoring its progress.

State Administrative Materials and Resources

State regulations are rules and procedures promulgated by state agencies (which may apply to Present Value and other topics); they are a binding source of law. In addition to promulgating regulations, state administrative boards and agencies often have judicial or quasi-judicial authority and may issue administrative decisions affecting Present Value. Finding these decisions can be challenging. In many cases, researchers about Present Value should check state agency web sites for their regulations, decisions, forms, and other information of interest.

State rules and regulations are found in codes of regulations and administrative codes (official compilation of all rules and regulations, organized by subject matter). Search here:

State opinions of the Attorney General (official written advisory opinions on issues of state law related to Present Value when formerly requested by a designated government officer):

Tools and Forms

Law in Other Regions

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