Reforming Credit Reform

21 Pages Posted: 2 Dec 2008

See all articles by Deborah J. Lucas

Deborah J. Lucas

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Marvin Phaup

U.S. Congressional Budget Office - Special Studies Division

Abstract

The Federal Credit Reform Act (FCRA) improved the treatment of credit in the federal budget, but failed to make the budget cost of credit and noncredit programs fully comparable. Inconsistencies and downwardly biased credit costs arise from the restriction under FCRA that cash flows be discounted at Treasury rates, and from the omission of certain administrative costs. We describe the shortcomings of FCRA and policy distortions that may occur, and propose modifications to the Act that would more closely align budget costs of credit and noncredit programs.

Suggested Citation

Lucas, Deborah J. and Phaup, Marvin, Reforming Credit Reform. Public Budgeting & Finance, Vol. 28, Issue 4, pp. 90-110, Winter 2008, Available at SSRN: https://ssrn.com/abstract=1307344 or http://dx.doi.org/10.1111/j.1540-5850.2008.00918.x

Deborah J. Lucas (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8333 (Phone)
847-491-5719 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Marvin Phaup

U.S. Congressional Budget Office - Special Studies Division ( email )

Ford House Office Building
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Washington, DC 20515-6925
United States

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