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Reforming Credit Reform
Author(s) -
LUCAS DEBORAH,
PHAUP MARVIN
Publication year - 2008
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/j.1540-5850.2008.00918.x
Subject(s) - treasury , federal budget , cash , economics , business , finance , monetary economics , archaeology , fiscal year , history
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.