Press Releases

Washington, D.C. – On Friday, Rep. Ralph Norman (R-SC) reintroduced the Fair-Value Accounting and Budget Act and the Cost Openness and Spending Transparency (COST) Act.

The Fair-Value Accounting and Budget Act is co-sponsored by Rep. Glenn Grothman (R-WI), Rep. Randy Weber (R-TX), and Rep. Keith Self (R-TX). The bill has the support of the National Taxpayers Union, Heritage Action, and Club for Growth

The COST Act is co-sponsored by Rep. Randy Weber (R-TX) and Rep. Keith Self (R-TX).

Background Information: Fair-Value Accounting and Budget Act

Between student loans and home ownership, the federal government provides various types of direct loans or loan guarantees to individuals and businesses. However, when it comes to making budget assessments in federal loan legislation, Congress does not currently use accounting guidelines that reflect the true value, or net impact, of loan defaults. A supplemental assessment method, fair-value accounting, is a tool that can be used by legislators to calculate a broader measure of an asset’s worth that would consider such risks.

Rep. Norman's Fair-Value Accounting and Budget Act seeks to provide Congress with better oversight and information on market risk in federal lending, ensuring a more accurate assessment of costs to taxpayers. Without fair-value accounting, legislators may continue to misjudge deficit reduction, leading to budget confusion and reckless spending.

The Fair-Value Accounting and Budget Act includes several provisions related to fair-value accounting:

(1) Allows the Chair or Ranking Member of the House and Senate Budget Committees to request a supplemental fair-value estimate for any legislation that establishes or makes changes to loan or loan guarantee programs;

(2) Provides CBO to include fair-value estimates in its Budget and Economic Outlook;

(3) Provides the option for Congress to use fair-value estimates to determine budget compliance and enforcement; and

(4) Requires OMB to provide an annual report on fair-value estimates and the costs of federal credit programs.

Background Information: COST Act

The federal government utilizes hundreds of companies, non-profit organizations, academic institutions, and other entities to implement a wide variety of programs, projects, and other activities. Under current law, entities that receive funding from some federal agencies are required to publicly disclose information about how those dollars are used, and what percentage of a project's total costs were paid for by taxpayers.

Unfortunately, this law is often ignored by recipients of taxpayer funds and the federal agencies distributing them. Currently, it only applies to the Departments of Labor, Defense, Health & Human Services, Education, and related agencies, resulting in limited transparency on how taxpayer dollars are spent.

The COST Act would improve this by:

(1) Requires the entity disbursing federal funds for a project to certify whether the recipient complied with all necessary disclosure requirements;

(2) Directs the OMB to review a random sampling of public communications issued by agencies and recipients of federal funds and make them available to the public; and

(3) To ensure compliance, this legislation adds avenues for people to report individuals or entities that don’t comply with the requirements set forth in this bill. 

Statements

"For far too long, our government has operated inefficiently, leading to poor lawmaking with hefty costs to the American taxpayer," said Rep. Norman in a statement on Friday. "I am proud to sponsor these budget reform bills to streamline cost estimating and ensure accurate information is given across agencies. Every member of Congress should support greater transparency in government spending."

On the Fair-Value Accounting and Budget Act: "The federal government has dramatically expanded its portfolio of direct loan and loan guarantee programs in recent years, exposing taxpayers to systemic and political risks," said Paul Winfree, President and CEO, of the Economic Policy Innovation Center (EPIC). "Unfortunately, the way these credit programs are accounted for in the budget understates the actual costs to taxpayers because it fails to account for market risks. Rep. Ralph Norman’s Fair-Value Accounting and Budget Act would instead use fair value accounting for credit programs. Even the Congressional Budget Office acknowledges that fair value scoring is a better method."

On the COST Act: "The American people deserve to know how their money is being spent by their government," said Paul Winfree, President and CEO, of the Economic Policy Innovation Center (EPIC). "The Cost Openness and Spending Transparency (COST) Act from Rep. Ralph Norman is a commonsense proposal to do just that. This legislation would promote transparency by requiring projects using federal funds to publicly clearly and publicly disclose how much taxpayer money is used."

"NTU applauds Rep. Ralph Norman for introducing the Fair-Value Accounting and Budget Act, a crucial reform to provide a more accurate assessment of the risks of federal loan programs," said Nick Johns, Senior Policy and Government Affairs Manager, National Taxpayers Union. "In 2024 alone, taxpayers were on the hook for over $1.5 trillion in loans, yet the current scoring methods obscure the true cost to the federal balance sheet. By adopting fair-value practices, this legislation will provide Congress with a better understanding of the ballooning federal loan liabilities, and help protect taxpayers from hidden fiscal risks."