Skip Navigation

This analysis of the Administration's 1982 credit budget was prepared at the request of the House and Senate Budget Committees. It is intended to supplement the budget documents by bringing together in one place information on the credit budget. The paper reviews major proposed changes in federal credit activity during 1981 and 1982 and presents a function-by-function examination of the Administration's credit program estimates. It also discusses the integration of credit budgeting into the federal budget process.

The paper was prepared by CBO's Budget Process Unit. The first three chapters were written by Elisabeth Rhyne. Marvin Phaup and John D. Shillingburg provided useful comments. The functional chapter was written by Deirdre E. Briggs, Michael Margeson, and Mitchell I. Mutnick. Patricia H. Johnston provided editorial and production assistance. Kathie Farri and Nancy E. Wenzel typed the paper for publication.
 

Alice M. Rivlin
Director
April 1981
 
 

SUMMARY

CHAPTER I. THE NEED FOR A CREDIT BUDGET

• Size and Growth of Federal Credit
• Economic Effects of Federal Credit
• Credit in the Budget Process
• Plan of the Paper

CHAPTER II. THE CREDIT BUDGET FOR 1982

• The Credit Budget Totals
• Components of the 1982 Credit Budget
• Revisions to the 1981 Credit Budget

CHAPTER III. ISSUES IN CREDIT BUDGETING

• Budget Resolutions
• Program Limitations
• Exemptions from Limitations
• Other Issues

CHAPTER IV. THE CREDIT BUDGET BY FUNCTION

• National Defense
• International Affairs
• Energy
• Natural Resources and Environment
• Agriculture
• Commerce and Housing Credit
• Transportation
• Community and Regional Development
• Education, Training, Employment, and Social Services
• Health
• Income Security
• Veterans' Benefits and Services
• General Government
• General Purpose Fiscal Assistance

APPENDIX A. GLOSSARY OF CREDIT TERMS USED IN THIS PAPER

APPENDIX B. THE ROLE OF THE FEDERAL FINANCING BANK
 

TABLES
1.	CREDIT BUDGET TOTALS
2.	THE CREDIT BUDGET TOTALS-JANUARY BUDGET COMPARED TO MARCH REVISIONS
3.	MAJOR CREDIT PROGRAM CHANGES IN LEVELS OF ACTIVITY BETWEEN FISCAL YEARS 1981 AND 1982
4.	THE CREDIT BUDGET BY FUNCTION
5.	FFB-FINANCED CREDIT ACTIVITY
6.	LIMITATION REQUESTS IN THE FISCAL YEAR 1982 BUDGET REVISIONS
7.	PROGRAMS PROPOSED TO BE EXEMPT FROM LIMITATION FOR FISCAL YEAR 1982
8.	THE CREDIT BUDGET TOTALS FOR FISCAL YEAR 1981
9.	CREDIT TARGETS IN THE FISCAL YEAR 1981 SECOND BUDGET RESOLUTION
10.	PROGRAMS FOR WHICH PROPOSED LIMITATION FOR 1982 EXCEEDS ESTIMATED NEW ACTIVITY
11.	NATIONAL DEFENSE-SUM MARY OF CREDIT ACTIVITY
12.	INTERNATIONAL AFFAIRS-SUMMARY OF MAJOR CREDIT PROGRAMS
13.	ECONOMIC SUPPORT FUND LOANS
14.	FUNCTIONAL DEVELOPMENT ASSISTANCE LOANS
15.	CREDIT ACTIVITIES FOR OVERSEAS PRIVATE INVESTMENT CORPORATION
16.	HOUSING AND OTHER CREDIT GUARANTEES
17.	FOOD FOR PEACE (PUBLIC LAW 480) LOANS
18.	EMERGENCIES IN THE DIPLOMATIC AND CONSULAR SERVICES
19.	FOREIGN MILITARY SALES CREDIT
20.	CREDIT ACTIVITIES FOR EXPORT-IMPORT BANK
21.	ENERGY PROGRAMS-SUMMARY OF CREDIT ACTIVITY
22.	SYNTHETIC FUELS AND ENERGY SECURITY RESERVE LOAN GUARANTEES
23.	RURAL ELECTRIFICATION LOAN AND LOAN GUARANTEE ACTIVITY
24.	TENNESSEE VALLEY AUTHORITY LOANS AND LOAN GUARANTEES
25.	OTHER ENERGY CREDIT PROGRAMS
26.	WATER AND POWER LOAN PROGRAM
27.	AGRICULTURE-SUM MARY OF CREDIT ACTIVITY
28.	AGRICULTURE CREDIT INSURANCE FUND LOANS AND LOAN GUARANTEES
29.	COMMODITY CREDIT CORPORATION LOANS
30.	COMMERCE AND HOUSING PROGRAMS-SUMMARY OF CREDIT ACTIVITY
31.	FEDERAL HOUSING ADMINISTRATION LOANS AND LOAN GUARANTEES
32.	GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-TANDEM PLAN DIRECT LOANS
33.	GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-GUARANTEES OF MORTGAGE-BACKED SECURITIES
34.	LOANS FOR HOUSING FOR THE ELDERLY OR HANDICAPPED
35.	RURAL HOUSING CREDIT ACTIVITIES
36.	NATIONAL CREDIT UNION ADMINISTRATION LENDING
37.	NATIONAL CONSUMER COOPERATIVE BANK (NCCB) LOANS AND GUARANTEES
38.	CHRYSLER LOAN GUARANTEES
39.	SMALL BUSINESS ASSISTANCE CREDIT ACTIVITIES
40.	BUSINESS LOAN AND INVESTMENT FUND, LOANS AND LOAN GUARANTEES
41.	DEPOSIT INSURANCE PROGRAMS
42.	FEDERAL SHIP FINANCING FUND-FISHING VESSELS
43.	TRANSPORTATION-SUMMARY OF CREDIT ACTIVITY
44.	RAILROAD REHABILITATION AND RESTRUCTURING LOANS AND LOAN GUARANTEES
45.	LOAN GUARANTEES FOR AMTRAK
46.	OTHER RAILROAD ASSISTANCE LOANS
47.	AIRCRAFT PURCHASE LOAN GUARANTEES
48.	FEDERAL CREDIT FOR SHIP FINANCING
49.	FEDERAL HIGHWAY LOANS
50.	COMMUNITY AND REGIONAL DEVELOPMENT-SUMMARY OF CREDIT ACTIVITY
51.	COMMUNITY DEVELOPMENT BLOCK GRANT LOAN GUARANTEES
52.	NEW COMMUNITIES FUND LOANS
53.	REHABILITATION LOANS
54.	ECONOMIC DEVELOPMENT CREDIT ASSISTANCE
55.	COASTAL ENERGY IMPACT LOANS
56.	RURAL DEVELOPMENT INSURANCE FUND CREDIT ACTIVITIES
57.	RURAL ELECTRIFICATION ADMINISTRATION CREDIT ACTIVITIES
58.	SMALL BUSINESS ADMINISTRATION DISASTER LOANS AND LOAN GUARANTEES
59.	COMMUNITY SERVICES ADMINISTRATION CREDIT
60.	INDIAN CREDIT ASSISTANCE
61.	EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES-SUMMARY OF CREDIT ASSISTANCE
62.	CREDIT ACTIVITIES FOR THE GUARANTEED STUDENT LOAN PROGRAM
63.	GUARANTEES OF STUDENT LOAN MARKETING ASSOCIATION OBLIGATIONS
64.	CREDIT ACTIVITY FOR NDSL PROGRAM
65.	CREDIT ACTIVITY FOR COLLEGE HOUSING LOANS
66.	HEALTH-SUMMARY OF CREDIT PROGRAMS
67.	CREDIT ACTIVITIES FOR HEALTH MAINTENANCE ORGANIZATIONS AND MEDICAL FACILITIES
68.	OTHER HEALTH CREDIT PROGRAMS
69.	INCOME SECURITY-SUMMARY OF CREDIT ACTIVITY
70.	LOW-RENT PUBLIC HOUSING LOANS AND LOAN GUARANTEES
71.	OTHER INCOME SECURITY PROGRAMS
72.	VETERANS' BENEFITS-SUMMARY OF CREDIT ASSISTANCE
73.	CREDIT ACTIVITY FOR VETERANS' EDUCATION PROGRAMS
74.	CREDIT ACTIVITY FOR VETERANS' HOUSING PROGRAMS
75.	GUARANTEED LOANS TO U.S. TERRITORIES
76.	DISTRICT OF COLUMBIA AND NEW YORK CITY-SUMMARY OF CREDIT PROGRAMS
77.	LOANS TO THE DISTRICT OF COLUMBIA FOR CAPITAL OUTLAYS
78.	NEW YORK CITY LOAN GUARANTEE PROGRAM
FIGURE
1.	COMPONENTS OF NET FEDERAL CREDIT, FISCAL YEARS 1971-1982

 

Last year the Administration and the Congress established a federal credit budget. The development of the credit budget was prompted by three concerns:

• Federal credit--in the form of direct loans and loan guarantees-grew rapidly, and apparently without control, in the 1970s.
  
  
• Federal credit activities can have important economic consequences--for the allocation of credit resources among various uses, the composition of economic activity, and the economy's growth rate--that the Congress should recognize even though the magnitude of these effects is unknown.
  
  
• The budgetary treatment of credit programs is less rigorous than that for direct spending and taxes, a factor that may have played a part in the rapid growth of federal credit.

The credit budget, which records estimates of new direct loans and new loan guarantees for each fiscal year, attempts to correct for the understatement in the unified budget of the size of federal credit activities. In 1980 the federal government made obligations to extend $39 billion in new direct loans and $70 billion in new loan guarantees. Yet net on-budget direct lending, the only portion of the credit budget included in the unified budget, accounts for less than 2 percent, or $9 billion, of total 1980 outlays. The unified budget understates the amount of new federal credit extended each year in three respects; the credit budget corrects for this understatement in each case, as follows:

• Direct loans by off-budget agencies are excluded by law from the budget totals. All direct loans, however are recorded in the credit budget.
  
  
• Loan guarantees are excluded by law from the budget totals, except in the event of default. They are fully counted in the credit budget.
  
  
• The unified budget records net loan disbursements. The credit budget records gross new credit activity.

Because the unified budget treatment understates credit activities, it has fostered the perception of federal credit as an almost costless form of federal assistance. The credit budget is designed to correct this perception by recording the total volume in each fiscal year of new credit activities. Through the imposition of limitations on the authority of agencies to enter into new obligations for direct loans and new commitments to guarantee loans, the credit budget can also enhance Congressional control of individual credit programs.

This document is available in its entirety in PDF.