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Brief

A Better Way to Budget for Federal Lending Programs

Donald Marron
September 29, 2014
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Primary tasks

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Abstract

Policy analysts have long debated how best to budget for student loans, mortgage guarantees, and other federal lending programs. Under official budget rules, these programs appear highly profitable; under an alternative, favored by many analysts, they appear to lose money. That discrepancy confuses policy deliberations. In this brief, Donald Marron proposes a new budgeting approach, known as expected returns, that would eliminate this confusion. Unlike existing approaches, expected returns accurately reports the fiscal effects of lending over time and provides a natural way to distinguish the fiscal gains from bearing financial risk from the subsidies given to borrowers.

Research Area

Federal Budget and Economy Federal budget
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Meet the Experts

  • Donald Marron
    Institute Fellow
Research report

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