![]() "I like to call them the scorekeepers," Paul said. The Congressional Budget Office has always served a vital role in government, economist Mark Paul explains in the latest episode of the "Pitchfork Economics" podcast. The media uncritically picked up those CBO numbers, warning that the BBB "would add to national debt" as USA Today reported, and the New York Times offered a dire assurance in a headline that the BBB " Will Add to Deficit." Finally, just before Christmas, West Virginia Senator Joe Manchin cited the CBO's deficit warnings when he announced that he would not vote for the BBB, effectively killing the legislation. CNBC's Jacob Pramuk reported in November that the CBO found the BBB "would increase the budget deficit by $367 billion over the years 2022 to 2031." Last winter, as Congressional discussions over President Biden's proposed Build Back Better legislation were heating up, the Congressional Budget Office issued a cost-benefit assessment of the bill. ![]() Under fair-value accounting-in which estimates of costs are based on the market value of the government’s obligations-that 2022 cohort of VA guarantees would increase the deficit by $9.7 billion.Account icon An icon in the shape of a person's head and shoulders.When compared with the other three mortgage guarantee programs, VA’s is the only one that has net budgetary costs on a FCRA basis. Such fees are lower, on average, than those for mortgages guaranteed by the Federal Housing Administration, Fannie Mae, and Freddie Mac. Subsidies that reduce fees for VA’s borrowers are the primary driver of those budgetary costs.Under the accounting rules used in the federal budget (as specified in the Federal Credit Reform Act of 1990, or FCRA), the guarantees of $268 billion in new mortgages that VA is projected to issue in fiscal year 2022 would increase the budget deficit by about $2.8 billion.The report also describes CBO’s estimates of the budgetary costs of the program and compares those costs with expenditures for other federal guarantees. This report by the Congressional Budget Office describes VA’s mortgage guarantee program, including eligibility and underwriting criteria, the structure of the guarantees, and the volume and characteristics of borrowers who obtain such guarantees. Fiscal year 2020 was a record year for VA, with guarantees totaling more than $375 billion and accounting for 12 percent of all single-family home mortgages issued that year. ![]() Since the financial crisis of the late 2000s, VA’s guarantees have generally increased both in dollar volume and as a share of total federal loan guarantees. The annual dollar volume of VA’s loan guarantees began to increase in 2000 before reaching a peak in 2003 and then declining through 2007. ![]() Since the Congress authorized VA to guarantee mortgages in 1944, the program has backed more than 25 million loans. The Department of Veterans Affairs (VA) plays an important role in financing housing for eligible veterans and others by guaranteeing that originating lenders will be partially protected from losses if borrowers do not repay their mortgages in full.
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