All Federal Guarantees Ought to be Budgeted

This is not a new thought; it’s been around but the media never puts legs on it.

Marvin Phaup, a research scholar at George Washington University who examines federal budgeting, is the one who is pushing the concept, which I feel is valid.

As an expert on government guarantees, he feels that government bailout costs ought to be measured and should appear in the budget. We ought to budget for possible losses on the tremendous amounts we guarantee.

Mr. Phaup was the researcher at the Congressional Budget Office in 1996 who made the initial effort to assign a value to the implied federal guarantee backing Fannie and Freddie.

Had we done this we would have been far better prepared to meet the resolution of the financial meltdown. And to realize the extent of the risk we were taking with the mortgage markets.