Federal Guarantees Should Also Appear on the Budget

  

Marvin Phaup, a research scholar at George Washington University who examines federal budgeting, has pushed the concept whereby government guarantees ought to be seen as potential debt.

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 who in 1996 made the initial effort to assign a value to the implied federal guarantee backing Fannie Mae and Freddie Mac.

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. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)