Econintersect: The Congressional Budget Office (CBO) provided thumbnail views of two government programs this past week:
- Starting in 2015, the highway account of the Highway Trust Fund will have insufficient revenues to meet its obligations, resulting in steadily accumulating shortfalls.
- In 2012, more than 95 percent of new mortgages were federally guaranteed.
CBO projects that, starting in 2015, the highway account of the Highway Trust Fund will have insufficient revenues to meet its obligations, resulting in steadily accumulating shortfalls. That projection is based on two assumptions: that the taxes whose receipts are allocated to the highway account will continue at their current rates (most of those taxes are scheduled to expire at the end of September 2016) and that federal funding for highways will increase at CBO’s projected rate of inflation. To avoid such shortfalls, lawmakers would have to enact legislation to reduce highway funding, increase dedicated tax receipts, transfer money from the general fund of the Treasury to the Highway Trust Fund (as has occurred in recent years), or undertake some combination of those approaches.
For more detail on CBO's most recent projections for the Highway Trust Fund, see Highway Trust Fund Accounts—February 2013 Baseline.
Before the recent financial crisis, federal agencies and the government-sponsored enterprises Fannie Mae and Freddie Mac guaranteed (meaning, assumed the financial risk for) about half of the total volume of residential mortgages originated each year. In 2008, as the financial crisis worsened and the government took control of Fannie Mae and Freddie Mac, the situation changed dramatically: By 2012, more than 95 percent of new mortgages were federally guaranteed. However, CBO expects that percentage to drop sharply in coming years under current law, as the effects of the financial crisis continue to subside and the private mortgage market recovers. (CBO’s projections also reflect the scheduled expiration in 2021 of a fee on mortgages guaranteed by Fannie Mae and Freddie Mac.)
For more detail on CBO's most recent projections for federal programs that guarantee mortgages, see Federal Programs that Guarantee Mortgages—February 2013 Baseline.