NCPA - National Center for Policy Analysis

Federal Liabilities Soaring

February 23, 1996

Government-guaranteed loans -- for which taxpayers are liable in the event of borrower default -- are expanding so fast that by 1998 they are expected to exceed $1 trillion, according to the Office of Management and Budget.

Each time a student or a small business takes out a federal loan, or a home buyer obtains a federally guaranteed mortgage, or a farmer gets federal insurance against crop damage the government's liabilities grow.

  • In 1992, such guarantees "only" amounted to $600 billion.
  • In 1995, the government was forced to set aside between $180 billion and $300 billion to cover costs and estimated losses among guarantee programs.

The U.S. Comptroller General has warned that the government has insufficient financial accounting systems and managers to ensure that those liabilities are properly monitored.

Source: Jeff Girth, "Federal Audits Find Rising Risks in Loan Programs," New York Times, February 23, 1996.


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