GAO Glossary of Terms and Definitions (September 2005)
Generally, a payment or benefit made by the federal government where the benefit exceeds the cost to the beneficiary. Subsidies are designed to support the conduct of an economic enterprise or activity, such as ship operations. They may also refer to (1) provisions in the tax laws for certain tax expenditures and (2) the provision of loans, goods, and services to the public at prices lower than market These include interest subsidies.
Under credit reform, subsidy means the estimated long-term cost to the government of a direct loan or loan guarantee, calculated on a net present value basis over the life of the loan, excluding administrative costs and any incidental effects on governmental receipts or outlays. (See also Credit Reform and Credit Subsidy Cost under Federal Credit; Tax Expenditure.)