Cbo 56334 Hr748 Cares Act
Summary
A Congressional Budget Office letter, revised April 27, 2020, from Director Phillip L. Swagel to Senate Budget Committee Chairman Mike Enzi giving a preliminary estimate of the budgetary effects of H.R. 748, the CARES Act, Public Law 116-136. CBO and the staff of the Joint Committee on Taxation estimate the act will increase federal deficits by about $1.7 trillion over the 2020-2030 period, including a $988 billion increase in mandatory outlays, a $408 billion decrease in revenues and a $326 billion increase in discretionary outlays. The letter summarizes the titles of Division A and Division B and explains the basis of the estimate and its uncertainties. It details Title I costs, including a $349 billion direct appropriation for PPP loans, $17 billion for SBA debt relief and $10 billion for EIDL grants. It closes with a table of Division B budget authority and outlays.
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CONGRESSIONAL BUDGET OFFICE Phillip L. Swagel, Director
U.S. Congress
Washington, DC 20515
Revised April 27, 2020
Honorable Mike Enzi
Chairman
Committee on the Budget
United States Senate
Washington, DC 20510
Re: Preliminary Estimate of the Effects of H.R. 748, the CARES Act,
Public Law 116-136, Revised, With Corrections to the Revenue Effect of
the Employee Retention Credit and to the Modification of a Limitation
on Losses for Taxpayers Other Than Corporations
Dear Mr. Chairman:
The Congressional Budget Office and the staff of the Joint Committee on
Taxation (JCT) have completed a preliminary estimate of the budgetary
effects of H.R. 748, the Coronavirus Aid, Relief, and Economic Security
Act (the CARES Act), which was enacted on March 27, 2020, as
Public Law 116-136. 1 CBO will provide a comprehensive analysis of this
act and related legislation when it publishes its updated baseline budget
projections later this year. 2
On a preliminary basis, CBO and JCT estimate that the act will increase
federal deficits by about $1.7 trillion over the 2020-2030 period (see
Table 1).
1. The CARES Act is authorizing legislation; however, consistent with section 23008 of the law,
division B is treated as appropriation legislation.
2. That analysis will include, where appropriate, information on the fair-value estimates of the
costs of credit programs.
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The estimate includes:
• A $988 billion increase in mandatory outlays;
• A $408 billion decrease in revenues; 3 and
• A $326 billion increase in discretionary outlays, stemming from
emergency supplemental appropriations.
Although the act provides financial assistance totaling more than $2 trillion,
the projected cost is less than that because some of that assistance is in the
form of loan guarantees, which are not estimated to have a net effect on the
budget. In particular, the act authorizes the Secretary of the Treasury to
provide up to $454 billion to fund emergency lending facilities established
by the Board of Governors of the Federal Reserve System. Because the
income and costs stemming from that lending are expected to roughly
offset each other, CBO estimates no deficit effect from that provision.
The estimated budgetary effects of the CARES Act are uncertain for several
reasons:
• How federal agencies will implement some provisions of the bill,
including those establishing the Federal Reserve’s emergency
lending facilities, is not yet known in detail.
• The effects of the novel coronavirus pandemic on economic output
and the labor markets are difficult to predict, and those effects drive
CBO’s estimate of the act’s changes to unemployment compensation
benefits.
• The duration of the emergency declarations related to the
coronavirus pandemic and the number of hospitalizations for
COVID-19 (the disease caused by the coronavirus) could differ
significantly from what CBO has projected, and the budgetary
3. On April 23, 2020, the estimated decrease in revenues was reduced by $2.7 billion to correct
an error in accounting for the effect of the Employee Retention Credit. Then, on
April 27, 2020, the estimated decrease in revenues was further reduced by $34.6 billion to
correct a computation error by JCT in the estimate of the effect of the Modification of a
Limitation on Losses for Taxpayers Other Than Corporations.
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effects of some provisions, such as those affecting Medicare, will
depend on those factors. 4
• The costs of some provisions depend on uncertain future
developments. For example, CBO cannot estimate the cost of
COVID-19 vaccines because no such vaccines are yet approved.
Uncertainties related to various provisions of the act are discussed in the
relevant sections of this estimate. Actual costs could vary significantly from
CBO’s preliminary estimates. In cases where an estimate is not possible,
this letter discusses but does not include costs for those provisions.
The nontax provisions of the act impose mandates on the private sector and
on state and local governments. CBO estimates that the costs of those
mandates will be substantial, exceeding the thresholds in the Unfunded
Mandates Reform Act (UMRA). JCT has determined that the tax provisions
of the act contain no intergovernmental or private-sector mandates.
Summary of the CARES Act
The CARES Act provides funding, expands eligibility for existing
programs, and establishes new programs to provide assistance to
individuals, businesses, and state, local, tribal, and territorial governments
in response to the coronavirus pandemic. Division A contains six titles.
Title I, the Keeping American Workers Paid and Employed Act:
• Provides funding to guarantee loans, which may be forgiven, to
small businesses and other eligible entities through the paycheck
protection program (PPP) to cover payroll and other eligible costs
over eight weeks and
4. For this preliminary estimate, CBO’s budgetary estimates are based on an assumption that the
emergency declarations will remain in place through early 2022 (that is, for an additional
21 months). Those declarations include a declaration of a public health emergency, as
authorized under the Public Health Service Act (42 U.S.C. 247d); and a declaration of
emergency, as authorized under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121). The declarations allow federal agencies to take actions and
expend funds to respond to emergencies, including outbreaks of disease. The duration of such
declarations is not necessarily an indication of the severity of the pandemic at any particular
point while they are in effect.
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• Provides debt relief by modifying the loans of small business
borrowers and expanding eligibility for certain Small Business
Administration (SBA) loan programs.
Title II, Assistance for American Workers, Families, and Businesses:
• Significantly expands eligibility for unemployment compensation
benefits, increases the weekly benefit amount by $600, and extends
the number of weeks of benefit eligibility;
• Shifts responsibility for some costs of unemployment compensation
benefits from the states to the federal government;
• Provides a refundable tax credit, the recovery rebate, of $1,200 per
qualifying adult and $500 per dependent child;
• Defers payment of the employer’s share of Social Security taxes
through December 2020; and
• Makes some changes to individual and business tax provisions.
Title III, Supporting America’s Health Care System in the Fight Against the
Coronavirus:
• Suspends payments on outstanding federal student loans and makes
other changes to federal education and student aid programs;
• Expands the list of items and services that are considered eligible
expenses in health savings accounts;
• Expands Medicare coverage for telehealth services;
• Eliminates Medicare cost-sharing requirements for COVID-19
vaccines;
• Increases some Medicare payment rates, eliminates near-term
sequestration cuts to Medicare (and extends mandatory sequestration
through 2030), and makes changes to coverage and payment rules
for certain providers of post-acute care; and
• Extends funding for several programs of the Department of Health
and Human Services.
Title IV, Economic Stabilization and Assistance to Severely Distressed
Sectors of the United States Economy:
• Provides funding to the Secretary of the Treasury for direct loans,
loan guarantees, or other support for various businesses and state and
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local governments through both the Treasury and the Federal
Reserve.
Title V, Coronavirus Relief Funds:
• Provides grants to states, local, tribal, and territorial governments for
spending related to the pandemic.
Title VI, Miscellaneous Provisions:
• Increases the borrowing authority of the U.S. Postal Service.
Division B, Emergency Appropriations for Coronavirus Health Response
and Agency Operations:
• Provides supplemental appropriations to federal agencies for
spending related to the pandemic.
Basis of Estimate
Consistent with CBO’s normal procedures, most of these preliminary
estimates are made relative to CBO’s March 2020 baseline projections. 5
Those projections were based on an economic forecast completed on
January 7, 2020, and they do not account for changes to the nation’s
economic outlook and fiscal situation arising from the recent and rapidly
evolving public health emergency related to COVID-19. Even though they
do not necessarily fully reflect current conditions, CBO expects that the
estimated costs are nevertheless informative. However, for provisions for
which costs depend importantly on the unemployment rate—specifically,
provisions related to unemployment compensation benefits—CBO used an
updated and notably higher projection of the unemployment rate that
reflects recent economic developments. 6 In CBO’s assessment, that
5. See Congressional Budget Office, Baseline Budget Projections as of March 6, 2020
(March 19, 2020), www.cbo.gov/publication/56268.
6. In preliminary economic projections as of April 3, 2020, the unemployment rate reaches
14 percent in the second quarter of calendar year 2020 and is still 10 percent at the end of
calendar year 2021. Those unemployment projections do not account for the effects on the
economy of the CARES Act or of the Families First Coronavirus Response Act. The
projection of the unemployment rate used for this estimate is higher than that used for the
estimate for H.R. 6201, the Families First Coronavirus Response Act (April 2, 2020),
www.cbo.gov/publication/56316.
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approach led to more informative estimates of the effects of those
provisions.
Estimated Federal Costs
In total, CBO and JCT estimate, the act will increase deficits by
$1.7 trillion over the 2020-2030 period; most of the budgetary effects occur
in 2020 and 2021. The provisions with the largest deficit effects are the
PPP, the recovery rebates, and the expansion of unemployment insurance
(see Figure 1).
Division A affects many direct spending programs that, in total, CBO
estimates, will increase direct spending by $988 billion and decrease
revenues by $408 billion over the 2020-2030 period (see Table 2 and
Table 3). Division B provides $330 billion in funding to a broad range of
federal agencies for defined purposes related to the current coronavirus
emergency (see Table 4).
Title I, the Keeping American Workers Paid and Employed Act
Title I directly appropriates $377 billion, primarily for SBA loans under the
PPP. A small portion of that funding will be used for principal and interest
payments on existing SBA loan guarantees and direct loans, the SBA’s
Economic Injury Disaster Loans (EIDLs), and other expenses.
Paycheck Protection Program. Section 1102 establishes the PPP, which is
to be administered by the SBA, to provide full guarantees of loans of up to
$10 million to small businesses, nonprofit organizations, independent
contractors, and other eligible entities. The loans guaranteed by the PPP are
primarily for maintaining existing payrolls over the eight-week period
following disbursement. The full principal amount and any accrued interest
on a PPP loan may be forgiven, although that forgiveness will be
diminished if a borrower either decreases the number of employees on its
payroll or reduces employees’ compensation. Amounts that are not forgiven
must be paid back to lenders within two years at an interest rate of
1 percent.
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Figure 1.
Deficit Effects Through 2030 of the CARES Act, by Major Provision
Billions of Dollars
Total 1,721
Paycheck Protection Program Unemployment Insurance Increased Limits
and Other SBA Grants and Loans 268 on Losses for
377 Corporations
and Individual
Taxpayers
161
Payments to State, Local, Other Employee
and Tribal Governments Discretionary Retention
150 Outlays Credit for
71 Affected
Employers
Recovery Rebates 55
293
Other Revenue FEMA Disaster
Provisions Relief Fund
49 44
HHS Public Health
and Social Services
Emergency Fund Department of
Veterans Affairs 19
Other
127 Mandatory Transportation
Outlays 35
43 Education
Stabilization Fund
31
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Components may not sum to totals because of rounding. Estimates are relative to CBO’s March 2020 baseline, except
for some provisions related to unemployment insurance.
Although the act provides financial assistance totaling more than $2 trillion, the projected cost is less than that
because some of that assistance is in the form of loan guarantees, which are not estimated to have a net effect on the
budget. In particular, the act authorizes the Secretary of the Treasury to provide up to $454 billion to fund emergency
lending facilities established by the Board of Governors of the Federal Reserve System. Because the income and costs
stemming from that lending are expected to roughly offset each other, CBO estimates no deficit effect from that
provision.
FEMA = Federal Emergency Management Agency; HHS = Department of Health and Human Services;
SBA = Small Business Administration.
Other revenue provisions include a temporary increase in the amount of interest expenses that businesses may
deduct, an expansion of qualified medical expenses that are tax deductible, and the suspension of certain aviation
excise taxes.
Other mandatory outlays include payroll assistance for aviation workers, additional borrowing authority for the
U.S. Postal Service, and relief for federal student loan borrowers.
Other discretionary outlays stem from funding for a broad range of activities, the bulk of which falls within budget
functions 350 (agriculture), 600 (income security), 050 (national defense), 450 (community and regional development),
and 550 (health).
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The act provides a direct appropriation of $349 billion for the subsidy cost
of guaranteeing and delivering PPP loans in 2020. 7 The SBA reports that
amount has been fully obligated and will be expended in fiscal year 2020.
Debt Relief for New and Existing SBA Borrowers. Section 1107
provides a direct appropriation of $17 billion for debt relief for new and
existing SBA borrowers. The section requires the SBA to pay the principal,
interest, and fees that are owed on specified loans for six months. Payments
on loans that lenders have already agreed to delay will be forgiven for
six months after the end of that deferment period. Payments on new loans
issued before September 27, 2020, will be forgiven for six months.
By providing debt relief for new and existing SBA borrowers, the SBA will
be modifying those loans. Modifications to direct loans or loan guarantees
are recorded on a net-present-value basis in the year the modification is
made. Because all modifications will occur before the end of fiscal year
2020, CBO expects that the full $17 billion will be spent to modify loans
made in that year.
Economic Injury Disaster Loans. Section 1110 expands eligibility for
small businesses and other entities to borrow money under the SBA’s EIDL
program to cover the costs of economic injury stemming from business
interruption. The section also provides the SBA more flexibility to process
and disburse small-dollar loans. The act directly appropriates $10 billion to
the SBA to make grants of up to $10,000 to small businesses, independent
contractors, sole proprietors, and other small employers to help those
entities cover the costs of economic injury incurred as a result of the
coronavirus emergency.
CBO estimates that the SBA will spend most of the appropriated funds in
2020 to make those grants to small businesses. CBO expects that businesses
will use the grants to cover the costs of maintaining their payrolls to retain
employees, make rent or mortgage payments, repay obligations that cannot
be met because of revenue losses, and obtain materials made scarcer as a
result of interrupted supply chains.
7. CBO estimated the costs of this provision using the methodology specified in the Federal
Credit Reform Act of 1990. The subsidy cost is the estimated lifetime cost to the government,
as measured by discounting all expected future cash flows associated with the loan or loan
guarantee to a net present value. A present value is a single number that expresses a flow of
current and future payments in terms of an equivalent lump sum received or paid at a specific
time.
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Title II, Assistance for American Workers, Families, and Businesses
The provisions with the largest budgetary effects in title II expand the
unemployment insurance program, provide refundable tax credits for
individuals, and allow taxpayers to fully offset nonbusiness income with
losses stemming from business activities.
Unemployment Insurance. Subtitle A of title II significantly expands
eligibility for unemployment compensation benefits, and it increases the
weekly benefit amount and the number of weeks beneficiaries can claim.
Major provisions include:
• Creating the pandemic unemployment assistance (PUA) program to
provide weekly benefits to unemployed people affected by the
epidemic who are otherwise ineligible for unemployment
compensation benefits,
• Temporarily adding $600 to the weekly benefit amount in
unemployment programs,
• Providing an additional 13 weeks of unemployment compensation
benefits through the pandemic emergency unemployment
compensation (PEUC) program to people who exhaust regular
benefits, and
• Federally funding various unemployment compensation benefits and
state administrative expenses.
The costs of provisions discussed below that are related to unemployment
insurance have been estimated using an updated and notably higher
projection of the unemployment rate that reflects economic developments
as of April 9, 2020. However, the estimated budgetary effects of those
provisions are particularly uncertain because they depend on the effects of
the pandemic on the labor market. Overall, CBO estimates, outlays for
unemployment insurance will increase by a total of $263 billion in 2020
and 2021 as a result of these provisions. Additionally, subtitle A will
decrease revenues by an estimated $5 billion, most of which would occur in
2020 and 2021, as discussed below.
Pandemic Unemployment Assistance. Section 2102 makes PUA weekly
cash benefits available to people who are unemployed, partially
unemployed, or otherwise unable to work because of the coronavirus, but
who are not eligible for regular unemployment compensation, extended
unemployment benefits, or the PEUC program. Those people include self-
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employed workers, independent contractors, and people without sufficient
work history to meet qualifications for other programs.
The PUA program will pay benefits for up to 39 weeks of unemployment
beginning on or after January 27, 2020, and ending on or before
December 31, 2020. The program will be administered by the Department
of Labor, and beneficiaries will apply for PUA benefits through state
unemployment agencies. The weekly benefit amount will be calculated
under state law on the basis of an applicant’s recent earnings, subject to a
minimum benefit amount of half of the state’s average weekly amount for
regular unemployment compensation. (In CBO’s projections, that average
weekly benefit for fiscal year 2020 is $366; CBO estimates that the average
weekly PUA benefit will be $238.)
CBO estimates that the new PUA program will increase outlays by a total
of $35 billion in 2020 and 2021. Disaster unemployment assistance has
historically been available during disasters to types of workers similar to
those who will be covered by PUA. Based on an analysis of disaster
unemployment assistance, CBO expects about 5 million people to claim
PUA benefits. However, given the extraordinary nature of current events,
the number of participants who claim benefits may differ significantly from
previous disasters.
Emergency Increase in Unemployment Compensation Benefits. People
who receive regular or extended unemployment compensation benefits,
trade readjustment allowances, short-time compensation, PUA benefits, or
PEUC through July 31, 2020, will receive their regular weekly benefits plus
an additional $600 each week. Overall, CBO estimates, that addition to
benefits will increase outlays by about $176 billion in calendar year 2020.
CBO estimates that most of the increase (about $139 billion) will stem from
about 17 million people receiving $600 weekly in addition to regular
unemployment compensation benefits.
Typically, not every person who is eligible for unemployment insurance
claims benefits. CBO expects that more people will apply for and receive
unemployment compensation benefits because of the temporary increase in
the weekly benefit amount. Of the increased outlays estimated for regular
unemployment compensation, CBO estimates, about $4 billion will result
from more people claiming benefits than would have otherwise.
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Pandemic Emergency Unemployment Compensation. The PEUC
program will provide up to 13 additional weeks of benefits for people who
have exhausted regular state and federal unemployment compensation
benefits. The benefit amount is the same as what a beneficiary would
receive as regular unemployment compensation. 8 Eligible people can
receive those benefits until the end of December 2020. CBO estimates that
almost 12 million people will receive PEUC and that the program will
increase outlays by about $51 billion in calendar year 2020.
Other Unemployment Provisions. Subtitle A contains additional
unemployment insurance provisions that would increase outlays in 2020
and 2021 by $2 billion, including additional funding for short-time
compensation programs, railroad unemployment insurance, and expenses
for states to administer the expansion of unemployment compensation
benefits.
Revenue Effects of Unemployment Insurance Provisions. CBO
estimates that revenues will decrease, on net, by about $5 billion over the
2020-2030 period as a result of the act’s various unemployment insurance
provisions. Most of those revenue decreases will occur in 2020 and 2021.
The unemployment insurance system is a federal-and-state partnership:
Unemployment compensation benefits paid out by states are recorded as
federal outlays, and the taxes levied by states to pay for certain benefits are
recorded as federal revenues. The act contains several provisions that shift
the funding of certain unemployment benefits from the states to the federal
government. As a result, states’ unemployment taxes will be lower than
they would have been otherwise, and federal revenues will be reduced.
Specifically, the act shifts funding from the states to the federal government
for:
• Fifty percent of the regular unemployment compensation benefits for
people who worked for public-sector entities and nonprofit
organizations, resulting in an estimated revenue decrease of
$4 billion over the 2020-2030 period;
• The first week of benefits for people in states that waive the one-
week waiting period for regular unemployment compensation,
8. People who claim PEUC before July 31, 2020, will receive $600 a week in addition to the
calculated weekly benefit amount. The increase in outlays attributable to the increased benefit
amount is included in the cost for the emergency increase in unemployment compensation
benefits.
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decreasing revenue by an estimated $4 billion from 2020 through
2030; and
• All short-time compensation benefits paid through the end of
December 2020 in states with short-time compensation programs,
decreasing revenue by $0.3 billion over the 2020-2030 period.
CBO estimates that those decreases in federal revenues will be partially
offset by a $3.5 billion increase over the 2021-2030 period as states
respond to smaller balances in their unemployment trust fund accounts by
increasing their future collections of unemployment taxes.
Recovery Rebates for Individuals. For tax year 2020, section 2201 creates
a refundable tax credit of $1,200 ($2,400 for joint filers) plus $500 per
dependent child under the age of 17. 9 The credit phases out for taxpayers
with adjusted gross income (AGI) over $75,000 ($150,000 for joint filers;
$112,000 for head-of-household filers). 10 A similar benefit is allowed in
U.S. possessions. Advance payments of the credit will be made “as rapidly
as possible.”
Eligibility for the advance payments is based on AGI from tax year 2019
returns, which typically would be filed in calendar year 2020. If a 2019
return has not been filed by the date of determination of eligibility, AGI
from a tax year 2018 return can be used to determine eligibility instead. If
an individual has not filed a 2018 or 2019 return but receives Railroad
Retirement benefits or Social Security (including Social Security disability
benefits), information on calendar year 2019 benefit payments can be used
to determine eligibility.
Those advance payments of the credit may be disbursed electronically to
accounts taxpayers have provided for direct deposit of tax refunds, Social
Security benefits, or Railroad Retirement benefit payments. Any taxpayers
eligible for a larger credit based on tax year 2020 information can claim the
additional amount when they file a 2020 tax return, most likely in the
spring of 2021. Taxpayers who are eligible for tax year 2020 credits that are
9. Refundable tax credits reduce a taxpayer’s overall income tax liability; if those credits exceed
other tax liabilities, the taxpayer may receive the excess in a refund. Such refunds are
classified as outlays in the federal budget.
10. AGI refers to total income for the tax year that is not specifically excluded by the tax code
minus certain deductions, including contributions to individual retirement accounts, alimony
paid, and student loan interest.
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less than their advance payments will not be required to repay the
difference. Dependent filers are not eligible, and a Social Security number
is required for eligibility for filers and their dependents. JCT estimates that
the provision will reduce revenues by $142 billion and increase outlays by
$151 billion over the 2020-2021 period. 11
Employee Retention Credit. Section 2301 provides a refundable tax credit
against payroll taxes to employers required to shut down because they face
a coronavirus-related government mandate and to employers that see a
significant decline in their revenue in 2020. The tax credit equals 50 percent
of the qualified wages paid by eligible employers from March 13, 2020,
through December 31, 2020. The maximum credit is $5,000 per employee;
qualified wages are capped at $10,000 per employee. The provision will not
change amounts credited to the Social Security and Railroad Retirement
trust funds. JCT estimates that the employee retention credits will reduce
revenues by $52 billion and increase outlays by $3 billion over the
2020-2021 period, for a net increase in the deficit of $55 billion.
Delay of Payment of Employer Payroll Taxes. Section 2302 allows
employers and self-employed people to defer payment of the employer’s
share of Social Security taxes incurred from March 27, 2020, through
December 31, 2020. The deferred amount will be due in two equal
installments—the first by December 31, 2021, and the second by December
31, 2022. Because some businesses that will incur payroll tax liability in
2020 may cease operations or otherwise fail to remit the installment
payments, the government might not collect all of those deferred taxes. The
provision will not change the amounts credited to the Social Security and
Railroad Retirement trust funds. JCT estimates that this provision will
reduce revenues by $351 billion over the 2020-2021 period and increase
revenues by $339 billion over the 2022-2023 period.
Modifications for Net Operating Losses. Section 2303 permits businesses
to offset 100 percent of taxable income for net operating losses (NOLs)
incurred over the three-year period from 2018 through 2020. Before the
enactment of the CARES Act, NOLs could be used only to offset up to
80 percent of taxable income. The act also temporarily allows corporations
11. Joint Committee on Taxation, Estimated Revenue Effects of the Revenue Provisions
Contained in an Amendment in the Nature of a Substitute to H.R. 748, the “Coronavirus Aid,
Relief, and Economic Security (‘CARES’) Act,” as Passed by the Senate on March 25, 2020,
and Scheduled for Consideration by the House of Representatives on March 27, 2020,
JCX-11R-20 (April 23, 2020), https://go.usa.gov/xvQuv.
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to carry back recently incurred NOLs for refunds of tax liabilities for the
prior five years. The losses must be incurred for tax years beginning after
December 31, 2017, and before January 1, 2021. Refunds will be calculated
using the tax rate in effect when the liabilities were paid. In general, the tax
rate was 35 percent before January 1, 2018. JCT estimates that the
provision will reduce revenues, on net, by $26 billion over the 2020-2030
period, with the largest effect, a reduction of $80 billion in revenue,
occurring in 2020.
Modification of a Limitation on Losses for Taxpayers Other Than
Corporations. Section 2304 allows individual taxpayers to use the full
amount of their business losses to offset nonbusiness income for tax years
2018 through 2020, or for farm losses, tax years 2018 through 2025. Before
the enactment of the CARES Act, a taxpayer could offset only up to
$250,000 ($500,000 for joint filers) of other income with business losses
for tax years 2018 through 2025. (The loss in excess of the limit could be
carried forward to use as a NOL in future years.) Section 2304 also clarifies
that all wage income from a business is “other income,” not business
income, for the purposes of the limitation on losses. JCT estimates that the
provision will reduce revenues by $135 billion over the 2020-2030 period.
Other Tax Provisions. Title II includes other individual and business tax
provisions with smaller budgetary effects, which together, JCT estimates,
will reduce revenues by $24 billion over the 2020-2030 period, largely
during the first two years. Those provisions include the following:
• A waiver of penalties for certain early withdrawals from retirement
accounts in calendar year 2020;
• A waiver of required minimum distribution rules for certain
retirement accounts in calendar year 2020;
• Relaxation of certain limits on the amount that taxable income may
be reduced by deductions for charitable contributions in calendar
year 2020;
• Creation of a partial “above the line” deduction for taxpayers who do
not itemize deductions in 2020 but make charitable contributions of
up to $300 in cash;
• Exclusion from taxation of certain employer payments for their
employees’ student loans;
• A temporary increase in the amount of interest expenses that
businesses may deduct for tax years 2019 and 2020;
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• Acceleration of when businesses may use credits for prior-year
minimum tax liabilities; and
• A change in the period over which the costs of improvements to
certain nonresidential real estate must be depreciated, or deducted,
from 39 years to 15 years.
Title III, Supporting America’s Health Care System in the Fight
Against the Coronavirus
Title III provides support for health care and education programs. All told,
title III will increase the deficit by $17 billion over the 2020-2030 period,
CBO estimates.
Education Provisions. Subtitle B of part IV of title III modifies grant and
loan programs related to education and federal student aid.
CBO estimates that the provisions in this subtitle will increase direct
spending by $8.8 billion over the 2020-2030 period, most of which will
occur in 2020. Of that total, $8.5 billion is for student loans and $0.3 billion
is for other grant and loan programs.
As required by the Federal Credit Reform Act of 1990 (FCRA), CBO
estimates most of the costs of the federal student loan programs on a net-
present-value basis. As required by FCRA, changes to the estimated costs
of outstanding student loans are shown in fiscal year 2020, the year of
enactment.
The CARES Act suspends until September 30, 2020, borrowers’ payments
on all outstanding loans in the William D. Ford Federal Direct Loan
Program and loans originated in the Federal Family Education Loan
Program that are held by the Department of Education. Borrowers will
receive credit toward meeting the requirements of any loan forgiveness and
rehabilitation programs as though they had made payments. The act also
waives interest accrual on those loans for the same period.
In response to the coronavirus emergency, the Department of Education
notified borrowers that they may apply for administrative forbearance to
temporarily stop making payments on their loans. The department also
waived interest accrual on loans through May 13, 2020, and may extend
that period. For this estimate, CBO assumes the department would have
waived interest accrual through June 30, 2020, in the absence of this act.
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Using data from the National Student Loan Data System on the portfolio of
outstanding loans, CBO estimates that this provision will increase direct
spending by $8 billion. That cost results both from a delay in the repayment
of outstanding loans and from a reduction in the amounts paid by borrowers
who make fewer payments because they will receive loan forgiveness or
loan rehabilitation. Because costs are accounted for on a net-present-value
basis, delaying repayments, even if the same amount is ultimately collected,
increases the cost to the federal government.
Other provisions in the act suspend involuntary collections on outstanding
student loans, allow the Department of Education to make payments on
outstanding loans to historically black colleges and universities, waive
certain rules and requirements for students who withdraw from school
because of the coronavirus emergency, and provide flexibility for schools’
and states’ use of federal education funds.
Expansion of Qualified Medical Expenses. Section 3702 amends the
Internal Revenue Code to expand the definition of qualified medical
expenses for health savings accounts, health flexible spending
arrangements, and other savings arrangements to include amounts paid for
menstrual care products and for over-the-counter medicines or drugs. Under
current law, certain individuals and employers may make tax-preferred
contributions to health savings accounts or use similar tax-advantaged
saving arrangements, such as flexible spending arrangements, health
reimbursement accounts, and Archer medical savings accounts. Generally,
contributions made by an individual are deductible for income tax
purposes, and contributions made by an employer, including through a
cafeteria plan, are excludable from income for income and payroll tax
purposes. This section includes as qualified medical expenses for those
accounts amounts paid for menstrual care products and for medicines or
drugs that have not been prescribed by a doctor. Because more products are
eligible for the tax exclusion, people will contribute more to those tax-
advantaged arrangements. JCT estimates that this provision will reduce
revenues by $9 billion over the 2020-2030 period.
Medicare Provisions. The CARES Act includes several provisions that
will change Medicare’s coverage of and payment for services. For the
duration of the declared emergency, sections 3703 through 3707 expand
how Medicare covers and pays for telehealth services in certain
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circumstances. 12 For example, beneficiaries will be able to receive
telehealth services from any clinician participating in Medicare rather than
only from those with whom they have an established relationship. CBO
used information on the use of telehealth services, as well as Medicare’s
payment rates, to estimate higher Medicare spending of about $2 billion
over the 2020-2030 period.
Section 3709 cancels the sequestration of Medicare spending for May
through December 2020. 13 It also amends the Budget Control Act of 2011
(P.L. 112-25) to extend by one year (through 2030) the sequestration of all
nonexempt mandatory spending. CBO estimates that this change will
increase outlays for Medicare by $8 billion in fiscal years 2020 and 2021,
and decrease total mandatory outlays, on net, by $26 billion in 2029 and
2030. In total, section 3709 will result in a net reduction in outlays of
$19 billion over the 2020-2030 period.
Section 3710 increases Medicare’s payment rate by 20 percent for inpatient
admissions for patients who are diagnosed with COVID-19 during the
national emergency and treated in a hospital that receives payment under
Medicare’s inpatient prospective payment system (IPPS). CBO estimates
that about 2 million Medicare beneficiaries will be admitted with a
diagnosis of COVID-19 during the emergency, and about 1 million of them
will be beneficiaries in traditional Medicare who are treated at hospitals
paid under Medicare’s IPPS. Using information about Medicare’s IPPS,
CBO estimates that the provision will increase Medicare spending by about
$3 billion over the 2020-2030 period.
For the duration of the emergency, section 3711 waives certain Medicare
criteria applicable to services provided in some post-acute care settings and
changes payments for some stays in long-term care hospitals. For example,
the provision waives the requirement that a patient must require a minimum
12. For its projections of the extent of the coronavirus epidemic, CBO developed a range of
scenarios based on models from academic, government, and other research institutions. Those
scenarios differed in the number of infections and the timeframe over which they would
occur. The agency then constructed a central estimate using a weighted average of the
scenarios. In CBO’s judgment, new infections could continue throughout 2020 and 2021. On
the basis of past public health emergency declarations, CBO expects that current declarations
will be in place until the beginning of calendar year 2022.
13. Sequestration refers to a set of across-the-board reductions in budgetary resources established
by the Budget Control Act of 2011. Those reductions are required under current law for some
mandatory programs and were extended through 2029 before the enactment of the CARES
Act.
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of 15 hours of therapy per week to be eligible to receive care in an inpatient
rehabilitation facility (IRF). CBO estimates that this change will increase
the number of IRF stays covered by Medicare, and it used data on
Medicare’s payments to IRFs to estimate the effect on Medicare’s
spending. Section 3711 also requires the Medicare program to pay long-
term care hospitals under the long-term care hospital prospective payment
system during the national emergency for certain stays that otherwise
would have been paid at a lower rate. CBO used data on Medicare’s
payment rates under that system to estimate the effect of this provision on
Medicare spending.
Taken together, CBO estimates, the changes under section 3711 will
increase Medicare spending by $4 billion over the 2020-2030 period. Most
of that increase will come from the changes to Medicare’s criteria for
payments to IRFs.
Section 3713 requires Medicare Part B to cover the costs of vaccines for
COVID-19 and the costs of administering them without imposing cost-
sharing requirements for patients. At this time, CBO cannot estimate how
much the provision will increase outlays. Because no vaccine is yet
approved, CBO has no basis on which to estimate its efficacy, Medicare’s
payment rate, or the number of doses that would be administered to
Medicare beneficiaries. Without that information, CBO cannot complete an
estimate of that provision’s budgetary effects.
Sections 3708, 3712, 3714, 3718, and 3719 make other changes to
Medicare’s payments and coverage. CBO estimates that, in total, those
provisions will increase direct spending by about $1 billion over the
2020-2030 period.
Provisions Affecting Programs in the Department of Health and
Human Services. Subtitle E of title III extends funding for and modifies
several federal programs in the Department of Health and Human Services
through November 30, 2020, including the Money Follows the Person
demonstration, community health centers, the National Health Service
Corps, teaching health centers, and the Special Diabetes Program. That
subtitle also will delay scheduled cuts to allotments for Medicaid
disproportionate share hospitals and extend for two years the certified
community behavioral health clinics demonstration program. In addition,
section 3211 appropriates supplemental funding for community health
centers for fiscal year 2020. In total, CBO estimates, the changes to
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programs in the Department of Health and Human Services will increase
direct spending by $8 billion over the 2020-2030 period.
Title IV, Economic Stabilization and Assistance to Severely Distressed
Sectors of the United States Economy
Title IV provides funding to the Secretary of the Treasury, subject to
certain terms and conditions, for direct loans, loan guarantees, grants, and
other support for various businesses and state and local governments, as
follows:
• $500 billion for the Secretary of the Treasury to provide loans and
loan guarantees to passenger air carriers, cargo air carriers, and
businesses that are critical to national security and to support
emergency lending facilities established by the Federal Reserve, and
• $32 billion for grants to the airline industry for payroll support.
Federal Reserve’s Emergency Lending Facilities. Section 4003(b)(4)
authorizes the Secretary of the Treasury to provide up to $454 billion—plus
any amounts provided under the subsection that are not used to support
other sectors—to fund emergency lending facilities established by the
Board of Governors of the Federal Reserve System. CBO estimates that the
Treasury Department, in consultation with the Federal Reserve, will use the
funds to secure lending or to purchase assets under the Federal Reserve’s
Section 13(3) emergency lending authority, making those amounts
available to cover loan defaults or other losses.
On April 9, 2020, the Board of Governors announced a series of emergency
lending programs that included a $110 billion commitment from the
CARES Act for equity investments. Approximately two-thirds of that
amount, $75 billion, will support loans to small and midsized businesses;
the rest will support lending to states and municipalities.
CBO expects that the Treasury Department will commit additional funding
provided in the act for Federal Reserve facilities as those facilities are
established or modified. Most commitments will be made in 2020, and the
rest will occur in 2021, CBO anticipates. Complete term sheets are
available for some but not all facilities, and the full nature of the
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transactions between the Treasury and the Federal Reserve has not been
determined. 14
CBO is estimating the budgetary effects of the provisions on a net-present-
value basis, rather than as year-by-year cash flows, in accordance with
subsection 4003(e) of the act. 15 FCRA requires costs for loans and loan
guarantees to be projected on a net-present-value basis. Although the
investments of the Treasury and the Federal Reserve might not take those
forms, the subsection extends FCRA measures to estimates of other
investments made under the act.
CBO estimates that the amounts committed by the Treasury Department
will significantly increase the total lending provided by the Federal
Reserve. The CARES Act and other laws provide broad authority to the
Federal Reserve, in consultation with the Secretary, to determine what
forms such lending will take. The budgetary effects of the additional
lending will depend on decisions of the Federal Reserve and the
Treasury. CBO has reviewed the Federal Reserve’s announcements
describing the new emergency lending facilities, but has not analyzed the
details of the new programs.
In the past, the Federal Reserve has not sustained losses on similar lending.
During the financial crisis of 2008 and 2009, for example, the Federal
Reserve earned interest income that exceeded its cost of financing, resulting
in larger remittances and therefore in profits for the federal government.
The additional lending under the CARES Act is likely to take a broader set
of forms than in the past. CBO estimates that the new lending will expose
the government to default and other losses, but also that it will generate
interest and other income that will exceed its borrowing costs. Based in part
on information from the Board of Governors, CBO estimates that the
income and costs will roughly offset each other, on an expected-value
basis—that is, on average. Therefore, the additional emergency lending will
not affect the deficit, CBO estimates.
That additional lending will result in substantial additional credit risk for
the government, however, which could have a wide range of budgetary
14. Term sheets set forth the basic terms and conditions established by the Federal Reserve for
the activities of the lending facilities created or modified with resources provided by the
CARES Act.
15. A present-value analysis presents a single number representing the sequence of projected cash
flows of an asset or liability in terms of an equivalent lump sum received or paid at a specific
point in time.
Honorable Mike Enzi
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effects. In CBO’s assessment, there is a high probability that the lending
will result in a small net profit for the government, thus reducing the
deficit, but there also is a small probability that the provisions could result
in a very large loss—an outcome that would significantly increase the
deficit. Finally, CBO expects that the performance of loans and assets will
vary across facilities, with some realizing net losses and others net gains.
Credit Assistance for Air Carriers and Businesses That Are Critical to
National Security. Section 4003 authorizes the Secretary of the Treasury
to provide direct loans or loan guarantees for up to $25 billion for
passenger air carriers and related businesses, $17 billion for businesses that
are critical to national security, and $4 billion for cargo air carriers. That
authority expires on December 31, 2020. The act requires the Secretary to
receive warrants, equity interest, or senior debt instruments issued by the
loan recipients as compensation for providing the loans.
On the basis of public announcements, CBO expects that the Treasury will
provide assistance in the form of direct loans rather than loan guarantees.
As required under FCRA, the estimated subsidy cost of those loans,
calculated on a net-present-value basis, will be recorded on the budget at
the time the commitments are made.
Both the volume and the subsidy costs of commitments that will be made
by December 31, 2020, are uncertain. Some eligible businesses have
publicly announced interest in obtaining loans, and others have indicated
that they have no immediate interest in those programs. 16 Similarly,
companies that currently have access to credit from the private sector may
become eligible for Treasury loans if their financial condition weakens in
the future. CBO has no basis to estimate which businesses and major air
carriers will seek loans from the Treasury under title IV. In the absence of
sufficient information from those industries on the demand for loans, CBO
estimates about half of the authorized loan volume ($23 billion) will be
used, recognizing that the actual demand for loans could be higher or lower.
Given the eligibility criteria in the bill, CBO estimates that the credit risk of
Treasury loans under this section will be similar to that of high-yield debt
with a credit rating of at least B minus. Using historical data from major
16. See Tracy Rucinski, “American Airlines Seeking up to $12 Billion From Aid Package:
Memo,” Reuters Business News (March 30, 2020), https://tinyurl.com/ry7u3xq; and
Peter Eavis, Niraj Chokshi, and David Gelles, “Take Government Aid? We’ll See, Some
Businesses Say,” New York Times (April 3, 2020), https://tinyurl.com/rh8n9gq.
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credit-rating agencies on the probability of default and recoveries, CBO
estimates that the subsidy rate for the loan program will average about
10 percent. Thus, on balance, the program’s estimated credit subsidy cost
will be about $2 billion over the 2020-2030 period.
The form and size of equity that the Treasury Department will receive are
uncertain. If the department uses an approach similar the proposal reported
for the airline payroll support program (as described in more detail below),
it would receive warrants with a face value equal to 10 percent of the loan
volume. 17 On that basis, and assuming that the warrants expire in five
years, CBO estimates that the returns on equity will total about $1 billion
over the 2020-2030 period, lowering the net cost of the loan program to
about $1 billion.
Suspension of Certain Aviation Excise Taxes. Section 4007 suspends
certain aviation excise taxes until January 1, 2021, including excise taxes
levied on transportation of persons and property by air and those levied on
fuel used in aviation. JCT estimates that those provisions will reduce
revenues by $4 billion over the 2020-2021 period.
Pandemic Relief for Aviation Workers. Section 4112 allows the
Secretary of the Treasury to provide financial assistance to the airline
industry for payroll support, as follows:
• $25 billion for passenger air carriers,
• $4 billion for cargo air carriers, and
• $3 billion for related contractors.
Awards are capped at each air carrier’s salary and benefit expenditures for
the six months ending September 30, 2019. According to Treasury
announcements, 70 percent of assistance to large carriers will come in the
form of grants, and 30 percent will come in the form of loans; assistance to
smaller carriers will be entirely in grants. 18
17. See David Shepardson and Tracy Rucinski, “Exclusive: Treasury Wants Warrants,
Repayment From Major U.S. Airlines on 30% of Grant Money—Sources,” Reuters Business
News (April 10, 2020), https://tinyurl.com/tj274fz.
18. See David Shepardson and Tracy Rucinski, “Airlines Want U.S. Treasury to Scrap Proposal
to Make Some Grant Money Repayable,” Reuters Business News (April 11, 2020),
https://tinyurl.com/u9fh43g.
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Using industry data on employee compensation, and assuming that all
major carriers will receive assistance, CBO estimates that about $23 billion
in grants will be disbursed over the 2020-2021 period. Using historical data
from major credit-rating agencies on the probability of default and
recoveries, and assuming interest rates of around 1 percent, consistent with
Treasury plans, CBO estimates that about $9 billion in loans will be issued
with an average subsidy rate of about 7 percent. Thus, on balance, the
estimated subsidy cost of the loans will be about $1 billion over the
2020-2030 period.
In addition, the act authorizes the Secretary to receive warrants, options,
and other securities as compensation for providing payroll assistance.
According to Treasury announcements, the department plans to receive
warrants under that authority with a face value equal to 10 percent of the
loan volume. Assuming a five-year expiration date for the warrants, CBO
estimates that the returns on the equity, which will be recorded in the
budget as offsetting receipts, will total less than $500 million over the
2020-2030 period. The resulting net cost of the payroll assistance program,
including grant payments, loan subsidy cost, and equity returns, is about
$24 billion over the same period.
Title V, Coronavirus Relief Funds
Title V provides $150 billion to state, local, tribal, and territorial
governments to offset expenses stemming from the pandemic. CBO
estimates that all of those amounts will be provided in 2020 and most will
be spent in that year, increasing outlays by $150 billion in 2020 and 2021.
The relief funds are allocated as follows:
• $139 billion for state governments,
• $8 billion for tribal governments, and
• $3 billion for the District of Columbia and U.S. territories.
The funds are allocated on the basis of population within each category. Up
to 45 percent of each state’s allocation may be provided directly to units of
local government, if those units certify to the Department of the Treasury
that they have incurred pandemic-related expenses. Those allocations will
be based on a local government’s share of the state’s population.
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Title VI, Miscellaneous Provisions
Section 6001 provides $10 billion in additional borrowing authority for the
U.S. Postal Service to help cover operating expenses. Such borrowing
authority can be used by the Postal Service to increase its spending without
a corresponding increase in offsetting receipts. Using information from the
Postal Service, CBO estimates that the agency will use that authority and
spend the entire authorized amount in 2020, increasing off-budget direct
spending by $10 billion.
Division B, Emergency Appropriations for Coronavirus Health
Response and Agency Operations
Division B provides $330 billion in supplemental discretionary
appropriations to a range of federal agencies for defined purposes related to
the coronavirus emergency. 19 CBO’s estimate of the outlays resulting from
those appropriations is summarized in Table 4. Those estimates reflect, in
part, historical spending patterns for programs that have received large
infusions of funding, as well as information from federal agencies about the
anticipated timeframe for carrying out activities specifically related to the
coronavirus pandemic. CBO estimates that about $99 billion of that funding
will be spent in 2020.
Almost 80 percent of the funding provided under division B consists of
appropriations for five major programs or activities:
• $127 billion for the Public Health and Social Services Emergency
Fund within the Department of Health and Human Services;
$100 billion of that amount will be available to reimburse health care
providers (such as hospitals) for expenses related to health care or
lost revenues as a result of the coronavirus emergency. The
19. That amount includes $14.3 billion stemming from changes to mandatory programs.
Section 11002 of division B provides the Commodity Credit Corporation (CCC) with a
$14 billion reimbursement for net realized losses in fiscal year 2020. The CCC is limited
to $30 billion in borrowing authority at any time and is authorized to receive an annual
reimbursement for its net realized losses. This provision is a supplemental reimbursement to
the CCC during fiscal year 2020. The effect is to lift the borrowing cap during the current
fiscal year by $14 billion. CBO estimates that this additional borrowing authority will result
in increased outlays of $10 billion in fiscal year 2020 and $4 billion in fiscal year 2021. That
estimate is based on information that the Department of Agriculture is considering using this
new 2020 authority to make additional producer support payments that may be similar to
the trade mitigation payments announced in 2018 and 2019. Division B also provides
$300 million for the Supplemental Nutrition Assistance Program; that funding will be used
for food distribution efforts for Indian reservations and U.S. territories.
Honorable Mike Enzi
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remaining amounts, including $16 billion for the Strategic National
Stockpile, will primarily support the development and purchase of
vaccines, therapeutic treatments and drugs, and medical supplies.
• $45 billion for the Disaster Relief Fund, which the Federal
Emergency Management Agency will use to support state and local
governments’ response-and-recovery efforts and to reimburse
federal agencies for costs incurred in responding to the emergency.
• $36 billion for the Department of Transportation to provide grants
and other assistance to public-use airports and transit systems, which
will defray operating expenses and other costs related to responding
to the emergency.
• $31 billion for the Department of Education to establish an
education stabilization fund, which will provide grants to states and
local education agencies and fund institutions of higher education,
primarily to provide grants to students.
• $20 billion for the Department of Veterans Affairs, primarily for
testing and treating veterans for COVID-19.
Almost all discretionary spending resulting from division B is designated as
emergency spending in keeping with section 251 of the Balanced Budget
and Emergency Deficit Control Act of 1985. 20 The limits on discretionary
appropriations established by the Budget Control Act of 2011, as amended,
will be adjusted to accommodate that funding.
Mandates
The CARES Act imposes intergovernmental and private-sector mandates as
defined in UMRA. CBO estimates that the aggregate cost of mandates in
the nontax provisions of the act will be substantial, exceeding the
thresholds established in UMRA of $84 million for intergovernmental
mandates and $168 million for private-sector mandates in 2020. (Those
thresholds are adjusted annually for inflation.) JCT has determined that the
20. Section 22004 rescinds and appropriates an estimated $72 million in unobligated balances for
homeless assistance grants administered by the Department of Housing and Urban
Development. That provision will have no net effect on budget authority or outlays in 2020,
CBO estimates. CBO also estimates that it will result in a $31 million increase in outlays in
2021 that will be largely offset by forgone spending in later years, for an overall net increase
of $5 million over the 2020-2030 period. Those effects are not designated as an emergency
requirement under section 251 of the Deficit Control Act.
Honorable Mike Enzi
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tax provisions of the act contain no intergovernmental or private-sector
mandates.
Requirements in the following provisions impose mandates whose costs,
CBO estimates, are substantial for the affected entities:
• Section 3605 extends a requirement for state and local governments
to provide paid family and medical leave to employees who were
laid off after March 1, 2020, and later rehired. CBO expects that a
small portion of the 18 million employees who have applied for
unemployment benefits between early March and April 4, 2020, are
eligible for the paid-leave benefit.
• Section 3202 requires health plans to reimburse providers for
conducting COVID-19 diagnostic tests at an amount equal to the
cash price published by each provider, unless the health plan and the
provider have a negotiated price in place. Because published prices
tend to exceed negotiated prices and health plans must cover the cost
of the test, the mandate will increase the aggregate cost to health
plans.
• Section 3203 prohibits group and individual health plans from
imposing cost-sharing requirements on enrollees for the cost of any
coronavirus vaccine that is developed. Because no such vaccine has
been approved for public use, CBO has no basis to estimate the cost
to comply with this mandate. However, a large number of people are
covered by group or individual health plans and will be eligible for a
vaccine under this provision.
• Sections 4022 and 4023 require private mortgage servicers of
federally backed loans to grant forbearance to borrowers negatively
affected by the coronavirus emergency. The cost of the mandate is
the delay or loss of principal and interest payments on loans
receiving forbearance.
• Section 4024 prohibits lessors of rental units that are insured,
guaranteed, supplemented, or assisted by the federal government
from charging penalties or evicting renters who fail to make rental
payments. According to published research, roughly 12.3 million
rental units are in federally financed properties.
Honorable Mike Enzi
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Requirements in the following sections impose mandates whose costs, CBO
estimates, are small:
• Sections 3112 and 3121 impose additional reporting requirements on
drug and device manufacturers.
• Section 3201 prohibits group and individual health plans from
imposing cost-sharing requirements on enrollees for certain
COVID-19 diagnostic tests.
• Section 3215 establishes liability protections for health care
professionals who volunteer during the coronavirus emergency and
preempts any state laws that contradict those new protections.
• Section 3221 prohibits state and local governments, health care
providers, employers, and landlords from discriminating on the basis
of information disclosed in health records.
• Section 3202 requires health care providers to post their cash prices
for conducting COVID-19 diagnostic tests online.
• Sections 3863, 4011, 4012, 4013, and 4014 require drug developers
and manufacturers as well as lending institutions to pay additional
fees to federal regulators.
• Section 4021 requires entities that furnish information to consumer
reporting agencies to report as current consumer accounts that
receive accommodations because of the coronavirus emergency.
Contributors
Many people were involved in preparing the estimates discussed in this
letter. They are listed below.
Estimate Prepared By
Division A
Title I. David Hughes and Jon Sperl.
Title II. Meredith Decker, Justin Falk, Justin Latus, Michael McGrane, and
the staff of the Joint Committee on Taxation (JCT).
Title III. Alice Burns, Julia Christensen, Jennifer Gray, Stuart Hammond,
Philippa Haven, Justin Humphrey, Lori Housman, Leah Koestner,
Jamease Kowalczyk, Kevin Laden, Avi Lerner, Kevin McNellis,
Honorable Mike Enzi
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Noah Meyerson, Lisa Ramirez-Branum, Lara Robillard, Robert Stewart,
Emily Vreeland, Ellen Werble, Rebecca Yip, and JCT.
Title IV. Alissa Ardito Ashcroft, Sunita D’Monte, Nathaniel Frentz,
Kathy Gramp, Stephen Hagenbuch, Wendy Kiska, Aaron Krupkin,
Kevin Laden, Michael McGrane, Stephen Rabent, Sarah Rens Zavislan,
and JCT.
Title V. Matthew Pickford.
Title VI. Stephen Rabent.
Division B
Joanna Capps, George McArdle, Justin Riordan, Mark Sanford,
Esther Steinbock, and J’Nell Blanco Suchy.
Mandates. Rachel Austin, Andrew Laughlin, Lilia Ledezma, and JCT.
Modeling and Economic Projections. Chris Adams, Robert Arnold,
Tia Caldwell, William Carrington, Yiqun Gloria Chen, Justin Falk,
Michael Falkenheim, Sebastien Gay, Sofia Guo, Stuart Hammond,
Nadia Karamcheva, Arin Kerstein, Wendy Kiska, Jamease Kowalczyk,
Michael McGrane, Ryan Mutter, Brooks Pierce, Matthew Schmit,
Chad Shirley, and Emily Stern.
Preparation and Fact-Checking of Tables, Figure, and Narrative.
Aaron Feinstein, Philippa Haven, Janice Johnson, Kate Kelly,
Brandon Lever, Matthew Pickford, and Robert Rebach.
Estimate Reviewed By
Christina Hawley Anthony, Megan Carroll, Kim Cawley, Chad Chirico,
Sheila Dacey, Wendy Edelberg, Theresa Gullo, Mark Hadley, Jeffrey
Kling, Leo Lex, Paul Masi, Sarah Masi, John McClelland, David Newman,
Sam Papenfuss, Joshua Shakin, Robert Sunshine, and Susan Willie.
Honorable Mike Enzi
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I hope this analysis is useful to the Congress. If you have any questions,
please contact me or Leo Lex, who can help you connect with the relevant
analyst.
Sincerely,
Phillip L. Swagel
Director
Enclosures
cc: Honorable Bernie Sanders
Ranking Member
Honorable John Yarmuth
Chairman
House Budget Committee
Honorable Steve Womack
Ranking Member
House Budget Committee
Table 1. Summary of Estimated Budgetary Effects of H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law 116-136 Revised April 27, 2020
By Fiscal Year, Billions of Dollars
2020- 2020-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2025 2030
INCREASES OR DECREASES (-) IN DIRECT SPENDING (Division A)
Estimated Budget Authority 1,452 69 2 * * -1 * * * 13 -49 1,522 1,486
Estimated Outlays 938 73 3 1 * -1 * * * 10 -36 1,014 988
INCREASES OR DECREASES (-) IN REVENUES (Division A)
Estimated Revenues -568 -240 177 173 9 12 12 8 5 2 2 -437 -408
DISCRETIONARY APPROPRIATIONS (Division B)
Budget Authority 330 0 0 0 0 0 0 0 0 0 0 330 330
Estimated Outlays 99 134 58 16 10 5 2 1 * * * 322 326
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Total 1,606 448 -116 -156 2 -9 -11 -7 -5 9 -38 1,773 1,721
On-Budget 1,596 448 -116 -156 2 -9 -10 -6 -4 9 -37 1,764 1,715
Off-Budget 10 * * * * * * * * * * 9 7
Sources: Congressional Budget Office; the staff of the Joint Committee on Taxation.
Components may not sum to totals because of rounding. Estimates are relative to CBO's March 2020 baseline, except for some provisions related to unemployment insurance.
Although the act provides financial assistance totaling more than $2 trillion, the projected cost is less than that because some of that assistance is in the form of loan guarantees, which are not
estimated to have a net effect on the budget. In particular, the act authorizes the Secretary of the Treasury to provide up to $454 billion to fund emergency lending facilities established by the
Board of Governors of the Federal Reserve System. Because the income and costs stemming from that lending are expected to roughly offset each other, CBO estimates no deficit effect from
that provision.
The CARES Act is authorizing legislation; however, consistent with section 23008 of the law, division B is treated as appropriation legislation.
* = between -$500 million and $500 million.
Table 2. Changes in Direct Spending Under Division A of H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law 116-136 April 16, 2020
By Fiscal Year, Billions of Dollars
2020- 2020-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2025 2030
INCREASES OR DECREASES (-) IN DIRECT SPENDING
Title I - Keeping American Workers Paid and Employed Act
Budget Authority 377 0 0 0 0 0 0 0 0 0 0 377 377
Outlays 377 1 * * * * * 0 0 0 0 377 377
Title II - Assistance for American Workers, Families, and Businesses
Pandemic Unemployment Assistance
Estimated Budget Authority 30 5 0 0 0 0 0 0 0 0 0 35 35
Estimated Outlays 30 5 0 0 0 0 0 0 0 0 0 35 35
Emergency Increase in Unemployment Compensation Benefits
Estimated Budget Authority 175 1 0 0 0 0 0 0 0 0 0 176 176
Estimated Outlays 175 1 0 0 0 0 0 0 0 0 0 176 176
Pandemic Emergency Unemployment Compensation
Estimated Budget Authority 12 39 0 0 0 0 0 0 0 0 0 51 51
Estimated Outlays 12 39 0 0 0 0 0 0 0 0 0 51 51
Other Unemployment Compensation Provisions
Estimated Budget Authority 2 * 0 0 0 0 0 0 0 0 0 2 2
Estimated Outlays 1 * 0 0 0 0 0 0 0 0 0 2 2
Recovery Rebates for Individualsa
Estimated Budget Authority 139 12 0 0 0 0 0 0 0 0 0 151 151
Estimated Outlays 139 12 0 0 0 0 0 0 0 0 0 151 151
Employee Retention Credita
Estimated Budget Authority 2 * 0 0 0 0 0 0 0 0 0 3 3
Estimated Outlays 2 * 0 0 0 0 0 0 0 0 0 3 3
Title II Total
Estimated Budget Authority 360 57 0 0 0 0 0 0 0 0 0 417 417
Estimated Outlays 360 58 0 0 0 0 0 0 0 0 0 417 417
Title III - Supporting America's Health Care System in the Fight Against the Coronavirus
Education Provisions
Estimated Budget Authority 9 * * * * * * * * * * 9 9
Estimated Outlays 9 * * * * * * * * * * 9 9
Page 1 of 3
Table 2. Changes in Direct Spending Under Division A of H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law 116-136 April 16, 2020
By Fiscal Year, Billions of Dollars
2020- 2020-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2025 2030
INCREASES OR DECREASES (-) IN DIRECT SPENDING
Increasing Medicare Telehealth Flexibilities
Estimated Budget Authority * 1 * 0 0 0 0 0 0 0 0 2 2
Estimated Outlays * 1 * 0 0 0 0 0 0 0 0 2 2
Adjustment of Sequestration
Estimated Budget Authority 6 4 0 0 0 0 0 0 0 13 -49 10 -26
Estimated Outlays 4 4 0 0 0 0 0 0 0 10 -36 8 -19
Medicare Inpatient Prospective Payment System
Estimated Budget Authority 2 * 0 0 0 0 0 0 0 0 0 3 3
Estimated Outlays 2 * 0 0 0 0 0 0 0 0 0 3 3
Increased Access to Postacute Care
Estimated Budget Authority 1 2 1 0 0 0 0 0 0 0 0 4 4
Estimated Outlays 1 2 1 0 0 0 0 0 0 0 0 4 4
Department of Health and Human Services Programs
Estimated Budget Authority 5 3 * * 0 0 0 0 0 0 0 8 8
Estimated Outlays 2 4 1 1 * * * 0 0 0 0 8 8
Title III - All Other
Estimated Budget Authority * 1 * * * * * * * * * 1 1
Estimated Outlays * 1 * * * * * * * * * 1 1
Title III Total
Estimated Budget Authority 23 11 2 * * * * * * 13 -49 37 1
Estimated Outlays 18 12 3 1 * * * * * 10 -36 34 8
Title IV - Economic Stabilization and Assistance to Severely Distressed Sectors of the U.S. Economy
Federal Reserve Emergency Lending Facilities
Budget Authority 454 0 0 0 0 0 0 0 0 0 0 454 454
b
Estimated Outlays 0 0 0 0 0 0 0 0 0 0 0 0 0
Credit Assistance for Air Carriers and Businesses Critical to National Security
Budget Authority 46 0 0 0 0 -1 0 0 0 0 0 45 45
Estimated Outlays 2 0 0 0 0 -1 0 0 0 0 0 1 1
Page 2 of 3
Table 2. Changes in Direct Spending Under Division A of H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law 116-136 April 16, 2020
By Fiscal Year, Billions of Dollars
2020- 2020-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2025 2030
INCREASES OR DECREASES (-) IN DIRECT SPENDING
Pandemic Relief for Aviation Workers
Budget Authority 32 0 0 0 0 * 0 0 0 0 0 32 32
Estimated Outlays 22 2 0 0 0 * 0 0 0 0 0 24 24
Title IV Total
Estimated Budget Authority 532 0 0 0 0 -1 0 0 0 0 0 531 531
Estimated Outlays 24 2 0 0 0 -1 0 0 0 0 0 25 25
Title V - Coronavirus Relief Funds
Budget Authority 150 0 0 0 0 0 0 0 0 0 0 150 150
Estimated Outlays 150 * 0 0 0 0 0 0 0 0 0 150 150
Title VI - Miscellaneous Provisions
Budget Authority 10 0 0 0 0 0 0 0 0 0 0 10 10
Estimated Outlays 10 0 0 0 0 0 0 0 0 0 0 10 10
Total Changes in Direct Spending
Estimated Budget Authority 1,452 69 2 * * -1 * * * 13 -49 1,522 1,486
Estimated Outlays 938 73 3 1 * -1 * * * 10 -36 1,014 988
On-Budget 928 73 3 1 * -1 * * * 10 -36 1,004 978
Off-Budget c 10 0 0 0 0 0 0 0 0 0 0 10 10
Sources: Congressional Budget Office; the staff of the Joint Committee on Taxation.
Components may not sum to totals because of rounding. Estimates are relative to CBO's March 2020 baseline, except for some provisions related to unemployment insurance.
The CARES Act is authorizing legislation; however, consistent with section 23008 of the law, division B is treated as appropriation legislation.
* = between -$500 million and $500 million.
a. This provision also affects revenues, which are shown in Table 3.
b. CBO is estimating the budgetary effects of this provision on a net-present-value basis, in accordance with subsection 4003(e) of the act. On that basis CBO estimates that income and costs from
authorized credit activities will roughly offset each other and not affect the deficit.
c. Off-budget spending results from $10 billion in additional borrowing authority for the U.S. Postal Service provided in title VI.
Page 3 of 3
Table 3. Changes in Revenues for H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law 116-136 Revised April 27, 2020
By Fiscal Year, Billions of Dollars
2020- 2020-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2025 2030
INCREASES OR DECREASES (-) IN REVENUES (Division A)
Title II - Assistance for American Workers, Families, and Business
Unemployment Insurance Revenue Provisions -3 -1 * * * * * * * 0 0 -5 -5
Recovery Rebates for Individualsa -131 -11 0 0 0 0 0 0 0 0 0 -142 -142
Special Rules for Use of Retirement Funds * -2 * * * * * * * * * -2 -3
Temporary Waiver of Required Minimum Distribution -11 -1 1 1 1 1 1 1 1 1 1 -8 -5
Allowance of Partial Above-the-Line Deduction for Charitable Contributions * -1 0 0 0 0 0 0 0 0 0 -2 -2
Modification of Limitations on Charitable Contributions During 2020 -1 -4 2 1 * * * 0 0 0 0 -1 -1
a
Employee Retention Credit for Employers -47 -5 0 0 0 0 0 0 0 0 0 -52 -52
Delay of Payment of Employer Payroll Taxes -211 -141 171 169 0 0 0 0 0 0 0 -12 -12
Modifications for Net Operating Losses -80 -9 3 4 9 13 13 9 6 3 3 -60 -26
Modification of Limitation on Losses for Taxpayers Other Than Corporations -74 -64 2 1 * * * * * * * -135 -135
Modifications of Limitation on Business Interest -7 -5 * * * * * * * 0 0 -13 -13
Other Tax Provisions -3 3 0 0 0 0 0 0 0 0 0 * *
Title III - Supporting America's Health Care System in the Fight Against the Coronavirus
Single-Employer-Plan Funding Rulesa 3 2 * * * -1 -1 -1 -1 -1 -1 3 *
Expansion of Qualified Medical Expenses * -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -4 -9
Other Tax Provisions 0 * * 0 0 0 0 0 0 0 0 * *
Title IV - Economic Stabilization and Assistance to Severely Distressed Sectors of the U.S. Economy
Suspension of Certain Aviation Excise Taxes -3 -1 0 0 0 0 0 0 0 0 0 -4 -4
Total Changes in Revenues -568 -240 177 173 9 12 12 8 5 2 2 -437 -408
On-Budget -568 -240 177 173 9 13 12 8 6 2 3 -436 -405
Off-Budget b * * * * * * * * * * * -1 -3
Sources: Congressional Budget Office; the staff of the Joint Committee on Taxation.
Components may not sum to totals because of rounding. Estimates are relative to CBO's March 2020 baseline, except for some provisions related to unemployment insurance.
The CARES Act is authorizing legislation; however, consistent with section 23008 of the law, division B is treated as appropriation legislation.
* = between -$500 million and $500 million.
a. This provision also affects direct spending, which is shown in Table 2.
b. Off-budget revenue losses come from changes in Social Security revenues.
Table 4. Discretionary Spending Under Division B of H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law 116-136 April 16, 2020
By Fiscal Year, Billions of Dollars 2020- 2020-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2025 2030
DISCRETIONARY APPROPRIATIONS
HHS Public Health and Social Services Emergency Fund
Budget Authority 127 0 0 0 0 0 0 0 0 0 0 127 127
Estimated Outlays 24 60 30 6 4 2 0 * 0 0 0 127 127
FEMA Disaster Relief Fund
Budget Authority 45 0 0 0 0 0 0 0 0 0 0 45 45
Estimated Outlays 18 13 3 3 2 1 1 1 * * * 40 44
Department of Transportation
Budget Authority 36 0 0 0 0 0 0 0 0 0 0 36 36
Estimated Outlays 11 12 5 4 3 0 0 0 0 0 0 35 35
Education Stabilization Fund
Budget Authority 31 0 0 0 0 0 0 0 0 0 0 31 31
Estimated Outlays 4 14 10 2 1 1 1 0 0 0 0 30 31
Department of Veterans Affairs
Budget Authority 20 0 0 0 0 0 0 0 0 0 0 20 20
Estimated Outlays 6 7 5 0 0 0 0 0 0 0 0 19 19
Othera, b
Budget Authority 71 0 0 0 0 0 0 0 0 0 0 71 71
Estimated Outlays 36 27 4 2 1 0 0 0 0 0 0 71 71
Total Changes in Discretionary Spending
Totala, b
Budget Authority 330 0 0 0 0 0 0 0 0 0 0 330 330
Estimated Outlays 99 134 58 16 10 5 2 1 * * * 322 326
On-Budgeta, b
Budget Authority 330 0 0 0 0 0 0 0 0 0 0 330 330
Estimated Outlays 99 134 58 16 10 5 2 1 * * * 322 326
Off-Budget
Budget Authority * 0 0 0 0 0 0 0 0 0 0 * *
Estimated Outlays * * * 0 0 0 0 0 0 0 0 * *
Source: Congressional Budget Office.
Components may not sum to totals because of rounding. Estimates are relative to CBO’s March 2020 baseline.
The CARES Act is authorizing legislation; however, consistent with section 23008 of the law, division B is treated as appropriation legislation. That section also requires the estimated budgetary effects of changes to mandatory
programs contained in division B to be excluded from the pay-as-you-go scorecards maintained by the Senate and the Office of Management and Budget.
FEMA = Federal Emergency Management Agency; HHS = Department of Health and Human Services; * = between zero and $500 million.
a. Estimated spending includes $14.3 billion in budget authority and outlays stemming from changes to mandatory programs administered by the Department of Agriculture.
b. Almost all discretionary spending resulting from division B is designated as emergency spending, in keeping with section 251 of the Balanced Budget and Emergency Deficit Control Act of 1985. One provision—section
22004—will affect the timing of outlays stemming from balances of regular discretionary funding for homeless assistance grants administered by the Department of Housing and Urban Development. CBO estimates that the
provision will have no effect in 2020, that it will increase outlays by $31 million in 2021, and that it will reduce outlays in later years, for a net increase in outlays of $5 million over the 2020-2030 period.
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