Congressional Budget Office, cost estimate for H.R. 7327, the Child Care for Economic Recovery Act (July 17, 2020)

Summary

A Congressional Budget Office cost estimate, dated July 17, 2020, for H.R. 7327, the Child Care for Economic Recovery Act, as introduced on June 25, 2020. Division A, the Emergency Child Care Support Appropriations Act, 2020, would provide $10,005 million in budget authority, $10,000 million of it for the Child Care and Development Fund as grants to states, with outlays of $9,980 million through 2030. Division B, the Worker Access to Child and Family Care Act, would raise direct spending by $113,563 million through 2030, led by a Child Care Stabilization Fund of $7,100 million a year ($78,100 million) and a refundable child and dependent care tax credit, and would reduce revenues by $56,729 million. CBO and the Joint Committee on Taxation put the net increase in the deficit at $169,085 million through 2030, assuming enactment in August 2020.

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       CBO Estimate for H.R. 7327, the Child Care for Economic Recovery Act, as introduced on June 25, 2020

Table 1. Discretionary Spending Under Division A, the Emergency Child Care Support Appropriations Act, 2020                                          July 17, 2020
By Fiscal Year, Millions of Dollars
                                                                                                                                                  2020-     2020-
                                           2020     2021     2022      2023     2024      2025     2026     2027      2028     2029     2030       2025      2030
Appropriations Subcommittee

Financial Services and General Government
   Internal Revenue Services
       Budget Authority                  5              0        0        0         0        0         0        0        0         0        0          5          5
       Estimated Outlays                 4              1        0        0         0        0         0        0        0         0        0          5          5

Labor, Health and Human Services, Education
  Child Care and Development Fund
      Budget Authority              10,000      0                0        0        0         0        0         0        0         0        0    10,000    10,000
      Estimated Outlays                225  2,050            5,000    1,800      500       300      100         0        0         0        0     9,875     9,975

       Total Changes in
       Discretionary Spending
         Budget Authority                10,005        0         0        0        0         0        0         0        0         0        0    10,005    10,005
         Estimated Outlays                  229    2,051     5,000    1,800      500       300      100         0        0         0        0     9,880     9,980
Source: Congressional Budget Office.
Assumes enactment in August 2020.

Division A would provide supplemental appropriations primarily for federal agencies to provide grants to states to support child care programs. The legislation
would designate those amounts as emergency requirements in accordance with section 251 of the Balanced Budget and Emergency Deficit Control Act of 1985.
       CBO Estimate for H.R. 7327, the Child Care for Economic Recovery Act, as introduced on June 25, 2020


Table 2. Changes in Direct Spending and Revenues Under Division B, the Worker Access to Child and Family Care Act a                                             July 17, 2020

                                                                                  By Fiscal Year, Millions of Dollars                                        2020-      2020-
                                                    2020     2021      2022     2023     2024     2025      2026      2027     2028      2029     2030        2025       2030

                                                                      INCREASES IN DIRECT SPENDING
Sec. 402 - Refundability and Enhancement of Child and Dependent Care Tax Credit
   Estimated Budget Authority                     0 3,518     3,363 3,890 3,850    3,865  3,865 3,050                          3,045    3,072     3,095     18,486     34,613
   Estimated Outlays                              0 3,518     3,363 3,890 3,850 3,865     3,865 3,050                          3,045    3,072     3,095     18,486     34,613
Sec. 408 - Child Care Stabilization Fund
   Budget Authority                                7,100    7,100     7,100    7,100     7,100    7,100     7,100    7,100     7,100    7,100     7,100     42,600     78,100
   Estimated Outlays                                 615    5,822     8,094    8,449     8,591    8,047     7,739    7,739     7,739    7,029     7,029     39,618     76,893
Sec. 409 - Family Care for Essential Workers
   Budget Authority                                  850        0         0         0        0         0        0         0        0         0        0        850         850
   Estimated Outlays                                 212      595        43         0        0         0        0         0        0         0        0        850         850
       Total Changes in Direct Spending
         Estimated Budget Authority                7,950 10,618 10,463 10,990 10,950 10,965 10,965 10,150 10,145 10,172 10,195                             61,936    113,563
         Estimated Outlays                           827 9,935 11,500 12,339 12,441 11,912 11,604 10,789 10,784 10,101 10,124                              58,954    112,356

                                                                INCREASES OR DECREASES (-) IN REVENUES
Sec. 402 - Refundability and Enhancement of Child and Dependent Care Tax Credit
   Estimated Revenues                             0 -4,049 -4,127 -4,592 -4,792 -5,021 -5,560 -6,108 -6,368                            -6,612    -6,846    -22,581    -54,072
Sec. 403 - Increase in Exclusion for Employer-Provided Dependent Care Assistance
   Estimated Revenues                               *   -185     -260   -273     -280              -287      -290     -296      -305     -314      -322     -1,286     -2,814
Sec. 404 - Payroll Credit for Certain Fixed Expenses of Child Care Facilities
   Estimated Revenues                               0      -84       0              0        0         0        0         0        0         0        0        -84         -84
Sec. 405 - Payroll Credit for Certain Employee Dependent Care Expenses
   Estimated Revenues                             0      -21      0                 0        0         0        0         0        0         0        0        -21         -21
Sec. 406 - Flexibility for Dependent Care Flexible Spending Arrangements
   Estimated Revenues                                0    217      54               0        0         0        0         0        0         0        0        271         271
Sec. 407 - Employee Retention Credit Allowed with Respect to Employment of Domestic Workers
   Estimated Revenues                            -7       -2      0        0       0      0                     0         0        0         0        0         -9          -9
       Total Changes in Revenues
         Estimated Revenues                            -7   -4,124   -4,333    -4,865   -5,072    -5,308   -5,850   -6,404    -6,673   -6,926    -7,168    -23,710    -56,729

                                                                                NET INCREASE IN THE DEFICIT

   Total                                            834 14,059 15,833 17,204 17,513 17,220 17,454 17,193 17,457 17,027 17,292                              82,664 169,085
      On-Budget                                     834 13,969 15,641 16,987 17,291 16,992 17,224 16,958 17,215 16,778 17,036                              81,715 166,924
      Off-Budget b                                    *     90    192    217    222    228    230    235    242    249    256                                 949   2,161
Source: Congressional Budget Office and staff of the Joint Committee on Taxation
Assumes enactment in August 2020.

Amounts may not sum because of rounding; * = between -$500,000 and $500,000

Division B would provide additional funds to states to support child care programs. It also would make various changes to the tax code related to expenses for child and
dependent care.

a. H.R. 7327 is appropriation legislation, but section 306 of division A specifies requirements for the budgetary treatment of division B. Consistent with those requirements,
   and at the direction of the House Committee on the Budget, division B is considered to be authorizing legislation rather than appropriation legislation and thus its
   estimated direct spending and revenue effects are subject to pay-as-you-go procedures. However, the legislation also would require the estimated budgetary effects
   stemming from that division to be excluded from the pay-as-you-go scorecards maintained by the U.S. Senate and the Office of Management and Budget.

b. Off-budget revenue losses come from changes in Social Security revenues.


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