Estimating the Federal Budgetary Effects of Pandemic-Related Legislation — CBO (September 25, 2020)

Summary

Congressional Budget Office slide presentation dated September 25, 2020 by Theresa Gullo, Director of Budget Analysis, titled Estimating the Federal Budgetary Effects of Pandemic-Related Legislation, for the Association for Budgeting and Financial Management's 2020 Virtual Symposium. The slides cover major laws enacted in March and April 2020 and give a total estimated deficit increase of $2.4 trillion over the 2020-2030 period, including $1.4 trillion for mandatory programs. They state that CBO's September projections raised the net deficit effect by $200 billion relative to its original estimates, with lowered PPP spending because demand tapered off. For the CARES Act, they give a total estimated 10-year cost of $1.7 trillion, including $377 billion for Small Business Administration loans, mostly PPP.

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                                                                             Congressional Budget Office

                                                                                               September 25, 2020




                Estimating the Federal Budgetary Effects of
                      Pandemic-Related Legislation

                                A Presentation to the Association for Budgeting and
                                 Financial Management’s 2020 Virtual Symposium


  Theresa Gullo
  Director of Budget Analysis


For further information about the venue, see https://tinyurl.com/y6sl4mrs.
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Four Major Laws Enacted in March and April in Response to the
2020 Coronavirus Pandemic
 H.R. 6074, Coronavirus Preparedness and Response Supplemental
  Appropriations Act, 2020

 H.R. 6201, Families First Coronavirus Response Act

 H.R. 748, Coronavirus Aid, Relief, and Economic Security (CARES) Act

 H.R. 266, Paycheck Protection Program and Health Care Enhancement Act




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Context for Cost Estimates

Prepared under extraordinary uncertainty about many factors
 How long and severe the pandemic would be
 How the economy, the Administration, and people would respond
 How quickly programs would get up and running

Generally used CBO’s March 2020 baseline projections
 Did not account for changes to the economic outlook and fiscal situation arising
  from the evolving public health emergency in most cases
 Used economic projections prepared in January 2020 for most provisions
 Used updated economic projections for provisions related to unemployment
  insurance to provide useful estimates

Used revenue estimates prepared by the staff of the Joint Committee
on Taxation.
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Total Estimated Budget Impact

Deficit increase: $2.4 trillion over the 2020–2030 period
 $1.4 trillion for mandatory programs (Payroll Protection Program [PPP],
  Unemployment Insurance [UI], recovery rebates)
 $498 billion in discretionary spending from appropriations for a wide variety of
  federal agencies and grant programs (designated as emergency requirements)
 $502 billion in estimated revenue losses in 2020, but an increase of
  $146 billion over the 2021–2030 period (JCT)

$2.2 trillion estimated to occur in 2020




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Updates Made for CBO’s September Projections

Some programs’ estimated costs increased; others decreased. On net, the deficit
effect increased by $200 billion over the 2020–2030 period relative to CBO’s
original estimates for the major legislation addressing the pandemic.

Major updates:
 Increased spending for UI (more people eligible)
 Shifted recovery rebates forward (from 2021 to 2020)
 Increased Medicaid spending (longer pandemic, more people)
 Increased 2020 outlays for Medicare Accelerated Payments
 Lowered PPP spending (demand tapered off more quickly)

CBO has not produced comprehensive updated cost estimates.



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Deficit Increases Over the 2020–2030 Period




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H.R. 6074, Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020
Enacted March 6
Total 10-year cost: $8.1 billion, almost all discretionary (emergency
requirements)
 $6.3 billion for medical care and research
 $1 billion for bilateral economic assistance
 $0.3 billion for State Department
 $0.5 billion for expanded telehealth coverage under Medicare




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H.R. 6201, Families First Coronavirus Response Act

Enacted March 18
Total estimated 10-year cost: $192 billion
Mandatory spending: $95 billion
 $50 billion for Medicaid (increase match; require continuous coverage)
 $10 billion for refundable tax credits
 $20 billion to waive work requirements for Supplemental Nutrition Assistance Program
  and allow maximum allotments
 $7 billion for Medicare
 $5 billion for 100 percent of the costs of extended UI benefits through December 2020
 Meals for children; testing; sick leave for federal employees
Revenues: $94 billion
 $94 billion in tax credits for Family and Medical Leave Act/sick leave (through December)
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H.R. 748, Coronavirus Aid, Relief, and Economic Security
(CARES) Act
Enacted March 27
Total estimated 10-year cost: $1.7 trillion

Mandatory spending: $988 billion
 $377 billion for Small Business Administration loans (mostly PPP)
 $262 billion for expanded unemployment benefits (expanded eligibility,
  $600 weekly)
 $150 billion for Coronavirus Relief Funds (for states)
 Health and credit assistance for critical businesses and education




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H.R. 748, Coronavirus Aid, Relief, and Economic Security
(CARES) Act (Continued)
Discretionary spending: $326 billion
 $127 billion for public health
 $44 billion for Disaster Relief Fund
 Transportation, education, defense

Revenue losses: $408 billion
 $352 billion in 2020–2021 from delay of payroll taxes (increase of $340 billion
  in 2022–2023)
 $142 billion for recovery rebates
 Tax assistance for businesses




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H.R. 266, Paycheck Protection Program and Health Care
Enhancement Act
Enacted April 24
Total estimated 10-year cost: $483 billion

Mandatory spending: $321 billion
 Increase PPP by $321 billion (expanded eligibility)

Discretionary spending: $162 billion
 $100 billion for medical care
 $62 billion for Economic Injury Disaster Loans (assistance to businesses)




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CBO Resources

An Update to the Budget Outlook: 2020 to 2030 (September 2020),
www.cbo.gov/publication/56517

The Budgetary Effects of Laws Enacted in Response to the 2020 Coronavirus
Pandemic, March and April 2020 (June 2020), www.cbo.gov/publication/56403

Cost estimate for H.R. 6074, Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020 (March 4, 2020), www.cbo.gov/publication/56227

Cost estimate for H.R. 6201, Families First Coronavirus Response Act (April 2, 2020),
www.cbo.gov/publication/56316

Cost estimate for H.R. 748, CARES Act, Public Law 116-136 (April 16, 2020),
www.cbo.gov/publication/56334

Cost estimate for H.R. 266, Paycheck Protection Program and Health Care
Enhancement Act (April 22, 2020), www.cbo.gov/publication/56338

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