CBO projects CARES Act will cost $1.76 trillion, not $2.2 trillion
The emergency relief CARES act that Congress passed and President Trump signed in late March will end up costing the government $1.76 trillion, according to a preliminary estimate from the Congressional Budget Office.
That figure is significantly below the $2.2 trillion price tag that had been calculated for the bill until this point.
“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,” said the report, which was written along with the Joint Committee on Taxation.
“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,” it continued.
But that may not be the final word on the matter.
“Actual costs could vary significantly from CBO’s preliminary estimates,” the CBO noted, pointing out that the total cost will depend on how provisions are implemented and the economic effect the pandemic will have on the country, which could affect spending on unemployment benefits, for example.
The major expenditures were broken down into three main categories: $988 billion in mandatory spending, $446 billion in decreased revenues, and $326 billion in discretionary outlays.
Even before the pandemic, the deficit for the year was projected to exceed $1 trillion.
That figure is expected to rise as a result of the economic downturn, a repercussion of social distancing measures and lockdowns, which will result in lower tax revenues and higher safety net spending. Paired with the unprecedented rescue package and health funding, the earlier deficit figure could nearly quadruple, according to the Committee for a Responsible Federal Budget, a fiscal watchdog group.
Congress is already haggling over additional funds for the Paycheck Protection Program, which offers small businesses forgivable loans to keep workers on the books. The program on Thursday exhausted the $349 billion Congress appropriated for it in the CARES Act, and Congress is expected to top up the program with another $251 billion.
Democrats are pushing for a similar amount of additional spending for states, local governments and hospitals.