The relief package put together by Congress — also known as the Coronavirus Aid, Relief and Economic Security (or CARES) Act — likely will cost $1.8 trillion over a 10-year period instead of $2.2 trillion, as first estimated by lawmakers, according to a report by the Congressional Budget Office and Joint Committee on Taxation.
The latest estimate of the budgetary effects of H.R. 748, the CARES Act, enacted on March 27, is a $1.8 trillion increase in the federal deficits over the 2020-2030 period, the CBO/JCT says in its just-released 35-page initial analysis.
The CBO/JCT preliminary estimate includes the following elements:
- $988 billion increase in mandatory outlays;
- $446 billion decrease in revenues; and
- $326 billion increase in discretionary outlays, stemming from emergency supplemental appropriations.
While the CARES 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,” the CBO/JCT explain.
The stimulus package authorizes the Secretary of the Treasury to provide up to $454 billion to fund emergency lending facilities established by the Federal Reserve Board, the analysis states.
“Because the income and costs stemming from that lending are expected to roughly offset each other, CBO estimates no deficit effect from that provision.”
Unknown Factors in CARES Act
The estimated budgetary effects of the CARES Act, the groups explain, are uncertain, because:
• 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 could differ significantly from what CBO has projected, and the budgetary effects of some provisions, such as those affecting Medicare, will depend on those factors.
• 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.