The mammoth coronavirus relief package enacted late last month will cost less than most lawmakers anticipated, the Congressional Budget Office said Thursday.
The sweeping legislation, which offered business loans, cash to families, an expanded social safety net and more, will cost $1.8 trillion over the coming decade, the CBO said in a preliminary cost estimate. Lawmakers and independent analysts had previously pegged the price tag at about $2.3 trillion.
But a portion of that aid came in the form of loan guarantees, including $454 billion to support lending by the Federal Reserve. That funding is not likely to increase the deficit because “income and costs stemming from that lending are expected to roughly offset each other,” the CBO said in its analysis.
The lower-than-expected price tag softens the budget blow slightly with lawmakers already pushing for another round of coronavirus relief.
Lawmakers and the White House are haggling over another measure that could cost in the $250 billion to $500 billion range, with additional aid to small businesses, hospitals and state and local governments in the mix. And a subsequent package could easily add that much and more, Speaker Nancy Pelosi has suggested.
Even so, the CBO described its cost estimate as “preliminary” and stressed that it comes with a significant degree of uncertainty. It’s not yet clear how long the pandemic will endure, making projections of health care costs difficult. It’s not clear how federal agencies will implement some provisions, including those establishing the Fed’s emergency lending program.
And calculating the cost of unemployment insurance benefits is difficult because it’s hard to predict the effect of the coronavirus on the economy and labor markets. With so much uncertainty, the budget scorekeeping agency said, “Actual costs could vary significantly from CBO’s preliminary estimates.”
The forecast assumes that public health emergency declarations will remain in place through early 2022. And it projects the unemployment rate to hit 14 percent in the second quarter of this year, falling to 10 percent by the end of 2021.
The single costliest item in the relief package was the so-called Paycheck Protection Program, which offers forgivable loans to small businesses to keep workers on the payroll during a shutdown. That program, along with some other Small Business Administration loans, is projected to cost $377 billion.
Almost all of that money has already been spent and the Trump administration has requested another $251 billion to replenish the small-business loan fund.
The second costliest provision provides tax rebate checks of up to $1,200 per adult and $500 per child. Those checks are projected to cost $293 billion, in a combination of reduced revenue and increased spending, since some checks will go to people who don’t earn enough to pay taxes.
And the third costliest provision provides increased unemployment insurance benefits, amounting to about $268 billion. Most of that cost comes from providing an extra $600 a week in unemployment compensation, on top of regular state benefits, through July 31.
The report also noted the package imposes mandates on the private sector and state and local governments. “CBO estimates that the costs of those mandates will be substantial,” it said, though it didn’t provide an estimate.
Such mandates include paid-leave benefits for state and local government workers; health insurer reimbursements to providers who administer COVID-19 tests; a prohibition on cost-sharing requirements for health plan enrollees for the price of yet-to-be-developed coronavirus vaccines; mortgage forbearance requirements and a prohibition on financial penalties or eviction for renters who fail to make payments.
The relief package assessed by the CBO on Thursday is by far the largest of the three that have been enacted so far. The first package was estimated to cost $8.3 billion and the second package was estimated to cost $192 billion over a decade.
Paul M. Krawzak contributed to this report.