House Democrats’ massive pandemic relief bill would cost nearly $3.5 trillion, according to an official estimate, dwarfing the previous record-setting March package aimed at preserving the coronavirus-battered U.S. economy.
That’s in line with preliminary estimates from congressional aides who had put the tally at over $3 trillion, but the new figures from the nonpartisan Congressional Budget Office could give skeptical Republicans another talking point.
The White House has already threatened to veto the measure, which the House passed 208-199 on a mostly party-line vote last month. Senate Republicans wasted no time in saying they would not take up the bill, which some described as a partisan “wish list.” Senate Majority Leader Mitch McConnell, R-Ky., has said further legislation might be necessary, but has not set a definitive timeline.
According to the CBO, roughly half the cost of the House bill, or just over $1.7 trillion, would occur in the remaining months before the new fiscal year begins Oct. 1. That would bring the deficit for the current year to an astronomical $5.4 trillion, or 26 percent of the size of the U.S. economy.
Much of the rest of the borrowed funds, or $1.4 trillion, would be tacked onto the fiscal 2021 deficit, which would clock in at a still-sizable $3.5 trillion.
Almost half the cost of the House-passed bill, $1.5 trillion, is for emergency appropriations. That includes almost $1 trillion in state and local government aid to deal with pandemic-related costs and replace lost tax revenue. A public health fund for hospitals and other medical providers, testing and tracing would cost an estimated $180 billion, CBO said. The agency estimates the cost of housing aid, with most of that for emergency rental assistance, at $124 billion.
The balance of the cost, $1.9 trillion, is primarily for mandatory spending and tax cuts, such as a continuation and expansion of tax rebates in the March aid package worth up to $1,200 per adult, depending on income.
Extending more generous unemployment insurance benefits worth an extra $600 per week on top of regular state allotments would cost about $437 billion, the agency said. Another provision would provide $180 billion to employers to provide premium pay to first responders, hospital workers and other essential workers during the pandemic.
The agency’s deficit estimate also includes a projected revenue loss of $310 billion over a decade attributable to tax changes in the bill, including proposals to beef up a tax credit to cover up to $36,000 of wages for employers experiencing revenue declines, and eliminate the $10,000 cap on state and local tax deductions for two years. That’s a net figure that takes into account $254 billion in revenue gains from tax increases aimed at clawing back loss deductions for certain business owners from tax breaks included in the March law.