CBO has just issued its analysis of the Emergency Economic Stabilization Act of 2008, as released tonight by the House Committee on Financial Services. Among other provisions, the legislation would create a Troubled Asset Relief Program (TARP). The pdf of our analysis is posted here. The text is pasted below.
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September 28, 2008
Honorable Barney Frank
Chairman
Committee on Financial Services
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
CBO has released a cost estimatefor HR 7174, the James Zadroga 9/11 Health and Compensation Act of 2008.
The legislation would provide:
Health care benefits for eligible emergency personnel who responded to the terrorist attacks in New York City on September 11, 2001, and for recovery and clean-up workers following the attacks;
Health care benefits to eligible residents and others present in the part of New York City that was affected by those attacks; and
A Wall Street Journal blog posting mischaracterizes CBO's testimony earlier this week on the net budget impact of the Treasury proposal to buy troubled assets. The Wall Street Journal blog states that the plan "likely won't have any effect on the 2009 budget deficit." That is incorrect.
Here's what I said in the testimony:
An article in today's Washington Post suggests that in testimony yesterday, I argued that the proposed Troubled Asset Relief Act of 2008 "could actually worsen the financial crisis" by forcing institutions to recognize new losses on their balance sheets through the sale of assets to the government and by revealing some of those same institutions to be insolvent. This is not fully accurate, and some clarification is in order.
This morning I am testifying before the House Budget Committee on the federal response to market turmoil. (Click here to link totoday's testimony). The text of my written statement is copied below:
Chairman Spratt, Ranking Member Ryan, and Members of the Committee, thank you for inviting me to testify this morning on the budgetary and economic implications of the recent turmoil in financial markets and the Administrations proposal to address it.
This morning I'm testifying on climate change before the Committee on Ways and Means in the House of Representatives.
I spoke today at the 10th anniversary of the Center for Health Policy (CHP) and the Center for Primary Care and Outcomes Research (PCOR) at Stanford University. The webcast of the lecture is available here.
As a follow-up to my previous post on CBO's estimate of the subsidy cost for extending government loans to automobile firms, I thought it might be useful to highlight the deferment feature of the authorized program, which has a significant effect on the estimated subsidy. In particular, under the program, borrowers could defer payments of principal and interest for up to five years after putting into operation the new or modified plant funded by the loan.
The emergence of H5N1, or "avian flu," motivated the Department of Health and Human Services' 2005 plan to prepare for and combat an influenza pandemic. Three years ago domestic manufacturers were unable to rapidly produce enough vaccine to protect the more than 300 million people living in the United States. That remains the case today. With current technology, a pandemic could circle the globe more quickly than vaccines could be produced.
Last year, the Congress authorized the Department of Energy to make $25 billion in loans to auto manufacturing firms and suppliers of automotive components. Manufacturers could use those loans to reequip or establish facilities to produce "advanced technology vehicles" that would meet certain emissions and fuel economy standards; component suppliers could borrow funds to retool or build facilities to produce parts for such vehicles.
