Cost Estimate for Proposed Senate Amendment to H.R. 1

Today CBO released a cost estimatefora proposed Senate substitute amendment to H.R. 1, the American Recovery and Reinvestment Act of 2009,introduced by Senators Inouye and Baucus on January 31st. The amendment would specify appropriations for a range of federal programs and would increase or extend certain benefits payable under the Medicaid, unemployment compensation, and nutrition assistance programs; it also would reduce individual and corporate income tax collections in a number of ways, including an alternative minimum tax (AMT) patch for 2009 anda tax credit of up to $500 for each workerin both 2009 and 2010.

CBO estimates that if enacted in mid-February, H.R. 1 as amended would increase outlays by $132 billion during the remaining several months of fiscal year 2009, by $242 billion in fiscal year 2010, by $145 billion in 2011, and by a total of $632 billion over the 2009-2019 period.In addition, CBO and the Joint Committee on Taxation (JCT) estimate that enactingthe proposedSenate amendment to H.R. 1 would reduce revenues by $101 billion in fiscal year 2009, by $219 billion in fiscal year 2010, and by a net amount of $253 billion over the 2009-2019 period. (Approximately $96 billion of the estimated revenue change is attributable to the proposed tax credit for wage earners and $70 billion to the proposed changes in the AMT.)

Combining those effects, CBO estimates that enacting the Senateamendment would increase federal budget deficits by $233 billion over the remaining months of fiscal year 2009, by $461 billion in 2010, by $142 billion in 2011, and by about $884 billion over over the 2009-2019 period. Thetable belowsummarizes CBO's and JCT's estimates of the legislation's budgetary effects.

These estimates differ fromCBO's cost estimatesfor similar legislationconsidered in the House of Representatives last week. On January 30,CBO transmitted a cost estimate for H.R. 1 as passed by the House on January 28, 2009; and on January 26,we transmitted a cost estimate for the bill as introduced in the House on that date. CBO and JCT estimated that the version of H.R. 1 that was passed by the House of Representatives would increase deficits by $526 billion over the 2009-2010 period and by a total of $820 billion over the 2009-2019 period; the Senate amendmentwould increase the deficit by $694 billion over the 2009-2010 periodand by about$884 billion over the2009-2019 period.

Much of the difference in the 11-year totals comes from the Senate amendments AMT provisions, which would reduce revenues by about $70 billion. The most significant difference in outlays from discretionary funding in the House and Senate versions stems from the proposed State Fiscal Stabilization Fund: both versions would appropriate $79 billion for this new activity, but CBO estimates outlays of about $31 billion over the 2009-2010 period under the House-passed version of H.R. 1 and about $52 billion over the 2009-2010 period under the Senate amendment. The difference reflects the fact that the House version would provide the funding in two components, the first available for obligation beginning July 1, 2009, and the second a year later; the Senate proposal would provide all the funding in 2009.