Summary
CBO has completed the estimate of the direct spending and revenue effects of S. 4049, the National Defense Authorization Act for Fiscal Year 2021, as passed by the Senate on July 23, 2020. Enacting the bill would increase both direct spending and revenues. The net increase in the deficit would total $7.9 billion over the 2021-2030 period.
The bill would increase net direct spending by about $8.0 billion over the 2021-2030 period. Those effects arise from 10 provisions:
- Section 1090B would add medical conditions to the list of conditions that are presumed to be associated with exposure to Agent Orange for purposes of disability compensation from the Department of Veterans Affairs;
- Section 6706 would change the timing of certain sales of oil from the Strategic Petroleum Reserve;
- Sections 6701-6705 would direct the Secretary of Energy to enter into agreements to demonstrate advanced nuclear technologies;
- Section 602 would require the Department of Defense (DoD) to provide hazardous-duty pay for military service related to the COVID-19 emergency;
- Section 1092 would make unexpired balances available to support the development of 5G communications technology;
- Section 1413 would allow retirees from the reserve components to reside at the Armed Forces Retirement Home;
- Title XVII, the Hong Kong Autonomy Act, would increase amounts available to compensate victims of state sponsored terrorism;
- Section 707 would require DoD to conduct a pilot program for drug pricing;
- Section 2887 would authorize the transfer of unexpended balances to the Oklahoma City Memorial Fund; and
- Section 551 would result in the award of additional Medals of Honor.
S. 4049 also would increase revenues by $28 million over the 2021-2030 period, CBO estimates. That increase would arise from the provisions of Title XVII that would impose penalties on individuals and entities who have contributed to undermining Hong Kong’s autonomy from China. Other provisions would have insignificant effects on revenues.
Because the bill would affect direct spending and revenues, statutory pay-as-you-go procedures apply.
CBO estimates that enacting S. 4049 would increase on-budget deficits by more than $5 billion in at least one of the four consecutive 10-year periods beginning in 2031. That long-run increase in the deficit would stem primarily from the additional disability compensation associated with section 1090B.
On March 2, 2020, CBO posted a cost estimate for S. 2657, the American Energy Innovation Act of 2020, as posted on the website of the Senate Committee on Energy and Natural Resources on February 27, 2020. Certain provisions in subtitles E and H of that bill are similar to sections 6701-6706 of S. 4049. Differences between the cost estimates for those bills reflect differences in the language.
On July 1, 2020, CBO transmitted a cost estimate for S. 4049, the National Defense Authorization Act for Fiscal Year 2021, as reported by the Senate Committee on Armed Services on June 23, 2020. That earlier version of S. 4049 would increase direct spending by an estimated $488 million over the 2021-2030 period. The two versions of S. 4049 have different provisions affecting direct spending and revenues, and CBO’s cost estimates reflect those differences.
On July 16, 2020, CBO transmitted a cost estimate for H.R. 6395, the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, as reported by the House Committee on Armed Services on July 9, 2020. That bill, which would have insignificant effects on direct spending and revenues, differs from S. 4049, and CBO’s cost estimate reflects those differences.