July 15, 2024

$1.9 Trillion Worth of Bad Policies

An activist from FreedomWorks, where I worked until the end of last month before moving to a new job, called me today to ask for some details about the COVID-19 relief bill, H.R. 1319, working its way through Congress. The Senate passed an amended version of H.R. 1319 on Saturday by a vote of 50 to 49. Sen. Dan Sullivan (R-AK) missed the vote, but it wouldn’t have changed the outcome considering that Vice President Kamala Harris would have broken the tie.

H.R. 1319 is heading back to the House of Representatives for consideration during the week of March 8. It’s highly likely that H.R. 1319 will pass on a party-line vote, much like it did the first time around.

Although H.R. 1319 was changed in the Senate, where some provisions like the minimum wage increase were removed and others were changed, the legislation is substantially the same as what passed the House on February 27. According to the Congressional Budget Office, the Senate Amendment to H.R. 1319 is projected to increase the budget deficit by just under $1.875 trillion between FY 2021 and FY 2030, or about $38 billion less than the House-passed version of the bill.

Breakdown of the Senate Amendment to H.R. 1319 Between FY 2021-2030 By Committee (Dollars in Millions)

Agriculture, Nutrition, and Forestry$18,858$2,574$931$159$31$158$22,711
Health, Education, Labor, and Pensions$40,802$114,334$65,419$40,515$25,744$17,090$303,904
Banking, Housing, and Urban Affairs$32,544$29,877$15,018$6,105$3,626$1,650$88,820
Homeland Security and Governmental Affairs$12,521$11,897$8,682$5,349$3,720$8,270$50,439
Small Business and Entrepreneurship$44,950$1,130$250$5$5$0$46,340
Environment and Public Works$812$1,102$528$412$151$200$3,205
Commerce, Science, and Transportation$22,427$9,539$2,780$886$64-$544$35,152
Veterans’ Affairs$10,510$4,288$1,438$275$131$26$16,668
Foreign Relations$1,159$4,196$2,695$871$327$278$9,526
Indian Affairs$1,976$4,348$1,166$412$284$393$8,579
Source: Congressional Budget Office (may not match exact CBO figures due to Excel formula)

More of the spending in the Senate Amendment to H.R. 1319 was shifted to FY 2021 and FY 2022 compared to the House version. Nearly 90 percent of the spending in the Senate’s version of the bill will happen in FY 2021 and FY 2022. The original House version of H.R. 1319, which was amended before it hit the floor, spent about 84 percent of the funds in those two fiscal years. The final House version spent 87.1 percent in FY 2021 and FY 2022.

Four specific provisions represent 55.5 percent of the spending in the Senate Amendment to H.R. 1319. Those provisions are the so-called “recovery rebates” ($1,400 direct payments), funding for state and local governments, $400 weekly unemployment benefits, and school funding.

The wisdom of these provisions is questionable, to say the least. Historically, direct payments haven’t boosted consumption, but politicians love them. The first round of direct payments in the CARES Act showed that nothing really changed. States did see declining revenues early in the pandemic, but state and local revenues have rebounded and most states aren’t expected to have shortfalls. The enhanced unemployment will incentivize people not to work. As far as the funding for schools goes, Congress has spent $67 billion on schools in previous COVID-19 bills.

Provisions of the Senate Amendment to H.R. 1319 With a Cost of $10 Billion or More (Dollars in Millions)

Recovery Rebates for IndividualsFinance$402,173
Coronavirus State and Local Fiscal Recovery FundsFinance$350,000
Federal Pandemic Unemployment CompensationFinance$163,050
Elementary and Secondary School Emergency Relief FundHealth, Education, Labor, and Pensions$125,805
Child Tax Credit Improvements for 2021Finance$88,486
Multiemployer Pension PlansFinance$83,229
Testing, Contact Tracing, and Mitigation ActivitiesHealth, Education, Labor, and Pensions$47,322
Federal Emergency Management Agency AppropriationHomeland Security and Governmental Affairs$47,000
Pandemic Unemployment AssistanceFinance$44,240
Higher Education Emergency Relief FundHealth, Education, Labor, and Pensions$39,585
Pandemic Emergency Unemployment CompensationFinance$34,590
Federal Transit Administration GrantsBanking, Housing, and Urban Affairs$28,400
Support for RestaurantsSmall Business and Entrepreneurship$25,000
Child Care StabilizationHealth, Education, Labor, and Pensions$23,975
Expanding Premium Assistance for ConsumersFinance$22,022
Emergency Rental AssistanceBanking, Housing, and Urban Affairs$21,550
Repeal of Election to Allocate Interest on a Worldwide BasisFinance$20,005
Temporary Increase in FMAP for Expanding ACA CoverageFinance$16,149
Targeted EIDL AdvanceSmall Business and Entrepreneurship$15,000
Child Care and Development Block Grant ProgramHealth, Education, Labor, and Pensions$14,840
Air Transportation Payroll Support Program ExtensionCommerce, Science, and Transportation$14,260
Medical CareVeterans’ Affairs$14,088
Single-Employer Pension PlansFinance$12,587
Source: Congressional Budget Office

The Committee for a Responsible Federal Budget notes that the spending from H.R. 1319 could exceed $4 trillion. Why? Well, interest payments from the debt incurred because of the deficit spending is one reason, but the bigger reason is that Congress will undoubtedly try to extend some of expansions of various programs. For example, the expansion of the premium tax credits under the Affordable Care Act that is in H.R. 1319 is something Democrats will undoubtedly try to make permanent at some point in the 117th Congress. Unemployment benefits and expansions of tax credits are also policies that Democrats will try to continue or make permanent.

According to the Committee for a Responsible Federal Budget, the legislative response to COVID-19 before H.R. 1319 is $4.1 trillion. These are dollars authorized but not necessarily spent. Some $3.1 trillion has been spent. H.R. 1319 would bring the total authorized response over the past year to roughly $6 trillion.


Policy wonk. Nonserious musician. Playstation ID: JaseLP22

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