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OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

Report No: 576
Date: 04/25/2002

  1. LAW NUMBER: P.L. 107-147 (H.R. 3090)

  2. BILL TITLE: Job Creation and Worker Assistance Act

  3. BILL PURPOSE: (1) Provides for extended unemployment benefits and a transfer to States of excess Federal Unemployment Trust Fund dollars; (2) provides temporary business tax reductions; (3) provides temporary tax benefits for areas of New York City damaged by the September 11th terrorist attacks; (4) temporarily extends certain expiring tax provisions; and (5) provides FY 2002 supplemental grants and extends authorization of the Contingency Fund under the Temporary Assistance for Needy Families (TANF) program.

    4.  

  4. OMB ESTIMATE: P.L.107-147 provides up to 13 weeks of temporary, extended unemployment benefits in all States. These benefits would be available through December 31, 2002 and would be 100 percent Federally-funded. States that meet certain requirements would be eligible for an additional 13 weeks of temporary extended unemployment benefits for workers who exhaust the initial 13 week extension. P.L. 107-147 also makes temporary business tax reductions that provide an additional first-year depreciation deduction and extend the carryback period for Net Operating Loss. In addition, the Act provides a number of tax incentives for reconstruction of businesses located in the New York Liberty Zone (a specified area surrounding the site of the World Trade Center) or relocated from the Liberty Zone to elsewhere in New York City. The Act also extends certain tax provisions that expired at the end of calendar year 2001 and makes other miscellaneous tax changes. P.L. 107-147 also provides 2002 funding for the Temporary Assistance for Needy Families (TANF) supplemental grant program and contingency fund. Other provisions in the Act increase payments to Puerto Rico and the Virgin Islands for the rum cover over and adjust the formula used to determine premiums paid to the Pension Benefit Guaranty Corporation (PBGC) . The Act designates the revenue losses and spending in the bill as emergency requirements for pay-as-you-go purposes. As a result, the amounts shown below for the Act will not be incorporated into the pay-as-you-go scorecard.

    5. (Fiscal years; in millions of dollars)
    2002 2003 2004 2005 2006 2007
    Pay-as-you-go costs:
    Outlay effect:
    Unemployment insurance 7,144 2,925 0 0 0 0
    TANF.............................. 144 138 63 0 10 15
    Other................................ 51 170 -1 -42 -48 -73
    Subtotal, outlays.............. 7,339 3,233 62 -42 -38 -58
    Revenue effect.................. -39,199 -33,645 -28,970 2,959 20,676 14,837
    Net pay-as-you-go costs... 46,538 36,878 29,032 -3,011 -20,714 -14,895
    Memorandum:
    Off-budget net costs......... 0 0 -10 0 0 0

     

  5. CBO ESTIMATE:
    6. (Fiscal years; in millions of dollars)
    2002 2003 2004 2005 2006 2007
    Pay-as-you-go costs:
    Outlay effect:
    Unemployment insurance 8,215 3,360 0 0 0 0
    TANF.............................. 63 64 64 65 34 33
    Other................................ 65 163 -4 -42 -48 -73
    Subtotal, outlays.............. 8,343 3,587 60 23 -14 -40
    Revenue effect.................. -42,526 -39,335 -29,048 -3,548 16,101 16,814
    Net pay-as-you-go costs... 50,869 42,922 29,108 3,571 -16,115 -16,854
    Memorandum:
    Off-budget net costs......... 0 10 -10 0 0 0

     

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. CBO estimates net costs of the Act at $93.5 billion over the period 2002 through 2007, $19.7 billion more than the OMB estimate of $73.8 billion. Of the $19.7 billion difference, $18.2 billion is in estimates of the revenue effect. Most of this difference is for the temporary business tax reductions, resulting from different baselines and estimating models. The remaining difference is largely the result of different estimates for unemployment insurance resulting from different economic assumptions.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2002 2003 2004 2005 2006 2007
    Outlay effect.............. -180 24,175 24,413 23,832 9,219 1,000
    Receipt effect............ 0 -86,866 -106,319 -107,744 -126,474 0
    Net costs.................... -180 111,041 130,732 131,576 135,693 1,000