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

Report No: 555
Date: 06/25/2001

  1. LAW NUMBER: P.L.107-16 (H.R. 1836)

  2. BILL TITLE: Economic Growth and Tax Relief Reconciliation Act

  3. BILL PURPOSE: Reduces individual income tax rates, increases the child tax credit, eliminates the estate tax, reduces the marriage penalty, expands Education IRAs, and makes several other changes to provisions of tax law, including retirement savings and pension provisions, other education provisions, and benefits relating to children.

    4.  

  4. OMB ESTIMATE: P.L. 107-16 would (1) create a new initial individual income tax bracket and phase in reductions to the four highest tax rates over six years; (2) increase the child tax credit from $500 to $1,000 for each qualifying child; (3) provide for phased reduction of current estate, gift, and generation-skipping transfer taxes; (4) provide marriage penalty relief; (5) expand Education IRAs, and (6) increase alternative minimum tax exemption amounts. The Act also makes numerous other changes to tax law. Most provisions of the Act are phased in and will sunset after December 31, 2010.

    5. (Fiscal years; in millions of dollars)
    2001 2002 2003 2004 2005 2006
    Paygo effects:
    Outlays.................. 0 4,451 5,729 5,274 5,218 7,413
    Receipts................ -69,501 -31,240 -80,670 -100,183 -101,112 -123,368
    Net costs............... 69,501 35,691 86,399 105,457 106,330 130,781
    Non-paygo............ 0 194 275 299 318 334
    Total...................... 69,501 35,885 86,674 105,756 106,648 131,115

     

  5. CBO ESTIMATE:
    6. (Fiscal years; in millions of dollars)
      2001 2002 2003 2004 2005 2006
    Paygo effects:  
    Outlays.................. 3,600 6,425 6,599 7,006 7,081 9,597
    Receipts................ -70,208 -31,145 -83,736 -100,415 -100,021 -125,290
    Net costs............... 73,808 37,570 90,335 107,421 107,102 134,887
    Non-paygo............ 0 192 266 281 297 315
    Total...................... 73,808 37,762 90,601 107,702 107,399 135,202

     

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. For 2001, the difference in the allocation between outlays and receipts is attributable to the scoring of the advance refund of the rate reduction credit. The difference in scoring the total cost of the Act for all years is the result of different baseline assumptions and estimating models.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2001 2002 2003 2004 2005 2006
    Outlay effect......... 3 16,638 20,274 21,014 22,071 7,413
    Receipt effect...... -69,501 -35,105 -84,594 -103,783 -104,936 -123,372
    Net costs............... 69,504 51,743 104,868 124,797 127,007 130,785

    NOTE: The cumulative effect of direct spending and revenue legislation enacted to date is currently estimated to result in an end-of-session sequester. The Administration looks forward to working with the Congress to ensure that an unintended sequester does not occur.