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. 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.

	(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:

	(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:

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:

	(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