House, Senate Recovery Bills Allot Vast Share of Benefits During Downturn, New Official Estimates Show
End Notes
[1] Figures in this paper for the House bill are based on CBO’s estimate of the bill (H.R. 1) passed by the House on January 28, 2009. Figures for the Senate bill are based on CBO estimates of the amendment in the nature of a substitute to H.R. 1 introduced on January 31 by Senate Finance Committee Chairman Max Baucus and Senate Appropriations Committee Chairman Daniel Inouye and do not include the effect of a provision extending relief from the Alternative Minimum Tax.
[2] The first two years covered are fiscal year 2009 (which ends September 30, 2009) and fiscal year 2010 (which begins October 1, 2009). Since a recovery package is unlikely to be enacted until at least the middle of February, almost halfway through fiscal year 2009, spending and tax cuts attributed to those two years really represent effects over a little more than a year and a half rather than two full years.
[3] It is important to note that a package that has a larger share of a given amount of spending and tax cuts in the first two or three years is not necessarily providing more effective stimulus in that period than a bill that has a somewhat smaller share of the effects in those years. If the share of the effects is higher in the former case because the package includes more measures that can take effect quickly but provide little stimulus — such as a reduction in corporate tax rates — that package may be less effective in stimulating the economy in that period.
[4] Congressional Budge Office Director Douglas W. Elmendorf, “The State of the Economy and Issues in Developing an Effective Policy Response,” Testimony before the House Committee on the Budget, January 27, 2009.
[5] Even with the stimulus effect provided by the House bill, CBO estimates that the GDP gap at the end of 2011 would remain high, between 2.7 percent and 3.6 percent of GDP.
[6] Elmendorf, page 20.