Senate Approves Bailout; Cost "Impossible" to Predict
by Craig Jennings, 10/2/2008
Last night, the Senate approved a financial rescue (or Wall Street bailout) bill, HR 1424, by a 74-25 vote. As we noted yesterday, the package includes not only a provision that grants the Treasury Secretary $700 billion to purchase troubled financial assets, but also a package of tax cuts passed previously by the Senate.
According to the Congressional Budget Office (CBO), the ten-year cost of the tax cuts, which include a fully-offset set of tax incentives for renewable energy production; an extension of dozens of miscellaneous individual and business tax cuts; and a $64 billion patch for the Alternative Minimum tax, would total $107.1 billion. The CBO, however, indicates that the cost of the asset purchase program is "impossible at this point to provide a meaningful estimate of the ultimate impact on the federal budget from enacting this legislation," but would be "substantially smaller than $700 billion." Nor can CBO estimate the cost of increasing FDIC limits on insured deposits.
| Budgetary Impact of Senate Financial Rescue Bill, HR 1424, Approved Oct. 1, 2008 (billions of dollars) | |
| Provision | Cost |
| Division A | |
| FDIC limit increase | "difficult to predict" |
| $700 Wall Street Bailout | "not currently possible to quantify," more than 0, but "substantially smaller than $700 billion" |
| Division B | |
| Renewable energy tax cuts | 16.9 |
| Offsets | -17.0 |
| Division C | |
| AMT patch | 64.1 |
| Extension of miscellaneous tax cuts | 59.3 |
| Disaster relief | 8.8 |
| Offsets | -25.2 |
| Total package cost | At least $107.1 billion, possibly more than $800 billion |
| Source: Letter to Honorable Christopher J. Dodd, Congressional Budget Office | |
Congressional Budget Office: Letter to Honorable Christopher J. Dodd (estimated budgetary effects)
Joint Committee on Taxation: Estimated Budget Effects of the Tax Provisions Contained in an Amendment in the Nature of a Substitute to HR 1424
