The tax-cut deal "adds more than $800 billion to the deficit over two years -- more than the cost of TARP and more than the cost of the Recovery Act" and about the same as health care reform.
Bobby Scott on Thursday, December 16th, 2010 in a news release.
Rep. Bobby Scott says tax deal costs same as health care reform, exceeds price of Stimulus and TARP
Rep. Robert C. "Bobby" Scott was not among the members of Congress cheering the recent tax-cut deal.
Scott, D-3rd, vehemently opposed any extension of the Bush-era tax cuts. Congress passed a two-year extension of all of them.
In a statement, Scott said the tax deal will keep deficits high.
"However popular these tax cuts may be today, that popularity will pale in comparison to the anger at the deep cuts in popular programs we will need to make in order to pay for this bill," he wrote.
Scott added: "This bill adds more than $800 billion to the deficit over two years -- more than the cost of TARP and more than the cost of the Recovery Act. It costs about the same over two years as the 10-year cost of the Health Care Reform bill, which we paid for."
That’s a lot to tackle, but we’re up to it.
First, is the $800 billion for the tax cuts continuation correct?
Yup, the Congressional Budget Office score of the tax compromise for just the next two years -- 2011 and 2012 -- is $797 billion.
"The 10-year cost is a bit higher due to some residual effects even though the compromise itself only lasts for two years," notes Nick Kasprak, an analyst at the nonpartisan Tax Foundation.
Next, let’s check TARP, or the Troubled Asset Relief Program. It passed under President George W. Bush in 2008 to address the subprime mortgage crisis.
Scott’s OK there, too. TARP authorized $700 billion in spending, much of which has been paid back. The Treasury now estimatesthat the true cost (minus what’s paid back) will be about $30 billion.
Next up, The Recovery Act, also known as The Stimulus. Here’s where Scott runs into a bit of trouble.
The most recent Congressional Budget Office estimate of the Stimulus bill’s 10-year cost is $814 billion. That’s $17 billion more than the estimated cost of the tax compromise.
Given that the new estimate was just released last month, perhaps Scott’s was relying on an older projection. The original Congressional Budget Office estimate was $787 billion, $10 billion less than the two-year tax cuts estimate.
Let’s move to health care reform.
Turning back to the CBO, the health care bill is projected to cost $788 billion over 10 years.
As Kasprak notes, that is, in theory, to be paid for with $931 billion in increased revenue, for a net deficit reduction of $143 billion.
"There are lots of assumptions and simplifications that go into a ten year score, and there is by no means universal agreement that the bill would actually reduce the deficit. But that is the official score," Kasprak said.
Regardless, Scott’s more than safe on the cost alone.
So, let’s review.
Scott’s said the tax compromise will cost more than TARP, more than the Stimulus and about the same as close to the 10-year cost of the Health Care Reform bill.
He’s right on TARP, right on health care reform, and off by a tad on the Stimulus -- perhaps because the cost estimate of the act recently changed.
We rate his claim Mostly True.
Published: Monday, December 27th, 2010 at 10:00 a.m.
Bobby Scott, "Scott opposes tax deal," Dec. 16, 2010
Congressional Budget Office, Estimated Impact of the American Recovery and Reinvestment Act, November 2010
Department of the Treasury, Troubled Asset Relief Program: Two Year Retrospective, October 2010
Congressional Budget Office, Estimates in changes of revenue and direct spending for S.A. 573 (Tax Cuts Compromise), Dec. 10, 2010
Congressional Budget Office, Estimated budgetary impact of health care law, March 20, 2010
Email interview with Nick Kasprak, Tax Foundation, Dec. 21, 2010
We want to hear your suggestions and comments. Email the Virginia Truth-O-Meter with feedback and with claims you'd like to see checked. If you send us a comment, we'll assume you don't mind us publishing it unless you tell us otherwise.