Phillip L. Swagel presented on the effects of recent legislation on the economy and budget at the American Economic Association Annual Meeting on January 7, 2022. The presentation analyzed the impact of pandemic-related legislation from March and April 2020 on GDP and the deficit. It found that this legislation increased GDP by 1.5-2.1 trillion and the deficit by 2.6 trillion from 2020 to 2023. The presentation also examined the estimated effects of the Build Back Better Act on the deficit, and projected growing deficits will drive federal debt to unprecedented levels over the next 30 years.

1. Presentation at the American Economic Association Annual Meeting
January 7, 2022
Phillip L. Swagel
Director
The Effects of Recent Legislation
on the Economy and the Budget
For more information about the meeting, see https://tinyurl.com/bderdaww.

2. 1
See Congressional Budget Office, The Effects of Pandemic-Related Legislation on Output (September 2020), Table 3, www.cbo.gov/publication/56537.
GDP = gross domestic product.
Effects of Pandemic-Related Legislation From March and
April 2020 on the Deficit and on GDP, Fiscal Years 2020 to 2023
Policy
Effect on the Deficit
(Billions of dollars)
Cumulative Effect on GDP
(Billions of dollars)
Cumulative Effect on
GDP per Dollar of Effect
on the Deficit (Dollars)
Paycheck Protection Program
and Related Provisions 628 226 0.36
Enhanced Unemployment
Compensation 442 297 0.67
Recovery Rebates for
Individuals 292 175 0.60
Direct Assistance for State and
Local Governments 150 132 0.88
Other Spending Provisions 700 548 0.78
Other Revenue Provisions 425 157 0.37
Total
–——
2,637
–——
1,535
——
0.58

3. 2
See Congressional Budget Office, The Effects of Pandemic-Related Legislation on Output (September 2020), Figure 1, www.cbo.gov/publication/56537.
GDP = gross domestic product.
Likely Range of the Effects of Pandemic-Related
Legislation From March and April 2020 on Real GDP
CBO’s likely range is
intended to cover roughly
the middle two-thirds of the
outcomes after accounting
for uncertainty about how
much changes in federal
spending and revenues
affect overall demand and
how much changes in
overall demand affect output
in the short term.

4. 3
CARES = Coronavirus Aid, Relief, and Economic Security Act; CAA = Consolidated Appropriations Act; ARPA = American Rescue Plan Act.
a. Changes in federal deficits, excluding debt service, from legislative changes. See www.cbo.gov/publication/56517, Table A-1.
b. Changes in federal deficits, excluding debt service, from legislative changes. See www.cbo.gov/publication/56970, Table 1-6.
c. Changes in federal deficits, excluding debt service, from legislative changes. See www.cbo.gov/publication/57263, Table A-1.
d. See www.cbo.gov/publication/57406.
e. See www.cbo.gov/publication/57627.
Net Increase in the Deficit From Major Pandemic-Related
Legislation (Enacted and Considered)
The effects on the deficit
were much larger in 2020
and 2021 than they will be
from 2022 to 2030, CBO
estimates.

5. 4
See Congressional Budget Office, “Year-by-Year Projections” (supplemental material for a letter to the Honorable Lindsey Graham and the Honorable Jason Smith regarding the
budgetary effects of making specified policies in the Build Back Better Act permanent, December 10, 2021), www.cbo.gov/publication/57673.
Net Increase in the Deficit From the Build Back Better Act,
as Passed and With Modifications
CBO estimates that the
deficit would increase by
$3.0 trillion from 2022 to
2031 under modifications to
the Build Back Better Act
that would make various
policies permanent rather
than temporary (as specified
by Senator Lindsey Graham
and Congressman Jason
Smith).
By comparison, the deficit
would increase by
$0.2 trillion over that period
under the version of the bill
passed by the House of
Representatives.

6. 5
See Congressional Budget Office, The 2021 Long-Term Budget Outlook (March 2021), Figure 1, www.cbo.gov/publication/56977.
Federal Debt Held by the Public, 1900 to 2051
In CBO’s extended baseline
projections from March 2021,
growing deficits drive federal
debt held by the public to
unprecedented levels over
the next 30 years. By 2051,
debt reaches more than
200 percent of gross
domestic product.