Committee for a Responsible Federal Budget

What's in the $1.1 Trillion HEALS Act?

Jul 29, 2020 | Other Spending

The Senate recently introduced the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act designed to further address the public health and economic crisis brought on by the novel coronavirus (COVID-19) pandemic. Though the Congressional Budget Office (CBO) has not released a score, we estimate the HEALS Act will cost roughly $1.1 trillion – significantly less than the House-approved HEROES Act. This would be on top of the $3.7 trillion already enacted – which would bring total legislative fiscal support to roughly $5 trillion.

The table below breaks down the components of the HEALS Act with our best rough estimate of the deficit impact of each provision. Actual costs may differ.

This blog post is a product of the COVID Money Tracker, a new initiative of the Committee for a Responsible Federal Budget focused on identifying and tracking the disbursement of the trillions being poured into the economy to combat the crisis through legislative, administrative, and Federal Reserve actions.

The HEALS Act would combine multiple proposals designed to support the economy during the current pandemic. Among the larger proposals, it would issue another round of $1,200 per person ($500 per dependent) payments, extend the temporary $600 per week unemployment bonus at a reduced bonus of $200 per week, require states to transition to an unemployment system offering a 70 percent wage replacement and encourage return to work, provide for a second round of targeted forgivable loans through the Paycheck Protection Program (PPP), establish new small business loans and support, increase health-related spending, increase funding for public schools and universities, provide new tax credits for businesses to retain, hire, and protect workers, and enact other targeted tax and spending reforms.

The HEALS Act would also include a federal standard for lawsuits about coronavirus exposure, and would create congressional committees to propose bipartisan solutions for trust funds projected to be insolvent: the Highway, Medicare, and Social Security trust funds.

We estimate the HEALS Act would cost $1.1 trillion through 2030, with the vast majority of costs occurring this year and next. Though parts of this estimate represent amounts appropriated or estimated by the bill authors, many elements are our own rough estimates of sometimes novel policies. They will be revised as new information is made available.

Policy Ten-Year Cost/Savings (-)
Reform & Extend Unemployment Benefits  $110 billion^
Extend unemployment bonus at $200 per week, down from $600, through September $50 billion^
Require states to transition to a 70% wage replacement rate in October, capping bonus at $500 and allowing states to keep paying a $200 bonus with a 2-month waiver $60 billion^
Fund administrative costs, increase payments to governments and self-insured non-profits, require more documentation from contractors and the self-employed, and require states to explain return-to-work requirements *
   
Issue Second Round of Economic Impact Payments  $300 billion
Provide tax rebates of $1,200/adult & $500/dependent, phases out above $75,000 of income ($150,000/couple) $300 billion
   
Provide Small Business Loans and Support  $158 billion
Provide $190 billion of "second draw" Paycheck Protection loans for small businesses with substantial revenue loss $90 billion'
Provide $100 billion of subsidized "Recovery Sector Loans" for certain struggling businesses $58 billion"
Establish Small Business Growth and Domestic Production Investment Facility $10 billion
   
Offer Tax Breaks for Employers to Hire, Retain, and Protect Workers $200 billion^
Expand Employee Retention Credit to cover 65% of wages up to $30,000 ~$100 billion^
Expand Work Opportunity Tax Credit to cover 50% of the first $10,000 of wages for someone hired from unemployment ~$50 billion^
Establish tax credit to cover up to 50% of expenses to protect employees from COVID ~$50 billion^
   
Increase Health-Related Spending $111 billion
Increase funding for COVID-19 vaccines, therapeutics, and diagnostics $26 billion
Increase Provider Relief Fund to $200 billion $25 billion
Increase funding for the CDC, CMS, NIH, and other health-related agencies $24 billion
Increase funding for COVID-19 testing $16 billion
Increase funding for Community Health Centers $8 billion
Provide 30% tax credit for PPE manufacturing $7 billion
Strengthen the Strategic National Stockpile $2 billion
Other provisions $3 billion
   
Increase Education Spending  $105 billion
Elementary and Secondary School Emergency Relief Fund $70 billion
Higher Education Relief Fund $29 billion
Consolidate student loan repayment plans into two options Unknown
Provide one-time Emergency Education Freedom grants using CARES Act funding $0
Other provisions $6 billion
   
Provide Targeted Support for Domestic Industries $63 billion
Provide additional support to farmers $20 billion
Compensate defense contractors for time not worked due to COVID $11 billion
Fund Airport Improvement Program $10 billion
Procurement and acquisition to support defense industrial base $8 billion
Covid-19 related Defense Production Act purchases $5 billion
Enact further defense spending increases $6 billion
Allow businesses to deduct 100% of restaurant meals for 2020, up from 50% $3 billion
   
Other Spending Increases  $39 billion
Provide Back to Work Child Care Grants $10 billion
Increase funding for Child Care and Development Block Grants $5 billion
Fund global health programs and international disaster assistance $4 billion
Fund public housing and rental assistance $3 billion
Increase Homeland Security funding $3 billion
Fund new FBI headquarters $2 billion
Other spending increases  $12 billion
   
Provisions with Little Fiscal Impact N/A
Enact liability protection through Safe to Work Act N/A
Establish trust fund rescue committees through TRUST Act N/A
Prevent Medicare Part B premiums from increasing in 2021, increasing future premiums to fund difference N/A
   
TOTAL  $1.1 trillion

^Estimates are extremely rough and actual costs could differ substantially.
'Cost is net of $100 billion rescission of unused PPP loans.
"Loans are estimated to have a 58% subsidy rate.
*First two provisions will cost roughly $5 billion, which we assume will be offset by second two provisions.
Source: Bill text, legislative summaries, and CRFB calculations based on CBO & JCT estimates.

Note 7/29/20: Originally, we estimated the HEALS Act would cost $1.2 trillion over a decade. However, based on new data, we have revised our estimate for changes to the Employer Retention Tax Credit downward, bringing the total to $1.1 trillion. These numbers represent rough estimates and are subject to further revision as new information emerges.