Last year's $787 billion economic stimulus bill is going to be even more expensive — $75 billion more.
The new Congressional Budget Office estimate, released Tuesday, provides more ammunition for Republicans who say the stimulus has been long on spending and short on creating promised jobs. The additional cost also eats into the savings forecast from the budget freeze President Barack Obama is expected to propose Wednesday night during his State of the Union address.
Almost half of the additional cost, $34 billion, is because the food stamp program won't be able to take advantage of lower-than-expected inflation rates and will instead have benefits set by the stimulus bill.
Higher unemployment insurance costs added $21 billion to the bill, and stimulus-subsidized bonds to pay for infrastructure projects have proven more popular than expected with state and local governments.
The $75 billion increase would erase one-third of the $250 billion in 10-year savings that would come from the partial domestic spending freeze being proposed by Obama. The boost in unemployment payments alone would more than erase the $10 billion to $15 billion in first-year savings from such a freeze.
Democrats say the beleaguered stimulus measure, a mixture of tax cuts and lots of spending, has helped keep the economy going and has produced up to 2 million jobs.
The nonpartisan CBO said five programs were responsible for most of the $112 billion in stimulus spending between last February and October: Medicaid; a $250 payment to almost 53 million Social Security recipients; Pell Grants; and fiscal relief for state governments. Tax cuts added $88 billion.
The stimulus is expected to add about $400 billion to the deficit in this budget year.
Democrats are pressing for another stimulus measure and top Senate Democrats have drafted an $82.5 billion jobs plan that would help small businesses, boost spending on road construction and mass transit, and give local governments money to retain teachers.
A draft document obtained by The Associated Press proposes $20 billion for a job creation tax credit and $12.5 billion to retrofit homes and businesses to make them more energy efficient.
The House passed a so-called jobs bill last month, costing about $174 billion. That plan was heavy with safety net spending such as a six-month extension of unemployment benefits and subsidies to help the jobless buy health insurance.
Democrats claim their proposals are partly paid for by repealing $150 billion worth of Treasury Department bailout authority to claim $75 billion in budget savings. But CBO director Douglas Elmendorf said those claims are based on outdated estimates.
Since the remaining bailout money won't be used, it can't be claimed as savings, he said.
"There really isn't money there to be saved," Elmendorf said.
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