White House rejects higher stimulus cost estimate

The White House is rejecting the official congressional scorekeeper’s estimate of how much the stimulus act will cost.

The Congressional Budget Office last month said the stimulus law will cost $862 billion over 10 years, or $75 billion more than projected a year ago, in part because unemployment has skyrocketed and the government is paying out more in unemployment checks.

But a senior administration official, briefing reporters Tuesday evening ahead of the release of a new report, said the White House rejects those assumptions about long-term unemployment, and said they are “holding to a recovery act at $787 billion.”

Since Congress controls the money, CBO’s cost estimate will likely control any actions Congress takes, but with the bill already passed and the spending underway it’s mostly academic.

In its budget outlook CBO said $21 billion of the $75 billion increase came because unemployment had grown much higher than originally projected, and that meant the government was paying more unemployment benefits.

The rest of the increase came from higher food assistance payments and increased subsidies to help state and local governments pay interest on taxable government bonds they issue.