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Report Number 507

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OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

Report No: 507
Date: 06/08/2000

1. LAW NUMBER: P.L.106-200 (H.R. 434)

2. BILL TITLE: Trade and Development Act of 2000

3. BILL PURPOSE: Authorizes expanded trade benefits to eligible sub-Saharan African and Caribbean Basin countries, authorizes permanent normal trade relations status for Albania and Kyrgyzstan, and includes other changes to U.S. trade laws.

4. OMB ESTIMATE: P.L. 106-200 expands tariff preferences to 48 sub-Saharan African and 27 Caribbean Basin countries. In addition, the Act reduces tariffs for certain worsted wool fabric. OMB estimates that, in total, these changes will reduce revenues by $505 million in 2001, and $3 billion over the period 2001 through 2005. The Act also accelerates the rum excise tax cover over payments to Puerto Rico and the Virgin Islands, which were delayed in Public Law 106-170. This shifts $32 million in payments from 2001 to 2000. Several other provisions also have small pay-as-you-go effects on outlays.

(Fiscal years; in millions of dollars)
2000 2001 2002 2003 2004 2005
Outlay effect............ 32 -28 5 5 5 4
Receipt effect.......... -8 -505 -583 -631 -666 -653
Net costs................. 40 477 588 636 671 657


5. CBO ESTIMATE:

(Fiscal years; in millions of dollars)
2000 2001 2002 2003 2004 2005
Outlay effect............ 52 -47 5 5 5 4
Receipt effect........... -8 -442 -507 -541 -573 -557
Net costs................. 60 395 512 546 578 561


6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

The differences between OMB and CBO estimates are the result of different baselines and estimating models.

7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:

(Fiscal years; in millions of dollars)
2000 2001 2002 2003 2004 2005
Outlay effect.............. 34 -99 -100 -108 -108 -109
Receipt effect............ -8 -620 -698 -746 -781 -768
Net costs.................... 42 521 598 638 673 659

*$500,000 or less.

NOTE: The cumulative effect of direct spending and revenue legislation enacted to date is currently estimated to result in an end-of-session sequester. The Administration looks forward to working with the Congress to ensure that an unintended sequester does not occur.


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