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Tuesday, Nov. 24, 2020

Is a $500 billion loan program in the March coronavirus relief package projected to cost taxpayers nothing?

Austin Tannenbaum, Gigafact
yes

In its April 2020 assessment of the deficit impact of the $2.2 trillion coronavirus relief package, the Congressional Budget Office estimated that one component, $500 billion of loan guarantees for big businesses, would not have a "net effect" on the budget. The CBO is a non-partisan agency that makes cost estimates for proposed legislation. It noted that the program was similar in structure to loan guarantees offered during the 2008-2009 financial crisis, which actually made a profit for the government.

Democrats had criticized the provision as a "slush fund" that lacked transparency, as neither borrowers nor sums borrowed would be disclosed for six months. Under the approved program, a special inspector will oversee the loans, all of which must be publicly disclosed. The program also includes a ban on stock buybacks extending one year past any loan's repayment.

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