Thread by @jasonfurman

The original CBO score of BBB which showed a deficit-impact that rounds to zero over ten years (and if extended would show deficit reduction over twenty years) is a more reliable guide to the likely fiscal impact of BBB than the hypothetical score they just released. A 🧵.

The programs in BBB include expirations, some of them very soon after the programs launch. It will be up to Congress how to handle these. Four possibilities:

1. Programs expire.
2. Extensions are paid for.
3. Extensions are not paid for.
4. Extensions traded for GOP extensions.

Under scenarios 1 and 2 the law would be roughly budget neutral over the next ten years and would be deficit reducing in present value. I place the greatest probability on those--is what the President says and Manchin/GOP will likely have veto power in the future.

If you integrate across the probability of all four outcomes then you get something more like deficit neutrality over the longer run.

BUT in many ways that collapses the next budget debate back into this one. The deficit increasing will come from the next law not this one.

Moreover, there are offsets to extend some of these programs. The top individual rate could easily rise to 39.6% and the corporate rate to 25-28%. Almost all of the Democratic Party would support these offsets in the future.

I'm more worried that preschool will go away than I am that the deficit will be increased. I say this for two reasons: (1) the probability of preschool going away is higher than it is deficit financed and (2) unlike POTUS/Manchin, I would rather have a deficit than no preschool.

Finally, the future fiscal trajectory will to some albeit imperfect degree a function of the future economic/fiscal situation. If interest rates are high and deficits are escalating that would make it even harder to extend everything.

Many things I wish were different re BBB: larger gross size, more tax increases, everything permanent, some deficit financing. But all a fight for another day. If you want to evaluate the fiscal impact of what Congress is passing you should look at CBO's score of the actual bill.