logo

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

Tuesday, November 24, 2020
By Austin Tannenbaum
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.

This fact brief is responsive to conversations such as this one.
ABOUT THE CONTRIBUTOR
Between 2020 and 2022, under close editorial supervision, Gigafact contracted a group of freelance writers and editors to test the concepts for fact briefs and provide inputs to our software development process. We call this effort Gigafact Foundry. Over the course of these two years, Gigafact Foundry writers published over 1500 fact briefs in response to claims they found online. Their important work forms the basis of Gigafact formats and editorial guidelines, and is available to the public on Gigafact.org. Readers should be aware that while there is still a lot of relevant information to be found, not all fact briefs produced by Gigafact Foundry reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date and need to be looked at with fresh eyes, don't hesitate to contact us at support@gigafact.org.
FACT BRIEF BY
facebook
twitter
email
email