It Should Be Easy to Offset Additional COVID Funds
The White House has made the case for additional funding to fight the COVID-19 pandemic – in particular to purchase vaccines, treatments, testing, and the global response efforts. However, the recently enacted Fiscal Year (FY) 2022 omnibus bill excluded $15.6 billion of pandemic funding after some Members objected to roughly $7 billion of offsets from clawing back 2 percent of the State and Local Fiscal Recovery Funds (the remaining costs were offset by repurposing other COVID relief).
State and local governments are currently flush with cash, and diverting a tiny fraction of their aid to prevent and treat a dangerous virus should be an easy choice. But many alternative options could generate that same $7 billion of offsets to ensure the bill is fully paid for. To the extent possible, this should come from repurposing additional COVID relief -- including by passing legislation to unwind relief being continued through executive action. But lawmakers could also draw on countless other options to lower health care costs, reduce spending, or close tax loopholes.
The below table includes just a handful of possible options.
Options to Offset Further COVID Funding
|Scale back the recent highway bill by about 1 percent||$7 billion|
|Fully reinstate Superfund fees||$13 billion|
|Freeze 2023 hospice care facility payment update (MedPAC)||$15 billion|
|Limit crop-insurance administrative reimbursements||$8 billion|
|Apply "Wash Sale" rules to cryptocurrencies and NFTs||$17 billion|
|Reduce Medicaid provider tax limit from 6 to 5 percent of provider income||$32 billion|
|Prohibit pharmacy benefit manager spread pricing||$5 billion|
|Freeze means-testing threshold for Medicare premiums for two years||$10 billion|
|Reduce Medicare bad debts reimbursement from 65 to 60 percent of costs||$7 billion|
|Close carried interest loophole||$20 billion|
|Expand cigarette taxes to include vaping||$10 billion|
|Calculate federal pension benefits based on high 5 years||$5 billion|
|Sell oil from strategic petroleum reserve||dialable|
Sources: Congressional Budget Office and Committee for a Responsible Federal Budget calculations.
While lawmakers have authorized more than enough fiscal support to fight the COVID-19 recession, assuring adequate funding to fight the pandemic itself is important. Lawmakers should prioritize these needs by identifying the appropriate offsets – either by repurposing existing COVID relief, reducing spending, or raising revenue elsewhere in the budget.