June 25, 2003

Honorable David Dreier
Chairman
Committee on Rules
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

The Congressional Budget Office has prepared a preliminary estimate of the impact of H.R. 1, the Medicare Prescription Drug and Modernization Act of 2003, on direct spending and revenues, based on the legislative language we received late this evening. As shown in the enclosed table, we estimate that enacting H.R. 1 would result in additional outlays totaling $4.0 billion in fiscal year 2004, $116.0 billion over the 2004-2008 period, and $393.2 billion over the 2004-2013 period. In addition, we estimate that federal revenues would increase by $4.8 billion over the 2004-2008 period and by $20.7 billion over the 2004-2013 period. The net effect of the bill, we estimate, would be an increase in the deficit of $4.0 billion in 2004, $111.2 billion over the 2004-2008 period, and $372.5 billion over the 2004-2013 period. These estimates are preliminary and subject to revision after we have had an opportunity to carefully review the legislative language. CBO has not yet completed its estimate of the discretionary costs of the bill.

If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Tom Bradley.

Sincerely,

Douglas Holtz-Eakin
 

cc:	Honorable Martin Frost Ranking Minority Member
	Honorable William "Bill" M. Thomas Chairman Committee on Ways and Means
	Honorable Charles B. Rangel Ranking Member
	Honorable W.J. "Billy" Tauzin Chairman Committee on Energy and Commerce
	Honorable John D. Dingell Ranking Member