H.R. 1998 would require the Administration to impose sanctions on any foreign persons knowingly engaged in piracy. Piracy is defined as illegal acts of violence, detention, or depredation, committed for private ends by the crew of the passengers of a private ship or a private aircraft on the high seas against another ship or aircraft.
Under current law, the Administration can sanction foreign persons that present a threat to U.S. national security. If the enactment of H.R. 1998 leads the Administration to broaden those sanctions, more people would be denied visas by the Department of State, resulting in an insignificant decrease in revenues from fees. Although most visa fees are retained by the Department of State and spent, some collections are deposited into the Treasury as revenues. Denying foreign nationals entry into the United States also would reduce direct spending on federal benefits (emergency Medicaid or federal subsidies for health insurance, for example) for which those people might otherwise be eligible.
The bill would block transactions involving certain assets either in the United States or under the control of people or entities in the United States. Under the bill, any person or entity violating those prohibitions would be subject to civil or criminal monetary penalties. Such penalties are recorded as revenues, and a portion can be spent without further appropriation.
On the basis of data about similar sanctions, CBO estimates any additional sanctions imposed under the bill would affect a small number of people. Thus, enacting H.R. 1998 would have insignificant effects on revenues and direct spending, and would, on net, reduce deficits by insignificant amounts over the 2025-2035 period.
H.R. 1998 would impose a private-sector mandate as defined in the Unfunded Mandates Reform Act (UMRA) by expanding the scope of authority for the Administration to regulate transactions between entities in the United States and foreign entities and officials of foreign governments who would be subject to sanctions under the bill. That expansion would result in additional burdens on individuals and entities, such as banks, in the United States that are required to monitor and report on foreign transactions and to block access to certain assets owned by sanctioned entities. It also would prohibit transactions between entities in the United States and sanctioned parties that otherwise would be permitted under current law.
The cost of the mandate would be any income or profit lost as a result of the bill’s enactment. CBO expects that because a small number of people or entities would be affected, the loss of income from any incremental increase in restrictions imposed by the bill would be small as well. CBO estimates that the cost of the mandate would fall well below the annual threshold established in UMRA for private-sector mandates ($206 million in 2025, adjusted annually for inflation).
H.R. 1998 contains no intergovernmental mandates as defined in UMRA.
The CBO staff contacts for this estimate are Emma Uebelhor (for federal costs) and Brandon Lever (for mandates). The estimate was reviewed by Christina Hawley Anthony, Deputy Director of Budget Analysis.
Phillip L. Swagel
Director, Congressional Budget Office