U.S. Senators Todd Young (R-Ind.) and Mark Warner (D-Va.) introduced the Fiscal Contingency Preparedness Act, legislation to require the Department of Treasury to conduct annual “stress tests” on the federal government’s finances. The legislation would require Treasury to examine the U.S. government’s financial ability to respond to potentially catastrophic events – like an economic recession or a significant natural disaster – and put forth a report on the short- and long-term fiscal risks and impacts associated with such a response.
“The United States has faced several threats to the stability of our economy and financial systems in recent years, including the 9-11 attacks, the 2008 financial crisis, and the COVID-19 pandemic. Our bill will require yearly reviews of America’s fiscal strength to ensure policymakers can properly respond to future emergencies and make informed policy decisions,” said Senator Young.
“The past decade has taught us the importance of bracing for the unexpected – whether that be a world-wide pandemic, a devastating weather event, or a cyberattack on major infrastructure,” said Senator Warner. “This legislation will allow the government to take a hard look at our nation’s financial resilience in the face of various crises, disasters, and other extraordinary events, and provide Congress with critical context needed to make important financial and policy decisions.”
Specifically, the Fiscal Contingency Preparedness Act would require that the Secretary of the Treasury work with the Director of the Office of Management and Budget (OMB) to complete these annual assessments, which would be subject to audit by the Government Accountability Office (GAO). The bill would assess distinct shocks to the fiscal health of the economy, including events like an economic recession or depression, a domestic energy crisis, a natural disaster, a health crisis (such as a global pandemic), a significant armed conflict or event, a significant cyber-attack, or a financial crisis.
“Policymakers and the public need access to the best available analysis on how a severe economic shock may impact the federal government's finances. While our nation’s largest banks are required to undergo regular stress tests to prepare for an unexpected shock, the federal government lacks an equivalent playbook. It is essential that the federal government be prepared for a possible fiscal emergency, and we commend Senators Warner and Young for introducing this bipartisan, commonsense proposal to strengthen our fiscal resilience,” said President of the Committee for a Responsible Federal Budget Maya MacGuineas.
Companion legislation was introduced in the House by Representatives Ben Cline (R-VA-6) and Jared Golden (D-ME-2).
Full text of the Fiscal Contingency Preparedness Act can be found here.
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