Mortgage stimulus plan proposed by US Senate Majority Leader Mitch McConnell would end the government’s $5.5 trillion, three-year stimulus program, end tax relief for homeowners and cut tax breaks for companies.
The plan is backed by Republican Senator Rob Portman of Ohio.
It is not expected to pass the Republican-controlled Senate.
The Senate voted 53-48 on Tuesday to move the measure to the floor of the upper chamber.
The measure now heads to President Donald Trump, who is expected to sign it.
The Senate measure was passed by the House last week, and will now go to Trump.
It is a key piece of Trump’s signature economic legislation, and would increase the deficit by $1.5tn, the CBO said.
It would also increase the size of the government and lead to job losses.
The plan, which was first unveiled in June, was touted as a major stimulus measure to help the struggling US economy and the economy as a whole.
But the plan was opposed by both Republicans and Democrats, with both parties accusing the plan of not doing enough to help homeowners and companies.
The US economy has been in recession for nearly three years.
The latest unemployment rate was 4.7 per cent, well below the official figure of 7.5 per cent.
The Trump administration has proposed a range of stimulus measures.
It has sought to stimulate the economy by boosting demand and hiring, boosting investment and cutting spending.
The House version of the bill would be more generous than the Senate version, however, it would do much more to boost the economy than the president has previously said.
The CBO said the plan would give households and businesses more money to spend, which would lead to a further increase in economic activity.
“The tax relief would be extended to individuals earning more than $500,000 and couples making more than ($200,000), with the average exemption doubling,” the CBO report said.
“Most taxpayers would be able to claim the $250,000-and-up tax-free benefit for families with at least one child.”
The bill would also make a number of changes to tax laws, including ending a deduction for mortgage interest paid by people with certain types of debt, reducing the deduction for interest paid on student loans and ending the deduction on investment income.
The measure would also lower tax rates on those making less than $10,000, for individuals and couples, and on couples with children.
It also would lower taxes on capital gains and dividends.
The bill also would extend the tax cuts for households with children and families with incomes under $250 000.
“Some changes in tax laws could help reduce the burden on low- and middle-income households,” the report said, adding that the bill “could help to reduce the impact of the stimulus package”.
The CBO also estimated the Senate bill would lead the economy to shrink by $3.4tn over the next 10 years, the largest one-time fiscal shock in history.
The White House, which had lobbied against the plan, has suggested that the measure is only meant to boost businesses, not help people struggling to get by.
The White and Congressional Budget Office have said that the White House budget office was “misleading” in its projections about the impact.
The nonpartisan Office of Management and Budget has also said that its assessment of the impact on the economy was based on “a highly speculative and unrealistic model of the economic impact of any stimulus package”, and it has urged Congress to “use its fiscal tools to bring economic growth back to a sustainable level”.