Dr. Smetters is the Boettner Professor in the Department of Business Economics and Public Policy at the Wharton School of the University of Pennsylvania, and is serving as the Faculty Director of The Penn Wharton Budget Model.
Professor Smetters brings a wealth of policy expertise to The Penn Wharton Budget Model, with a strong record of research in public economics as well as work experience in the public sector. Starting in May 2001, he spent 17 months serving as Deputy Assistant Secretary for Economic Policy at the U.S. Department of the Treasury. He subsequently became a member of the bipartisan Blue Ribbon Advisory Panel on Dynamic Scoring, convened by the Joint Committee on Taxation of the U.S. Congress. His experience also includes a position as an economist in the Congressional Budget Office, and as a consultant for the World Bank and the Urban Institute.
Professor Smetters earned bachelorâs degrees in Economics and Computer Science from Ohio State University, and received his MA and PhD degrees in Economics from Harvard University. His research interests include financial regulation, government debt and Social Security policy, and retirement and financial planning. In addition to his faculty position at Wharton, Professor Smetters is a Faculty Research Fellow in the Aging Program at the National Bureau of Economic Research (NBER), as well as a Research Associate in NBERâs Public Economics Program. He also is a member of the National Academy of Social Insurance, and a Research Associate of the Michigan Retirement Research Center and the Pension Research Council.
Professor Smettersâ research has appeared in leading journals, including American Economic Review, Journal of Political Economy, and The Quarterly Journal of Economics. He often is cited in major news outlets such as the Wall Street Journal, Forbes, and Marketplace, and also hosts the program âYour Moneyâ on Wharton Business Radio (Sirius XM Channel 111).
We estimate that the United States federal debt cannot rationally exceed roughly 210 percent of GDP as an outer limit. Under historical excess cost growth in healthcare, this outer limit is likely reached within 20 years; there is a 25% chance of reaching it in 14 years. Debt markets unravel earlier if beliefs about government repayment shift.
PWBM projects the U.S. resident population will grow from 343.5 million in 2026 to 371.5 million in 2056, with net immigration accounting for more than 100 percent of this growth. Real GDP growth slows from 2.2 percent to 1.1 percent as growing mandatory spending is matched with shrinking working-age labor force participation.
Only about 60 percent of today's mandatory spending can be explained by population aging, general economic scale, inflation and healthcare excess cost growth since 2004. The remainder reflects new programs, expanded eligibility, emergency spending, and deliberate reclassification away from traditional discretionary appropriations.
American retirees receive over twice as much in total federal outlays as working-age adults and six times more than children and young adults. These ratios are even larger on a per-capita basis. Expenditures on retirees are projected to rise even more.
We project that Social Security's Old-Age and Survivors Insurance Trust Fund will deplete in six years (2032). We consider five different reform options that vary in the amount of tax increases and benefit cuts. Traditional policy analysis that dominates federal policymaking often provides very different â even opposite â insights compared to more comprehensive modeling.
The current Social Security program faces a significant shortfall, equal to 4.2 percent of all future covered payroll over the next 75 years. This shortfall persists under alternative and favorable projections of fertility, interest rates, immigration and the projected impact of AI on future wages.
We estimate that AI will increase productivity and GDP by 1.5% by 2035, nearly 3% by 2055, and 3.7% by 2075. AIâs boost to annual productivity growth is strongest in the early 2030s but eventually fades, with a permanent effect of less than 0.04 percentage points due to sectoral shifts.
It is well known that mass deportation reduces aggregate economic variables like GDP due to scale effects. We project that deportation also reduces wages of high-skill workers, compromising 63% of workers. Still, authorized low-skilled workers can see their wages increase but only if the deportation policy is permanently sustained after 4 years. Even with new funds provided in the 2025 OBBBA, we estimate that permanent deportation would cost an additional $900 billion over the first 10 years.
Deporting unauthorized workers over 10 years cuts Social Security revenue, raises deficits by $133 billion (10 yrs) and $884 billion (30 yrs). The Trust Fund depletes 6 months earlier; 75-year deficit rises by 0.25% of payroll.
We examine recent capital market dynamics in the context of budget reconciliation and trade policies. Understanding these dynamics requires modeling the interaction between microeconomic behavior and macroeconomic outcomesâan approach particularly well suited for the overlapping-generations lifecycle model.
