Supreme Court Tariff Ruling: IEEPA Revenue and Potential Refunds
We project that reversing the IEEPA tariffs will generate up to $175 billion in refunds. Unless replaced by another source, future tariff revenue collections will fall by half.
Kent Smetters
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).
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The Long-Term Outlook for Social Security: Baseline and Alternative Assumptions
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.
The Projected Impact of Generative AI on Future Productivity Growth
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.
Mass Deportation of Unauthorized Immigrants: Fiscal and Economic Effects
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.
The Impact of President Trumpâs Deportation Policies: The Social Security Program
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.
Debt, Tariffs, and Capital Markets in a Dynamic Setting: An Explainer
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.
Budget Reconciliation Options with Permanent Business Tax Extenders
For the final bill, please see our analysis of the President Trump-Signed Reconciliation Bill .
The Economic Effects of President Trumpâs Tariffs
Many trade models fail to capture the full harm of tariffs. PWBM projects Trumpâs tariffs (April 8, 2025) will reduce long-run GDP by about 6% and wages by 5%. A middle-income household faces a $22K lifetime loss. These losses are twice as large as a revenue-equivalent corporate tax increase from 21% to 36%, an otherwise highly distorting tax.
Shifting Immigration Toward High-Skilled Workers
We evaluate two immigration policies that shift 10 percent of future low-skilled immigration toward either: (i) high-skilled immigrants (â HSI â) that otherwise maintains the current share of STEM workers within the high-skilled group, or (ii) only high-skilled STEM workers (â HSI STEM â) that increases the share of STEM relative to other high-skill workers. The number of total immigrants remains the same under both policies. Both policies grow the economy, reduce federal debt, and increase wages across all income groups: lower-skilled, higher-skilled non-STEM workers, and higher-skilled STEM workers. In fact, this policy change affords the rare opportunity of a âPareto improvementâ benefitting all groups.
Change in American Families: Favoring Cohabitation over Marriage
Cohabitation rates have increased significantly during the last two decades. Cohabiting individuals appear to have weaker workforce engagement and earnings. With changing U.S. demographics, the trend toward favoring cohabitation over marriage appears likely to continue.
