In a July 2023 brief, we estimated that President Biden’s SAVE plan would incur a budgetary cost ranging from $391 to $559 billion over the next ten-year budget window, with a medium estimate of $475 billion. Tables 1a and 1b below present updates of our cost estimate, which includes a shift in the 10-year window by one year along with other changes in the economy over the past 13 months.
Federal Student Loan Payment Pause: Budgetary Effect and Distributional Impact
In November, the U.S. Department of Education announced another extension of the pause on student loan repayment, interest, and collections (“Payment Pause”) until August 2023 at the latest.
Student loans have been in Payment Pause since March 2020. We calculate the conventional budgetary costs and distributional effects of the current-law Payment Pause between March 2020 and August 2023.
Current Law: All federal student loan borrowers are eligible. Total budgetary costs are estimated to be $210.0 billion with 23% of the benefit accruing to households in the bottom 50 percent of the income distribution.
We also present three alternative policies that would have instead limited the Payment Pause to lower-income households based on different means-tested rules. If implemented in March 2020 and continued until August 2023, we calculate the following results:
Alternative 1: Only Pell Grant recipients are eligible. Total budgetary costs are estimated to be $129.0 billion with 49% of the benefit accruing to households in the bottom 50 percent of the income distribution.
Alternative 2: Only households with income below 2.25 times the Federal Poverty Line are eligible.
Total budgetary costs are estimated to be $60.1 billion with 89% of the benefit accruing to households in the bottom 50 percent of the income distribution.
Alternative 3: Only households with income below 1.5 times the Federal Poverty Line are eligible.
Total budgetary costs are estimated to be $30.2 billion with 100% of the benefit accruing to households in the bottom 50 percent of the income distribution.
White House Reconciliation Revenue Package
At 9AM this morning, the White House released a set of revenue options for budget reconciliation that the White House estimated to total $1,995 billion over 10 years (available here). PWBM's estimate of the same package is $1,527 billion, a difference of $468 billion.
Dynamic Distributional Analysis of the Biden Platform
PWBM uses dynamic distributional analysis to evaluate the effects of the Biden platform on different age and income groups. We find that working-age individuals in the bottom 40 percent of taxable income benefit the most due to expanded health insurance, increases in housing subsidies, and lower cost of prescriptions in the Biden platform, while young, high-income individuals and wealthy retirees see net losses due to tax increases and lower returns on their savings. Please refer to our analysis of the estimate for more information.
Macroeconomic effects of Biden’s immigration policy
Using PWBM’s dynamic model, we show the macroeconomic effects of Presidential candidate Biden’s immigration proposal. By 2050, GDP increases by 1.7 percent in 2050 relative to current law while GDP per capita stays the same. Please refer to our analysis of the estimate for more information.
Presidential Candidate Joe Biden’s Proposed Child Tax Credit Expansion
Presidential candidate Joe Biden recently announced a proposal to temporarily expand the Child Tax Credit (CTC). We find that this proposal would cost $110 billion if implemented solely for calendar year 2021 and would cost $1.4 trillion over ten years if extended permanently. While higher income households are more likely to have qualifying children and would see larger average tax cuts ($1160 for the 90-95th percentile), lower income groups would see the largest relative benefit, with after-tax incomes increasing by 9 percent for the bottom quintile. Refer to our analysis of the estimate for more information.
The Biden Platform
Presidential candidate Joe Biden’s campaign has released a substantial list of policy proposals. PWBM finds that over the 10-year budget window 2021 – 2030, the Biden platform would raise $3.375 trillion in additional tax revenue and increase spending by $5.37 trillion. Including macroeconomic and health effects, by 2050 the Biden platform would decrease the federal debt by 6.1 percent and increase GDP by 0.8 percent relative to current law. Almost 80 percent of the increase in taxes under the Biden tax plan would fall on the top 1 percent of the income distribution. Please see our analysis of the estimate for more information on the proposals.
Business Taxation in the Biden Tax Plan
We analyze several foreign and domestic business taxation provisions from the Biden tax plan. While raising the effective tax rate on foreign profits increases domestic capital, wages, and GDP, provisions that raise domestic business taxes have the opposite effect—when combined, these business tax provisions decrease the capital stock by 0.21 percent and decrease wages by 0.69 percent in 2050.
The Updated Biden Tax Plan
We estimate the budgetary, distributional and economic effects over the 10-year budget window (2021 - 2030) of Presidential Candidate and Former Vice President Joe Biden's updated tax plan. Detailed summaries of each proposal can be found in our analysis of this estimate and our analysis of the previous version of his plan.
The Biden Plan for Social Security
We estimate the effects on Social Security's finances and the economy of Former Vice President Joe Biden's Social Security plan. Detailed summaries of the proposals in the plan can be found in our analysis of the estimate.
The Biden Tax Plan
We estimate the budgetary, distributional and economic effects over the 10-year budget window (2021 - 2030) of Former Vice President Joe Biden's tax plan, which raises taxes on high-income households through ten specific proposals, united around the common theme of raising taxes on capital income. Detailed summaries of each proposal can be found in our analysis of the estimate.