PWBM estimates that Medicaid’s inflation adjusted expenditures on Long Term Care services will increase from $130 billion in 2020 (0.62 percent of GDP) to $179 billion in 2030 (0.71 percent of GDP). We project that Medicaid expenditures on Nursing Home and Home Health will increase 4.7 percent and 6.9 percent per year above inflation through 2030, respectively.
This brief examines different approaches to removing the capital gains “lock-in effect” within a realization-based tax framework. We estimate that this change would produce between $115 billion and $357 billion in additional tax revenue over the next 10 years, depending on the exact design.
PWBM estimates that auto-enrolling into a Medicare Advantage (MA) plan those who age into Medicare and fail to sign up for Medicare Fee-For-Service (FFS) or another MA plan would increase enrollment in the MA program by 1.4 million people in 2032 and increase federal outlays by $189 billion over the 2022-32 period. If we assume that in response to such a policy change people would lose the incentive to enroll in Medicare FFS and instead get automatically enrolled into a MA plan, enrollment would increase by 6.8 million people in 2032 and outlays would increase by $269 billion over the 2022-32 period.
We estimate that increases in wage earnings in 2021 offset the higher cost of living due to inflation for most households with incomes between $20,000 and $100,000. Higher-income households saw their earnings rise by more than their cost of living, while the lowest-income households (below $20,000) saw their earnings rise by only one third of their increase in cost of living.
In a general equilibrium, overlapping generations model with heterogeneous agents and stochastic labor productivity, we account for differences between immigrants and natives to investigate the macroeconomic effects of immigration to the United States. Including household labor productivity transitions jointly with legal status transitions, we model policies which change the size and composition of the immigrant population and analyze implications for government spending and tax revenues. Temporary increases in legal immigration rates lead to long term fiscal benefits, in aggregate and on a per capita basis, in part because of decreases in the old-age dependency ratio. These policies produce long lasting, multi-generational effects, as the children of new immigrants enter the workforce. A six year increase in legal immigration by 25% is predicted to lead to a 0.08% increase in per capita GDP and a 0.41% decrease in total government debt in 2032, but, by 2052, the policy increases per capita GDP by 0.30% while government debt is 1.34% lower than in the baseline. Policies which legalize unauthorized immigrants imply a trade-off between higher wages for newly-legalized workers and increased government debt through additional spending on social programs for those same immigrants. A full legalization policy leads to a 0.02% increase in government debt by 2032 and a 1.26% increase by 2052. Per capita GDP, meanwhile, is 0.01% lower than baseline in 2032 and 0.37% lower in 2052.
We estimate that White households inherit over 5.3 times as much as Black households and 6.4 times as much as Hispanic households. White households are 2.8 times more likely than Black households to inherit any wealth. Differences in inheritances reflect and may contribute to wealth differences by race.
PWBM projects that the spending and taxes in the Build Back Better Act (H.R. 5376), as written, would add up to 0.2 percentage points to inflation over the next two years and reduce inflation by similar amounts later in the decade. As an illustrative alternative, if temporary major spending provisions were made permanent, the bill would add up to a third of a percentage point to near-term inflation and have a negligible impact on inflation later in the decade.
We estimate that inflation in 2021 will require the average U.S. household to spend around $3,500 more in 2021 to achieve the same level of consumption of goods and services as in recent previous years (2019 or 2020). Moreover, we estimate that lower-income households spend more of their budget on goods and services that have been more impacted by inflation. Lower-income households will have to spend about 7 percent more while higher-income households will have to spend about 6 percent more.
PWBM estimates that H.R. 5376, the Build Back Better Act, would increase spending by $2.1 trillion over the 10-year budget window while increasing revenue by $1.8 trillion, for a 10-year deficit of $274 billion. By 2050, the proposal would decrease GDP by 0.2 percent, relative to current law.
