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Effects of President Biden’s Unauthorized Immigrant Legalization Proposal on SNAP and Payroll Tax

PWBM projects that the legalization provisions of the U.S. Citizenship Act proposed by President Biden would increase per capita spending on the Supplemental Nutrition Assistance Program (SNAP) by 1.2 percent in 2031 and 0.7 percent 2050 relative to the current policy baseline. Per capita payroll taxes would increase by 1.3 and 0.2 percent relative to the current policy baseline, in 2031 and 2050 respectively.

Effects of President Biden’s Unauthorized Immigrant Legalization Proposal on SNAP and Payroll Tax

Explainer: Economic Effects of Infrastructure Investment

Public infrastructure investment boosts the productivity of private capital and labor, leading to higher output, but this positive effect can be offset if the investment is financed with additional government borrowing. PWBM estimates that an illustrative 10-year, $2 trillion public investment plan will raise public capital by 4.6 percent but lower private capital by 0.8 percent in 2040, with a net zero effect on GDP in 2040.

Explainer: Economic Effects of Infrastructure Investment

Republican and Bipartisan Infrastructure Proposals: Budget and Economic Effects

We estimate that Sen. Capito’s $330 billion infrastructure package, funded by user fees over 8 years, would increase GDP by about 0.05 percent in 2050. A $579 billion infrastructure investment being considered by a bipartisan group of senators, would increase output in 2050 by 0.1 percent if funded by user fees or have roughly zero net effect on GDP if deficit financed.

Republican and Bipartisan Infrastructure Proposals: Budget and Economic Effects

COVID-19 School Closures: Long-run Macroeconomic effects

PWBM estimates that the learning loss from school closures reduced GDP by 3.6 percent in 2050. Extending the 2021-22 school year by one month would cost about $75 billion nationally but would limit the reduction in GDP to 3.1 percent. This smaller reduction in GDP produces a net present value gain of $1.2 trillion over the next three decades, equal to about a $16 return for each $1 invested in extending the 2021-22 school year.

COVID-19 School Closures: Long-run Macroeconomic effects

President Biden's American Families Plan: Budgetary and Macroeconomic effects

PWBM projects that the American Families Plan (AFP) would spend $2.3 trillion, about $500 billion more than the White House’s estimate, over the 10-year budget window, 2022-2031. We estimate that AFP would raise 1.3 trillion in new tax revenue over the same period. By 2050, the AFP would increase government debt by about 4 percent and decrease GDP by 0.3 percent.

President Biden's American Families Plan: Budgetary and Macroeconomic effects

Revenue Effects of President Biden’s Capital Gains Tax Increase

PWBM estimates that raising the top statutory rate on capital gains to 39.6 percent would decrease revenue by $33 billion over fiscal years 2022-2031. If stepped-up basis were eliminated—as proposed in President Biden’s campaign plan—then raising the top rate to 39.6 percent would instead raise $113 billion over 2022-2031.

Revenue Effects of President Biden’s Capital Gains Tax Increase

Corporate Debt: Historical Perspective and Options for Reducing Interest Deductibility

While corporations are at historically high levels of debt relative to assets, leverage remains close to its historical average relative to firms’ market value and relative to interest expense as a fraction of cashflow. In PWBM’s dynamic firm model, reducing the deductibility of interest expenses by 10 percentage points decreases corporate output by 0.26 percent while decreasing corporate debt by 6.76 percent.

Corporate Debt: Historical Perspective and Options for Reducing Interest Deductibility

President Biden’s $2.7 Trillion American Jobs Plan: Budgetary and Macroeconomic Effects

PWBM projects that the American Jobs Plan proposed by President Biden would spend $2.7 trillion and raise $2.1 trillion dollars over the 10-year budget window 2022-2031. The proposal’s business tax provisions continue past the budget window, decreasing government debt by 6.4 percent and decreasing GDP by 0.8 percent in 2050, relative to current law.

President Biden’s $2.7 Trillion American Jobs Plan: Budgetary and Macroeconomic Effects

Demographic and Economic Effects of President Biden's Proposal to Legalize Immigrants

PWBM projects that by 2050, the legalization provisions of the U.S. Citizenship Act proposed by President Biden would increase the size of the U.S. population by 4.21 percent, increase GDP by 0.5 percent, but decrease GDP per capita by 0.2 percent. More specific legalization proposals targeted at farm workers, DACA recipients, and essential workers would each increase GDP per capita by 0.1 percent in 2050.

Demographic and Economic Effects of President Biden's Proposal to Legalize Immigrants