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Lasting Macroeconomic Impacts of the Coronavirus Crisis, Absent Fiscal Policy Response

We estimate the lasting macroeconomic effects of the anticipated recession due to coronavirus, as the initial shock leads to lower federal revenue and higher debt. If the economy recovers the year after a deep recession ("V shape"), we project that federal debt will be 3.2 percent higher and GDP will be 0.3 percent lower by 2030. If the recovery occurs over two additional years (“U shape”), federal debt rises by 5.9 percent and GDP falls by 0.6 percent lower by 2030. Barring future fiscal policy to reduce debt, so-called “potential GDP” will, therefore, be permanently lower due to the coronavirus.

New Charitable Deduction in the CARES Act: Budgetary and Distributional Analysis

The CARES Act establishes a new, temporary charitable deduction (limited to $300) in tax year 2020 for taxpayers who claim the standard deduction. PWBM projects that this provision would cost about $2 billion and would have little effect on total donations. More than half (53 percent) of the benefit would accrue to families in the 60th to 90th percentiles of the income distribution.

Continuation of Low Oil Prices Would Hinder Investment and Growth in 2020

If oil prices remain at current levels through the end of 2020, we estimate that growth in business investment will be 1.9 percentage points lower and growth in GDP will be 0.25 percentage points lower in 2020.

The Demographics of the Coronavirus Crisis: Living Arrangements of “Leisure and Hospitality” Workers

Options for Emergency Lump-Sum Cash Payments in Response to Coronavirus Budgetary and Distributional Analysis

We present budgetary and distributional estimates for three potential versions of the lump-sum payment that President Trump announced earlier today. All three options increase the after-tax income of low income households the most. However, higher-income households have more children on average and would receive larger cash payments unless additional adjustments are made.

The Demographics of the Coronavirus Crisis: Impacts at the Front Line of the “Leisure and Hospitality” Sector

The economic downturn due to coronavirus has disproportionately harmed workers in the leisure and hospitality businesses, such as restaurants and bars—these workers tend to be less-educated and lower-income.

President Trump’s Payroll Tax Holiday: Alternative Distributional Analysis

We expand our previous analysis of President Trump’s proposed payroll tax holiday by considering two scenarios for how the employer side of the tax cut would be distributed: either to the full benefit of business owners and corporate equity holders (“profits rise”) or to the full benefit of workers (“wages rise”). When profits rise, the top 1 percent of families by income receive about 29 percent of the total payroll tax cut, compared to about 4 percent of the total cut when wages rise.