The House-Passed Reconciliation Bill: Budget, Economic, and Distributional Effects
For the final bill, please see our analysis of the President Trump-Signed Reconciliation Bill .
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House Reconciliation Bill: Illustrative Calculations with Permanence (May 20, 2025)
If spending and tax changes in Reconciliation are made permanent, federal debt increases by 11.1 percent in 10 years and 24.3 percent in 30 years. GDP remains flat and wages fall by 0.5 percent. Dynamic costs exceed conventional costs in the budget window.
House Reconciliation Bill: Budget, Economic, and Distributional Effects (May 19, 2025)
We estimate the House reconciliation bill increases primary deficits by $3.3 trillion over 10 years. Even so, GDP rises in the short and long term, as precautionary increases in labor supply and savings respond to a reduced social safety net.
Budget Reconciliation Options with Permanent Business Tax Extenders
For the final bill, please see our analysis of the President Trump-Signed Reconciliation Bill .
Raising Top Ordinary Rates: Options under TCJA Extension (Updated)
Under current law, the 2017 Tax Cuts and Jobs Act (TCJA) will expire at the end of 2025, raising personal income tax rates back to 2017 levels. Some lawmakers propose extending the TCJA but with higher rates for high-income households. We consider three options.
Tax Collections Remain Strong in 2025 Despite IRS Concerns
Treasury data through April 28 shows that tax receipts are broadly in line with government projections made earlier this year, before the downsizing of the IRS was announced. Receipts from tariffs have significantly exceeded projections.
The Economic Effects of President Trump’s Tariffs
Many trade models fail to capture the full harm of tariffs. PWBM projects Trump’s 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 (“ HSI ”) that otherwise maintains the current share of STEM workers within the high-skilled group, or (ii) only high-skilled STEM workers (“ HSI STEM ”) 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 “Pareto improvement” benefitting all groups.
The FY2025 House Budget reconciliation and Trump Administration Tax Proposals Budgetary, Economic, and Distributional Effects
For the final bill, please see our analysis of the President Trump-Signed Reconciliation Bill .
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.
