Tagged: Public Investment

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Projected Effects of the New (March 2026) H-1B Visa Lottery

We project that the new DHS H-1B selection rule, going into effect in March 2026, will shift the H-1B visa allocation toward higher-paid and higher-education foreign-born workers, but by less than alternative designs being debated. Based on data from the current random lottery in the last five years, we estimate that the new DHS rule will have no significant impact on wages of U.S.-born workers, including non-college, college-educated, and STEM workers. Any reduction in competition from fewer STEM H-1Bs is offset by a reduction in productivity growth.

Projected Effects of the New (March 2026) H-1B Visa Lottery

Total Cost of Universal Pre-K, Including New Facilities

We estimate that each new preschooler for a universal pre-K program requires about $21,000 in new construction costs for facilities expansion. Including non-construction costs, a universal pre-K program for three- and four-year-olds will cost about $351 billion over the 10-year budget window. If made permanent after 10 years, this program will have essentially no impact on long-run GDP. A pre-K program for just four-year-olds reduces the 10-year cost to $196 billion and slightly increases long-run GDP, if that program is made permanent.

Total Cost of Universal Pre-K, Including New Facilities

The Impact of the Build Back Better Act (H.R. 5376) on Inflation

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.

The Impact of the Build Back Better Act (H.R. 5376) on Inflation

Macroeconomic Effects of the White House Build Back Better Budget Reconciliation Framework

PWBM estimates that the White House’s Build Back Better reconciliation framework would increase spending by $1.87 trillion over the 10-year budget window and revenues by $1.56 trillion over the same period. By 2050, the proposal would increase federal debt by 2.0 percent and decrease GDP by 0.1 percent, relative to the current law baseline.

Macroeconomic Effects of the White House Build Back Better Budget Reconciliation Framework

Updated Bipartisan Senate Infrastructure Deal: Budgetary and Economic Effects

The bipartisan Senate infrastructure deal, endorsed by President Biden, authorizes about $548 billion in additional infrastructure investments, which we estimate is funded by $132 billion in new tax provisions and $351 billion in new deficits. We project that proposal would have no significant effect on GDP by end of the budget window (2031) or in the long run (2050).

Updated Bipartisan Senate Infrastructure Deal: Budgetary and Economic Effects

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

PWBM Budget Contest: TEACHUP Early Childhood Education Grants

The TEACHUP program, proposed by Rick Miller, Ph.D. as part of the PWBM Democratizing the Budget Contest, would give grants to states in order to provide full-day preschool for four-year-old children at or below 200 percent of the poverty line. On a conventional basis, PWBM projects that TEACHUP would cost $92.4 billion over ten years and a total of $282.53 billion by 2050. However, on a dynamic basis that includes productivity effects and expansion of the tax base, PWBM estimates that the program would effectively pay for itself by 2050 by holding public debt nearly constant.

PWBM Budget Contest: TEACHUP Early Childhood Education Grants

COVID: Trade-offs in School Reopening

We estimate that each month of school closures in response to the COVID pandemic cost current students between $12,000 and $15,000 in future earnings due to lower educational quality. We also estimate total value-of-life, medical, and productivity costs per infection at $38,315 for September 2020. Using these costs, we calculate the cost-benefit threshold to keeping schools closed for October at over 0.355 new expected infections in the community per student kept out of school.

COVID: Trade-offs in School Reopening

Short-Term Economic Effects of a “Phase 4” Infrastructure Response to Coronavirus

We estimate that a large infrastructure bill would increase GDP by no more than $360 billion per year for 2020 and 2021. Short-run GDP expansion from new infrastructure spending is limited by available projects and likely social distancing measures, and so states could not absorb more than $300 billion per year in new federal aid over the next two years.

Short-Term Economic Effects of a “Phase 4” Infrastructure Response to Coronavirus