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Jan 14, 2025 | 
brookings.edu | Sarah Ahmad |Louise Sheiner
Congress relies on the Joint Committee on Taxation (JCT) to estimate the revenue gain or loss for tax bills, and the Congressional Budget Office (CBO) to estimate the impact of spending bills. Both agencies provide “static” scores that assume that changes in taxes and spending don’t affect GDP. But members of Congress and other analysts are often interested in the economic effects of taxes and spending changes, both for their deficit impact and broader implications for economic growth.
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Oct 8, 2024 | 
brookings.edu | Janice Eberly |Pascal Michaillat |Louise Sheiner |Jón Steinsson
The full-employment rate of unemployment may seem like a contradiction, but in fact, economists have long understood that some unemployment is necessary. In their new paper, Pascal Michaillat of UC Santa Cruz and Saez of the University of California, Berkeley present a new formula for identifying the efficient rate of unemployment in the U.S. and find that the labor market has been inefficiently slack for most of the last century.
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Sep 23, 2024 | 
brookings.edu | Georgia Nabors |Louise Sheiner
Social Security’s costs have exceeded its income from taxes and interest since 2021. The government currently relies on the assets in the Old-Age, Survivors, and Disability Insurance (OASDI) trust fund to help finance benefits. Once the trust fund is depleted—which Social Security actuaries put at 2035—revenues will be sufficient to cover only 83% of benefits. Raising the full retirement age would improve the financial outlook of the Social Security system.
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Apr 24, 2024 | 
brookings.edu | Janice Eberly |Andrew Fieldhouse |David Munro |Louise Sheiner
In the mid-20th century, U.S. states experienced recessions very differently from one another, which resulted in many workers migrating between states in search of work. But a newly developed dataset shows that economic recoveries have begun to look very similar across states in recent decades.
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Mar 22, 2024 | 
brookings.edu | Louise Sheiner |David Wessel |Elijah Asdourian
Editor's note: You can download the full conference summary here. The onset of the COVID pandemic was a severe shock to the U.S. economy. Unemployment reached 14.8% in April 2020, the highest since the government began measuring it in 1948, while the labor force participation rate dropped to 60.1%, the lowest since the 1970s. By 2022, the labor market had rebounded, but inflation was growing at the fastest pace since the mid-1980s.
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Mar 20, 2024 | 
brookings.edu | Louise Sheiner |Lorae Stojanovic |David Wessel
What is Medicare? Medicare is a federal health insurance program that covers nearly all Americans aged 65 and over and some younger Americans with disabilities. As of September 2023, 66 million individuals were enrolled in Medicare, with 11% receiving assistance due to disability and 89% due to age. Medicaid, a separate program, covers low-income individuals. The federal government spent $832 billion on Medicare in fiscal year 2023, a sum equal to 3.1% of GDP.
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Jan 12, 2024 | 
brookings.edu | Louise Sheiner
With the Federal Reserve’s key inflation measure—the Personal Consumption Expenditures (PCE) price index excluding food and energy—averaging 1.9% over the past six months, it might seem as if the soft landing has been achieved. So why isn’t the Fed declaring victory? In this post, I argue that the details of the inflation data suggest that the post-pandemic adjustment in inflation is still underway, meaning that there is still much uncertainty about the trajectory of inflation.
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Dec 21, 2023 | 
brookings.edu | Chloe East |Benjamin H. Harris |Sanjay Patnaik |Louise Sheiner
With 2023 winding down, we asked six Brookings experts to take a moment to look back on some of the biggest economic policy developments of 2023 and the ways they expect them to evolve in 2024. Explore their reflections on fiscal policy, the social safety net, climate economics, and more below. On some dimensions, the U.S. labor market appears to have mostly recovered from the COVID-19 shock and to be stronger than before.
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Nov 22, 2023 | 
brookings.edu | Louise Sheiner |Alexander N. Conner
The federal budget deficit—the difference between government spending and revenues—increased from 5.4% of GDP in FY 2022 to 6.3% of GDP in FY 2023. Adjusting for the effects of President Biden’s student loan forgiveness program, which boosted the deficit in FY 2022 when it was announced and decreased it in FY 2023 when it was ruled unconstitutional, the increase was significantly larger—from 3.9% of GDP last fiscal year to 7.5% in 2023. Why did the deficit increase so much?
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Sep 20, 2023 | 
brookings.edu | Louise Sheiner
The U.S. budget deficit is on track to be much bigger this year than last. Interest rates—a big issue given the level of the federal debt–have risen notably in recent months. And the U.S. faces long-run fiscal challenges associated with population aging that will require tax increases and spending cuts. But there is no reason to panic. The rise in the deficit this year isn’t because of a sudden surge in spending—it mostly reflects a fall in revenues from unusually high levels last year.
