This paper reviews recent economic events and their impact on U.S. fiscal performance and prospects. We highlight the historic nature of the 2009 budget outcomes, the unsustainability of plausible ten-year budget projections, and the increasingly dire long-term fiscal problem. These conditions...
In 2009, the federal deficit will be larger as a share of the economy than at any time since the 1940s. After 2009, we project an average deficit of $1 trillion per year for the next 10 years, under optimistic assumptions. The longer-run picture is even bleaker, with a fiscal gap of 7-9 percent...
Tax policy has been a major issue in the Presidential election campaign, with both candidates proposing extensive changes. The candidates take very different approaches to tax policy. The main differences are two: first, McCain's plans would reduce revenues by significantly more than Obama's;...
CNNMoney.com op-ed, July 30, 2009. William Gale and Alan Auerbach explain that the government is spending more than it's bringing in, resulting in a deficit. They explain why that gap must be brought under control.
With the economy rocked by mortgage defaults, illiquidity in financial markets, a falling dollar, and declining consumer confidence, fiscal matters have been placed on the back burner to some extent by policy makers and commentators. However, the fiscal problems facing the country not only won't...
In the next few years, several factors will push tax issues to the forefront of policy discussions. First, under current law, almost all of the Bush Administration's tax cuts will expire at the end of 2010. A second factor is the rapid growth in the alternative minimum tax (AMT), which will...
A good tax system raises the revenues needed to finance government spending in a manner that is as simple, equitable, stable, and conducive to economic growth as possible. But the challenge for the next President will be to make reform work not just in the abstract, but in the real world, where...
Americans are taught from an early age to aspire to homeownership, and several long-standing federal institutions and regulations support owner-occupied residential housing. The income tax deduction for mortgage interest payments is possibly the best-known federal housing policy. Evidence...
The individual alternative minimum tax (AMT) was originally designed to limit the amount of tax sheltering and to assure that high-income filers paid at least some tax. The current AMT, however, has strayed from those original goals and under current law the tax will affect over 23 million...
Researchers have shown how the tax system can reinforce disparities between households of different races or ethnicities, even though the Internal Revenue Code does not...
There is substantial evidence that income inequality in America rose throughout the late 20 th and early 21 st centuries. Influential research by Thomas Piketty,...
Most years, the Tax Policy Center celebrates Valentine Day with a whimsical analysis of the costs and benefits—tax-wise—of marriage. What’s new this year is that...
Congress should eliminate the debt ceiling this year. It serves no useful purpose. It doesn’t contribute to fiscal discipline, and breaching it entails large, potentially,...
Recent analysis by the nonpartisan Joint Committee on Taxation (JCT) shows the impact of several tax pieces included in the Inflation Reduction Act (IRA). The...
Debates about corporate income tax cuts follow a familiar script. Republicans claim that rank-and-file workers benefit . Democrats argue that affluent shareholders reap the gains...
Over the past three decades, the United States has gone from taxing roughly half of closely held business (that is, firms other than corporations) and...
The murder of George Floyd, in May 2020, sparked a national reckoning and renewed attention to issues of racial equity and justice. This long-overdue awakening...
As of this morning, yields on 10-year Treasury bonds stood at 1.33 percent. The yield on TIPS bonds–which are adjusted for inflation–was negative. These astonishingly...
Last week, Congress and President Trump enacted the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, the largest aid package in American history...
The Congressional Budget Office just projected a series of $1 trillion budget deficits—as far as the eye can see. Narrowing that deficit will require not...