The Budget Lab at Yale

Today, we are excited to launch The Budget Lab at Yale, a non-partisan policy research center dedicated to providing in-depth analysis for federal policy proposals impacting the American economy. The Budget Lab aims to fill a critical gap in policy evaluation, focusing on the long-term effects of proposed policies on the economy, income distribution, and recipients.? The Budget Lab is co-founded by leading economic advisors and academics whose goal is to bring fresh ideas and new methods to policy making. Natasha Sarin, Co-founder and President, is a Professor of Law at Yale Law School with a secondary appointment at the Yale School of Management in the Finance Department. She served as Deputy Assistant Secretary for Economic Policy and later as a Counselor to the U.S. Treasury Secretary Janet Yellen. Danny Yagan, Co-founder and Chief Economist, is an Associate Professor of Economics at UC Berkeley and a Research Associate of the National Bureau of Economic Research. He was the Chief Economist of the White House Office of Management and Budget. Martha Gimbel, Co-founder and Executive Director, is a former Senior Advisor at the White House Council of Economic Advisers, Senior Policy Advisor to the U.S Secretary of Labor, and Senior Economist and Research Director at Congress’s Joint Economic Committee.? https://lnkd.in/eRDtY3uN

"The Coming Tax Debate." Watch a discussion hosted by The Budget Lab at Yale on the?expiring provisions of the TCJA and areas for subsequent reforms with a panel including: - Martha Gimbel, Executive Director of The Budget Lab - Kyle Pomerleau, Senior Fellow, American Enterprise Institute - Rachel B. Snyderman, Managing Director, Economic Policy Program, Bipartisan Policy Center - Michael Linden, Senior Policy Fellow, Washington Center for Equitable Growth. Watch here: https://lnkd.in/exwmwasb

I'm in Bloomberg Opinion today discussing the extension of the Tax Cuts & Jobs Act (TCJA) and the fiscal & macroeconomic outlook. Extending the tax cuts without paying for them may be a bridge too far for our economy in the long-run. Luckily Congressional Republicans themselves proposed a sensible solution eight years ago that they should revisit now. https://lnkd.in/eV_ERiuu

"The Coming Tax Debate."?Join The Budget Lab at Yale for a webinar on Wednesday, Nov. 20 at 12:10pm EST. With most provisions of the Tax Cuts and Jobs Act (TCJA) expiring next year, the tax system will be a central point of debate and policy making in the next presidential administration. Policymakers are faced with real tradeoffs that will have long-run effects on the U.S. fiscal outlook. Martha Gimbel, executive director of The Budget Lab, will moderate a panel featuring the following speakers: - Kyle Pomerleau, Senior Fellow, American Enterprise Institute - Rachel B. Snyderman, Managing Director, Economic Policy Program, Bipartisan Policy Center - Michael Linden, Senior Policy Fellow, Washington Center for Equitable Growth. RSVP here:?https://lnkd.in/e7NYM4kW

How will worker power change in the next economy under the Trump administration? Join The Burnes Center for Social Change Senior Fellow Seth Harris as he sits down with Executive Director of The Budget Lab at Yale , Martha Gimbel, and Director of Economics at The Budget Lab at Yale , Ernie Tedeschi, to discuss the current and future states of the economy! Visit the links in the comments to watch Power At Work's latest blogcast or listen to the podcast!

Ernie Tedeschi joined CNBC's "Squawk on the Street" today to discuss market outlook post-election: https://lnkd.in/epdwuWkY

Watch Natasha Sarin on CNBC "Squawk Box" this morning discuss what’s ahead for the American economy. https://lnkd.in/eHkQdckp

The jobs report this morning tells us what we already know: that the hurricanes and strike weighed on job growth in October. But the unemployment rate didn’t move – holding steady at 4.1 percent. Given that collection rates were in the normal range for the household survey but low for the establishment survey, looking to the household survey this month is a better proxy for where the economy currently is. While some may focus on the fact that job growth came in below expectations, many of us discussed beforehand the lack of confidence in predictions this month given the uncertainty around the hurricanes. Barring any future extraordinary events, one would expect job growth to return to trend in the months to come.

Friday’s jobs report will provide the last snapshot of the labor market before the election on Tuesday. Everyone will want to rush to create a narrative about where the economy is heading into a momentous election off of the jobs numbers. Unfortunately, there is a nonzero chance that the numbers are impacted by the horrific hurricanes that hit the United States at the end of September and beginning of October (Helene and Milton). Spoiler alert: the payroll growth number could be extremely low and there is a nonzero chance of a negative read. First, Jed Kolko has previously found that three industries (construction, mining and logging, and leisure and hospitality) account for most of the variance in weather-affected job growth. Those industries have accounted for about 15 percent of job growth over the last three months, for an average of 27,000 jobs per month. But those industries may understate the impact given the widespread destruction. Second, we could look at which industries are more concentrated in Florida and North Carolina. Given the extent of the storms, it is likely that normal working conditions were hurt for a wider swathe of people than would be expected during “usual” weather disruptions. Overall, the distribution of industries looks similar to the national numbers – with Floridians and North Carolinians slightly less likely to be employed in manufacturing, education and health services, and government than workers nationally, and slightly more likely to work in leisure and hospitality, professional and business services, and trade, transportation, and utilities. But the distributions are similar enough that it is unlikely specific industries will be able to tell us much. Finally, we can look to historical patterns to help us out. In September and October 2005, job growth was only around 75,000, compared to around 200,000 over the previous few months. However, the initial estimate for September was even lower – at a loss of 35,000 jobs – and in October – adding 56,000 jobs. Assuming that the impact of Helene and Milton was similar to Katrina, that means we could assume the job growth could be negative on Friday even if it is later revised upward. On the other hand, unemployment insurance claims have not moved up as much around the timing of Helene and Milton as they did around Katrina (unemployment insurance claims rose by about a third in the aftermath of Katrina, compared to only about 13 percent in the aftermath of the recent hurricanes), which would imply a low, but not negative number. In addition to the hurricanes, the Boeing strike is likely to affect the jobs numbers (although not the focus of this piece). While that will hit manufacturing hardest, there could be spillover effects into other industries as well. In conclusion, it is highly likely that the jobs numbers on Friday give us relatively little information about the state of the economy and much more information about how the hurricanes impacted workers.

The Budget Lab at Yale released a new analysis today, "No Tax on Police Officers, Firefighters, Veterans, and Active Duty Military: Basic Background," by Ernie Tedeschi. Last week, former President Trump mentioned he was considering?exempting police officers, firefighters, veterans, and active duty military from federal income taxation. The Budget Lab's analysis gives an overview of the population that would be covered by this proposal and what the fiscal impact of a federal tax exemption might be. In summary: - In 2023, there were 19 million people who would be covered by this new federal income tax exemption; 16 million of these were veterans alone, another 1.4 million were police officers and 1.3 million were active duty military. - The exemption would cost $2 trillion over the next 10 years against current policy if applied just to income taxes (0.6% of GDP), and $3.6 trillion if applied to both income and payroll taxes (1% of GDP). - In 2023, an income tax exemption for this population would have been regressive: more than half of the aggregate tax benefit would have fallen on the top two income deciles. Read the full report here: https://lnkd.in/eGkfuGXc