Young was among the speakers. An hour and 45 minutes. Hi, i know everybody is excited about the budget scoring, but im asking to ask everyone to take their seats. Thank you all so much for coming, particularly on an intermittently rainy friday afternoon. We are so excited to be here for the launch of the budget lab. My name is marcy gimble, im with our chief economist and president , our hope is to bring attention to the way that budget scoring is an incredibly important part of the policy process, bring a new perspective with focus on innovation and transparency. Were incredibly excited for danny to get up here shortly and share some of the research that weve been working on. Before i do that, im going to briefly embarrass our team by pointing them out because without them this would not have been possible. We have rich, our director of policy analysis, ernie our director of economics, john rico, associate director of policy analysis, harris epsteiner, associate director of economics. Josh kendall, our research fellow. And until earlier this afternoon, a student and Research Assistant at yale law school, but she has been promoted to associate professor at yale. So were very excited for her. [applause] and then i also want to thank our undergraduate aids, jay, larry, thomas, and anna bell, who could not be with us today and also Sara Robinson who worked with us to get this thing started over the summer and fall and a shout out to sylvia none of this would have been possible. Your website looks so good, please tell them how nice it looks. And again, you know, were looking forward to the feedback which knowing this crew, there will be much of, but we just want to say for now, we are so proud of what weve built and what the team has put together and excited to get started. As i said, danny is going to run through our results, but before then, were incredibly excited and honored to have remarks from Shalanda Young the director of Office Management and budget, a member of joe bidens cabinet and made history when she was confirmed by a bipartisan vote in the u. S. Senate, the first black woman to lead the agency. Historic both as the first black woman to lead the agency and also with a bipartisan vote, which is becoming less and less common as time goes on. As director shes secured amazing levels of funding for key national priorities. She was a top negotiator of the fiscal responsibility act of 2023 that averted a catastrophe and lifted the debt ceiling. A native of southern louisiana and moved to serve as president ial management fellow at the National Institute of health. She then spent 14 years on capitol hill culminating as the staff director for the House Appropriations committee a masters from tulane, bachelors of arts from loyala new orleans, and with her young daughter in washington d. C. Please help me in welcoming Shalanda Young. [applause] all right. Well, one, because this is also a yale event, i have a teenager with me looking at colleges this weekend. My god son i cant believe is looking at colleges is visiting from new orleans with his mom, my best friend since high school, so, you know, they get to follow me to the wonkiest of things one can talk about and she goes, is this exciting . And i said for us, yes. And there are not many rooms in d. C. Budget score keeping, how excited you are and everyone else is also just as excited to talk about it, but i want to thank natasha and danny and marsha for having me and for doing this. This is a long time overdue, so, thank you all for taking on this important work. Ernie, did you take a break at all . Ernie left us and went straight over and i wont get too far down and calling people out. Talked about debt limit and negotiations. Michael linden, also, who was the, you know, someone who was staff for 14 years and whose boss often thanked them for their work. I just would be remiss to say, michael was the hand you always saw in the pictures when they captured me because i did nothing doing debt ceiling negotiations without michael linden. Good to see you here and a lot of friends and a lot of people ive known a long time and youre absolutely right, martha, everyone will let you know their opinions about what you present today. Im truly excited to be here because, of course, budgets scoring and the question of how to assess fiscal policy is central to what my agency does, kind of in the name, management and budget. Across the federal government. Our score keeping efforts are not only part of omb statutory role theyre central as we engage in each years budget process making recommendations to the president and ultimately laying out his agenda to congress and the public and not written yelling at agency like where is my score, how did you dare come up with this score. What is this . I cant use this, go look at it again. Thats budget score keeping, as one puts together a president s budget. At the same time because of how essential it is to the process, were mindful of the way that some of the score keeping and others, our cbo partners, for example, may not always provide a complete picture to policy makers as they wrestle with difficult decisions. After you will, thats ultimately one of the primary purposes of scoring, whether an intimate policy discussions or debates that may play out in the press or floor of congress, scoring is a tool that helps policy makers assess and consistent and standardized ways to tradeoffs associated with the change in law. It can help assess the pros and cons of different decisions. It can be used as an excuse not to do something or to do something. To help us understand where we might be going under our current trajectory and to weigh how different choices could affect our trajectory, so, its worth wrestling with places where current models may not always capture all of the elements that policy makers should care about, especially when translated to the public as a simple 10year fiscal cost. Weve seen this happen in the headlines, during the debate over complex, transformative policies and the fuller pros and cons of a given proposal. Providing better tools for the policy making processes requires first making sure that were asking the right questions. Lets take an example thats near and dear to my heart, investments in children. When were considering a new program like those in the president s budget, to invest in child care, early child care education, it may seem straight forward enough to estimate how much the government is going to spend on a program over the next decade. But when were thinking about the overall impact on the budget or perhaps more importantly, our economy, and our society, there are other questions we may want to know that score keeping may not always capture. We may care about longer term impacts beyond the 10year budget window. For example, Early Childhood education has many immediate benefits for Child Development and they also generate long run benefits including higher earnings in adulthood that materialize over decades and we may compare about the benefits that new ones can spur and thats not designed to capture. For example, expanding access to child care increases opportunities and Labor Force Participation of caregivers. I know a lot about that. Which can boost the economy and budget outcomes in turn. We may also care about distribution, recognizing that when we look at programs on either the tax or the spending side were mindful who benefits. We may especially care, for example, whether an investment in Early Childhood education is going to reach lower income families. Where the benefits both for family today and longterm outcomes may be particularly meaningful. And in each of those areas, research from economists and other experts can provide data and insights that can help inform how we approach these questions. And how we think about the impact new policy might have. These questions are not just relevant to questions around child care and early education. Theyre worth asking, for example, when were considering new investments in climate, and especially when it comes to the better cost of inaction and baseline scenario if we do nothing, and even outside of hot button policy debates, these questions can be important to ask in the bread and butter of managing the federal government. For example, when we look at the difficulties federal agencies have and in securing funding through the appropriations process for large, onetime Capital Investments such as the physical building or i. T. Modernization, those things matter because guess what . If the score is eaten up by those things, we cant do more in child care, we cant do more in head start so the rudimentary, daily, how do you manage those things, impacting how we do score keeping. These are challenging questions when it comes to the Technical Details as we consider how the answers should be incorporated and to the policy process and thats why its so important not only to ask the questions, but to develop additional tools to answer them. We work to do that in the federal government, but our work is greatly aided by outside experts, thats why im excited to be here today at the launch of the budget lab. From personal experience, i know danny, natasha, and martha and the team bring the kind of methodlogical rigor and trade in public finance, not just because of the personal experiences that theyve had and are anticipating around new investments and human capital. [laughter] theyre having babies. [laughter] im excited about the questions that theyre already bringing to the fore, and i look forward to engaging with the new ideas that develop as the budget lab gets up and going and thank you, again, for welcoming me here today and i look forward to reading this work, commenting on this work. I wont scream at you like i do oak and others, and im reading it. And delving into budget keeping, and how packed this room is, its important to know. Thank you so much. [applause] thank you so much, its an honor to have you here. Im danny, and part of the lab and uc berkeley and for the first couple years i got to learn from shalanda how to be analytically rigorous and actually useful, which is very, very hard and hopefully its lessons that were bringing here today and were just so excited to be able to share with you now. So, a huge thanks to our team and i get to be the one up here presenting these initial results, but it obviously leans on all of our work for weeks and years and months. Thank you. And were excite today share with you, our first two reports on the tax cuts and jobs act and the Child Tax Credit. What are we doing . What are we trying to do here . We are bringing an academic, nonpartisan perspective to try to do two things, to democratize and innovate on the budget scoring process. To try to quantify the tradeoffs that shalanda emphasized are there, theyre real, and theyre hard to understand. And so, the more information transparent, easy to use, easy to understand, that policy makers, voters, the press have, hopefully the Better Outcomes that we get. More in line with what voters want. We are trying to do this in sort of two ways and we chose our two policies to showcase the democratize half and the innovation half. Lets start with the democratization, what do we mean by that . All of us in this room have had some experience at some point where its, i wonder how much this tax proposal or spending proposal would raise, if made it less generous this way or applied to these taxpayers. Thats very hashed to do, hard to do in a Campaign Context or a policy, staffer context and without the long lag thats needed for the precise estimates from the Budget Office and joint committee on tax, or other entities. So what weve created for the tax cuts and jobs act is a do it yourself online portal where you can go right now and start turning the dials and we have tried to put our best frames forward here to come up with a different interaction that we run in the background so when you mix and match, you can get approximate scores and distributions that give you a sense who is going to win and who is going to lose and whats the impact on the deficit are both in the current year and beyond. So whats the same and whats different from what you are used to seeing . The same is that we have a 10year conventional score and we have a 10year dynamic score and producing the distribution analysis that would typically accompany these scores either right away or on a lag, but were also extending everything to 30 years, with a focus on intergenerational impacts when appropriate. Were going to showcase that with the Child Tax Credit and thats one of our key innovation areas. And along pt way, we are going to do more like the administrative which ill show you today. How long does it take to you file your taxes. When there are certain economic assumptions that we think that recent research has suggested. Maybe the Capital Gains fee should be lower than what is being used in the standard score keeping analysis. Document that, take a targeted approach and layout our reasoning that we hope everyone in this room will be able to read and say, yeah, that makes sense and thats where things should go. So, lets start with the tax cuts and jobs act. As a reminder, much of the tax cuts and jobs act expires on december 31st of next year, thats going to do two things, its going to restrain deficits, baked into the cbo baseline. If there werent these, those would be larger in the baseline and that comes at the cost of higher taxes, across the income distribution. Theres already a lot of discussion about whether this expiration time will be a moment for tax reforms in this country again. And so what we provide, are the do it yourself transparent, analysis of how you mix and match different options that could be on the table and were generally aiming to match cbo and gct. So what youre getting is fast, comprehensive do it yourself in real time, but there are going to be targeted areas like i was just mentioning when we definite evaluate deviate, well call it out and hopefully others agree with and other entities incorporate. So specifically you can think about what happens under expiration in two buckets. One that affects everybody, and one that affects only the highest earners. So, affecting everybody, tax rates are going to rise across the board. Were going to revert back to the lower standard deduction and higher exemption, the exemptions to compensate as we had before 2017 and the Child Tax Credit is going to fall in half. At the high end, the tax, our state and local Tax Deductions expired. The 20 tax subsidy to pass through business income, concentrated, called qbi will expire and then the state tax exception will fall by half so more of the wealthiest americans will have a state tax due as they die. And how are we going to anchor these analyses . Well look at three reform options, again, you can create your own, but just to talk through what should be on the table, weve looked at a full extension policy and takes current and forward. A partial extension policy does full extension, but concentrates taxes in only in the bottom 99 . How does that allow that, t top bracket 39. 6r and eliminates the qbis deduction. Those are unpaid for. We also analyzed the policy and the proposal by our own natasha and kim, formerly of treasury, that would extend at the bottom, except for the rate cuts so think of the standard deduction and the other tax components. Thats more than paid for through four trillion from progressive revenue raisers. So its one way to look at combining deficit reduction along with extension. All right. Everyone, put on your lab coats and enter the budget lab. So, we will start with the deficit picture and then go into distribution and then a couple longerrun analysis. So in black here is effectively the cbo baseline, so, little down dips in 2033 and 2028 come through mandatory changes to medicare that are already in the baseline. What you see here is that there are big stakes at play. So if there is full extension, primary deficits will be 1 of gdp higher every year going forward. In contrast, obviously, pairing with deficit reduction, you can reduce primary deficit, and what would it take to get to debt stabilization . Its something around the proposal that would reduce primary deficits down to about 1 of gdp. So theres an enormous stakes at play here. And just to note, if you are a close reader of the president s budget, as many of you are, the president s proposal would be something in the middle of partial extension and causing that would do partial extension, but would be fully paid for, so the deficit picture would look similar to the black line. Okay. So we see that there are big stakes at play, you know, 1 of gdp. Who is going to win and who is going to lose from these different proposals so were going to retain the color scheme, red, yellow and blue, partial extension and full extension and now show you changes in after tax income across the income distribution. And for now, ive deliberately left out the top 1 so we can just focus on working, middle and upper middle class families. So, what you see are two contrasting patterns of after tax income changes, depending on the type of reform proposals here. Full extension are partially identical, below the top 1 and thats why you really cant see the yellow line. In that scenario, rise across the board between 1 and 2 with largest increases at middle incomes and higher middle incomes. In contrast, under a string proposal, proposes full refundability of the Child Tax Credit with progressive raisers like a higher Corporate Income tax at the bottom the main beneficiary of the tax credit after tax incomes rise enormously, 8 increases in after tax incomes, that then tapers down with income gains through the middle income bracket and then in the top quintile, net losses. So, thats tax revenue raised from the top 20 . Now, what happens in the top 1 . This is where full refundability of partial im sorry, full extension and partial extension differ. When that top bracket rate rises, the state and local Tax Deduction limits deductions at the top. The top 1 and especially in the top. 1 end up paying more taxes on that so theyre partially clawing back that deficit reduction, im sorry, the extra deficits that full extension would imply. And instead, causing trends, raises revenue, a great deal from the top 1 . Now, lets focus for a second on this upper middle class dot here. The