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February 6, 2024

Research by a Top Biden Administration Economist Reinforces the Importance of Work Incentives in the Child Tax Credit and the Safety Net

For the past two years, economist Jacob Bastian has been the main researcher dedicated to trumpeting the virtues of a child tax credit (CTC) expansion. Writing first as an economist from academic perches at Rutgers and Princeton, later as an affiliate of moderate think tanks like the Niskanen Center and the R Street Institute, and…

February 2, 2024

Has Intergenerational Progress Stalled? Income Growth over Five Generations of Americans

Abstract We find that each of the past four generations of Americans was better off than the previous one, using a post-tax, post-transfer income measure constructed annually from 1963-2022 based on the Current Population Survey Annual Social and Economic Supplement. At age 36–40, Millennials had a real median household income that was 18 percent higher…

January 31, 2024

The Wyden-Smith Child Tax Credit and Work: Responding to Critics

The Wyden-Smith tax bill under consideration in the House has rekindled a debate about the Child Tax Credit (CTC) and work incentives. We, along with our colleagues, Angela Rachidi and Matt Weidinger, recently released an analysis of the incentives built into one overlooked feature of the CTC reforms proposed in the bill—the so-called “look-back” provision….

January 19, 2024

The Work Incentive and Employment Effects of Eliminating the Child Tax Credit’s Annual Income Requirement

Abstract Senior House and Senate tax committee leaders agreed to a framework for modifying the Child Tax Credit on January 16, 2024. The most consequential reform would eliminate the Child Tax Credit’s annual income requirement by allowing individuals to calculate their eligibility using their current or prior year’s income, whichever year maximizes the family’s benefit….

January 15, 2024

The Economy Is Good. Why Do Consumers Feel So Bad?

As we approach another federal election cycle, there will be a lot of talk about the state of the economy. Are Americans better off, economically speaking, than they were when President Biden took office three years ago? Despite our having lived through a pandemic and the resulting unprecedented economic shocks, it still should be a…

January 12, 2024

When It Comes to the State of the American Economy, Let’s Keep It Real

Here we go again. An oft-repeated economic claim on social media is that most Americans lack the means to cover a $400 emergency expense. More evidence that most of us in “late capitalist” America live paycheck to paycheck. Indeed, another common claim on social media is that nearly 80 percent of US workers live paycheck…

January 12, 2024

Congress Shouldn’t Expand Welfare in Return for Corporate Tax Cuts

Bipartisan negotiations to revive the Democrat-favored 2021 Child Tax Credit in return for Republican-favored business-tax cuts are heating up. The business-tax cuts could be helpful in principle — if they focus on encouraging future investment and don’t add to the deficit. But under no circumstance should Republicans agree to turn the Child Tax Credit into a welfare…

January 10, 2024

By the Numbers: Here’s How the New Federal Financial Aid Formula Harms Families with More Than One Child

The old federal formula for higher education financial aid is dead. The new formula creates winners and losers. Specifically, the new formula harms middle-class families with more than one child in college at a time. It’s not that the new formula doesn’t take family size into account at all—it does, barely. The issue is that the new formula calculates the total…

January 9, 2024

Let’s Expand the Child Tax Credit a Little Bit

A bipartisan group of senators is trying to hash out a deal on extending some of the Republican tax cuts from 2017. If Congress does nothing, the child tax credit will drop down to $1,000 per child from its current level of $2,000. Some lawmakers want to expand the child tax credit massively. Others don’t. There’s a middle course that involves moderately growing…

January 9, 2024

Post-Pandemic Recovery for America’s Prime Age Labor Force: A Tale of Two Sexes

The Bureau of Labor Statistics (BLS) “monthly jobs report” last Friday closed the book on 2023, recording a continuing expansion of both labor supply and paid work in America last year—and continuation of the lowest annual unemployment rate since the 1960s. America not only missed the 2023 recession that many (including your humble servant) were…