The Border Security, Economic Opportunity, and Immigration Modernization Act (S. 744) would revise laws governing immigration and the enforcement of those laws, allowing for a significant increase in the number of noncitizens who could lawfully enter the United States permanently or temporarily. The bill also would create a process for many currently unauthorized residents to gain legal status, subject to their meeting conditions specified in the bill. The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have prepared an estimate of the cost of that...

The Congress faces an array of policy choices as it confronts the prospect of large annual budget deficits and further increases in the already-large government debt that are projected to occur in coming decades under cur-rent law. To help inform lawmakers about the budgetary implications of changing federal policies, the Congressional Budget Office (CBO) periodically issues volumes of policy options and their effects on the federal budget, of which this is the most recent. The agency also issues separate reports that present policy options in particular areas. This document provides...

Changes in federal fiscal policies-which can take the form of changes in federal spending, taxes, or both-can have both short-term and long-term effects on the economy. In the short term, the economy's output can deviate from its potential level (a level that corresponds to a high rate of use of labor and capital) in response to changes in demand for goods and services by consumers, businesses, governments, and foreigners. Tax cuts and increases in government spending can boost demand, which encourages businesses to gear up production and hire more workers than they otherwise would; tax...

Over the past decade, the U.S. Army's principal modernization initiative has been its digitization effort, designed to harness the power of the microchip to significantly improve the fighting capabilities of soldiers on the battlefield. But implementing that initiative presents significant challenges. Digitization requires the rapid transmission of large amounts of information over significant distances. Experiments conducted to date as well as recent operations in Iraq, where troops employed some of the results of the service's digitization efforts, have shown that that requirement is...

This paper presents the simulation model that the Congressional Budget Office (CBO) uses to project the budgetary costs of the Federal Housing Administration's (FHA's) single-family mortgage insurance program. CBO simulates defaults, recoveries, and prepayments on cohorts of mortgages insured by FHA with key parameters estimated from a dataset of FHA-insured mortgages. Those simulations are used to estimate the loan guarantees' subsidy rates, which are the lifetime cost of FHA's insurance claim payments minus fees, expressed as a percentage of the original loan amounts. The simulations are...

Policymakers use estimates of labor supply elasticities to understand how tax changes affect labor supply and, by extension, tax revenues and economic growth. A number of researchers have estimated these elasticities on both the participation and hours margins. While many studies estimate elasticities close to zero for married men, estimated elasticities among married women have fallen dramatically over the last 40 years and now approach those of married men. The studies present various explanations for this trend-women's stronger attachment to the labor force, increasing levels of...

This book presents the simulation model that the Congressional Budget Office (CBO) uses to project the budgetary costs of the Federal Housing Administration's (FHA's) single-family mortgage insurance program. CBO simulates defaults, recoveries, and prepayments on cohorts of mortgages insured by FHA with key parameters estimated from a dataset of FHA-insured mortgages. Those simulations are used to estimate the loan guarantees' subsidy rates, which are the lifetime cost of FHA's insurance claim payments minus fees, expressed as a percentage of the original loan amounts. The simulations are...

Labor supply elasticities are often used to evaluate the effect of changes in tax rates on the total hours worked in the economy. Historically, married women have tended to have larger labor supply elasticities than their spouses because they were the secondary earners in a couple. However, those elasticities have fallen sharply in recent decades-a decline that has been attributed to greater labor force participation rates and increased career orientation among married women. Indeed, a growing share of wives earn more than their husbands, raising the question whether a person's sex or...

Federal debt held by the public now exceeds 70 percent of the nation's annual output (gross domestic product, or GDP) and stands at a higher percentage than in any year since 1950. Under an assumption whereby current laws generally remain unchanged, federal debt will be 77 per-cent of GDP in 2023, the Congressional Budget Office (CBO) projects.1 Such a large amount of federal debt will reduce the nation's output and income below what would occur if the debt was smaller, and it raises the risk of a fis-cal crisis (in which the government would lose the ability to borrow money at affordable...

Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family's income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.