The Penn Wharton Budget Model predicted that President Joe Biden’s budget reconciliation bill would add almost $500 billion to the national deficit, while the White House maintains that it would reduce national debt over time.
The model, directed by Wharton professor Kent Smetters, aims to analyze the economic impact of public policies, Smetters said. He added that the model is non-partisan and works with policymakers as they write legislation in order to help the government be more efficient.
The PWBM’s analyses counter the White House’s findings, contending that the bill as the White House proposed it would bring in $468 billion less in revenues over ten years than predicted. The analysis also found that the bill would decrease GDP by 0.1 percent by 2050.
Smetters said that there are actually different versions of the bill — one from the White House, and one from the House of Representatives. He added that the more recent House of Representatives version of the bill still does not reduce national debt, but because of an increase in revenue, the deficit would only be $274 billion.
“We estimate that the deficit, the 10 year deficit, is not going to be as large as what the White House version will be," Smetter said. "It's gonna be smaller than that. It's still not zero. It doesn't pay. It's not fully financing, but to be clear we estimate a 10 year deficit of 274 billion."
Several officials in the White House including Chief of Staff Ron Klain had refuted the earlier results of the PWBM — dismissing it as right-wing and incorrect and asserting the validity of their own models.
Smetters added that Donald Trump’s administration previously called the PWBM a “liberal group,” but that the organization is ultimately non-partisan.
“It's not our job at the Penn Wharton Budget Model to be referee of, you know, where politics is going to go," Smetters said. "It is our job to be referee of good modeling and good economic modeling."
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