Overview
Title
To amend the Congressional Budget and Impoundment Control Act of 1974 by requiring a distribution analysis of a bill or resolution under certain circumstances, and for other purposes.
ELI5 AI
The FAIR Act is like a special rule that asks for a careful look at how some big money decisions by the government affect different people, like how much money they have by race or income. It’s like making sure everyone is treated fairly when new rules about money are made.
Summary AI
S. 5420, titled the “Fiscal Analysis by Income and Race Scoring Act” or the “FAIR Act,” seeks to amend the Congressional Budget and Impoundment Control Act of 1974. The bill mandates a distribution analysis by income and race for any proposed law or resolution with a significant budget impact, showing how it would alter income distribution across different races and economic groups. This includes estimating these changes in dollars and percentages for each year projected in the budget. Additionally, the bill calls for a report on how similar analyses could be conducted by gender.
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AnalysisAI
General Summary of the Bill
The proposed legislation, known as the “Fiscal Analysis by Income and Race Scoring Act” or the “FAIR Act,” seeks to amend the Congressional Budget and Impoundment Control Act of 1974. The key amendment would require the Congressional Budget Office (CBO) to perform distribution analyses by income and race for significant bills, specifically those with a substantial budgetary impact. Furthermore, the Joint Committee on Taxation (JCT) would be tasked with including distribution analyses alongside revenue estimates. The bill includes provisions for a report on analyzing major legislation's impact by gender. These changes aim to provide Congress with detailed information on how legislation affects different demographic groups, potentially informing more equitable policy decisions.
Summary of Significant Issues
A primary issue is the complexity of the required analyses, which might pose significant challenges in terms of accurate implementation and resource demands. Clear methodologies and criteria are not specified, particularly regarding gender-based analysis, leading to potential inconsistencies. Additionally, the bill does not allocate specific funding or designate a responsible entity for these analyses. The complexity and potential ambiguity of the language used to describe required analyses could hinder understanding and effective implementation. Moreover, the timeline for preparing the gender report could be seen as excessive, given modern data processing capabilities.
Impact on the Public
If implemented effectively, the FAIR Act could enhance legislative transparency by demonstrating how proposed laws might affect different income and racial groups. This transparency might foster public trust in government decision-making and encourage policies that mitigate existing economic disparities. By highlighting potential impacts on various demographics, the bill could indirectly prompt more informed public discussions around inequality and legislative actions aimed at addressing it.
Impact on Specific Stakeholders
Public Stakeholders: For the general public, especially those from marginalized communities, the FAIR Act offers the promise of legislative consideration of economic disparities that disproportionately affect them. This could lead to more equitable policy outcomes that address systemic inequality.
Policymakers and Legislative Bodies: Members of Congress may find themselves better equipped to create policies addressing wealth and income inequality. However, the added requirement for these complex analyses might also introduce delays or complications in the legislative process.
Government Agencies: Entities like the CBO and JCT would face increased workloads without clear additional resources or guidelines. This might strain their capabilities unless adequately supported by new funding or explicit directives.
Academic and Economic Researchers: The bill could offer new opportunities for researchers to study legislative impacts on different demographics. However, it might also challenge researchers to develop robust methodologies suitable for policymakers’ needs.
Economic Inequality Advocates: This group might view the FAIR Act as a significant step toward recognizing and addressing disparities in wealth and income, potentially using the information derived from these analyses to advocate for further reform.
In conclusion, while the FAIR Act presents an ambitious step toward more inclusive and informed policymaking, its success will depend on the clarity of its implementation mechanisms and the resources available to support its requirements. The intent to address and mitigate racial, income, and gender disparities in policy impacts is a positive direction but requires careful consideration of potential operational challenges.
Financial Assessment
The FAIR Act is a legislative proposal focusing on altering how Congress assesses the impact of proposed laws, particularly concerning financial distribution impacts among racial and income groups. Financial references are predominantly centered around estimating the economic effects of legislation rather than direct spending or appropriations. However, some critical financial considerations emerge from the requirements of the bill.
Financial Analysis Requirements
The bill mandates the Congressional Budget Office (CBO) to perform a distribution analysis for significant budgetary proposals. Specifically, this involves analyzing changes in income distribution across races and economic groups for any bill or resolution with a budgetary effect equaling at least 0.1 percent of the gross domestic product (GDP) of the United States. This analysis is to reflect both dollar amounts and percent changes in after-tax-and-transfer income. While the concept aims to provide insight into the socioeconomic impact of legislation, it presents several implementation challenges:
Complexity and Resource Requirements: Conducting such detailed and precise analyses could prove to be resource-intensive. The CBO would need adequate resources—financial, personnel, and technological—to carry out these complex evaluations accurately. The absence of explicit funding appropriation or allocation raises concerns about the CBO's ability to meet these demands without additional resources.
Clarity and Methodology: The bill does not specify the methodologies or exact criteria for conducting the distribution analyses. This absence could lead to different interpretations and possibly inconsistent results, as highlighted in the issues list. The complexity of language, such as "transfers that would result in dollars and as a percent change in after-tax-and-transfer income," may require simplification for broader stakeholder understanding.
Reporting on Gender-Based Analyses
In addition to income and race, the bill envisions developing methods for conducting distribution analyses by gender. Within a year of the act's enactment, the CBO Director is tasked with delivering a report on the methods appropriate for these analyses. However, the legislation does not specify any budget or source of funding to prepare this report, leading to ambiguities regarding financial allocation. This omission could hinder timely and thorough completion of the report.
Threshold for Analysis
The proposal sets a threshold for these analyses based on a 0.1 percent impact of legislation on the GDP. While intended to limit the analysis to significant legislative proposals, the practical implications of this threshold are not explicitly detailed. This could potentially lead to inconsistencies in determining which bills require such analysis.
Summary
Overall, while the FAIR Act seeks to provide Congress with comprehensive insights into the economic and racial impact of legislation, it introduces several financial and operational challenges. The lack of explicit funding sources, clear methodological guidelines, and practical thresholds could pose significant hurdles to its effective implementation.
Issues
The amendment requires complex analyses (a distribution analysis by income and a distribution analysis by race) for certain bills or resolutions, which might be difficult to implement accurately and could be resource-intensive. This requirement is set out in Section 3.
The section lacks clarity on what specific methodologies or criteria will be used for the distribution analysis by gender in Section 4, which may lead to different interpretations or inconsistent methods.
There is no specified budget or funding source for preparing the report on distribution analysis by gender in Section 4, which could lead to ambiguities in financial allocation for this task.
The Bill does not specify which department or entity is responsible for carrying out the complex calculations required by the amendments in Section 3, potentially leading to accountability and execution issues.
The language used in the amendments in Section 3 ('transfers that would result in dollars and as a percent change in after-tax-and-transfer income') is complex and could be made clearer to ensure better understanding by all stakeholders.
The threshold for these distribution analyses ('a gross budgetary effect of at least 0.1 percent of the gross domestic product') in Section 3 is not clearly defined in terms of its practical implications, potentially leading to ambiguity in implementation.
The timeline of 'not later than 1 year' for preparing and submitting the report in Section 4 may be considered lengthy given technological advances and available data analysis tools.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill states the short title, which may be referred to as either the “Fiscal Analysis by Income and Race Scoring Act” or the “FAIR Act”.
2. Findings Read Opens in new tab
Summary AI
Congress finds that wealth and income disparities are growing in the United States, with White Americans generally having higher wealth and income compared to Black and Hispanic Americans. Additionally, Asian Americans and Pacific Islanders, as well as women, experience significant economic disparities, highlighting the need for informed policies to address these inequalities.
Money References
- (2) In 1968, and with the amounts adjusted for inflation, the median middle-class Black household had $6,674 in wealth, while the median middle-class White household had $70,786 in wealth, and in 2016, the median middle-class Black household had $13,024 in wealth compared to $149,703 for the median White household.
- (4) As of 2019, White families have the highest level of both median and mean wealth at $188,200 and $983,400, respectively, while Black and Hispanic families have considerably less wealth than White families, with Black families having a median and mean wealth of less than 15 percent of the median and mean wealth of White families, at $24,100 and $142,500, respectively, and Hispanic families having a median and mean wealth of $36,100 and $165,500, respectively.
- (5) In 2023, the median annual income for households led by Asian Americans was $112,200, compared with $89,050 for non-Hispanic White-led households, $56,490 for Black-led households, and $65,540 for Hispanic-led households.
- (7) As of the second quarter of 2024, women earned roughly 81 cents for every dollar paid to men, as measured by median usual weekly earnings for full time wage and salary workers, and for every dollar paid to White men, Black women earned roughly 71 cents, and Hispanic women earned roughly 65 cents.
- For example, between 2015 and 2019, Hmong women earned 60 cents for every dollar paid to White men.
- As of 2022, the median net worth for female-led households was $58,080, whereas male-led households had a median net worth of $82,200, and a study from 2013 showed that single Black women and single Hispanic women had a median wealth averaging less than a penny for every dollar of wealth owned by single White non-Hispanic men.
3. Distribution analysis by income and race Read Opens in new tab
Summary AI
The section of the bill amends the Congressional Budget and Impoundment Control Act to require the Congressional Budget Office to perform and include in certain reports a distribution analysis by income and race for bills with significant budget impacts. It also updates how the Joint Committee on Taxation should include distribution analyses alongside revenue estimates.
Money References
- (a) CBO estimates.—Section 402 of the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. 653) is amended— (1) in paragraph (2), by striking “and” at the end; (2) in paragraph (3), by striking the period at the end and inserting “; and”; (3) by inserting after paragraph (3), and before the flush text, the following: “(4) for a bill or joint resolution that has a gross budgetary effect of at least 0.1 percent of the gross domestic product of the United States in any fiscal year within the budget window— “(A) a distribution analysis by income showing the transfers that would result in dollars and as a percent change in after-tax-and-transfer income for as many years in the budget as is necessary to illustrate the anticipated effects; and “(B) a distribution analysis by race showing the transfers that would result in dollars and as a percent change in after-tax-and-transfer income for as many years in the budget as is necessary to illustrate the anticipated effects.”; and (4) in the flush text following paragraph (4), as added by paragraph (3) of this subsection, by striking “and description” and inserting “description, and analyses”.
4. Report on distribution analysis by gender Read Opens in new tab
Summary AI
The section requires the Director of the Congressional Budget Office to create and submit a report within a year, detailing methods for analyzing how major legislation affects people differently based on gender. This report should also highlight the pros and cons of various approaches and be sent to specific committees in the Senate and House.