Faculty Spotlight: Professor Natasha Sarin on Tariffs, Tax Cuts, and Data Privacy
Professor of Law Natasha Sarin4 joined the Law School in 2023 and received tenure in 2024. Her research centers on public finance and financial regulation, with work on tax policy, household finance, insurance, and macroprudential risk management.
In April 2024, Sarin launched The Budget Lab at Yale5, a nonpartisan policy research center dedicated to providing in-depth analysis6 for federal policy proposals impacting the American economy. To date, the center has analyzed the impact of policies including the child tax credit, tax cuts, and deficit reduction.
In February, Sarin was named by The Washington Post to its inaugural Post Next 50 list7 of 50 people shaping society in 2025.
Prior to joining the Law School, Sarin served as deputy assistant secretary for economic policy and later as a counselor to Treasury Secretary Janet Yellen at the United States Treasury Department. She also taught at the University of Pennsylvania Carey Law School and The Wharton School.
In the Q&A below, Sarin reflects on the work of The Budget Lab, how potential tariffs will affect consumers, the sensitivity of Americans’ data at the Treasury Department, and what policymakers should think about as they consider extending tax cuts past 2025.
Your center, The Budget Lab at Yale5, is a nonpartisan policy research center that provides in-depth analysis of federal economic policy proposals. How do you hope this work will help policymakers and the public?
Bills in Congress live or die by their “scores” — the official estimates of costs and revenues produced by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT). Members of Congress are rightly interested in how much policies will cost, and in some instances, these estimates literally determine whether a bill can move forward. In the budget reconciliation process, which Congress is working through right now, a budget resolution must not be found to increase the deficit over 10 years.
The official scorekeepers do a fantastic job, but they are limited by what they are assigned to do. Take that 10-year time horizon: Plenty of policies have their most significant effects only over the longer term. Investments in children, for example, won’t show economic dividends within 10 years.
At The Budget Lab we widen the aperture to provide a fuller picture of the costs and benefits of proposed policies. We look not only at short-run costs but also at the impact on the federal budget and the economy over 30 years. Because we’re able to move quickly in our analysis, we also work directly with members of Congress so that they can understand the impact of policies as they are developing them.
The Budget Lab’s analysis has said that if tariffs are enacted on China, Mexico, and Canada, the typical U.S. household will lose $1,200 annually. What do you see the effects of such tariffs being on consumers and the broader economy?
This is a topic of really active policy debate. At The Budget Lab, we’ve been hard at work analyzing the impacts of recent proposals as they are announced. Tariffs on China, Mexico, and Canada8 would cost the typical American household $1,200, and the more recently announced “reciprocal” tariffs9 — which would hit every single country — would cost Americans $3,400. These tariffs would also significantly reduce GDP and GDP growth, shrinking the U.S. economy and leaving Americans with less.
Every analysis of increased tariffs, both those we have published at The Budget Lab and from others, finds the same thing: tariffs make Americans poorer. American consumers pay the cost of tariffs in the form of higher prices. We’ve seen how inflation has affected Americans over the past several years, and how salient it has turned out to be for people. Tariffs raise prices in the same way.
You’ve spoken about the security of sensitive information10 from the Bureau of the Fiscal Service. What are some of the potential risks?
The Bureau of the Fiscal Service (BFS) is essentially the federal government’s accounts payable department. Its functions are mechanical, not political. Because they keep track of most of the government’s payments, they have access to incredibly sensitive information about all Americans, including Social Security numbers and bank account information.
While it’s completely reasonable to be concerned about fraud in government payments, the BFS isn’t where you would go to address it. They don’t decide who is eligible for what tax credits and benefits, they just process the payments. Tackling waste, fraud, and abuse would mean going to the agencies that administer spending themselves — not the BFS.
Tax cuts from 2017 will expire at the end of 2025. What impacts should policymakers be thinking about11 as they consider whether to extend them?
We are on an unsustainable debt trajectory, with the national debt now exceeding $36 trillion. Last year, the U.S. spent $882 billion just on servicing the debt. Interest on our debt now is the second largest federal expenditure, behind only Social Security. Both Social Security and Medicare are also on an unsustainable trajectory, with both trust funds set to become insolvent next decade. This is a major, long-term, structural problem that policymakers should take seriously.
A lot of attention will be given to how TCJA (Tax Cuts and Jobs Act) extension proposals score in the 10-year budget window. The entire reason that these provisions expire in the first place is that the TCJA needed to score as being deficit-neutral over 10 years to make it through budget reconciliation in 2017. But focusing on that number alone will miss the full range of impacts.
In 2023, I published with my co-author Kimberly Clausing a set of reforms12 that laid out four principles we hope will govern the coming TCJA debate: (1) raise revenue to improve fiscal sustainability, (2) increase the progressivity of the tax code to reduce inequality, (3) reduce inefficiencies in the tax code, and (4) address global collective action problems such as climate change and tax competition. These are achievable goals. While the challenges we face are significant, they are not insurmountable.
The tax code is at the heart of American policymaking. As the tax debate unfolds, The Budget Lab will hold seminars to discuss the framework for TCJA and publish ongoing analyses of the long-run fiscal, economic, and distributional impacts of policy options. We hope to work with policymakers so they can propose legislation that takes the long view to build a fairer, more prosperous, sustainable future.
