The Budget Outlook and Options for Fiscal Policy

Auerbach, Alan J.; Gale, William G.; Orszag, Peter R.

doi:10.2139/ssrn.308562

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The Budget Outlook and Options for Fiscal Policy

52 Pages Posted: 5 May 2002

See all articles by Alan J. Auerbach

Alan J. Auerbach

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Peter R. Orszag

Lazard Asset Management

There are 2 versions of this paper

Date Written: April 2002

Abstract

This paper examines the federal budget outlook and evaluates alternative fiscal policy choices. Official projections of the federal budget surplus have declined dramatically in the past year. Adjusting such measures for the treatment of retirement trust funds, realistic estimates of future tax and spending levels, and longer time horizons implies an even bleaker picture. Freezing the tax cut passed last year would be a significant step toward fiscal responsibility. In contrast, the Bush Administration's budget proposes making last year's tax cut permanent and seeks further tax cuts that would exacerbate long-term fiscal problems.

Keywords: budget, surplus, fiscal policy, trust funds

JEL Classification: E62, H55, H60

Suggested Citation: Suggested Citation

Auerbach, Alan Jeffrey and Gale, William G. and Orszag, Peter R., The Budget Outlook and Options for Fiscal Policy (April 2002). Available at SSRN: https://ssrn.com/abstract=308562 or http://dx.doi.org/10.2139/ssrn.308562