Fiscal Solutions: A Balanced Plan for Fiscal Stability and Economic Growth

28 Pages Posted: 26 Jan 2012

See all articles by Joseph Antos

Joseph Antos

American Enterprise Institute (AEI)

Andrew G. Biggs

American Enterprise Institute

Alex Brill

American Enterprise Institute (AEI)

Alan D. Viard

American Enterprise Institute

Date Written: May 25, 2011

Abstract

Our country faces a serious fiscal crisis. According to President Obama’s National Commission on Fiscal Responsibility and Reform, the nation is on an unsustainable fiscal path, with spending well above tax revenue. The Congressional Budget Office projects that, under current policies, federal debt will soar from 62 percent of annual GDP in 2010 to 87 percent in 2020 and 185 percent in 2035.

The plan presented here represents the collaboration of its four authors and does not reflect the position of the American Enterprise Institute or any other organization. The individual authors do not fully agree with every provision of the plan, but we join in presenting it as a way to address the fiscal imbalance while promoting economic growth.

Our plan re-establishes a balance between federal spending and revenue that achieves long-term fiscal stability and promotes economic growth. We cannot simply tax our way to a balanced budget without suffering the consequences of a sluggish economy and reduced prosperity. We also cannot simply cut spending without risking the loss of essential services for an aging population, undercutting our infrastructure on which economic growth builds, and reducing our ability to defend the country against its enemies.

Our plan limits the national debt to 60 percent of annual GDP in 2035. Ambitious cuts in federal spending are required to achieve that goal while minimizing tax burdens on the American people and the drag that high marginal tax rates impose on long-run economic growth.

Keywords: Fiscal Policy, Budget Deficit, Public Debt

JEL Classification: H63, H61

Suggested Citation

Antos, Joseph and Biggs, Andrew G. and Brill, Alex and Viard, Alan D., Fiscal Solutions: A Balanced Plan for Fiscal Stability and Economic Growth (May 25, 2011). Available at SSRN: https://ssrn.com/abstract=1991384 or http://dx.doi.org/10.2139/ssrn.1991384

Joseph Antos

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

Andrew G. Biggs (Contact Author)

American Enterprise Institute ( email )

1150 17th Street N.W.
Washington, DC 20036
United States
202-862-5841 (Phone)

HOME PAGE: http://www.aei.org

Alex Brill

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

Alan D. Viard

American Enterprise Institute ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States
(202) 419-5202 (Phone)
(202) 862-7177 (Fax)

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