The Budget Outlook and Options for Fiscal Policy
52 Pages Posted: 5 May 2002
Date Written: April 2002
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