The Budget Outlook and Options for Fiscal Policy

Posted: 8 Jun 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)

William G. Gale

Brookings Institution

Peter R. Orszag

Lazard Asset Management

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Abstract

This report 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 these 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

Auerbach, Alan Jeffrey and Gale, William G. and Orszag, Peter R., The Budget Outlook and Options for Fiscal Policy. Tax Notes, Vol. 95, No. 11, June 10, 2002. Available at SSRN: https://ssrn.com/abstract=315401

Alan Jeffrey Auerbach

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-643-0711 (Phone)
510-643-0413 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
202-797-6181 (Fax)

Peter R. Orszag

Lazard Asset Management ( email )

30 Rockefeller Plaza
New York, NY 10112
United States

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