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The new budget outlook: policymakers respond to the surplus

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  • Alan D. Viard

Abstract

Economic events and policy changes have unexpectedly moved the federal budget into surplus. If current policies are maintained, surpluses are expected to continue for twenty years, although deficits are expected to return after 2020. Congress and President Clinton are considering proposals to reduce the projected surpluses through tax cuts or spending increases. In this article, Alan Viard describes the recent budget events and the new budget outlook. He analyzes the effects of the proposed tax cuts and spending increases, finding that they are likely to reduce national saving and lower future output. He concludes that the desirability of this outcome depends on value judgments about the needs and rights of current and future generations.

Suggested Citation

  • Alan D. Viard, 1999. "The new budget outlook: policymakers respond to the surplus," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 2-15.
    • Handle: RePEc:fip:fedder:y:1999:i:qii:p:2-15
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    References listed on IDEAS

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    Keywords

    Budget; Budget deficits;

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